House prices still falling fast

[P & CA News Bot]

UK house prices fell another 2.6% in November - to record a 14.9% annual fall - according to figures from the Halifax.

More...

[Francois Cellier]

... and here is the full article from BBC News

House prices still falling fast

Page last updated at 11:45 GMT, Thursday, 4 December 2008


House prices fell another 2.6% in November, the Halifax says.

According to its latest survey, that increased the annual rate of house price falls to 14.9%, as against the 13.7% rate in the 12 months to October.

The Halifax said the average property in the UK was now valued at £163,605, a level last seen in July 2005.

Last week, the Nationwide building society said the pace of house price decline had eased off, with prices down 13.9% in the year to November.

But the Halifax figures suggest that house price falls are accelerating.

"The combination of high house prices in relation to earnings, constraints on householders' incomes and spending power, and the decline in the availability of mortgage finance since the summer of 2007 has curbed housing demand," said the Halifax's chief economist, Martin Ellis.

The mortgage lender calculates the annual rate of decline by comparing the average house price over the past three months with the average for the same three-month period the year before.

A straightforward monthly year-on-year comparison suggests that prices may have fallen even faster, by 16.1%, although the lender argues that this approach can be distorted by short-term price fluctuations.


Stabilising?

The Halifax's survey suggests that the average house price has now dropped by £31,485 in the past 12 months.

Mr Ellis said there were indications that sales, if not prices, had bottomed out.

"The number of mortgages approved to finance house purchase was broadly unchanged for the fourth successive month in October at a seasonally adjusted 32,000," he said.

"The recent flattening off in approvals suggests that housing market activity may be stabilising."

However, there are widespread fears that the current rationing of mortgages will become even worse in the coming year, unless the government's efforts to overcome the crisis in the banking industry and to revive mortgage lending come to fruition.

The Council of Mortgage Lenders (CML), among others, has warned that new lending may be negative in 2009, for the first time on record.

That means that there could be so little new lending by banks and building societies that it would be outstripped by borrowers paying off their mortgages.

That in turn would means sales falling even further, putting further downward pressure on prices.


More price falls

The Halifax will be publishing its formal house price prediction for 2009 later this month.

"We have said we were comfortable with the consensus that prices would fall by about 20% over the course of 2008 and 2009," said Mr Ellis.

"But we do need to look at that again," he added.

Other commentators have already suggested that prices will continue to fall fast, with some suggesting they could drop by another 15-20%.

"The speed at which this housing market correction is unfolding, already the fastest on record by a country mile, is likely to step up a gear over the coming months," said Seema Shah at the consultancy Capital Economics.

"We think that we are only half way through this correction."

[Tom Joad]

Housing prices have to have a reasonable relationship to people's income. Historically here is the US, the median house price is about 2.5 to 3 times median household income.

Since they are coming off a huge bubble the bottom will overshoot that mark. I'd guess it will bottom out in the 2.0 to 2.5 range.

After that it will slowly rise to the normal 2.5 to 3.0 area.

Then the market will stabilize, maybe.

If there is a world-wide 1930's type depression all bets are off.

[witnesstheday]

Problems comparable to those in the 1930 crash have already, it now seems, begun

Corporate bonds are deemed dear or expensive relative to their spread over government bonds. In the US, this spread has widened to levels not seen since the 1930s depression.

http://news.bbc.co.uk/1/hi/business/7763261.stm

The overall property market loss in the UK is likely to hit 40% before the financial blood-loss is halted.

The property market had reached about 141% of its true value - i.e. houses had risen way too fast in prices, driven by absurd levels of mortgages, ridiculous commission schemes, and absolutely unbalanced greed (banks, estate agents, investors). Thus it is no surprise really that the final chop-off percentage is around 40%

So far we have shed 15 of that 40.

And an Asian Monetary Fund is being discussed now, so it's true - China has played a devilish chess game with the west (and those many rioting unemployed chinese workers at the bottom don't have anyone representing them - they will go down in history as yet more of the successfully suppressed masses).

I'd like to say "long live the revolution", but nothing's changed yet. All we have is chaos. There is still nothing visibly good in the world because of it. But I have faith. This is the time for the talented, as I keep saying. The merchants of liquidity are getting their just desserts and those who can actually contribute to society now have a chance to get credit for what they do, since the smoke screen of money has disappeared from the world.