House prices coming down

[Bruce Everiss]

[Bruce Everiss]

House prices to fall a further 36pc
Full story: http://www.telegraph.co.uk/finance/econ ... -36pc.html

"Financial markets are pricing a further 22pc fall in the housing market over the next 12 months, with another 14pc in 2010, before flattening out in 2011.

Figures derived from trades on the HBOS House Price Index show traders are betting on the housing market falling far more over the next two years than the majority of commentators have so far forecast. If the fall is realised it would amount to a halving of house prices from its peak last year to the bottom of the market. The derivatives market also suggests it will take 10 years for prices to return to their current levels.............................."

[Bruce Everiss]

Half price houses by 2011, says the futures market
http://www.contractjournal.com/blogs/br ... -says.html
"The futures market has marked house prices down further following the release of the latest Halifax figures and now predicts a fall of 46% in cash terms from peak to a trough in 2011.

According to the Tradition Future HPI the price of an average house will plunge to £109,108 by November 2011 against the peak price of 201,081 reached in August 2007 - as measured on the non-seasonally adjusted Halifax index.

Prices, says Tradition, are not forecast to rise until 2012.

So, if we assume we are not struck by a nasty bout of deflation and that general prices rise on average, say, 2% a year, that would put the price of an average house in real terms at roughly half its peak value......................................"

[Bruce Everiss]

Why record low interest rates will fail to ease house building woes
http://www.contractjournal.com/blogs/br ... rates.html

"The Bank of England's decision to cut interest rates to just 2% today, the lowest in its 300 plus years, will come as a relief to some.

But in reality the Bank is near powerless to influence the direction of house prices or the rate of their decline.

There will be some benefits from a rate cut, but they are likely to be weak in the current economic climate.

There will be a reduction in pain for some homeowners. Hopefully this may mean fewer repossessions than might otherwise have been the case.

But many homeowners will see little reduction in their mortgage rates. Meanwhile, what spare cash there is from any cut in mortgage rates is more likely to go into paying off debt than into boosting the UK economy.

The nation is waking up to a very nasty hangover from the debt binge and a "hair of the dog" is unlikely to be the first thought on their minds as they see a plague of unemployment sweeping across the country.

In reality the Bank lost control of the housing market when it narrowly voted to cut interest rates in August 2005. It was understandable emotionally given the London bombings, but unwise in retrospect............................................"

[Bruce Everiss]

The real market already down 23.4% in June/August
http://www.telegraph.co.uk/finance/pers ... ction.html

"Calculations by the Liberal Democrat Treasury Spokesperson, Lord Oakeshott, show that the average price of the 3,993 houses sold at auction between June and August this year was £130,400, which is 23.4pc lower than the £170,300 average during the same period last year."

Add at least another three month's drop to that.
So we are probably looking at around a 30% drop in the market as things stand today.

[Bruce Everiss]

[Bruce Everiss]

House prices plunge at fastest rate on record, losing an average of £100 a day
http://www.mailonsunday.co.uk/news/arti ... 0-day.html

"Houses lost nearly a fifth of their value in 2008, the worst fall on record. The average price dropped from £197,074 to £159,896 in 12 months, according to the Halifax.
The £37,178 decline was the equivalent of losing more than £100 a day.
Prices are already at levels last seen in August 2004 and experts warn further, equally large, declines are possible.......................The Halifax said house prices have been falling for 11 straight months and declined by 2.2 per cent in December alone..........................And in a dire warning to homeowners, Ed Stansfield from the consultancy Capital Economics said: 'In 2009, house prices will fall at least as far as they have in 2008, possibly a tiny bit further.'....................Howard Archer, of the economic consultancy IHS Global Insight, said he did not expect house prices to stabilise until summer 2010..................The estate agency Knight Frank predicts one in four homes will be worth less than their owners paid when the market bottoms out next year. More than 200 families are expected to be evicted from their homes every day this year after failing to pay their mortgage."

[Bruce Everiss]

The Land Registry has offered voluntary redundancy to 1,250 staff due to a significant fall in fee income.

The government department responsible for keeping and maintaining the Land Register of England and Wales has offered all staff over the age of 50 early retirement while all at Registration Assistant and Registration Officer grades have been invited to apply for voluntary redundancy.

The Land Registry currently employs 8,000 people.

Peter Collis, chief executive, said: "Our main priority is to safeguard our long-term position as we try to ‘ride out’ this downturn in the market.

"We do not know how long the property market will be in the doldrums, but we are determined to emerge from this stronger and more successful than ever before."

The amount of work coming into Land Registry has fallen significantly as a result of the economic situation leading to a significant fall in fee income.
As a trading fund, the Registry is required to cover its costs and set fees accordingly.

A spokeswoman said the Land Registry was already aiming to reduce staff numbers due to the move to more online services, and the downturn in the housing market "accelerated the downsizing process".

In May 2006, the Land Registry announced proposals to reduce the amount of property it holds because staff numbers had fallen since the early 1980s, resulting in about a 30% surplus of property overall.

As such, the Land Registry has also offered voluntary early release to all staff at six of its regional offices in towns where it has two offices - Lytham, Lancashire, Swansea, Wales, Birkenhead Rosebrae and Birkenhead Old Market.

An announcement on how many staff are to be made redundant will made at the end of January.

[Bruce Everiss]

Home reposessions almost double in 12 months.
http://news.bbc.co.uk/1/hi/business/7844540.stm

"The number of people losing their homes after failing to meet their mortgage repayments has almost doubled, the UK's financial watchdog has said.
The number of possession orders granted by courts in the third quarter of 2008 was 13,161, up 92% from a year earlier.
The Financial Services Authority also said the number of people struggling to clear home loan arrears had risen......................
The FSA said the number of homeowners who were about three months behind with their mortgage repayments had jumped to 340,000, a rise of 24% from a year earlier and 10% higher than in the previous quarter............................"

[Bruce Everiss]

U.K. Home Prices Forecast to Drop 45% from Peak
http://online.wsj.com/article/SB123241510486096355.html

U.K. house prices will need to fall by nearly half from their peak of 18 months ago before they start to rise again, according to the current pricing of property derivatives, which analysts say would push substantial portions of U.K. banks' mortgage books into negative equity.

Analyst reports issued by Morgan Stanley and Royal Bank of Scotland Group PLC last week each said derivatives were pricing a peak-to-trough fall of 45% in U.K. house prices from August 2007 to the end of 2010. RBS's estimated that such a substantial fall would put 60% of HBOS's mortgage book into negative equity, more than half on Lloyds TSB's books and more than a third at Barclays PLC and RBS. HBOS and Lloyds this week merged into Lloyds Banking Group PLC.

Barclays said the average loan-to-value of its mortgage book in June last year was 35%, and average loan to value ratios on new residential mortgages were 51%, but it wouldn't comment further. Lloyds TSB declined to comment. HBOS and Royal Bank of Scotland didn't return phone calls seeking comment.

U.K. house prices have been hit by tight lending conditions, restricting the issuance of new mortgages. Nationwide, a leading mortgage lender the previous week said the average home in the U.K. lost £30,000 (about $44,200) in value over last year, falling to £150,000. The average price of houses now stands at about the same level as spring 2005, the report said.

Morgan Stanley said the average value of U.K. homes has already dropped by a fifth since the peak in August 2007.