Nationwide’s profits have halved as its commercial property business experiences hundreds of millions of pound worth of impairment. Low interest rates have also had an adverse impact.
Graham Beale, the Nationwide Chief Executive, paints a very gloomy picture for the immediate future of the UK property market saying there will continue to be a “very difficult trading environment” with a continued weakening housing market.
He is also predicting that future unemployment will rise, reversing the supply / demand balance toward oversupply, which will force prices down again.
Nationwide’s profits for the six months to 30th September were Â£177 million compared to Â£322 million last year. But Beale went on to stress the underlying strength of the company.
This bearish outlook will put the dampeners on those who think the house price slide is over. As many have said, prices will probably slide further next year. With recovery, when it comes, being slow. We may in fact see people with the money, speculators and BTLers getting in first before the real recovery starts, in about 2-3 years say.
For the immediate future the prospect of prices going up month on month, year on year is not realistic. If Beale is right (probably) then it’s just a matter of how low this second dip is likely to go.
For those buying now, especially with a mortgage at the higher end of the LTV equation, you should do so with the intention of keeping it for many, many years.
For those that sold 2006 / 2007 with the intention of renting and the hope buying a bargain in a couple of years, you may still have a long time to wait. And in the final analysis you may have been better off holding on to your house.