Tide turn on house prices
The housing market has turned. Last week, Nationwide reported that house prices had fallen for two consecutive months for the first time in seven years.
Speak to Halifax and the picture is even gloomier - its figures show prices falling by 2.4pc since August.
The worries are confirmed by the Council of Mortgage Lenders saying the number of home loans approved is plunging sharply.
Despite this, and the dark economic clouds generated by the credit crunch, most City economists remain relatively sanguine about the prospects for house price inflation this year. Nervous consensus has settled between -3pc and +3pc growth in 2008, though some forecasters, including Grant Thornton and Citigroup, have warned of falls of up to 10pc.
More intriguing is the answer provided by the nascent derivatives market, in which traders take positions based on their expectations for the Halifax house price index. The market shows investors are betting that by November 2008 house prices will be 9pc lower than today - followed by a further 10pc fall by November 2009, according to specialists Tullett Prebon.
It was all so different last January. Prices nationwide were growing exponentially as the bubble rushed towards bursting point. Then, in early summer, the breathless race for housing began to slow. Housebuilders reported a slight drop in visitor numbers, but nothing significant. A month later, credit markets crunched and the reverse began in earnest.
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More Recent News
- Slight rise in volume sales for October BBC News 20 Nov. 2008 Property sales rose slightly in October, for the second month in a row, the National Association of Estate Agents (NAEA) said. Read more
- Mortgage lending rises by 7% Alex Coxall 20 Nov. 2008 Mortgage lending rose by almost 7% in October over September, suggests figures released by the Council of Mortgage Lenders today. Although this shows a move in a positive direction the figures are significantly down on the October of the previous year. Read more
- Buy-to-let trouble ahead BBC 19 Nov. 2008 Between 20% and 40% of buy-to-let (BTL) landlords will fall into negative equity if house prices keep on falling at their current rate, a report says. Read more
- RICS survey conclusions Alex Coxall 14 Nov. 2008 Transactions have slowed again during October but lead activity indicators and the headline price balance has improved, according to a survey carried out by RICS. Read more
- Nationwide predict fall into 2010 Alex Coxall 10 Nov. 2008 Graham Beale, chief executive of Nationwide is predicting that house prices will continue to fall possibly into 2010. Over all he predicts that the market will decline by 25% from its peak value to the lowest point. Read more
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