RT.com
22 Jan 2023, 18:13 GMT+10
Average home prices could fall by up to 10% this year, Lloyds Bank predicts
British house prices, which have been on a downward trend recently, will fall by up to 10% this year, according to Lloyds Bank CEO Charlie Nunn, citing higher mortgage rates and the impact of the cost-of-living crisis.
He told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland, that the UK is facing a mild recession this year, with a GDP fall of about 0.1%. According to Nunn, unemployment will stay strong and "that's more because of the constraints on the supply side, interest rates about 4% and a recovery coming into 2023."
"The other challenge a lot of our customers are focused on is house prices and we do see house prices softening about 8-10% this year," he said.
The British housing market has been under pressure following former prime minister Liz Truss' disastrous economic plan. Known as the mini-budget, the plan, which was revealed in September, sent British financial markets into freefall and pushed up borrowing costs. The economic plan eventually resulted in the replacement of Truss with Rishi Sunak.
Meanwhile, the Bank of England (BoE) continued to hike interest rates aggressively in order to rein in double-digit inflation. The regulator said that the country was entering its longest recession on record.
Inflation hit 10.7% in November, and the BoE has hiked rates at nine consecutive policy meetings, to lift its main rate from 0.1% to 3.5%. Economists say that further increases will follow in the coming months.
The Office for Budget Responsibility (OBR) had warned earlier that British households face their sharpest fall in living standards on record. Nunn said that Lloyds was seeing a "tale of two stories."
"First of all, there is a relatively small but really important group of customers with mortgages and also without who are going to struggle to make ends meet in the cost of living. That's about 1% of customers we can see in the UK and we really need to focus on supporting them," he said.
"We're seeing a much larger set of customers having to adapt their spending and adapt to both higher costs of living and higher mortgage spend, but there still is real resilience in businesses, in households and in individuals at the higher income levels in the UK and strong spending we're seeing going through," Nunn added.
For more stories on economy & finance visit RT's business section
(RT.com)
Get a daily dose of Sports Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Sports Sun.
More InformationThe Cleveland Cavaliers look to bounce back from a rare home loss when they host the Memphis Grizzlies on Thursday. ...
The Boston Celtics didn't do much wrong in the opening quarter and breezed to a 139-96 home victory over the ...
Dejounte Murray recorded 21 points, eight assists and six rebounds and the Atlanta Hawks never trailed while drubbing the host ...
Lauri Markkanen scored 28 points and grabbed 13 rebounds and rookie Walker Kessler had a big game on both ends ...
Los Angeles Dodgers CEO Stan Kasten and president of baseball operations Andrew Friedman expressed no regrets Wednesday about the team's ...
Lauri Markkanen scored 28 points and grabbed 13 rebounds and rookie Walker Kessler flirted with a triple-double en route to ...
The PGA Tour makes the 14th of 44 regular-season stops in the FedEx Cup season at one of the world's ...
Hall of Fame NFL executive Bobby Beathard, an architect of four Super Bowl titles for two different teams, has died ...
Buffalo Bills safety Damar Hamlin is teaming up with the American Heart Association on an initiative promoting CPR. Hamlin had ...
He inspired, confounded and dominated peers for 23 years in the NFL, but Tom Brady insists he's leaving for real ...
The San Francisco quarterback room just got smaller as 49ers head coach Kyle Shanahan signaled Wednesday that Jimmy Garoppolo will ...
Field Level Media's Golf Glance provides weekly news and storylines from each of the major North American golf tours. PGA ...