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Last Updated: Monday, 22 November, 2004, 12:16 GMT
Barclays warns of house price dip
Estate agent's window
There are mixed views on where the market is heading
UK house prices are "coming off their peaks" and may fall by 20% in the next three years, Barclays Bank has said.

The UK's fifth biggest lender believes consumer spending will be hit as a result but does not predict a "crash".

The prediction comes as property website Rightmove says prices will fall until the market reaches a level at which buyers feel confident again.

It found asking prices fell by 1.7% in the month to mid-November, with annual inflation falling from 13.4% to 11.6%.

Barclays, which owns former building society the Woolwich, is forecasting an 8% fall in property prices in 2005, followed by further declines in 2006 and 2007.


Most commentators realise that house prices have gone up by as much as they could
Barclays Bank

The assessment of the housing market by Barclays chief economic adviser Christopher Smallwood are contained in a trading statement to be released this week.

The Barclays' observations on consumer spending go against the recent Bank of England view of "modest" price falls which would have little impact on the High Street.

"Most commentators realise that house prices have gone up by as much as they could and there has to be a period of equalization," a spokesman told BBC News.

"We're saying prices are coming off their peaks.

"There's no suggestion of a house price crash or a return to big negative equity."

Mixed views

Rightmove said its Monthly Property Index suggested further falls were likely into the new year as the slowdown affected all UK regions.

"We're going to see a couple of painful months for sellers as the market finds a level at which buyers are confident again," said Rightmove commercial director Miles Shipside.

"It may be ugly for a month or two, but a bit of turbulence is inevitable on the approach to the much hoped for `soft landing'."

But opinion is split how the UK housing market will develop. Property market experts are split whether there will be a crash or not.

Analysts at Goldman Sachs have suggested prices will dip between 10 and 15% over the next 18 months, while as long as a year ago Capital Economics forecast a 20% "peak-to-trough" drop.

Lenders Halifax and Nationwide both reported monthly decreases in house prices for October, but are ruling out the possibility of large falls.

"We are not looking towards a long period of house price falls or a sharp correction in the market," Halifax chief economist Martin Ellis has said.

"Housing market fundamentals remain sound."

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