B&B signals wind down of house price boom

Bradford & Bingley, the mortgage lending bank, signalled that the runaway housing boom was slowing down yesterday when it said that house prices would grow at a "significantly lower rate" next year.

The bank, a specialist mortgage lender, which also operates one of the largest estate agency networks, said it expects "low single-digit" price growth next year - in sharp contrast to the current 25%-30% annual rate of growth.

B&B said there was clear evidence that prices were already falling in London and that price inflation had slowed in the south of England.

Its comments follow a string of warnings that the market's continued strong growth was increasing the chances of an early 1990s-style crash.

Prices are rising at their fastest since the height of the last boom, 13 years ago, with Nationwide and Halifax reporting increases in November of 2% and 1.4% respectively. This means prices are now 29.2% higher than a year ago, according to the Halifax.

The Council of Mortgage Lenders recently predicted price rises of 7% next year and said homebuyers should be prepared for the possibility of "more turbulent times ahead".

B&B appears to be taking an even more cautious view on property values. In a trading update yesterday, it said: "We believe that in 2003 average house prices will grow at a significantly lower rate than that experienced in 2002."

Christopher Rodrigues, the B&B chief executive, said: "These are good things, as there has been a degree of irrational exuberance and the rate of growth needs to slow.

"The customer is getting sensible and looking for value. Our best guess would be that house prices will grow in the low single-digits next year."

He added the bank did not envisage average prices falling next year, although there were pockets of the country where this could happen.

Since its flotation on the stock market in December 2000, B&B has reinvented itself as a high street independent financial adviser and mortgage broker.

Yesterday, Mr Rodrigues signalled that it might look at snapping up other businesses in the retail financial services sector to add to acquisitions such as mortgage broker Charcol and lending specialist Mortgage Express.