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House prices "to fall for two years"

• Robert Peston
• 19 Jul 08, 05:00 AM

The chairman of one of the world's most powerful banks has warned that house prices in the UK and the US are likely to fall for another two years.

Sir Win Bischoff, the chairman of the US banking giant Citigroup, has told me that he expects it will take two years for these markets to find a floor.

The interview will be broadcast on the News Channel at 22.30 tonight (and at various other times), in the first of a new series of interviews with business leaders, called Leading Questions (click to watch it).

Citigroup, till recently the world's biggest bank, yesterday announced it had lost $2.5bn in the three months to the end of June, taking its cumulative losses in the past nine months to $17bn - largely due to massive writedowns of its holdings of subprime and other investments.

However the bank's latest losses were less than analysts had been expecting.

Sir Win expects the credit crunch, the fraught conditions in financial markets, to continue through 2009.

Along with its huge presence in investment and corporate banking, Citigroup is one of the biggest consumer banks in the world, with a massive presence in the US and a serious one in the UK, where it owns Egg.

So Sir Win's remarks to me that he expects house prices to fall for another two years on both sides of the Atlantic carry weight.

Citigroup is selling assets and cutting costs by shedding staff, to cope with these harsh new conditions.

It employs around 12000 just in the UK (and 370,000 in total) - and Sir Win says there will be redundancies all over the world, some of which will be compulsory.

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