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!

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

Buyers will not be so daft as to think they will get a good bargain unless they mark it down by 20%.

From The Times - November 24, 2007

Sub-prime time bomb is set to explode in Britain - Grainne Gilmore and Gabriel Rozenberg

Lenders are cracking down on sub-prime borrowers across Britain and could force tens of thousands of homeowners into forced sales of their homes, property experts warned yesterday.

The global credit crunch provoked by the crisis in American sub-prime mortgages is creating a time bomb in Britains own market for loans to borrowers with imperfect credit records.

The warning came as figures from the British Bankers Association (BBA) suggested that the slowdown in house prices was on course to be the most severe in at least a decade, as would-be buyers take fright at a declining market.The number of mortgages approved in October for home purchases by the BBA dropped by 17 per cent over the month to only 44,105, the lowest figure since the body began to compile figures in September 1997. Approvals were 37 per cent lower than a year ago.

Experts fear that the emerging British sub-prime crisis could further destabilise the domestic property market. As existing homeowners with particularly bad credit records known as heavy sub-prime customers come to the end of the cheap two-year fixed deals that were readily available until the summer, lenders are refusing to offer similar terms.

Bob Sturges, of Money Partners, a sub-prime lender, said: These are people who before the credit crunch would have been able get a maximum of 95 per cent LTV. Now the maximum they can get is 75 or 80 per cent. When they come off their fixed-term deal they are going to be disenfranchised from the beneficial rates they have enjoyed. If they cant afford the higher rates, they face the prospect of selling up and joining the rental sector. This will affect tens of thousands, if not hundreds of thousands of people.

Those who have insufficient equity in their homes and who do not have the cash to make up the shortfall will be forced to pay their lenders expensive Standard Variable Rate (SVR).

Two years ago, borrowers could snap up a two-year fixed-rate deal for heavy adverse borrowers of 6.58 per cent. Hundreds of thousands of homeowners face being moved on to their lenders higher rate, which typically will be at 9.5 per cent. On a 150,000 mortgage, this will leave homeowners facing an extra 280 a month in loan repayments. Thomas Reeh, of Black & White Mortgages, the sub-prime broker, said: There are very difficult times ahead for customers who are habitual defaulters, or heavy sub-prime. They are unlikely to get a new competitive deal, and face significant pressure from their existing lender.

The higher cost of all mortgages, prime and sub-prime, in the wake of rises in interest rates and the credit squeeze has also put people off from dipping into their housing equity to fund big purchases, in a worrying sign for the retail sector as the Christmas season approaches. Mortgages not for house purchase or remortgage fell to 38,471 in October, the lowest figure since May 2000.

The sharply weaker picture of the property market led some analysts to predict that the Bank of England would move to cut interest rates next month, despite a noncommittal speech this week by Rachel Lomax, a Bank deputy governor.

The argument for keeping rates on hold was strengthened yesterday by data showing that the economy had enjoyed continued robust growth in the third quarter.

I don't doubt for a moment that the housing market is stalling, but headlines of doom and gloom always sell better.
Let me play devils advocate for a moment and tell you what the quieter types in the industry are saying.
Firstly the credit squeeze. How much is real and how much is a feeling of cynicism?
Remember that all UK mortgages are based on an Independant and professional valuation of property. We must believe this to be accurate, or else we believe the RCIS members to be wrong. So if a property was valued at 200k 2 years ago it would be reasonable to assume that was accurate and it will have accrued some value since then. Therefore the loan is pretty much secure now.
Secondly the media are painting a picture (see above) of heavy defaulters and non payers mortgaging to 95% LTV. This is not true. The heavy and unlimited sub prime clientelle could only raise 80% or 85% in exceptional circumstances.
Finally the rates, and therefore jump to SVR is not as bad as painted. The 6.58% quoted above was for near prime or minor adverse products, or higher adverse at very low LTV.
The upshot is, that in reality, a customer on heavy sub prime may now owe about 65-70% on his property and be facing a rise of around 2% on his monthly bill. This is not the meltdown portrayed above. The crisis in the USA came around because the value of the property was questionable in an economy that had seen very high growth and falling demand for houses. While we had seen the growth to some extent, it was not as rampant and other factors point to a softer landing here.
Both the housing and mortgage markets face problems - true. But they will only be that bad if the media keep on fuelling it. The old self fulfilling prophecy again. All to sell papers.
Alan

The housing market is not as good as you think, Alan, if you think they are out only to sell papers. Only 40% of graduates are able to get on the property ladder after 10 years of working life...and number will increase when inflation and interest rates and fuel prices are going through the roof.

We are living in a 'boom and bust' economy that Gordon Brown has created.

I don't think it's good!!
I just don't think its as bad as the media paint it.
The basics are very different from the US, and the mortgage holders are not facing quite what the papers say.
I just think that the "crash" will not be the multi car pile up they predict, more of a 3 car shunt and that the biggest driver (pun intended) will be peoples lack of confidence rather than the fundamentals, and the principle cause of a lack of confidence is the reporting of a potrential meltdown.
The basics are still that rates are historically low, employment high, growth steady, demand high (if a little down), supply short and likely to decrease due to HIPS and builders pulling their horns in and affordability is not at its worst ever, with the possible exception of the capital.
There does however need to be a change in peoples expectations.
In the 1980's Lord Tebbit was very quick to tell people in my area to get on their bikes and find a job, and stop whining that there were none in the area. the same rule applies. Being a nurse does not grant you automatic rights to buy a property in the most expensive area of the country. Find another job or move away. When the NHS cannot function in London, and there are few police, ambulance or fire crews and no-one to staff the schools, property prices will fall and equilibrium will out.
Harsh, but no more harsh than the north went through in the 80's. In most of the UK first time buyers can still buy, but they have to be realistic.
Slowdown? Yes. Crash? Not for most, though I sympathise with those in the over priced areas. Time to move???
Alan

You're right about moving, I live in the southwest and there is no way I can get anything more than a flat, tiny terraced houses around here (2 bed), no garage/parking and very small gardens are going for 125 k, I would be deep in debt until the day I retire, I can, however, move to South Wales, do the same job as I'm doing now and 3 bed houses are on the market for as little as 38 k, hope to be off asap.

I haven't been following this in detail but would like to know, PineChris, where in South Wales you can buy a 3-bed house for 38k! Is it a wreck that needs complete rebuilding?

AHH, can't find the one I was looking at for 38 k, several under 52 k though, go to darlows.co.uk and look in Rhondda and follow links to auctions, next auction this Wed, not sure if I can find out exactly what they sold for, will 'phone the agent on Friday, some require modernisation but I understand most are fit to live in, will go and have a look around in a week or so when I get time off.

That's amazing - really didn't think it was possible to buy anything fit for habitation, even if only vaguely, at that price. Good luck if you're going to the auction!

http://www.rightmove.co.uk/viewdetails-15539903.rsp?pa_n=1&tr_t=buy , In the east midlands a 2 bedroom property in a good area is around 125k .

That's more realistic, Fliper.

I purchase properties in the southwest at auction, and would like to point out, that although you are correct about the prices being lower in parts of Wales, the guide prices are always set very low at auction to entice strong interest, i have just paid 107k for a 3 bed that had a guide of 70k...