House prices coming down

[Bruce Everiss]

Prices still have a long way to go down:

[Bruce Everiss]

UK house prices rose by 1.9 per cent in January, says the Halifax house price index.

IHS Global Insight’s Howard Archer on the figures:

The Halifax completely unexpectedly and somewhat incredibly reported that house prices rose by 1.9% month-on-month in January. This was the first rise in house prices since January 2008, although it did not stop the annual decline in house prices widening to 17.2% in the three months to January from 16.2% in the three months to December.

However, the year-on-year decline in house prices did narrow to 16.4% in January itself from 18.4% in December itself. The Halifax data follows on from the Nationwide reporting that house prices dropped 1.3% month-on-month in January after falling 2.5% in December. Consequently, the year-on-year fall in house prices widened to 16.6% in January from 15.9% in December on the Nationwide measure.

The very unexpected spike up in house prices in January reported by the Halifax does not fundamentally change our belief that further significant falls are highly likely in 2009. House prices can be very volatile on a month-to-month basis, and it is significant that January’s rise on the Halifax measure followed particularly sharp falls through the fourth quarter of 2008 (1.6% in December, 2.7% in November and 2.4% in October). Consequently, we would certainly want to see more widespread and sustained signs of revival before changing our view of the housing market. While there are some indications from the latest mortgage data and surveys that housing market activity may be bottoming out, this is at an exceptionally low level and there continue to be a powerful set of negative factors that seem highly likely to depress activity and prices for some time to come.

[Bruce Everiss]

[Bruce Everiss]

Reposessions rocketing: http://news.bbc.co.uk/1/hi/business/7900854.stm

"The number of homes in the UK repossessed by lenders last year rose by 54% to 40,000, according to the Council of Mortgage Lenders (CML).
Despite the recession, the CML said this was fewer than it had originally predicted, but it expects repossessions this year will reach about 75,000............

By the end of last year, 182,600 mortgages had arrears worth 2.5% or more of the outstanding balance owed to the lender.
That amounted to 1.57% of all mortgages currently in existence.
That was up sharply from the 1.08% of mortgages with this level of arrears at the end of 2007, and the 1.29% of mortgages in this position at the end of September of 2008......................."

[Bruce Everiss]

Another great graph that gives you an idea about what is going to happen next:

[Bruce Everiss]

And the latest news (houses dropping by £1,500ish per month for each £100,000 of value): http://www.bloomberg.com/apps/news?pid= ... fer=europe

U.K. housing sales dropped to the lowest since at least 1978 as the recession pushed prices down further, the Royal Institution of Chartered Surveyors said.

The average number of transactions in a survey of real- estate agents and surveyors dropped to 9.5 per respondent in the quarter through February, the lowest since the data began three decades ago, the group said today in London. The gauge of house prices fell last month to minus 78.3 from minus 76.6 in January.............

“The lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place,” said Jeremy Leaf, a spokesman for RICS. “Without further intervention, the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost, which will inevitably have serious implications for the wider economy.”...............


House prices fell an annual 17.7 percent last month, Lloyds Banking Group Plc’s Halifax division said last week, the most since the survey started in 1983........

The housing slump mirrors waning consumer demand in the U.K. after the economy contracted 1.5 percent in the fourth quarter. Retail sales fell 1.8 percent from a year ago in February, a separate report by the British Retail Consortium showed today..............

[Bruce Everiss]

House prices 'could fall by further 55 per cent'
http://www.telegraph.co.uk/finance/econ ... -cent.html

People who bought buy-to-let flats are expected to “begin panic selling” and the average home value could drop below £100,000.

The predictions in a 298-page report from Numis Securities, a City investment bank, are the bleakest yet on the deteriorating state of the British property market.

House prices have already fallen by about 20 per cent over the past year.

However, in the note written last month, Numis said: “Despite UK house prices already having fallen 21% from the peak, we do not believe that the correction is anywhere near over.

“Our core headline forecast is that UK property prices remain between 17% and 39% overvalued based on fair valuation. Moreover, history has shown us that when property…which has experienced a price bubble corrects, the price tends to fall below fair value for a period of time, as confidence in that market remains low. Prices could fall a further 40-55% if the over-correction was as bad as the early 1990s in our view.”

The report warns that “city centre flats” and “new executive homes” are likely to record the biggest reductions and describes investing in buy-to-let property as a “poor man’s hedge fund”.

[Bruce Everiss]

Daily Telegraph:

"Homebuyers will be prevented from borrowing more than three times their annual salaries under new mortgage rules to be announced this week. "

http://www.telegraph.co.uk/finance/pers ... owing.html

With an average house currently around five times average salary, this is going to put downward pressure on the market.

[Bruce Everiss]

I like my graphs. And just how revealing is this one?
People taking so much equity out of a temporarily inflated asset to squander on holdays and cars.
No wonder the economy is going to hell in a handcart.
And G. Brown, chancellor of the exchequer, allowed this to happen.

[Bruce Everiss]

House price decline accelerates

http://news.bbc.co.uk/1/hi/business/7967715.stm

" House prices are falling even faster than before in England and Wales, according to the Land Registry.

Prices dropped by another 2% in February, pushing the annual rate of decline from 15.1% to 16.5%.

It means the average property is now worth £153,862, down by £30,361 in the past year, and back to the level last seen in September 2004.

Prices have now fallen for 18 months in a row, dragged down by the impact of the recession and the mortgage drought......................................"

So a £300,000 house (not untypical in and around Harbury) lost £6,000 in one month.