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!

UK house prices recorded an annual fall of 10.9% in August - the first double digit drop since 1983 says the Halifax.

The lender said that property prices dropped 1.8% in August compared with July, leaving the cost of an average home in the UK at 174,178.

It said market conditions would remain "challenging" in the months ahead, despite government help for buyers

News that house prices are still falling close to 2% month-on-month and the expectation of further declines is likely to be an important factor limiting the scope for a quick recovery.

The benefits of the stamp duty saving would be wiped out in less than a month

Over the past six months, house prices on the Halifax index have fallen by an average 2,900 a month, greater than the maximum potential saving of 1,750 to a buyer from the recently introduced stamp duty holiday.

A slowdown in transactions suggests many buyers are delaying as prices continue to fall.

2009 SPRING IT A MUST I HOPE.

england prices r down more like!!

prices will keep going down till 2010 at least......prices wont increase a lot till 2015 according to top housing advisor to pm

I don't think so!

Prices may fall more but everybody is waiting to dive in when the market bottoms because they will feel they are getting a bargain and won't want to be beaten to the property by anybody else. Greed will get the better of people. The recovery may initially be slow but bricks and mortar have always been a good investment.

If I was given 1 every time an analyst came out with crap, I'd be a millionaire!

There may be people waiting to dive in but, the number that will be able to dive in will be affected by affordability. This whole episode is going to educate people the hard way including the banks and, mortgages will get harder to get even if prices fall by another 25% or so. I live in Kent and I do not think the penny has totally dropped yet with people. As for Gordon's help with stamp duty etc. imho if possible, I would advise people to stear clear of buying a house for the time being and live with Mum and Dad for a year or so and see if there is a new dawn then. Its all the fault of unreasonable cheep lending, greed, awful tv property programs stirring up encouragement, and a generation of too many people with the lack of respect for monetary value for one reason of another. Last but certainly not least its the fault of scotinvestor's mate Gordon with his high taxation and wasteful ways.

Sentiment is the key word, at some point lenders have to become more competitive to gain business, they cant just keep writing off millions and refuse to lend, lending is where they make money. I believe it is already happening, with interbank rates becoming slightly more competitive. The point is, if investors started reading headlines like the worst is over, there would be a bigger panic to purchase property in fear that prices are already as low as they are likely to go... this may not be as far away as some people think. imo. We are still an overpopulated island, and everyone wants to own their own home. When sentiment does change, i believe prices are capable of rising, initially, just as sharply as they have fallen.

BT. I think a little over optimistic.

Some analysts are talking of more losses in 2009 for housebuilder Redrow and, with so many adjustments, that is likely. More worrying is that Redrow is expecting to be cash negative for the next six months, in spite of discounting its homes and not committing to more land purchases. With one-sixth of the market value in the hands of short-sellers, and a hedge fund holding a 27% stake. A rally since the start of July provides a possible exit window.

Now 200p

NEW YORK WASHINGTON, Sept 24 (Reuters) - Prices of existing homes in the United States suffered a record drop in August while the sales pace slowed and the overstock of homes shrank, the National Association of Realtors said on Wednesday.

The pace of existing home sales decreased 2.2 percent to a 4.91 million unit annual pace while the median national home price declined 9.5 percent to $203,100.

Economists polled by Reuters were expecting home resales to fall to a 4.93 million-unit pace from the July rate of 5.02 million units. The dollar extended losses against the euro after the data.

The realty trade group said in a report that as many as 2 in 5 home sales are by borrowers who have seen their property lose value or are facing foreclosure.

'The big question now is whether lending is so tight that sales are being hurt,' said Gary Thayer, senior economist at Wachovia Securities in St. Louis, Missouri. 'If we can work through the current lending difficulty, sales are likely to improve later this year.'

The inventory of existing homes for sale fell 7.0 percent to 4.26 million from the record-high overstock reported in July.

LONDON, Oct 2 British house prices fell 1.7 percent in the month of September to post their biggest annual drop since comparable records began in 1991, the Nationwide building society said on Thursday.

Interest rate futures rallied as investors speculated the figures increased the chance of an interest rate cut by the Bank of England next week, although analysts cautioned that a cut in itself would do little to halt sliding property values.

'Even if the Bank of England cuts interest rates as early as next week, as we now expect, this is likely to provide only very limited support to the housing market given that elevated money market rates are exerting upward pressure on fixed rate mortgages,' said Howard Archer, economist at Global Insight.

Nationwide said house prices in August were 12.4 percent lower than a year earlier. Before 1991, Nationwide conducted quarterly house price surveys. The largest annual fall on that measure was a 10.7 percent drop recorded in the early 1990s.

The 11th consecutive monthly decline highlights the sharp reversal of fortune for the property market since the credit crunch took hold last summer, bringing an end to a decade in which property values almost trebled.

'Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets,' said Fionnuala Earley, Nationwide's chief economist.

'We would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices.'

September's decline pushed the average price of a property to 161,797 pounds ($286,060), the lowest since February 2006.

The precipitous drop in house prices both in Britain and overseas has been a key element of the crisis that is rocking the global banking sector and threatening to send many industrialised economies into recession.

A reluctance by banks to lend to each other had led to a sharp increase in wholesale funding costs in recent weeks. Several mortgage providers have responded by raising their own mortgage rates.

Policymakers are concerned a weakening property market could feed a vicious downward spiral of falling consumer demand and rising unemployment.

Futures markets suggest the Bank of England will cut interest rates to 4.75 percent next week and to 4 percent by this time next year.

A Reuters poll this week showed 45 of 66 economists polled Sept. 29-Oct. 1 said the BoE would hold rates at 5.0 percent next week. A cut by the end of the year is now almost a certainty with forecasters in the poll.

Average house price drops £25,000 over 12 months making property bust of 2008 much worse that the 90s crash


House prices have fallen by an average of £25,000 in less than a year, making the property bust of 2008 even worse than the early 1990s. The average fall is put at 12.4%, which is greater than anything seen during the disastrous crash and wider recession of 18 years ago. Industry analysts last night warned of a deep and long-running property crisis that will see prices fall by more than 30per cent by early 2010. House prices have fallen for the 11th consecutive month in September, with the average house in the UK now worth £161,797. The latest figures from the Nationwide building society put the average price at £161,797 in September - some £25,000 below the peak of October last year. The market has hit a brick wall following a ten year boom where prices surged ahead of wage rises, fuelled by reckless lending that included loans of 125per cent of a property's value.
The global credit crunch means banks and building societies have drastically reduced the number of mortgages available and tightened the rules on who they will lend to.

The resulting mortgage drought, falling prices and a squeeze on consumer finances, have sent potential property buyers running for cover. Economist Seema Shah of Capital Economics, said: 'Even during the early 1990s slump, the furthest house prices fell in one year was 10.7per cent - reached in the final three months of 1990. 'This correction has already surpassed that, and we are only in the initial stages of what is likely to be a severe economic downturn.' She added: 'The toxic combination of the mortgage credit squeeze, sharply slowing economic activity, and plummeting buyer confidence have caused house prices to fall at a record pace over the past year. 'With none of these factors likely to disappear, or even ease, over the coming months, the house price declines could easily intensify.
'Buyer confidence, already reeling from the fall-out of the mortgage credit squeeze and sharply slowing economy, is likely to be further depressed by the negative developments in the financial markets. 'What’s more, recent rises in mortgage funding costs have already led lenders to raise mortgage rates, which had only just come down. 'Overall, the outlook for the housing market remains extremely bleak.'

House prices falls have been widespread across the country, however the declines in some regions are remarkable.

The figure in Northern Ireland is down 29.8per cent when comparing the last three months with the same period last year. The fall in East Anglia and the South West is put at 11.4per cent. The fall in Scotland was a lower 7.1 per cent and 8.6 per cent in the North. ]

Economist Howard Archer, of Global Economics, warned that house prices could now fall by 34per cent from their peak last autumn. 'House prices seem poised to fall substantially further for an extended period as the fundamentals are pretty ugly,' he said. 'Fewer mortgages are available, while lenders have raised their fixed rate mortgages in recent days. 'Meanwhile, faster rising unemployment, heightened concerns over the economic outlook and widespread expectations that house prices will continue to fall markedly for some considerable time to come will depress housing market activity and prices.'

Mr Archer said the Government's recent decision to suspend stamp duty on property costing less than £175,000 will do nothing to help the market. His company is now predicting that house prices will fall 16per cent in 2008 and 15per cent in 2009.

Mr Archer said: 'Reduced falls in house prices are expected in the first half of 2010, taking them down to a low of £123,505, which would be 34per cent below their peak.' The Nationwide's chief economist, Fionnuala Earley, said: 'Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets.' Miss Earley said consumers' confidence in the market changed almost immediately following the problems at Northern Rock.
'As expectations have collapsed, house purchase approvals have fallen to less than a third of their long run trend,' she said. 'It seems that we would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices.' She said that while sentiment is important, a resolution to the current financial turmoil is also key. Despite the recent house price falls, the average cost of a home is still 60per cent higher than it was in 2000. Nationwide said even if prices continue to fall at their current rate for two years, they would still be around a fifth higher in real terms than at the millennium.

British House Prices Down By 40%


One flat in Folkestone, Kent, went on the market on January 28 this year at 125,000, and has now been reduced to 75,000.

The one-bedroom, lower ground floor property lies in an upmarket area of the coastal town, and is in need of refurbishment.

When Sky News Online posed as cash buyers, the estate agent Fell Reynolds confirmed the flat had been slashed from 125,000 to 99,950 and then to 75,000 because of the housing slump.

"We felt that because of the lack of interest and the market conditions, 75,000 would be a realistic price," the agent added.

"It's a nice little flat in a good area."

Other properties in the UK have fallen even more sharply, according to Propertysnake, a website which measures price reductions.

One two bedroom house near Worthing, West Sussex, was first advertised last October at 319,950 - but is now down a staggering 53% to 149,995.

A similar home in Cardiff, Wales, has been slashed by 45% from 184,950 to 100,000 in less than a year.

The news comes as new figures show estate agents are selling only one house a week.

The Royal Institution of Chartered Surveyors (RICS) said its members sold an average of just 11.5 homes during the three months to the end of September - the lowest level since its survey first began in 1978.

The situation is even worse in London, where estate agents have made an average of just eight sales during the period.

Some London homes on the market are down 20% from original asking prices, taking them back to levels seen in 2005 and 2006.

And completion prices are even lower because of 'gazundering' - where buyers cut their offer at the last minute - in the capital.

A five-bedroom house in Herne Hill has been cut by 37% from 1,275,000 to 795,000 as the number of homes sold in London falls to its lowest level since records began 30 years ago.

One London agent said: "We're 20% down. There are some very, very keen sellers out there."

In other new figures, the number of first-time buyers getting on to the property ladder slumped to a record low during August.

An RICS spokesman said he hoped this week's bail-out of three high street banks would help the housing market and restore buyer confidence.

Its time to change the header!

Lots of cheap property out there . Good time to make deals .

I think it's only fair they get reposssessed - why did they take a 125% mortgage in the first place??? Northern Bank is a business, not a charitable organisation...



Repossesssions rising sharply.

Around 19,000 homes were repossessed in the first half of this year by mortgage lenders and banks as a whole.

The charity said that the bank was not being flexible enough with customers who defaulted on their mortgage repayments.

Chris Tapp, Director of Credit Action said: "There's not a lot of flexibility being shown by Northern Rock. They are also not giving people a lot of time, they seem to be moving for repossession quite quickly as a resort."

He added: "They are being quite aggressive in terms of their use of the courts in going for repossession, but for a lot of people they don't need to get to that point, if only Northern Rock would be more flexible with them in the first place."

Earlier this week the nationalised lender said it was "well ahead" of its Government loan repayment target, having paid back more than half the 26 billion owed, to leave 11.4 billion outstanding as of September 30.

Before running into funding problems last summer, Northern Rock was one of the UK's biggest and most aggressive mortgage providers, advancing loans worth as much as 125 per cent of home values.

But it was forced to turn to the Bank of England for emergency support after the money markets froze, leaving the group facing a funding crisis.

Northern Rock's nationalisation in February led to 1,500 job losses as it scaled back activity to pay back the Government.

The lender has been reducing the size of its mortgage book in order to pay back its Government borrowing.

Most of the repossessions were for properties secured with a "Together" mortgage, which allowed buyers to borrow up to 125 per cent of the property's value.

hlyeo98 - they took 125% mortgages because they were encouraged to do so and in their ignorance trusted the lender. It would never have happened in the "old fashioned" banking days, when the lenders felt a duty of care towards their customers. Unlike you and me, they were ignorant of basic financial acumen, which imo should be the first thing on the National Curriculum at Secondary schools.

Sorry, I can't agree with that, partridge. It's just like the younger generation are draining their credit cards and not paying up. Despite that, they still think things are 'hunky dory'. This is sheer stupidity.

We will have to agree to differ. I believe most people are still basically honest, but have not a clue when it comes to their finances, until it is too late. Having given some time voluntarily a few years ago to talk for an hour a week to 16 year olds at a good independent school about basic finance issues, I was appalled at the lack of knowledge - and they were generally very bright students. We are now beginning to see the results of ignorant borrowers and irresponsible lenders. A government which has encouraged high levels of debt as a normal thing, both by its own direct actions and by insisting that there is nothing wrong with coming out of university with a debt of 30K, also imo takes some responsibility.

Collapsing house prices are plunging 60,000 homeowners a month into negative equity, which means the country is on course for a worse crisis than the 1990s crash.

At current trends, 2m households will enter negative equity by 2010, outstripping the 1.8m affected at the bottom of the last housing slump.

New research from Standard & Poors, the ratings agency, coincides with evidence that banks are aggressively seizing homes whose owners have slipped just a few hundred pounds behind on their mortgage payments.

It is a further signal that the financial crisis is now infecting the real economy as hundreds of thousands of families face the prospect of being unable to move house because their home is worth less than the value of their mortgage.

Many more homeowners will now be afraid that the bank may suddenly repossess their property. Repossessions have soared to 19,000 in the first half of the year, up 40% on the previous six months. That figure is expected to rise to 26,000 in the second half of 2008.

Economists believe house prices will fall by up to 35% from their peak by 2010. This compares with a drop of only 20% in the early 1990s.

Last night opposition politicians blamed Labour for encouraging a culture of indebtedness that now threatens to cause an implosion in the housing market. Philip Hammond, the shadow Treasury chief secretary, said: We are now paying the price for a decade of debt-fuelled boom, with hundreds of thousands of people unable to sell their property, after being encouraged by the government to overstretch themselves to get on the property ladder.

Vince Cable, the Liberal Democrat finance spokesman, urged Gordon Brown to do more to prevent unnecessary repossessions. It genuinely must be a lenders last resort, which right now it certainly is not, he said.

With official figures out this week expected to show Britain has fallen into recession, Brown is planning a 1930s-style programme of public works, spending billions on new schools, homes and transport projects. He has urged senior colleagues to increase expenditure on big capital projects despite forecasts that tax revenues are about to collapse.

Browns ambitious plan is modelled on Franklin Roosevelts New Deal, which helped drag America out of the Great Depression. A Whitehall source said: We cannot afford to risk the complete collapse of our construction industry. We have to make sure that the skills have not been lost when we finally pull out of the downturn.

Standard & Poors has calculated that by the end of the month 335,000 homes will be worth less than their mortgages. The figure represents a rise of 260,000 in four months.

Capital Economics, the City consultancy, expects up to 2m properties will be in negative equity by 2010 more than in the recession of the early 1990s.

Northern Rock, the bank nationalised this year, is said to be behind a wave of aggressive repossessions. In the nine months to the end of September, the state-owned lender made more than 2,000 seizures.

Esther Spick, from Surrey, is three months in arrears on her Northern Rock mortgage. The lender has launched repossession proceedings, even though she owes just 1,200. In one case reported to The Sunday Times by a housing charity, the bank is trying to seize a home where the owner is just 800 in arrears, even though he has about 40,000 of equity in the 180,000 property.

Chris Tapp, director of Credit Action, a debt charity, said: What makes these negative equity statistics so worrying is that they come at a time when banks are behaving so unreasonably over repossessions.

We are particularly dismayed with the inflexibility of Northern Rock.

Adam Sampson, chief executive of Shelter, the housing charity, said: Northern Rock is behaving very aggressively on repossessions, but it is not the only lender acting like that.

The Council of Mortgage Lenders said there were no industry guidelines for how deeply in arrears a lender had to be for a home loan provider to be entitled to launch repossession proceedings.

The government said last night it would bring forward laws forcing lenders to offer alternative payment schemes before they were allowed to take back possession of the property.

Northern Rock denied that it was overly aggressive. Repossession proceedings are only launched as a last resort, it said.

The details of the prime ministers extra spending on public works is expected to be unveiled in the pre-budget report next month. Brown has already tasked his new enforcer, the Cabinet Office minister, Liam Byrne, with compiling a list of major construction projects at risk from the credit crunch that would benefit from extra government support.

Browns handling of the financial crisis has failed to improve Labours electoral prospects. Despite most voters saying he had performed well over the past few weeks, only 13% said they were now more likely to vote Labour, an ICM survey for the News of the World found.