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!

Interesting research out today.
The good old north / south divide is back in business.
There is a long history of the north being a far more stable housing market than the overcrowded south, so perhaps the northern housebuilders may suffer less than their southern counterparts.
This is in % terms of course, but a (say) 10% downturn on a 250k house is still more off the bottom line than the same downturn on a 150k house. On top of this the south usually suffers a greater % fall (or rise) than the north.
If you must stay in the housebuilding sector, then perhaps the least risky play is for an upmarket northern builder and the most risky is for a low cost southern builder. However they seem contradictions in terms!!

The USA have cut intrest rates , are we going to do the same ?

i would doubt it, for there looks to be no necessity .... in fact the move by Fed could prove to be a poison chalice in the long(er) run with it's inevitable inflationary effect

From The TimesNovember 3, 2007

Cracks appearing as bankruptcies riseGrainne Gilmore and Gabriel Rozenberg
The number of consumers becoming insolvent is expected to soar next year after figures published yesterday showed rising bankruptcies and a fall in the use of arrangements to avoid going bust.

Personal insolvencies overall fell in the third quarter by 3 per cent, and were 5 per cent lower than a year ago at 26,072, data from the Governments Insolvency Service showed.

However, accountants said that the figures disguised the problems that are set to emerge in the consumer credit market, which will give people fewer means of combatting debt.

Individual voluntary arangements (IVAs), a form of insolvency that has gained popularity over the past decade, dropped by 14 per cent year-on-year. But the decline comes in the aftermath of an industry-wide squeeze by banks on IVA providers.

Steve Treharne, of KPMG, the accountant, said: This is really a lull in the storm. The traditional ways that people can delay the impact of money worries such as a new credit card or a second charge on their home are gradually being closed off as a result of the credit crunch. This is now a plateau, but all the indicators are that consumers are in for a rough ride.

IVAs, which allow debtors to freeze and sometimes reduce their debt while paying off a manageable sum each month, have been affected by a dispute between creditors and IVA companies. Some creditors believe the fees charged by IVA companies are too high, and have rejected large numbers of IVA applications. Nearly one in five IVA applications are rejected.

Several insolvency operators, including Debt Free Direct, the market leader, have been forced to issue profit warnings this year as banks withdraw their support.

John Hall, chief executive of personal debt solutions provider new-tomorrow.com, said: These figures arent surprising and the underlying position is much worse than the figures suggest.

There is a dam waiting to burst and the cracks are starting to appear. The reason the figures are not higher still is that lenders are making it more difficult for their customers to put a voluntary debt solution in place by insisting on unachievable repayment levels, resulting in significantly more house repossessions.

Mr Treharne said: According to the Council of Mortgage Lenders, the number of property repossessions is likely to rise by 50 per cent in 2008. If people struggling with debt lose their home they often give up and either go bankrupt or enter into an IVA.

Although personal bankruptcies were down by 3 per cent in the third quarter compared with the previous three months, they rose by 2.2 per cent from a year earlier. Some 111,359 people went into bankruptcy or entered into an IVA in the year to the end of September, up 13 per cent year-on-year. Other data showed that about 3,100 companies went into liquidation in the third quarter of this year, nearly 3 per cent down on the number of company liquidations in the same period last year. The number of compulsory liquidations fell by 4 per cent, while voluntary liquidations fell by 2 per cent.

Mike Jervis, partner in the Business Recovery Services practice at PricewaterhouseCoopers, said: Credit has been readily available to corporates until this summer and the downward trend in corporate insolvencies reflects this. However, while companies have so far avoided formal insolvency, less creditworthy corporates are finding that it is increasingly difficult to borrow at affordable rates in the current climate. There is still uncertainty as to how many businesses will fail as a result of the more restrictive credit environment.

Ministry of Justice figures showed housing possession orders rose in the third quarter, to 23,800 from 23,000.

From The Times - November 8, 2007

Two years of downturn predicted for housing - Gabriel Rozenberg and James Rossiter

The housing market will face two years of blight stemming from the impact of the global credit squeeze, with prices falling continuously over much of southern England, a report forecasts today.

Prices are set to fall by as much as 4 per cent in the West Midlands by the end of 2009 and there will also be sharp drops in the East Midlands, the South West and Northern Ireland, according to Experian, the economic forecaster.

However, London is tipped to buck the trend with a 6 per cent rise, slightly above inflation, the report says.

Andrew Burrell, of Experian’s business strategies division, said that GDP growth would slow to just 2.1 per cent next year, from 3.1 per cent in 2007, with an even more abrupt downturn in consumer demand.

The situation could worsen if market interest rates fail to fall in line with official rates, the report said, because lenders would be forced to cut back on issuing new mortgages, resulting in price falls in all regions.

Redrow, one of Britain’s largest builders of affordable homes, added to the gloom surrounding the housing market yesterday as it gave warning that its sale volumes for the second half of this year would be 10 per cent below those achieved last year.

The housebuilder blamed general uncertainties in the banking sector for the sudden drop in buyer confidence since September.

Redrow’s warning has wider resonances beyond the new homes market because it targets the type of buyer who promotes activity in the broader residential homes market.

The housebuilder’s Debut range of starter homes sell for about £79,000, while its core Signature brand of houses and flats go on the market at approximately £168,000. Buyers of these homes are typically first-time buyers or young homeowners who are looking to move up the property ladder.

Redrow’s warning comes just a day after Bovis Homes, one of the country’s leading specialists for selling mid-market homes in the regions priced at less than £250,000, said that its sales volumes this year would be down on last year.

Last week Taylor Wimpey, Britain’s largest builder of new homes, blamed buyer fears about the health of the wider economy as it gave warning that its 2007 UK sales would be 5 per cent lower than last year.

BDEV and WOS are excellent to short now. Both are on a slippery slope. SELL!

i know what you are all saying but if the arse falls out of the market belive me their are people out there waiting for it to happen, with the cash to buy thats how they first started with the big boys and the buy to let lot started, they had the cash buying up all the houses, and give them credit where its due the nerves to go for it

Subprime losses could reach $400 billion Tue Nov 13, 2007 - Reuters

NEW YORK (Reuters) - Banks worldwide may lose as much as $400 billion (193 billion pounds) from subprime mortgages, as at least one in four of the risky home loans go into default, analysts said on Monday.

Mike Mayo, an analyst at Deutsche Bank Securities Inc, estimated $150 billion to $250 billion of losses based on $1.2 trillion of U.S. subprime loans, and an additional $150 billion of losses on derivatives linked to subprime debt.

David Hilder, a Bear Stearns & Co analyst, also estimated a $150 billion to $250 billion loss on subprime home loans, in what he called a $2 trillion market.

"Given our fundamental outlook, which is for rising inflows of non-performing loans in both mortgage and commercial loan portfolios, we believe the odds are in favor of the write-downs getting worse, rather than better," this year, Hilder wrote.

Banks including Citigroup Inc (C.N: Quote, Profile, Research), Merrill Lynch & Co (MER.N: Quote, Profile, Research) and Wachovia Corp (WB.N: Quote, Profile, Research) have announced more than $40 billion of write-offs this year as U.S. foreclosures set records and after investors stopped buying many kinds of risky debt.

Mayo said large banks and brokerages may suffer $100 billion to $130 billion of the subprime losses. He said this could include $60 billion to $70 billion by year end, including $43 billion already reported.

In the fourth quarter alone, he said Barclays (BARC.L: Quote, Profile, Research), HSBC Holdings (HSBA.L: Quote, Profile, Research), Royal Bank of Scotland Group (RBS.L: Quote, Profile, Research) and UBS (UBSN.VX: Quote, Profile, Research) might each need to write off $5 billion, while Merrill Lynch might write off $4 billion and Bank of America Corp (BAC.N: Quote, Profile, Research) $1 billion.

Mayo's forecast assumes a 30 percent to 40 percent default rate and 40 percent to 50 percent loss rate. Hilder assumes a 25 percent to 30 percent default rate and 30 percent to 40 percent loss rate.

Yes, BDEV and WOS have gone down further today.

More people are renting , because they cannot get a mortgage . Others are trying to be wise and sell now , rent , and buy back at a lower price . There are many buyers waitng to get property at a good price .

All the estate agents are twiddling their thumbs now, I notice.

BDEV is 480p and WOS is 654p...excellent shorting...continue SELL signal getting ever stronger now. Great.

Barratt sees slowdown - MoneyAM

Barratt Developments today confirmed that the UK housing market has continued to tighten.

Since the end of September private home sales are lower than last year and cancellation rates higher.

In a trading update for the 19 weeks since July 1st, the housebuilder said the reduction of private sales per week and site reflected the more challenging market conditions, due to the cumulative impact of rate rises and the effects of the more recent liquidity squeeze.

However, Barratt said net average selling prices in the period to the end of October increased by 2%, despite average sales discounts running marginally higher than the same period last year, and it expects its operating margin for the half year to be 'broadly' in line with the guidance given at the preliminary results.

The housebuilder, which saw sales fall by 5%-10% in the week following the Northern Rock crisis, expects first half home completions of around 8,750 units. It said it has a 'strong' forward order book, which currently stands at approximately 1.8bn, and has now secured around 61% of its full year requirement.

Barratt added that it continues to prioritise operating margins rather than volume, by focusing on cost reduction and deploying its sales capabilities to deliver completion volumes and sale prices at satisfactory levels.

'Looking forward, the fundamentals of the market remain strong with demand exceeding supply and with a Government committed to increasing the supply of new housing,' it said in a statement.

New lows again for WOS and BDEV today.

Haven't checked Persimmons (above) but whats happened there???

*edit* ok sorry false alarm, chart showed a 55% gain, but has mysteriously changed its mind now and i cant delete the post!!!

I am going to buy a property , knocked a fair bit off the asking price so here goes !

From Times Online - November 23, 2007

Housing slump looms as new mortgages fall; Home Information Packs discourage sellers - Marcus Leroux

The rate of UK mortgages approvals fell by 16 per cent in October as the Government's controversial Home Information Packs discouraged sellers from putting their homes up for sale and higher interest rates put off buyers taking out home loans.

The British Bankers' Association (BBA) said today the number of mortgages approved for home-buyers fell from 54,000 in September to 44,100 last month a 37 per cent slump on October last year.

The BBA said that the sharp fall was the delayed result of five interest rate increases since August 2006, which are now impacting the housing market.

Also, the BBA said that the introduction of Home Information Packs, faltering confidence following the Northern Rock crisis and the global credit squeeze had also taking the steam out of UK housing.

David Dooks, the head of statistics at the BBA, said: Octobers data provide evidence of a rapidly slowing mortgage market and of consumers limiting their personal borrowing.

Pressure on household finances, the cumulative impact of interest rate rises over the last year, the expanded application of Home Information Packs and the consequential impact of the credit crunch may well all have a part to play in suppressing current demand and supply.

Last week, Nationwide Building Society forecast that house price inflation would tumble from near-double figures to zero by the end of next year.

Howard Archer, the chief UK and European economist at Global Insight, said: "Slowing housing demand is expected to steadily feed through to dampen house prices over the coming months. Indeed, there is undeniably a very real risk that the housing market could see a sharp correction."

The reality at present is of a falling residential market, likely to deteriorate further in 2008. Underlying demand is good looking further out, so what will happen? If history is anything to go by, depressed selling prices will feed through into lower land prices and the stronger building companies will ultimately prosper, with weaker ones failing or being taken over.Bit of "falling knife" syndrome across the sector at present, but FWIW I have just tucked away a few ABBY - ungeared, trading at substantially below net asset value and very solid track record.Always DYOR

Will the new HIPS for all properties discourage many people putting their houses on the market ? An estate agent i spoke to today thinks it will .

No it wont all the seller will do is add it onto the asking price, The house will be overpriced buy 5k knowing that they will have to come down a bit so the buyer thinks he has a good buy all of its just a big mind game and the only people who make any big money is the estate agents