Morgan Stanley Sees U.K. Home Prices Extending Drop in 2012
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Morgan Stanley said U.K. house prices will continue to decline through 2012 as a squeeze on consumers’ incomes and higher interest rates restrain property demand.
Home values will fall a total of 10 percent in the two years through 2012, compared with a previous estimate of a 7 percent decline to the end of this year, Morgan Stanley economists including London-based Melanie Baker and Cath Sleeman said in a note to clients dated yesterday. The declines will cause U.K. banks to post larger loan losses, with Lloyds Banking Group Plc the most exposed to price drops, they said.