Barclays chief: House prices "could fall by 30%"
House prices will drop 30%
Wednesday, 17, Dec 2008 03:29
House prices could fall by as much as 30 per cent from their peak, according to the head of Barclays.
John Varley, the head of high street lender Barclays, warned in an interview to be shown on Sky News tonight that Britain is only halfway through the housing slump.
As house prices have already fallen by around 15 per cent, the total fall could wipe almost a third off the average house price.
Mr Varley said: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30 per cent. I suspect we're about halfway through that at the moment."
At the peak of the housing boom, some banks were willing to lend 125 per cent of the house price, assuming prices would continue to rise and now putting these homeowners at risk of negative equity.
Mr Varley said of this practice: "Looking back on it, madness."
Mr Varley also said banks must accept responsibility for their role in the recession and say "sorry" to customers.
It is the first time the head of a bank has spoken so openly about the credit crisis and the part lenders have played in causing the situation.