House prices fall further and mortgage lending drops

‘Many areas are reporting a correction rather than dramatic falls in prices...'

I think you'll discover very soon that dramatic falls ARE the 'correction' required to get house prices down to a sustainable level. Obviously, if the government and BoE hadn't allowed the bubble to get overinflated in the first place we could have got away with a gentle decline, but it's too late now!

The housing market is very overpriced in the current economic environment. It is quite amazing that some high value new property has sold at inflated prices in the last year. Overseas buyers have been evident but I suspect they are in for a cold in the next 5 years. Sellers should get real and realise they will no longer get valuations of 3/4 years ago.

Having just returned from Marrakesh-----where there must be several billions of euro of housing in various stages of being unfinished, I believe us lemmings have already fallen over the cliff into the abyss.

I do not know how deep the abyss is, or what will eventually stop us, and house prices, falling further at the bottom.

http://www.accountingweb.co.uk/blogs/jefflcbba/mad-lemming?page=1

No debt-fuelled asset bubble in history has ever failed to unwind,EVER,there are no exceptions.The only aspect we do not yet know is how it will happen;

A. A quick and severe fall in values.Or;

B. A long and painful period of stagnation against a backdrop of rising interest rates.

Most people under the age of 40 will only ever have known a benign property market.Still perhaps this time it will be different....................

Spoke to an agent this morning. Of the 156 houses in my road (in SW14) she has 8 on her books, all at or close to historic high asking prices. Other agents have several each. Surely what's needed is sellers to capitulate & accept what the "market" ie buyers are prepared to pay. This may yet take a while but in my experience, when one sells at a new price level, others then see the reality of the new price level. This holds true when prices are rising & falling. I suspect the reality check is coming very soon!

Richard, it seems to me that the housing bubble is already unwinding and has been for the past three years.The BoE's tactic of devaluing the currency gently through modest inflation and QE will help speed the process without making it so obvious.

I bought a house 3 years ago at the 2007 peak and sold it 3 months ago at a nominal 12% loss. But if you add in the effects of nearly three years inflation @ around 3% p.a., that would add another 8% to the loss, or a total 20% haircut.

I expect this process to continue for a while yet but don't see why anything more dramatic (interest rate rises etc) is needed - it's already dramatic enough !

I couldn't care less about house prices, I'm so absolutely bored of reading and watching news about house prices, I'm so absolutely bored of TV shows about property development, buying homes abroad, celebrity homes abroad etc etc. In particular those horrible stories in the Sunday magazines profiling those couples who have spent the past two years doing up their holiday cottage in Cornwall resplendant with painted floor boards and reclaimed lobster pot outside the door.

I'm so bored of the endless so called property experts giving their opinions on where house prices will be in a years time. If a property crash puts an end to all this I would gladly give the equity in my house.

Also I've taken voluntary redundnacy four months ago and have never been happier (I worked for a large internationa corporate IT company).

Bring on the crash I'm sick of it all!!!

Paul, I think you need a holiday - do you want to borrow my holiday home in Cornwall? We've just finished 2 years of renovations and it's lovely, currently has Laurence Llewelyn-Bowen staying but he will be gone next week and it will be available. We've painted the floorboards a lovely sea blue colour and have model sail boats throughout - just let me know....

Kenpen2.

You are spot on with your point about the `Stealth` tactics employed by the authorities ( The BOE apparently have a major part of their pension fund in Index-Linked Gilts) to try to inflate the problem away without Joe Public noticing or feeling too much pain.

However,political expediency can only work up to a point.As someone once said `You can`t buck the market` and if we don`t take the necessary medicine it will eventually be forced upon us.

After the party comes the hangover i`m afraid.

"House prices have continued to fall, weighed down by an increasing supply of homes on the market"

Rubbish! The market is "weighed down" simply because house prices are far too high and FTB cannot get mortgages - for which, in a few years time, they will be very grateful.

If you really want to know what could happen to the housing market in the next few years, here in the UK, take time to consider the ongoing saga which is unfolding America.

There are now three areas of malpractice which have been uncovered, which when added together summon a nightmare scenario.

They are: (1) Mis-sold mortgages where the true credit rating and the borrower's ability to repay was deliberately hidden by falsifying documents. (2) Records of property transfers may be incomplete because documents relating to mortgages held on those properties have been lost or are incorrectly filed due to the highly complex securitisation process. i.e. The issue of CDOs--- (bundling) (3) The bank's exuberance in using legal process to recover mortgage debt. (foreclosure and repossession) where true ownership and title to a property cannot be established due to incomplete or false documentation.

To learn more go to Barry Ritholtz blog The Big Picture. There have been numerous contributors who have discussed the subject in detail plus Barry's professional overview.

FAO Paul Dodd

I totaly agree with you

The market is on its knees and it has futher to fall bring it on

This is the best thing that has ever happened

OMG its that house price discussion again. Out comes a survey which shows that house prices in the Midlands are a little bit lower and hey presto we are peering into the abyss. What tosh. "Its grim up North" springs to mind. Is n't it in the Midlands where a lot of speculative property was built to slake the thirst of the "young urban professionals2 as the property pornsters would have you believe. I still remeber hearing the tales of woe of people buying five units at the time off plan without even having set foot in the City they bought them in. Hey something similar here with some speccie property deals in Florida? C'mon chaps stop hyper-ventilating property will never be cheap in the right location, up north you might consider Harrogate or Alderly Edge or even Withenshawe. Everything looks pretty cool down here in the Cotswolds not many forsale boards up ahh I forget our houses are normally sold through Savills.

When I look at houses in the shop windows in estate agents in Bromley and Beckenham I contine to be amazed at how overpriced houses are - half a million and no garage to park your car in?? The prices were forced up artificially high by the greedy buy to let market in the past and now that bubble has burst I hope we will see prices continue to tumble down to a more realistic level.

The Cotswolds... there's a good place to make an objective comment from...NOT. Savills and Knight Frank are experts at over pricing.

Beckenham? Its double that in Chislehurst :)

Anonymous 1, I do need a holiday and I'd like to take up the offer of your house in Cornwall - before I comitt can I ask if there are an assortment of shells in the bathroom and the downstairs toilet please? Are the fabrics, furniture and acessories horribly over considered?

"It's grim down south" too for some unfortunate souls, at least is was when I visited in the spring.

Just two miles from the tree lined boulevards and million pound town houses of Kew Gardens I came to a shanti village on the banks of the River Thames at Kew Bridge. People living in tents and make shift shacks. I must admit I admired their sense of humour. They had put up signs which read. "This is our land" "visitors welcome" "Tours Available"

Paul

COMMIT!

ACCESORIES!!

Really!!!

Or even accessories (sorry typo)

Ironically, given the subject matter HotRod, that site of the shanti town at Kew is now being developed into luxury flats!!!

The property market is not helped by the press who love nothing better than doom and gloom.

Them and the moaners who can't afford a big house like mine no matter how bad the market gets.

If everybody works as hard as me the country should be back on its feet in no time.