NatWest Chair’s Controversial Property Market Optimism

Backlash Erupts Over NatWest Chair’s Property Market Remarks

George Huggies

The chair of NatWest, one of Britain’s largest banks, ignited a storm of controversy on Friday with his assertion that getting on the property ladder is currently “not that difficult.” Speaking on the BBC’s “Today” program, Howard Davies expressed his belief that the process largely involves saving, harking back to traditional norms. His comments, however, came at a time when the average property in the U.K. costs £287,105 ($366,357), with prices in London soaring to an average of £528,798, according to recently released data. The stark contrast between Davies’ perspective and the harsh economic reality facing aspiring homeowners triggered widespread criticism.

Despite the economic landscape marked by a 15-year high in interest rates and U.K. mortgage rates exceeding 5% since April 2023, Davies downplayed the challenges faced by potential homebuyers. Acknowledging the need for a higher down payment due to post-financial crisis regulations, he argued that the current financial system is safer for consumers. This perspective, however, did little to assuage critics who viewed his comments as a manifestation of being out of touch with the struggles faced by many.

Social media erupted with condemnation, characterizing Davies as disconnected from the lived experiences of those attempting to step onto the property ladder. Ben Twomey, the CEO of campaign group Generation Rent, questioned the chair’s understanding of the struggles faced by renters, emphasizing the financial burden they bear in the face of soaring bills. Richard Murphy, a political economist and professor, went further, describing Davies’ remarks as a “staggering demonstration of the disconnect between bankers and reality in this country.”

As property experts foresee a potential increase in purchases in 2024 due to easing interest rates, the overall outlook remains challenging. Richard Donnell, executive director of Zoopla, highlighted suppressed sales volumes in 2023 and the need to rebuild sales momentum. The transition from low mortgage rates to higher percentages is expected to have a lasting impact, underscoring the ongoing complexities in the U.K. property market that go beyond the simple act of saving, as suggested by Davies.