10% decline in property prices say Citigroup

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by Kay Murchie

Experts at Citigroup, the world’s largest bank, have warned that property prices will fall by 10% over the next 3 years. Citigroup’s chief UK economist said property prices are heading for a major downturn, losing a 10th of their value or more.

The warning from Citigroup is just the latest from a major bank on property prices and comes after Morgan Stanley’s prediction of 10% falls.

Halifax, Nationwide and the Royal Institution of Chartered Surveyors (Rics) have warned of widespread falls in prices across the country.

It is anticipated that Rightmove will announce a larger than anticipated fall in average asking prices in its December Index. This is primarily due to lenders tightening their lending criteria.

Michael Saunders of Citigroup said whether you call it a crash or a slump, this is going to be very painful. He continued that the central banks’ move to inject liquidity into money markets would not ‘remove the prospect the economy will slow sharply because of the drag from severe housing weakness, high household debts, rate hikes and the tightening of credit availability.

Mr Saunders added that he expects property prices to decline by 3% each year for the next 3 years although the 10% decline could easily come at once. It’s going to be fairly bleak concluded Mr Saunders.