Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Stock Market Crash Edition - 26th Mar 19
Handy Ways to Boost Your Home Income - 26th Mar 19
US Treasury Bond Yield Inversion and Political Fed Cycles - 26th Mar 19
Golan Heights Oil all about the Shekels - 26th Mar 19
Falling Yields a Catalyst for The Gold Catalyst - 26th Mar 19
Can We Lock Up Rachel Maddow Now? - 25th Mar 19
Real US National Debt Might Be $230 Trillion - 25th Mar 19
Friday's Stock Market Sell-Off - New Downtrend or Just Correction? - 25th Mar 19
20 Days Left to Find Buying Opportunities In Gold - 25th Mar 19
Will the Historic Imbalance in Gold Stocks to Gold Price Resolve ? - 25th Mar 19
EasySMX Wireless Games Controllers Review - 25th Mar 19
Stock Market Short-term Top - 25th Mar 19
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

RICS Data Confirms UK Housing Market Heading for 1990's Style Crash

Housing-Market / UK Housing Mar 11, 2008 - 04:44 AM GMT

By: Nadeem_Walayat

Housing-Market

Best Financial Markets Analysis ArticleA matter of days after soothing words on the prospects for UK house prices for 2008 were issued by the chief economist of Britain's largest Mortgage Bank (The Halifax), the Royal Institute of Chartered Surveyors released data today which shows the worst margin between rising and falling house prices since the height of the 1990's property crash.

The RICS data shows that only 4% of surveyors reported a price rise against 57% reporting price falls, thus resulting in a net negative reading of 53%, which seasonally adjusts to a 64% negative reading, the worst since June 1990. Stocks of unsold inventory continue to build up on surveyors books to levels not seen in a decade and up more than 50% over the last 12 months.


Home sellers hoping to escape the property slump via the quick auction route may find the situation there having further deteriorated since the most recent analysis of 2nd December showed a near 1/3rd of properties unable to be sold at that time despite cuts in reserve prices from months earlier.

As this analyst warned in an article barely 3 days ago, the UK housing market is primed for a crash that is scheduled to occur in April 2008 following the changes in capital gains taxes, though this is not the reason for falling house prices but merely a triggering point. Today's RICS data merely illustrates the tail end of the hurricane that is about to hit the UK housing market, which will be far more lasting and damaging than the recent stormy weather that has battered much of Britain's coastline.

The prospects for the UK housing market is to continue to trend towards at least a 15% fall in average house prices over 2 years from August 2007 to August 2009 (Data:Halifax NSA).

Even property shows such as the BBC's popular and entertaining 'Homes Under the Hammer' is finding it difficult to present a positive picture on the outcome of auction buyers ability to realise a gain on their speculative refurbished buys. Instead of the slickly dressed walk on estate agents announcing potential profits of several tens of thousands of pounds, as used to be the case, now are being replaced with wide ranging rental value estimations. Defensive smiles from the property speculators cannot hide the fact that yields of under 4.5% are nothing much to smile about given the risks of capital loss, and this taken from programming shot during the second half of 2007. It will therefore be interesting to see what current programming reveals in say 4 to 6 months time.

The reasons why the UK housing market is heading towards a crash are many, and have been iterated numerous times since May 2007 which can be revisited in the extensive articles archive. Home owners hoping that interest rate cuts will able to halt the decline will find disappointment in that expectation, as sentiment switches from greed to fear. From the prospects of capital gains to the realisation of capital losses as expressed in the loss of equity far beyond that of the £30 or so saved in interest payments per month following each 0.25% base rate rate cut. That is IF the banks in their decimated state are willing or even able to pass on the rate cuts to their increasingly high risk mortgage borrowers. No, not even wishful thinking that the government will step in to save the day will come to pass as we have seen with the Northern Rock debacle. A bank which is driving mortgage interest rates higher so that mortgage borrowers remortgage to another bank and hence Northern Rock moves that step closer to repayment of the £50 billion loaned from the British tax payer.

The UK has already witnessed the once booming flats and commercial property market crash. The plug pulled from under many commercial property funds starting in late last year, as the investment funds ran dry of cash and become forced sellers of properties to meet panic redemption requests from investors in the face of sharp falls in fund unit values. Those that remain in the funds, are now increasingly locked into depreciating assets.

The buying instead of renting dead money mantra never really stood up to proper scrutiny as highlighted back in October 2007, the relative costs between the two are never usually properly evaluated when seen through the rose tinted glasses of perpetual money for nothing capital appreciation during a mania driven market environment.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 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.

Attention Editors and Publishers! - You have permission to republish THIS article if published in its entirety, including attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

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


Comments

Speculator
14 Mar 08, 12:40
House prices / Earnings / Interest Rates Ratio

Any chance of getting an update on this chart after the recent interest rate cuts?

http://www.marketoracle.co.uk/images/uk_housing_market.jpg

It might show interesting breakout.


Nadeem_Walayat
14 Mar 08, 23:23
House Price Ratio Chart

Hi

The formula used to calculate the chart was revised to make it more accurate.

The chart is updated quarterly, with next update due on release of the March data.

The current chart be found here - http://www.marketoracle.co.uk/Article3814.html


Post Comment

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

6 Critical Money Making Rules