Britain's largest mortgage and savings provider HBOS expects house prices in the UK to fall by 9% in 2008, according to the company's latest trading statement which covers the first three months of the year. The company said that asset growth was slowing and the rate of deposit growth is targeted to outstrip that for assets in 2008. 'We are achieving substantially better pricing on new lending in our key markets and, as a result, the decline in the net interest margin seen in 2007 is expected to moderate in 2008.'
Britain's largest mortgage and savings provider HBOS expects house prices in the UK to fall by 9% in 2008, according to the company's latest trading statement which covers the first three months of the year. The company said that asset growth was slowing and the rate of deposit growth is targeted to outstrip that for assets in 2008. 'We are achieving substantially better pricing on new lending in our key markets and, as a result, the decline in the net interest margin seen in 2007 is expected to moderate in 2008.'
Lending and investment in the house building sector at the end of May 2008 totalled £4.2bn (EUR 5.3bn) compared to £4bn in December 2007, of which £3.5bn was in loans. Revenues from the corporate investment portfolio however, are expected to be well below the record level achieved in 2007. The book value of the investment portfolio at the end of May 2008 was £4.8bn compared to £4.2bn in December 2007. According to the statement this was due to net additions to the portfolio, investment write downs of some £200mln (including £100mln in respect of the house building sector) being substantially offset by increased valuations elsewhere.
In further bad news for the housebuilding sector, the Financial Times reported on Thursday that HBOS had written down the value of its equity stakes in UK housebuilders by half - to about £100mln - because of the turmoil in the sector. According to the report, the bank has stakes in six UK housebuilders, including 50 % in Crest Nicholson, and 20% in retirement homes specialist McCarthy & Stone. Despite this, the report noted that only 38% of the company's corporate loan book was property-related, and only 3% of that related to housebuilders.
This follows the news last week that Bank of Scotland has agreed to finance a 1.3 hectare waterfront scheme, valued £128mln (EUR 162mln), at Mann Island, Liverpool to be developed by Countryside Neptune. The development company is a joint venture between Countryside Properties, one of the UK's largest housebuilders, and Neptune Developments, a Liverpool-based property development company.
