UK House Price Slump 10% by 2008
The culmination of high interest rates, introduction of Selling packs, credit squeeze on loans and the professionals view that the UK housing stock is 40% overvalued, is now understandably starting to bite away at consumer confidence.
The signs couldn't be much bleaker.
House prices have begun to fall, albeit slightly.
Commercial property is seemingly on the brink of collapse on a par with that seen in the early 1990s.
The buy-to-let market is vulnerable.
The Bank of England has, unprecedentedly, voiced concerns about the grim prospects for real estate.
And the Financial Services Authority has warned of the "very real prospect" of the global credit crunch getting much worse. It is that bad.............
House prices fell for the third successive month in November!
Prices fell 1.1pc last month and mortgage approvals were 32pc lower than a year earlier, according to the latest survey by Britain's biggest mortgage lender Halifax.
The decline is the largest monthly drop since December 2002, and followed declines of 0.6pc in September and 0.5pc in October, according to Halifax House Price Index figures............
The housing market is on the brink of a record slump, one of the country's leading experts warned.
Morgan Stanley's chief UK economist Professor David Miles warned that prices will drop 10 per cent next year.
That would be the biggest full-year decline since records began in 1969.
A drop on that scale could plunge thousands of people into negative equity and recall the worst days of the recession of the 1990s.
Mr Miles, who has advised Gordon Brown on mortgages, said the pain would not end there, as prices could continue to fall in 2009.
Such a slump would come as yet another blow to the Prime Minister, who has founded his claim to office on his record for economic stability and rising prosperity.
The predicted drop will be caused by a combination of five Bank of England interest rate rises and the turmoil in the banking system which is leading to sharp increases in the cost of borrowing.
Sterling slumped on Wednesday bearing the hallmark of the rising likelihood that the Bank of England would deliver an interest rate cut on Thursday.
Economic data provided support for a 25 basis points cut to 5.5 per cent as service sector activity slowed in the wake of financial market turmoil and house prices continued to fall..............
Pressure for a cut in interest rates !
Britain's dominant services sector is facing its weakest growth in four years, in the latest sign that the economy is weakening dramatically.
A leading measure of the sector's strength dropped to the lowest level since early 2003 today, piling yet more pressure on the Bank of England to cut interest rates tomorrow.
The Chartered Institute of Purchasing and Supply said its services purchasing manager's index dropped to 51.9 last month - well below economists' forecasts.
The fall is particularly worrying since services, which includes everything from hairdressers to lawyers and airlines, accounts for around three-quarters of Britain's overall economic output.............
October 29, 2007
House prices fell for the first time in two years this month, sending a shudder through millions of homeowners already hit by rising mortgage repayments and more expensive borrowing.
The outlook for homeowners is likely to worsen with news that the wealthy are losing confidence in bricks and mortar as an investment. There has been a big drop in City bonuses being used to buy prime property in Central London and in the popular second-homes areas, triggering fears of price falls in the South West, East Anglia and the Cotswolds.
The amount of City bonus cash flowing into prime London property and into second and third homes will fall by 60 per cent to £2 billion in the coming year, according to one of the country’s largest property agents.
Today’s figures come days after a report published by the International Monetary Fund saying that Britain’s housing market is overvalued by as much as 40 per cent.….