Housing guru: Prices set to fall by a FIFTH


Housing guru: Prices will fall by a fifth – Founder Rightmove fears ‘deep recession’ as rising mortgage rates make homes unattainable

  • Harry Hill: Recession ‘could see 20% price cuts’
  • Mortgage payments have doubled for many homeowners
  • Higher borrowing costs can push many to put properties on the market







Market expert: Harry Hill sold Countrywide in 2007 for £1 billion

Market expert: Harry Hill sold Countrywide in 2007 for £1 billion

The founder of Britain’s largest property website predicts a housing market slump, which could send prices down by a fifth.

Harry Hill is an industry veteran who founded FTSE100 property giant Rightmove and sold estate agent group Countrywide for £1bn a year before the 2008 banking crisis.

He said he is “nervous” about a “potential deep recession” and how the economy would develop.

Home prices are already falling at their fastest pace in more than two years, Nationwide Building Society said last week.

Leaving aside the pandemic, real estate values ​​have not fallen this much since the financial crisis more than a decade ago.

Mortgage approvals – an indicator of future lending – are also at their lowest level since the pandemic, according to the Bank of England.

Hill told The Mail on Sunday: ‘My view of the housing market is that it is going either way. Transactions are going down. Prices are going down.

The only question is how many? Intuitively, it feels like double digits for both, from now on.”

He said if Britain goes into a recession leading to a downturn in trade and business, “we could see price cuts of 20 per cent.” Hill added, “Then that starts to hurt people a lot.”

Monthly mortgage payments are expected to double for many of the 1.8 million UK homeowners due to refinance next year. Hill said the higher borrowing costs could prompt many of those with mortgages to put their properties on the market, leading to a drop in prices.

He said some borrowers could expect their mortgage costs to rise ‘from £1,000 to £3,500 a month’.

“People in working-class areas – in places like Manchester, Liverpool and Darlington – are already struggling quite a bit,” he said.

“The idea that these people will be less well off in the next 10, 15 or 20 months is not good for any market, especially not for the housing market.”

But Hill added that most homeowners are unlikely to end up in negative equity — which is what happens when the value of a home falls below the price originally paid.

He points out that the housing market has had a “brilliant run” in recent years, with most property values ​​remaining well above purchase price.

Hill’s predictions are unusually bleak for a loyal brokerage firm – and worse than most commentators. But his opinion is important given his past successes in the industry.

He built Countrywide into the largest brokerage group in the world before selling to US private equity firm Apollo in 2007.

In 2000 – while running Countrywide and when the internet was still in its infancy – Hill spearheaded the creation of Rightmove with a £2 million investment.

He remained the chairman until 2008. Today, Rightmove is the UK’s leading property portal with a market capitalization of £4.6 billion.

Hill is not alone in predicting falling prices. Economists at the EY ITEM Club, which uses the Treasury’s forecasting model, expect real estate values ​​to fall 10 percent next year.

The government’s spending watchdog predicted last month that house prices will fall by 9 percent over the next two years as affordability issues weigh on demand and prices.

Nationwide said last week that prices fell 1.4 percent in November from the previous month. The mortgage bank said the average property price fell from £268,282 in October to £263,788, and the market looks set to remain ‘subdued’ in the coming months.

The National Institute of Economic and Social Research calculates that 3.8 million households will see their monthly mortgage payments rise by an average of £400 if interest rates, currently at 3%, peak at 4.5% in line with market expectations.

NIESR estimates that this would wipe out the savings of 1.4 million households by the end of next year.

Hill, now semi-retired, is considering a comeback to the stock market. He has his sights set on Rightmove’s struggling online rival Purplebricks.

Activist investor Adam Smith has proposed that Hill City veteran Paul Pindar, who has presided over mounting losses as chairman of Purplebricks, should replace it. The company’s shares are down as much as 97 percent in five years.