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The Power of the Wave Principle

UK Housing Market on Brink of Price Crash - Media Lessons from 1989!

Housing-Market / UK Housing Sep 25, 2007 - 02:15 AM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleThe UK Housing market is teetering on the brink of a crash led by the buy to let sector investors jumping ship. But the messages coming from the major banks and UK central bank are still benign. In many ways the situation is reminiscent of the initial stages of the the early 1990's property bust, which was also accompanied by soothing statements that ignored the facts on the ground as this article will illustrate.


Firstly, The Market Oracle Outlook for UK House Prices

The Market Oracle forecast as of 22nd of August 07 has been for a 15% drop in UK house prices over the next 2 years ( UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth). The impending peak in the UK housing market was warned of on 1st May 2007 UK Housing Market Heading for a Property Crash , prior to which analysis supported a continuing rise in the UK housing market despite the slump in the US housing market. UK House Prices continue to Rise whilst the US Housing Market Slumps - 25th Feb. 07, Why UK House prices continue to rise ! - 14th Oct 06.

 

Current Opinions Amongst Major Institutions

Bank of England - The U. K. housing market remains in good shape despite turmoil in financial markets, Bank of England Monetary Policy Committee Member Kate Barker - 20th Sept 07

Halifax Bank of Scotland - UK's largest mortgage lender said a crash was unlikely as fundamentals remain strong. Also that the credit crunch is likely to result in cuts in UK interest rates and thus supportive of house prices - Martin Ellis, Chief economist- 18th Sept 07

Royal Institution of Chartered Surveyors (RICS) - Only 10% chance of a 1990's style housing market crash, Simon Rubinsohn - 18th Sept 07. This is a barely a month after mr Rubinsohn recommending buy to let investments - “people who were thinking of dipping their toe into the equity market may now be tempted to forget about stocks and buy to let instead”. (The Independant).

Paragon, Mortgage Company - "the buy-to-let market was still strong"

House Price News from 1989 !

The Times TUE 03 JAN 1989 Agents optimistic about house prices A leading national firm of estate agents believes a collapse in the property market in 1989 is highly unlikely. Strutt and Parker has completed a review of 1988 trends, dominated by panic buying in the summer, then a London-led slowdown in the last q...

The Times FRI 06 JAN 1989 Shortage of teachers in Essex linked to soaring house prices Essex faces a chronic shortages of teachers because of soaring house prices, according to a survey by the National Association of Schoolmasters/Union of Women Teachers. Eight per cent of teachers are moving from the Basildon and mid-Essex area to ot...

The Times WED 11 JAN 1989 A realistic new year;House prices;Residential Property The owner of a two-bedroom flat in St John's Wood, London, was advised by an estate agent last summer to offer it at Pounds 170,000. After five months of frustration he has asked Roy Brooks to find a buyer at the considerably lower price of Pounds 1...

The Times MON 06 MAR 1989 House prices recover House prices, suffering from the effects of interest rate increases, showed a slight recovery in February, rising by 1.6 per cent, compared with a fall of 0.8 per cent in January, Halifax Building Society reports today. The index shows that over the...

The Times WED 08 MAR 1989 Agents forecast up to 20% rise in house prices near route;Channel tunnel rail link Property prices in Kent in areas within reach of stations on the Channel tunnel rail link are likely to rise by 10 to 20 per cent because of improved access to London the line will bring, according to estate agents in the county. They believe that th...

The Times WED 22 MAR 1989 Marking time;House prices in Britain House prices in Britain are likely to stagnate this year, the Halifax Building Society said yesterday. It expects high demand in the Midlands and North but a slowing down in the South.

The Times WED 29 MAR 1989 House trend bucked;Quarterly prices Property in the north of England is showing steady price increases against the trend elsewhere, according to the Halifax Building Society. The average quarterly price change is zero, varying from falls of 5 per cent to rises of 5 per cent. In contra...

The Times FRI 07 APR 1989 North booms;House prices House prices in northern areas, including the North-west, Yorkshire and Humberside, increased by 10 per cent in the last three months compared with a rise of only 1 per cent in the London area, the Nationwide Anglia Building Society's new house marke...

The Times MON 10 APR 1989 10% house price rise forecast House prices in Britain could rise by up to 10 per cent this year, although the South of England will see only a modest if any increase, it is predicted in a report published today by the House Builders' Federation. Even in the South, however, house ...

The Times WED 12 APR 1989 Housing reverses North-South divide;House price survey The North-South housing divide, which favored the South last year, has been reversed, the Halifax Building Society reports in its house price survey yesterday. Prices took off in the South in the first quarter of last year while the economic boom wa...

The Times WED 26 JUL 1989 Tunnel line cuts price of houses;Channel tunnel A number of properties blighted by their closeness to the Channel tunnel terminal at Cheriton in Kent have been put up for sale at 20 per cent below market value. The 26 properties are in the villages of Newington, Peene and Frogholt and are being so...

The Times FRI 11 AUG 1989 House prices will not rise until 1991 House prices are unlikely to start rising again until 1991, according to Black Horse Relocation, which published its annual report on the housing market yesterday. The announcement came as the Building Societies Association announced that 70 per cent...

The Times SAT 30 SEP 1989 House prices down by 3.8% House prices in London fell by 3.8 per cent in the last three months, leaving them 16 per cent lower than at the height of the property boom last year, according to Barnard Marcus estate agents (Our Property Correspondent writes). That drop was the s...

The Sunday Times SUN 05 NOV 1989 House prices may rise next spring BRITAIN'S depressed housing market could pick up much sooner than expected, according to a forecast to be published this week. The Morgan Grenfell bank believes the housing market has reached a point where recovery is in sight. It says rising income...

The Times THU 09 NOV 1989 House prices 'to rise' Property prices in London, the south-east and East Anglia will recover next year and begin to increase by about 10 per cent a year, according to Morgan Grenfell, the merchant bankers, in a report on the housing market published yesterday. The recover...

The Times FRI 17 NOV 1989 House prices to recover next year House prices are expected to reach a turning point in the third quarter of next year after a two-year decline, Charterhouse the merchant and investment banking group said yesterday in its annual study of the housing market. A week ago another firm of...

Of particular note is the March 89 report that The channel tunnel will lead to a 20% rise in prices, 4 months later that the tunnel wil force prices down by 20% ! A 40% variation in 4 months !

By the end of 1989, despite house prices having started to fall during 1989 the banks and related institutions were still issuing bullish announcements on housing market expectations for 1990.

UK Housing Market Forecast for 2008-09 - As of 22nd August 2007
UK House Prices to fall by 15% over two years, falling prices to be accompanied by cuts in UK interest rates. (22nd Aug 07), (25th Sept 07)

 

By Nadeem Walayat
Marketoracle.co.uk

The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Tom Mullane
30 Sep 07, 20:53
Uk Sub Prime

I have read many articles about the US sub prime mortgages and that the UK has a much smaller amount of Sub Prime borrowers. But tell me how many people do you know that earn enough money to legitimately get a mortgage for a 1 bedroom flat in Chiswick that costs 350'0000. If they had a 100'000 pound deposit they would still have to make over 70'000 a year. Of all my friends and colleagues that have mortgages I know not one that hasn't either exaggerated, lied or created fake p60's to get there mortgage, I personally exaggerated my earnings by over 50% to get my mortgage.


John_York
30 Sep 07, 22:33
UK Subprimes Much larger than statistics show.

What you illustrate is the fact that once the UK housing bubble bursts, then the proported size of the UK subprime will be many times bigger as peopel such as you and your friends will also be reclassified as subprime.

Therefore the size of the UK subprime potential is much larger ! As you have

1. Real subprimers

2. Buy to letters

3. Self certifiers

4. Those that exagerate pay


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