Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

UK Housing Bear Market Has Begun - House Prices Fall for Two Consecutive Months

Housing-Market / UK Housing Nov 09, 2007 - 12:44 AM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleBritian's biggest mortgage bank HBOS's monthly house price statistics revealed that UK House prices fell by 0.5% in October to £197,248. This follows a 0.6% drop in September, which is the first consecutive drop in house prices since May 2005, as the credit crunch hit the UK mortgage banking sector and five interest rate rises to 5.75% started to impact on affordability. The trend in UK house prices is now in line with the Market Oracle forecast for a 15% decline over the next 2 years as of 22nd August 2007.


Housing market activity is declining with Mortgage approvals to fund house purchase falling by 6% in September and approvals in 2007 Quarter 3 were 11% lower than in 2006 Quarter 3. New buyer interest in purchasing a house fell for the tenth consecutive month in September, demonstrating that potential buyers have become more cautious.

Despite the bad news, the Halifax's chief economist (Martin Ellis) gave an up beat take for the mortgage bank, commenting :

" House prices fell by 0.5 per cent in October. Prices in the three months to October were 0.3% higher than in the previous quarter – a good guide to the underlying trend - continuing the steady easing in house price growth since the end of 2006.

The rise in interest rates since August last year and negative real earnings growth so far this year are curbing housing demand, leading to a slowdown in both price growth and activity.

The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage in the number of properties available for sale, will continue to support house prices."

HBOS also states:

Sound fundamentals underpin the housing market……

The continuing strength of the UK economy and the associated expansion in employment will provide a sound underpinning for the housing market over the coming months.

Gross domestic product (GDP) increased at an annual rate of 3.3% in 2007 Q3, comfortably above the long-term average rate of 2.5%. (Source: ONS)

The number of people in employment has increased by 82,000 over the past year to a record total of 29.10 million. There was a 22,000 increase in employment during the three months to August compared with the preceding three months. (Source: ONS)

Unfortunately as is usually the case, the mortgage banks such as Halifax are likely to only acknowledge the dire state of the UK housing market AFTER the event i.e. after house prices have fallen for some time, which was the case during the last housing bust when bullish commentary continued for several years as house prices fell. Economic growth tends to be overstated as true inflation is much higher than the price deflator used to calculate real GDP growth. Additionally employment tends to be a lagging indicator for economic activity by between 6 and 12 months and ignores the high level of persistent unemployment as a consequence of migrant workers.

The Market Oracle's New enhanced affordability index indicates that UK house prices are now at extreme levels of unaffordability not seen since 1989. The indicator also clearly shows why house prices were extremely under valued for nearly 8 years right into 2002, when many housing pundits were prematurely calling for a UK house price crash without doing the sums on affordability. I.e. such as Andrew Oswald, Professor of Economics, Warwick University who published "The Great 2003-2005 Crash in Britain’s Housing Market". and various house price crash websites that sprung up around that time.

I also refer first time buyers to my article - Buy Or Rent A House in the UK - Five Scenarios of Gains or Losses's over the Next Five Years , which concluded that house prices needed to rise by 2% per annum for first time buyers to break even on a property purchase as against renting at this time.

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),
1st May 07 - UK Housing Market Heading for a Property Crash
25th Sep 07 - UK Housing Market on Brink of Price Crash - Media Lessons from 1989!
28th Oct 07 - UK House Prices - Primary Reasons For a Sharp Fall

 

Note - The UK House Price Affordability Index takes into account the following variables - Average Earnings, Average Household Disposable Income, UK Interest rates, Average House Prices , Mortgage Costs

By Nadeem Walayat
Copyright (c) 2005-07
Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of analysing and trading the financial markets and is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting 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

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in