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  1. #1
    Join Date
    Sep 2003
    High up above and deep down under

    Default U.K. House Prices Fall the Most Since 1992,

    U.K. House Prices Fall the Most Since 1992, HBOS Says (Update3)

    By Svenja O'Donnell and Brian Swint

    April 8 (Bloomberg) -- U.K. house prices dropped by the most since 1992 in March as the seizure of credit markets worldwide forced banks to pull mortgage offers, a report by HBOS Plc showed.

    The average cost of a home in Britain fell 2.5 percent to 191,556 pounds ($379,000) from February, HBOS, the U.K.'s biggest mortgage lender, said in a statement on the Regulatory News Service today. The 1 percent drop in the first three months of this year from the fourth quarter was the biggest since 1995.

    The pound fell after the report on speculation that the Bank of England will reduce the benchmark lending rate on April 10 for the third time since December to prevent an economic slump. Abbey, the U.K. unit of Spain's Banco Santander SA, today became the last major British lender to withdraw its 100 percent mortgage as rising funding costs hampers banks' ability to lend.

    ``We're in for a long period of house prices falling or not growing at all,'' said George Buckley, chief U.K. economist at Deutsche Bank AG in London. ``It's another reason for the Bank of England to cut interest rates this week.''

    Economists predicted a 0.3 percent monthly decline in house prices, the median of 12 estimates in a Bloomberg survey show. The pound fell as much as 0.4 percent against the dollar after today's report and traded at $1.9767 as of 9:54 a.m. in London.

    End of the Boom

    The U.K. has the second-highest proportion of homeownership among the Group of Seven industrialized nations, after Italy. A decade-long housing boom fuelled 62 consecutive quarters of economic growth and helped seal three election victories for the ruling Labour Party led by Tony Blair, and his successor as Prime Minister, Gordon Brown.

    Shares of U.K. property companies also declined. Barratt Developments Plc, Britain's second-biggest homebuilder by volume fell 6.1 percent. Bellway Plc of Newcastle Upon Tyne dropped as much as 4 percent. Taylor Wimpey Plc, the U.K. No. 1, declined as much as 3.8 percent.

    Fifty of the 61 analysts surveyed by Bloomberg News predict policy makers, led by Governor Mervyn King, will cut the benchmark interest rate by a quarter point to 5 percent on April 10. That would still be the highest among the G-7 nations and compares with the Federal Reserve's main rate of 2.25 percent and the European Central Bank's 4 percent.

    Predictions for Declines

    While former Fed Chairman Alan Greenspan said today that the drop in U.S. home prices will probably end before next year, some economists say U.K. values have further to fall. David Miles, chief U.K. economist at Morgan Stanley, predicts they will drop by 10 percent in 2008.

    All mainstream U.K. lenders have now withdrawn their 100 percent mortgage offers. More than 20 banks offered loans equal to the value of a home at the beginning of March, the Financial Times said today.

    ``We expect there to be a modest fall in house prices this year,'' said Martin Ellis, chief economist at HBOS, who had previously forecast prices would be unchanged this year. ``Any declines, however, should be viewed in the context of the significant price rises over recent years.''

    U.K. house prices are still up 171 percent over the past decade, HBOS said, and Ellis predicts a growing labor market to continue underpinning the housing market.

    Unemployment fell to the lowest since 1975 in February, retail sales unexpectedly rose and Bank of England policy makers said at their last rate decision in March that economic growth was more resilient than they expected.

    Loan Offers

    Still, banks including Nationwide Building Society, HSBC Holdings Plc and Royal Bank of Scotland Group Plc have raised borrowing costs or scaled back loan offers even after two interest-rate reductions by the Bank of England since December. U.K. mortgage approvals stayed close to a nine-year low in February, central bank data show.

    ``We were excited about buying our first house, but now we're worried about making a big financial commitment when prices are falling,'' said Robin Agnes, 30, a civil servant in London. ``I feel very uncertain.''

    HBOS said April 4 that new customers at Halifax face higher interest-rate payments if they provide less than a 25 percent deposit for their home purchase. It refused to comment on a report the previous day that it may halt current home-loan deals.

    Credit `Victim'

    ``I'm definitely a victim of the credit-crunch,'' said Dania Vize, 39, an account manager in London. Her monthly home payment went up more than 100 pounds when she re-mortgaged and her credit card limits have been reduced in the past few months. ``Banks have gone from giving you money willy-nilly to being much, much more careful about who they lend to.''

    Today's report is the third in the past two weeks showing that the property market is slowing. Hometrack Ltd. said on March 31 that U.K. home values fell for a sixth month, while a Nationwide survey showed March 28 that consumers predict property values will fall 3 percent in the next six months.

    The U.K. central bank forecasts economic growth will cool this year to an annual 1.6 percent rate in the fourth quarter, matching the slowest pace since 1993. Lehman Brothers Holdings Inc. predicts the slowdown may be worse and says there's a 35 percent chance of a recession in the next two years.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #2
    Join Date
    Feb 2004


    Nice time for us to be thinking about getting a house in the UK really isn't it...

  3. #3
    Join Date
    Apr 2008


    And no need for a property manager.

    PS - What has the resolution of "the Troubles" done to the market in Belfast and (London)Derry?

  4. #4
    Join Date
    Feb 2004


    It has boomed for the last few years especially in traditionally "trouble" free areas such as where we are (Portstewart, basically small seaside town, think Brighton and you are pretty much there) so much so that prices are seriously out of whack with rents I'd estimate the place we are living in (5 Bedroom house with sea views) is now worth £300000+ we are paying a rent of £450 per month... A truly anaemic return for our landlords. I think as with the rest of the UK, the market here has become over enthused and over priced particularly with all the new construction occurring and a correction is inevitable.

    Cheers David

  5. #5
    Join Date
    Apr 2008
    Christchurch, New Zealand


    Activity levels down over 60% from last housing market crash
    Monday 18th August 2008

    Wolsey calls for Government action or face the consequences. While the Government continues to flounder on the sidelines, activity in the housing market has sunk to an unprecedented low level.

    Wolsey Securities is calling on the Government to take urgent action, as activity falls to a low level that even surpasses the slump during the last housing market crash.

    With the Bank of England figures showing that only 36,000* mortgage approvals were made in June, the number of housing transactions is currently set to total just over 400,000 this year. This low level represents over a 60% drop in activity on the worst year of the 1990s housing market crash, when transactions ran at around one million.


  6. #6

    Default UK House Prices Crash by 14.6%

    Prices fall by 1.4% in October
    Reluctance of sellers to reduce asking prices could be hindering market activity
    Recognition that the UK is heading into recession opens door to sharp cuts in rates.

    Headlines October 2008 September 2008
    Monthly index * Q1 '93 = 100 319.0 323.6
    Monthly change* -1.4% -1.5%
    Annual change -14.6% -12.4%
    Average price £158,872 £161,797

    * seasonally adjusted

    If you need analysis, please feel free to ask me...

    Go Go Go


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