House prices 'might drop 30%', bank chief says

15/12/2008

House prices could fall by another 15 per cent next year - plunging hundreds of thousands of homeowners into negative equity.

This is the prediction of John Varley, chief executive of Barclays - who now thinks that the property market could decline in value by 30 per cent by the end of 2009.

In an interview with Sky News, the bank chief also said that mortgage lenders' policies prior to the beginning of the credit crunch had been "madness" - helping to inflate the property bubble.

Since then, house prices have dropped by around 15 per cent.

Mr Varley added: "Our view was that from the top to the bottom, you would see a fall [in prices] of something like 25 to 30 per cent.

"I suspect we're about halfway through that at the moment."

In the interview, Mr Varley also said that banks needed to say "sorry" to customers and take responsibility for their part in causing the financial downturn with their lending policies.

Tags; Housing Debt and Bills, Young Family Finances,

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