House prices falling at fastest rate in 25 years
By Harry Wallop and Angela Monaghan
Last Updated: 1:59pm BST 04/09/2008
Home owners have been dealt a double-whammy of doom, as figures showed that house prices were falling at the fastest rate in at least 25 years and the Bank of England failed to cut interest rates.
The Base rate was left at 5 per cent, despite the increasing threat of recession.
While the move was widely expected by economists, it will further add to the pessimism in the housing market, which has been rocked by falling prices and very low levels of activity.
advertisement
Figures from Halifax, the country’s largest mortgage lender, showed that the average house has lost £25,434 in value over the last 12 months to reach £174,178, equating to a drop of 12.7 per cent. (AtW's comment: this does not seem to take into account house price growth at the end of 2007 - effectively the drop (from peak value) is higher.)
The lender has never recorded such a large annual fall since it stared its monthly survey in 1983.
The average house price is now just below the Government’s new, temporary stamp duty threshold of £175,000.
Halifax’s chief economist Martin Ellis said: “The pressure on householders’ income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels.”
However, he added that the Government’s initiative to raise the stamp duty threshold would do little to help those living in the South East, where just 12 per cent of sales during August would have been free from the duty.
And house prices still have much further to fall, warned economists, who pointed out that the number of mortgages being approved has plummeted by two-thirds over the last year.
Howard Archer, chief UK economist at Global Insight said: “It seems odds-on that house prices will continue to head rapidly south given that the Bank of England reported record low mortgage approvals for house purchases in July, while latest surveys generally show that house sales are depressed, buyer interest remains weak, it is taking longer to sell a house, and sellers are achieving a falling percentage of their asking price.”
The failure of the Bank of England to cut rates was widely expected, considering inflation is running at 4.4 per cent – more than double the Government’s target.
The pressure is now on for the Bank to cut rates before the end of the year.
----
A lot of people were just trying to wait it out hoping it was a short downturn - they use credit cards to fund their morgages and it won't last long, I expect very shortly (probably Q1 2009) to see a lot of distress sales. In fact I think by the end of 2009 average house prices will have fallen by 30-35%, by mid 2010 it will probably be closer to 45-50% - at that point house prices will be kind of reasonable.
By Harry Wallop and Angela Monaghan
Last Updated: 1:59pm BST 04/09/2008
Home owners have been dealt a double-whammy of doom, as figures showed that house prices were falling at the fastest rate in at least 25 years and the Bank of England failed to cut interest rates.
The Base rate was left at 5 per cent, despite the increasing threat of recession.
While the move was widely expected by economists, it will further add to the pessimism in the housing market, which has been rocked by falling prices and very low levels of activity.
advertisement
Figures from Halifax, the country’s largest mortgage lender, showed that the average house has lost £25,434 in value over the last 12 months to reach £174,178, equating to a drop of 12.7 per cent. (AtW's comment: this does not seem to take into account house price growth at the end of 2007 - effectively the drop (from peak value) is higher.)
The lender has never recorded such a large annual fall since it stared its monthly survey in 1983.
The average house price is now just below the Government’s new, temporary stamp duty threshold of £175,000.
Halifax’s chief economist Martin Ellis said: “The pressure on householders’ income, together with the reduction in the availability of mortgage finance due to the global financial markets crisis, is resulting in both lower property prices and activity levels.”
However, he added that the Government’s initiative to raise the stamp duty threshold would do little to help those living in the South East, where just 12 per cent of sales during August would have been free from the duty.
And house prices still have much further to fall, warned economists, who pointed out that the number of mortgages being approved has plummeted by two-thirds over the last year.
Howard Archer, chief UK economist at Global Insight said: “It seems odds-on that house prices will continue to head rapidly south given that the Bank of England reported record low mortgage approvals for house purchases in July, while latest surveys generally show that house sales are depressed, buyer interest remains weak, it is taking longer to sell a house, and sellers are achieving a falling percentage of their asking price.”
The failure of the Bank of England to cut rates was widely expected, considering inflation is running at 4.4 per cent – more than double the Government’s target.
The pressure is now on for the Bank to cut rates before the end of the year.
----
A lot of people were just trying to wait it out hoping it was a short downturn - they use credit cards to fund their morgages and it won't last long, I expect very shortly (probably Q1 2009) to see a lot of distress sales. In fact I think by the end of 2009 average house prices will have fallen by 30-35%, by mid 2010 it will probably be closer to 45-50% - at that point house prices will be kind of reasonable.
watering
Comment