House price predictions 'futile'

House prices have fallen at an unprecedented rate this year

Trying to predict the short term course of house prices is "futile" at the moment, says the Council of Mortgage Lenders (CML).

In its latest fortnightly review, the CML admits that its prediction of a 7% fall this year, made in May, has become rapidly outdated.

It says the property market is unlikely to recover from its current slump before 2010.

Both the Halifax and Nationwide say prices have fallen 11% this past year.

"Our May prediction of a 7% correction now looks wide of the mark, but trying to update that is now futile," said Bernard Clarke of the CML.

Volatile conditions

The outlook of many participants in the property market has changed rapidly this year, as they have been caught out by the most sudden downturn in sales and prices in the past 60 years.

At the start of 2007 many experts were forecasting that prices this year would stabilise or possibly rise very slightly.

But the mortgage drought, brought on by the worsening international credit crunch, has made even updated forecasts look rapidly out of date.

At the start of this month Andy Hornby, the head of HBOS, which owns the UK's largest mortgage lender the Halifax, said he thought that sales and prices would not recover until 2010.

And Graham Beale, the chief executive of the Nationwide, revealed that he thought prices might eventually fall by 25% from their peak a year ago to their eventual trough.

Mr Clarke of the CML said that expectations of such a large drop in prices now appeared to be an industry consensus for the course of 2008 and 2009.

"In current volatile conditions we need greater clarity before updating our forecast," he said.