RBS Predicts UK House Prices Will Decline Further

Lately, the Royal Bank of Scotland (RBS) announced that according to its survey carried out among bond investors, UK property prices will decline by another 17.2% before the property market in Great Britain bottoms out. The results of the survey, which was undertaken by one of Britain’s largest government-backed banks, were distributed among its clients on Friday, August 21st. More than 86% of respondents to the RBS survey said that the price of UK property, which has already seen a dramatic decline of 15% since the fall of 2007, is to go down further. It is important to note that the results of the poll of mortgage-backed investors do not coincide with the latest signs of UK property market recovery. Lately, the Nationwide Building Society and the Royal Institute of Chartered Surveyors revealed data that suggest UK house prices have been rising for 3 consecutive months and that they are expected to grow further in the course of 2009. RICS data also reversed the earlier prediction of the organization, which implied that house price in Great Britain will by another 15% in 2009. More evidence suggesting that the British property market has already lived through its worst times came from Mr. Ben S. Bernanke, chairman of the Federal Reserve and Mr. Jean-Claude Trichet, president of the European Central Bank. In their opinion, the recession not only in the UK, but all over the world is already past its worst point as US house prices have increased by 7.2% in July. The Edinburgh-based bank also highlighted in its survey that the mortgage-backed bond market will deteriorate this year. More than 63% of investors expect bonds to increase, while the remaining 37% percent think they will narrow. Interestingly, the representative of the London branch of the Royal Bank of Scotland, Mrs. Aoife Reynolds, refused to comment on the data.