Fog blankets the Canary Wharf business district including global financial institutions Citigroup Inc., State Street Corp., Barclays Plc, HSBC Holdings Plc and the No. 1 commercial office block Canada Square, on the Isle of Dogs on November 5, 2020 in London, England.
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LONDON – UK house prices will fall by up to 10% this year, as higher mortgage rates and the broader cost of living crisis have curbed home purchases, Lloyds Bank CEO Charlie Nunn told CNBC on Tuesday.
The UK housing market has come under pressure after The disastrous “small budget” of former prime minister Liz Truss in September, prompting lenders to withdraw around 40% of all mortgage products from the UK market amid fears of soaring interest rates.
The UK property sector has remained stagnant in recent months, due to Bank of England continued to sharply increase interest rates to control double-digit inflation. It predicts that the country is entering the longest recession on record.
Inflation reached 10.7% in November, and Bank raised interest rates at nine consecutive policy meetings to raise its primary rate from 0.1% to 3.5%. It is expected to increase further in the coming months.
A report from British property website Rightmove on Monday showed Ask for a slight increase in house prices in January for the first time in two months.
“Our base case for 2023 is we’re going to have a recession – a mild recession – GDP around -0.1% this year, unemployment still high and more is due to supply-side constraints, interest rates around 4% and a recovery coming in 2023,” Nunn said on the sidelines of the World Economic Forum in Davos, Switzerland.
“Another challenge many of our clients focus on is home prices and we see home prices falling about 8-10% this year.”
The independent Office for Budget Responsibility (OBR) forecasts that UK households face the steepest drop in living standards on record. As head of the largest retail and trade financial services group in the UK, Nunn revealed that Lloyds is seeing a “two-story story”.
“First of all, there’s a relatively small but really important group of customers with mortgages, and there aren’t those who will struggle to cover the cost of living. That’s about 1% of the customers that we have. can be seen in the UK and we really need to focus on supporting them,” he said.
“We’re seeing a much larger group of customers having to adjust their spending and accommodate both higher cost of living and higher mortgage spending, but still have real resilience.” in businesses, households and individuals at a higher level of income than in the UK and the strong spending we are seeing.”
