7 Oct 2010

Monster’ one month fall in house prices

What a monster of a figure. A 3.6 per cent fall in house prices in one month. That is off the scale. I was not aware that such a fall was even feasible. It has never happened before in the entire history of the landmark Halifax House Price Index, since it started in 1983.

The sharp correction in 2008 saw the monthly falls trough at 2.6 per cent, so September 2010 saw absolute carnage in the housing market.

Now it is true to say that monthly house price figures do bounce around. The quarterly number, the underlying trend is now down 0.9 per cent.

Martin Ellis, Halifax’s housing economist pointed to softening consumer confidence.

“An increase in the number of properties available for sale in recent months has reduced the imbalance. At the same time, renewed uncertainty about the economy and jobs has caused consumer confidence to falter recently, dampening the demand for home purchase,” he said.

As I said in August, the Austerity talk clearly has spooked Britain. But this could well be the beginning of something much bigger. A fundamental correction, that was put on hold by the bank rescues.

17 reader comments

  1. Dorian Grey says:

    We have to wait and see the Oct. Numbers for confirmation but it looks serious.

  2. the baldman says:

    Looks like good news for the UK. Cheaper more affordable housing and the chance to be more competitive as we have lower costs.

    There will be some temporary pain for the those who have over borrowed but for prudent savers this must be good news.

  3. planning4acrash says:

    That is 43.2% fall, annualized. And interest rates haven’t even gone to 15% yet. Maybe the entire house bubble since 1980 is about to dissapear? Maybe house prices will return to between 20k and 50k? Because, inflation is worse than 1991, yet interest rates then had to go to 17%. To avoid currency destruction this time, we’ll need something north of 25%, but the public have not yet been prepared for this. But you cannot avoid economic law. Either borrowers suffer and savers benefit via higher interest rates, or, via government manipulation, borrowers benefit and savers suffer as inflation does the job. I think they may go for inflation, because the government is most in debt. Could it be a ploy to destroy nation states tho to bring in the IMF’s proposal for a Bancor, a global currency to replace the dollar? Well, they keep discussing it.

  4. Ban the Banksters says:

    Well said, Faisal. About time someone in the media pointed out the simple economic truth that house prices MUST fall back.

    The only problem is that now the BoE are likely to embark on a hugely inflationary programme of QE to try to support prices at the cost of sending the cost of living soaring.

  5. Dr Deflation says:

    This is just the start.

    Prepare for reality!

  6. Tom Wright says:

    The questions everyone wants answered is this: how much of this influx of property coming onto the market is from Buy to Let landlords seeking to exit the market, afraid their tenants are going to have problems as a result of the housing benefit cap?

  7. David Brent says:

    One day, house prices will be affordable again. The house price increases between 2002 and 2007 were fuelled by greed and delusion. I knew in my heart that something would “give”.

    Houses are for living in!

  8. wikichris says:

    Well, what goes up must come down. The rises were extreme (but people were happy to ride it up) and so the drops are going to be equally extreme.

  9. Asif Ragistarn says:

    But this time it’s different!

    Yes, its a massive H-bomb!

    Those minding the UK economy 1999-2004 should all be shot for allowing the biggest bubble in history to form…all for short term political ends.

    Brown, Blair, George – these are not leaders but criminals and enemies of the people.

  10. Steve says:

    when you earn £40k and you can only afford an entry level house in a half decent area, then something is wrong.

    now mortgage companies will not lend voer 3x salary, then house prices will have to come down to meet that factor, or the houses wont sell. simple

  11. Ray Turner says:

    I suspect the problem might have something to do with all the buy-to-lets that people are desperately trying to flog off before they get stung with extra capital gains tax…

    1. Tom Wright says:

      And indeed, when their publicly funded tenants tell them their housing benefit has been cut, en masse. Far from urban flight, we are going to see price reductions, and, this is a damn good thing. Rent costs too much, mortgages cost to much, and landlords and bankers must be the two least popular groups in the UK.
      How can we have economic recovery without disposable income, and how can we have disposable income when its all gone on the mortgage or rent?

  12. Old Holborn says:

    When you hear the protests outside, it is not about the fear of starving to death or being homeless.

    It is the fear of missing Eastenders because you had to get the bus home instead of driving.

    It is the fear of disappointing the little ones by not buying them everything they see for Christmas.

    It is the fear of not being able to brag about the holiday in the Maldives or the trip to Disney Nanna so desperately wanted.

    It is the fear of not being able to buy the full Man Utd away kit or the iPhone4


    1. Tom Wright says:

      That’s all right then. Sorted. No-one’s actually hard up at all. Just annoyed about missing the ‘Enders.

      Clearly what we need is to reject the consumer society, put on hair shirts, and go back to the land.

  13. JMC says:

    We are now moving to the fear stage. This graph shows you where we are now going. http://www.housepricecrash.co.uk/images/bubble-lifecycle.gif

    I nearly wet myself this morning at 3.6% I had been waiting for a -0.6 as forexcalendar predicted.

    So saving up that massive deposit during the times everyone was getting rich by taking on more debt (MEW, Mortgage Equity Withdrawal). Debt is wealth HAHA.

    And so it begins…… About time we had less X5’s and BTL mum n dads.

  14. Ken Ichikawa says:

    Hey Faisal, best not go hill walking this weekend eh?

  15. Paul Begley says:

    “A fundamental correction, that was put on hold by the bank rescues.”

    Call me a cynic, but it does look as if all that socialist government intervention (rescuing the banks etc) was tolerated by the “market mafia”, just long enough for them to dump their liabilities on the rest of us.

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