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!

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

Fal , I am one of them , but i have good LTT so i will wait . 1 month into my current project and its back to the shell . New gas ch and a rewire in the next few weeks before i fit the kitchen and bathroom .

From The Times - January 3, 2008


London prime property market falters - Judith Heywood, Deputy Property Editor

Prices at the higher end of London’s property market, thought to have been largely immune to recent ructions in the wider industry, have suffered their first quarterly decline since 2003.

Savills, the estate agent, has revealed that the price of prime property – that valued at more than £1 million – had fallen by 2 per cent in the last three months of 2007.

The absence of a spending spree by those earning large City bonuses has been blamed for the poor quarterly performance across the prime London market.

Last year, £5.5 billion of the £8.8 billion City bonus pot was poured into homes. This year Savills thinks that only £2 billion, from a total fund of £7 billion, will find its way into the property market.

interestingly, "pukka property" around Harrogate is seemingly still holding up well and selling steadily

tip\for 2011

I have a number of friends either on the tools or running constuction business - all seem to be very busy still (and using Marshalls)...

I seem to remember the last time there was a housing crash the food chain of builders, developers and contractors went to the wall because of delayed or non payment causing a domino effect. I can't pay you because I haven't been paid and so on...

Inflation rate is worst in 17 years - AFX


WASHINGTON (AP) - Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years, even though prices generally remained tame outside of those two areas. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy.

Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006, the Labor Department said Wednesday. Consumers felt the pain when they filled up their gas tanks or shopped for groceries. Prices for both energy and food shot up by the largest amount since 1990.

In a second report, the Federal Reserve said that output at the nation's factories, mines and utilities showed no growth in December, adding to a string of weak economic reports showing that the economy was slowing at the end of last year.

The unchanged output in December was the poorest showing since industrial output actually fell by 0.5 percent in October. Output had been up by 0.3 percent in November.

The December weakness reflected flat output at U.S. factories, a tiny 0.1 percent rise in the mining industry and a 0.2 percent drop at the nation's utilities.

The Consumer Price Index rose by 0.3 percent in December, slower than the 0.8 percent in November, as food costs were flat for the month and energy prices rose by 0.9 percent after an even bigger 5.7 percent jump in November.

Outside of food and energy, inflation rose a more moderate 0.2 percent in December. This measure of core inflation rose by 2.4 percent for all of 2007, down slightly from a 2.6 percent increase in 2006.

The Federal Reserve is closely watching to see whether the jump in food and energy becomes more widespread and starts pushing core inflation higher.

From The Times - January 16, 2008

UK house price decline worst since 1990s slump

New figures suggest the housing downturn is gathering pace as unsold properties build up and surveyors' confidence falls - Grᩮne Gilmore and Gary Duncan

Falls in house prices across the country may now be at their most severe since the property slump of the early Nineties, according to bleak figures today suggesting that Britain's housing downturn is gathering pace.

A highly influential barometer of housing market conditions reports this morning that 49.1 per cent more surveyors found that house prices fell last month than saw them rise.

The gloomy result is the worst since November 1992 in the closely watched poll carried out by the Royal Institution of Chartered Surveyors (RICS), when this negative balance fell as far as minus 60.1 per cent. December's figure compares with a negative balance of 40.6 per cent of surveyors who reported that prices were on the slide in November.

With virtually every other reliable indicator of the housing market also pointing to grim conditions and falling prices, today's RICS report will deepen already intense gloom over prospects for homeowners this year.

Housebuilders were in full retreat after broker Dresdner Kleinwort downgraded Persimmon and Taylor Wimpey, saying both stocks should be sold. Among the second-liners Barratt Developments was also weaker after Dresdner Kelinwort reiterated its "sell" recommendation, while Bovis headed lower after Dresdner changed its stance to "sell" from "reduce".

UK house prices slump - MoneyAM

Halifax has reported UK house prices registered their biggest monthly fall in over 15 years in March.

Halifax, which is part of the HBOS banking group, the country's leading mortgage lender, said today house prices dropped 2.5% month-on-month, the biggest fall since September 1992 and much worse than the 0.4% fall analysts had expected, following February's fall of 0.3%.

The average house price in the UK in March was ?91,556, down from February's ?96,649, Halifax said.

In annual terms, March's prices slowed to a quarterly rise of 1.1% from February's 4.2%. The March increase was the smallest since March 1996 and below analysts' forecasts for a 2.3% rise.

House prices fell 1% in the first quarter from the previous quarter, the biggest fall since the second quarter of 1995.

'Overall, we expect there to be a modest fall in UK house prices this year,' said Martin Ellis, chief economist.

However Ellis added that any declines should be viewed in the context of significant price rises over recent years, adding that housing valuations are being underpinned by a strong labour market, low interest rates and a shortage of new houses.

"housing valuations are being underpinned by a strong labour market, low interest rates and a shortage of new houses."

No shortage of new housing around our way. In fact the enticements are becoming ridiculous. Unfortunately there's no money to be loaned at anywhere near the rates they were.

Low interest rates maybe, but then multiples are way over the average.

... and the strong labour market is probably the only thing holding it all up. Problem is it's a lagging economic indicator and by the time it shows up, we'll be well down.

Interestingly I'm about to start some building work and a couple months ago, 1 guy coming round with his quote actually told me there were builders laying off around here. I live near Edinburgh and that's hardly a place you normally associate with a bad housing market.

Food for thought.

i came back to aberdeen last year and housing was up about 35% in the year.....that was on top of another 30 odd per cent rise prev year.
property has doubled within 3 years in aberdeen.

i saw a 2 bedroom flat......price was 245,000.....haha, u must be joking.
anyway prices quoted, u need to add about 50% here to get property......an estate agent early last year told me on average there were 28 people after a given property.......i wonder what it is now

Oil booming. Lived there 90-96. You wouldn't believe the bargains when I moved there and it was just when the rest of the country was looking peaky. '86 had ruined it. It'll happen again. ;-0

Short term, who knows what is happening.
But who remembers the decade of woe that was the 1970's?
One thing many of us should remember clearly was the queues outside building societys on the first of every month, as young couples wanting to buy their own home queued for very limited funds that the society were able to lend out as mortgages.
You had to be a member and you had an interview as well as an application and by the end of the day, the society had often committed all it could for that month.
We are not going to see that again, but signs are apparant that something similar is happening.
High street lenders are pricing high to deter borrowing. Off street lenders are pulling deals each month as their tranche of lending becomes used up.
Only this morning, one of the biggest off street lenders has e-mailed to say its April money for 90% lending has gone.
The remaining question is whether this is due to demand or low supply. The housing figures suggest supply must be very low, I know demand to be very high, mainly for remortgaging debts.
Where next? It is unlikely we will go back to the days of queueing, but lenders will cherry pick their borrowers more and more until more money is available. The problem with this is tha an estimated 70% of all the population is classed as sub prime from a credit perspective, and without those people being able to join consumerism, consumerism will suffer a long slow starvation.
Doom and gloom? Perhaps. But the silver lining is that capitalism abhors a vacuum and someone will evolve the product to plug a gaping gap. When they do, the surge will be huge.

I agree with you about the gap filling in principle but I don't think this will happen while house valuations remain too high. There is only a credit crisis for riskier borrowers or high geared companies notwithstanding conditions have generally tightened. Its a pity financial institutions did not keep more older experienced staff to hand on a stricter discipline. Well they must all learn the hard way now. Sounds to me hewittalan6 that the government would like to see a giant Northern Rock situation where governments buy up these sub prime assets at tax payers expense. They must be worried about social unrest particularly with so many people threatened with repossession. So much for Brown's stability and the end to boom and bust.

The gap filling principle has been tried once in this round of problems, Gus.
A lender started sourcing cheap money on the Swiss LIBOR, but this has failed. The sign is though that they are already trying. I know of one source where 100% funding is available on a quite risky basis for purchases under value, using newcastle B. Soc and a bridging facility. Scary.
Mervyn King did actually say consideration was being given as to haw to prevent large amounts of repossession and I think this will form from a shift in policy towards lenders having a more difficult ride in repossession proceedings, rather than a government bail out.
I envisage a court approach where the lender has to prove that repossession is the only option on a longer term basis, rather than on the short term basis it currently has to prove.
In other words the current test of there being no likelihood of arrears being caught up in the foreseeable future may drop the word foreseeable and allow defendants to argue that potential changes in circumstances in the more distant future and reduced payments in the present would show a net result of the mortgage not exceeding its original term.
Another possibility is that mortgages come under similar rules to HP, in that when equity achieves a particular % level, the property cannot be repossessed, but remains as security, with interest rolled up or payments made for as long as it takes, at a level set by the courts.
My opinion is that capitalism demands nature takes its course and we swallow the bitter medicine for the good of the economy.