With the US subprime crisis spreading to Europe, shockwaves in Northern Rock which would spread to other banks, UK economy growth not looking healthy, increasing trade deficits, sharply rising mortgage costs, falling corporate profits and job cuts especially in the City, and as market turmoils escalates, housing price which shows a first drop of 2.6% (from Rightmove last month), this are the signs of the beginning of a housing crash. PROPERTY SHARES ARE A SELL!

".... its all reason enough to fear that we may be about to experience the most prolonged downturn in the housing market for 15 years or so."

http://www.bbc.co.uk/blogs/thereporters/robertpeston/

The housing market in London is starting to show its seams. No doubt it will start to fall from now.

Meanwhile, across the pond today:

White House lowers '08 economic forecast:
"The housing market decline has been more significant than we expected," Edward Lazear, chairman of the White House's Council of Economic Advisers, told reporters in a conference call.

US foreclosure filings up in October:
U.S. foreclosure filings nearly doubled in October from the same month last year, the latest sign many homeowners are falling behind on mortgage payments and increasingly losing their homes, according to a mortgage research company.

Federal National Mortgage Assoc Home prices fall 0.4 percent in Q3:
U.S. home prices marked a quarterly decline for the first time in 13 years in the third quarter, according to government data released Thursday that provide fresh evidence of the housing market slump.

It's coming here, it has to!!!!!

I think an intrest rate cut is on the cards .

'Cards' being the operative word here.
The only thing it'll boost maybe is credit card spending over the festive wotsit.
It won't make a blind bit of difference to mortgage holders or applicants - rates have already gone up because of LIBOR.

Indeed.

Additionally, they'll no longer lend to just any Tom, Dick, Harry or Choccy. ;-)))

Oh they will, Big Al.
Capitalism can almost be defined by saying that where there is a demand, someone will evolve to supply it!! The rates may not be as good and the underwriting a tad more cautious, but it will exist. And inevitably, as the boldest players make good money from a less competative, but equally profitable market, competition will be back to drive margins down and risks up.
It may be some considerable time yet, but it will come about, because demand for this type of loan will rise, and those facing repossession or unmanagable debts will pay whatever rate they need to in order to save their home or consolidate their monthlys so they can have a beer at the weekend.
Just IMO of course.
Alan

Times are hard choccy , are you still holding your bank shares ?

Alan - I think we always agree to disagree.

People have been going bankrupt, making IVAs and losing their homes at the highest rate in years for quite some time. Of course, you don't read about it in the papers yet. The only reason there is demand is because money is cheap. It's been as cheap as it was in the 60s. Unfotruantely the 70s happened next. ;-)))))

Yes but for every repossession that goes to auction, there is ten buyers bidding strong money for the property, strong demand will not go away unless we build 100,000 more starts a year for the next ten years...

Rubbish IMO. It's all a house of cards built on very cheap money that is becoming ever more expensive.

Do you really think in your wildest dreams that people will be able to take 6x salary at 8% when they've had it at 4.5% for 2-3 years. Get real.

Not sure about 8%, the only reason there is a slowdown is because of the delayed effect of 5 rate rises still biting, 5.75% is still low. The mistake by the BOE was by lowering the rate back down to 4.5% 2 years ago, when it was at 4.75, they fuelled the surge in prices which has led to the problems we face now...

We'll disagree then Al. :-)
Just remember that 6x salary at 8% is 50% of income. Just the same as 4x salary at 12.5%, and rates were running at higher than that when I got on the ladder. Since then we have seen almost continuous boom.
Anyway, if lots get repossesed, they end up renting and there is a limited stock of social and council housing so rents will rise as demand outstrips supply. The effect will be to make buying appear more affordable than renting and so the whole shebang kicks off again.
The simple fact, long term, is that we have a population that outstrips housing supply, a changing demographic of fewer people per household and an increasing population, and not enough houses being built. There is no way that the businesses involved in home financing will not want a slice of this, so as the supply of credit comes back, prices will rise.
As a foot note, we are all pretty much locked in to it. Even though 2008 may see a dip in prices, it would have to fall almost 20% for it to be worthwhile selling my property and buying in again at the bottom, and thats if I could call top and bottom accurately and find a willing buyer and then seller, so ther is little I or anyone else can do.
Alan

Talk of an intrest rate cut on thursday ? we shall see .

House prices fell for the third month in a row during November, dropping by 1.1%, Britain's biggest mortgage lender said today.

Halifax said it was the first time prices had fallen for three consecutive months since early 1995, while it was the biggest monthly drop recorded since December last year.

The slide pushed annual house price inflation down to 6.3%, its lowest level since March last year.

The figures confirm the slowdown is now well under way, as the market responds to higher interest rates and stretched affordability.

Halifax is currently the only one of the major indexes to report three consecutive months of falling prices, but Nationwide Building Society last week said house prices fell by 0.8% during November - their biggest monthly drop for more than 12 years.

Property information group Hometrack said house prices in England and Wales fell for a second month during November, easing by 0.2%, while website Rightmove said they dropped by 0.7% in the four weeks to November 10.

Wednesday's figures will further stoke speculation among some commentators that the market is now heading for a period of sustained price falls.

But Halifax said a mixed pattern of monthly price rises and price falls was a "typical feature" of a more subdued housing market.

It said between July 2004 and June 2005 there were six monthly falls and six monthly increases as the market slowed in response to higher interest rates.

It added that higher mortgage repayments and falling earnings in real terms had put pressure on households' income, leading to a slow down in both house price growth and activity.

Well just 0.25 off , but more to come .

From The Times - December 17, 2007



London house price fall of 6.8% in past month stokes economy fears - Gabriel Rozenberg, Economics Reporter

House prices in London have fallen by an average of £28,000 in the past month, as the capital sets the pace of an accelerating property downturn, a leading survey reports today.

Rightmove, the property website that tracks asking prices for homes across the market, says that prices tumbled by £20,000 a week in affluent Kensington and Chelsea – and by more than £10,000 a week in inner-city Hackney.

The company’s data shows that house prices fell by 3.2 per cent across the country, and by 6.8 per cent in London, over the month to the middle of December.

The figures are the gloomiest that homeowners have had to face since the market began to turn this autumn.

In Kensington and Chelsea, the average asking price in December was £1,572,814, compared with £1,653,696 a month ago. In Hackney, prices fell from £473,377 to £425,007.

However, house prices in the West London borough had risen by 41 per cent in the past year.

The news comes as business leaders warn that a property-led downturn in investment is set to hamper the economy next year.

The CBI says today that consumer spending will slow sharply and overall growth will be weak for the next two years.

This may worsen if the credit crisis deepens.

Rightmove says that the substantial falls in asking prices confirmed that sellers were adjusting to a new reality of buyers’ unwillingness to take any chances in a deteriorating market.

However, the impact of the downturn has been magnified by sellers putting their homes on the market before compulsory and costly Home Information Packs (HIPs) were introduced for smaller properties last week.

Prices fell in most regions of England and Wales, but the effect was harshest in London and the South East.

The falls took the national house price inflation rate down to 4.8 per cent, from 7.9 per cent the previous month, with a house typically losing £7,590 in value.

Miles Shipside, commercial director of Rightmove, said that the introduction of HIPs had distorted the latest figures.

He said: “Many sellers who have listed this month have priced below the market to try to sell. It is wrong, however, to speculate that prices will continue to fall based on one month’s statistics from a quiet December.”

However, the report said that the property market was now in “uncharted territory” because of the difficulty that mortgage lenders are having in raising funds.

Fears over a shortage of liquidity have caused money markets to seize up in recent weeks, in a renewal of problems first seen over the summer that have darkened the outlook for the economy.

Concern over the credit squeeze has led the CBI, the business group, to cut its forecast for growth next year for the third time.

It now predicts that the economy will expand by 2 per cent in 2008 and by 2.1 per cent in 2009. The decline from bullish growth of 3.1 per cent this year will be driven by a fall in investment in residential and commercial buildings, the CBI said, and by the effect of the squeeze on the financial sector.

Consumer spending growth was tipped to weaken to only 1.9 per cent next year, from a figure of 3.1 per cent this year.

Toya, from post 94, found a 3 bed end tce for £25k, needed work and now sold, also 3 bed mid tce central heating dbl glazed for £35k, also sold, going to look at 6 early Jan from 2 bed mid tce for £40k, 3 bed mid tce dbl glazed, rewired, replastered, needs finishing, £45k and another 4 3 bed houses from £45k to £52k, all around Mountain Ash/Tonypandy area, as I'm well into cycling/mountain biking this would be ideal, should be able to transfer with my job to Merthyr as well.

Noted from paper that many Buy to letters are expected to ditch in April when CGT reduced