UK housing trends ~ Down, Down, Down......

House Price Reports

UK house prices continue to crash at an alarming pace

Well that was short lived, no sooner had the "green shoots of recovery" appeared last month (in relation to house price growth) then the true overall trend re-emerges, downwards...
House prices have fallen 17.7% year on year and approx. 20% from their peak - in September 2007. It's also useful analysing the 'swing' from positive to negative; from 15% positive to 17.7% negative has taken twenty months, this is unprecedented during the (circa) twenty five years of house price data collation.

With falls now accelerating it's more important than ever that first time buyers remain increasingly vigilant ensuring they buy at future 2010 prices; perhaps negotiating a discount of 15% off the asking and or valuation price in order to insulate themselves from further falls.


Martin Ellis;
"The average UK house price declined by 2.3% in February. This monthly decrease more than offset January's 2.0% increase. Prices in the three months to February compared to the previous quarter, which provides a better indicator of the underlying trend, were 3.6% lower...
Whilst market activity remains at very low levels, there are some tentative signs that activity may be beginning to stabilise. The house price to earnings ratio - a key measure of housing affordability - has fallen to its lowest level for six years.

Continuing pressures on incomes, rising unemployment and the negative impact of the dislocation of the financial markets on the availability of mortgage finance are, however, likely to mean that 2009 will be another difficult year for the housing market."

LLOYDS BANKING GROUP HOUSE PRICE INDEX
Ket Statistics
February 2009 (seasonally adjusted)
Annual change
-17.7%
Monthly change
-2.3%
Average Price
£160,237
.
Key facts
House prices declined by 2.3% in February. This fall more than offset January's 2.0% increase (revised from 1.9%). Historically, house prices have not moved in the same direction month after month even during a pronounced downturn. For example, prices fell for seven successive months in 1989 but subsequently increased in three of the first ten months in 1990 even though the overall trend in prices was downwards.

Prices in the three months to February compared to the previous three months - an indicator of the underlying trend - were 3.6% lower. This is slightly below the quarterly rate of decline of 5-6% recorded consistently between June 2008 and January 2009.

House prices in February were 17.7% lower on an annual basis. The annual rate of change (measured by the average for the latest three months against the same period a year earlier) fell from 17.2% in January to 17.7%. The UK average price has returned close to the level in August 2004 (£159,799).

-The house price to earnings ratio - a key affordability measure - is at its lowest for six years. The house price to average earnings ratio has declined from a peak of 5.84 in July 2007 to an estimated 4.42 in February 2009; a fall of 24%. The ratio is at its lowest level for six years (February 2003: 4.41). The long-term average is 4.0.

-Tentative signs of a stabilisation in activity albeit at a very low level. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase was unchanged between December 2008 and January 2009. Approvals in January, at a seasonally adjusted 31,000, were also identical to the monthly average recorded in the second half of 2008.More details about UK house prices continue to crash at an alarming pace (opens a new window)

Should Banks be lending at all????????

Should banks be lending to house buyers?January 19th, 2009 by Peter King
Should the UK government really be encouraging households to borrow money to buy houses in the current climate? And should it be encouraging banks to lend to them as part of the latest bailout package?

Clearly there is considerable pent up demand for housing and this will grow over time. But a responsible government would surely be telling first-time buyers and others to put off their purchases. What is the sense in taking out a mortgage to pay for an asset that is declining in value by 15% a year?

And instead of exhorting the banks to offer cheap finance so households can saddle themselves with negative equity, the government should be congratulating them for their entirely rational behaviour of limiting their exposure to the housing market.
Tags: bailouts, credit crunch, financial crisis, housing, Peter King
This entry was posted on Monday, January 19th, 2009 at 1:55 pm and is filed under Political economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

New Year Newish Problems.....Welcome to 2oo9

1,600+ retailers expected to go bust in 2009

REUTERS

January 01 2009

LONDON (Reuters) - The downturn in consumer spending will drive over 1,600 retailers out of business in 2009, triggering thousands of job losses and leaving more than one in ten shops empty, a report said Thursday.
Market researchers Experian said trading conditions for survivors would be the worst for at least 30 years and there would be knock-on effects at suppliers, manufacturers and service providers.
"There is no doubt that the impact on retail will resonate through the entire economy," said Jonathan de Mello, Director of Retail Consultancy at Experian.
Retailers are slashing prices as indebted shoppers curb spending amid rising unemployment, sliding house prices and fears of a deep recession.
Experian said big discounts had lured some consumers back into stores, with shopper numbers leaping 12.8 percent in the last week of December. But that was not enough to prevent a 3.1 percent drop in footfall for the month as a whole.
"The last minute surge in shoppers came as a relief to retailers but for most it was not nearly enough," de Mello said.
"The boost in numbers was driven by massive unprecedented discounting all at the expense of retailer margins."
Some retailers have not survived, with sweets-to-DVDs chain Woolworths and furniture group MFI falling into administration, a form of creditor protection, in the run-up to Christmas and several smaller companies following suit in recent days.
Experian said 1,137 non-food retailers went out of business in the year ended December, up 21.2 percent on the year, and forecast 440 more would become insolvent over the next four months and the total for 2009 as a whole would be about 1,400.
Some 194 food retailers failed in 2008, up 10.9 percent, and Experian predicted that number would rise to about 230 in 2009.
"The collapses we've seen so far are just the tip of the iceberg," de Mello said.
"At the moment there is too much space in the market and not enough demand. Many retailers are either making no margin or losing money. We anticipate that January will be the toughest for 30 years."
Experian said the vacancy level on shopping streets was around 7 percent, but with a flurry of businesses recently going into administration that would rise to about 10 percent -- "a figure which is likely to increase as more retailers go into administration in January."
"This large scale retail business failure is expected to have a significant impact on high street returns, affecting everything from investors' yields on rents to revenues to local authorities," it said.
"This is not to forget the devastating impact on people's jobs and livelihoods," de Mello. "Britain is still a nation of shop keepers and the retail sector is one of the UK's largest employers."
(Reporting by Mark Potter; Editing by Mike Nesbit)

The interview with Jack today..........

Straw says UK can 'weather storm'

Justice secretary defends Labour's "experienced pilot and co-pilot"
Justice Secretary Jack Straw has said Labour is best placed to see Britain through the current economic downturn.

He told BBC One's Andrew Marr Show that economic management under Labour would help the UK to "weather these storms".

He said Chancellor Alistair Darling did not speak out of turn saying economic conditions were the worst for 60 years.

The Tories have said it shows a split between him and Gordon Brown. Mr Straw also ruled out any Labour leadership challenge to the prime minister.

Experience

Mr Straw likened Britain's current economic situation to an airliner passing through turbulence.

There won't be a leadership challenge from me or from anybody else

Jack Straw, Justice Secretary
"The question for the country is who is better to take us through this turbulent period?" he said.

"Is it an experienced pilot and co-pilot in Gordon Brown and Alistair Darling, who have had the experience… or is it two people in David Cameron and George Osborne, who have had no experience of flying a large plane whatsoever."

The Tories have claimed Alastair Darling's comments to the Guardian newspaper "let the cat out of the bag" about the economy and proved that government was divided at the top level.

But Mr Straw insisted the Cabinet was completely in step and stressed that Mr Darling had been referring to the worldwide impact of the credit crunch and soaring food prices, rather than Britain's situation specifically.

This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly

Alistair Darling


Darling defends economy warning
Analysis: Darling's frank comments

He said: "We talk to each other all the time, each of us talks for the other. I'm sorry about this, but we're not clones of each other, and we sometimes use different adverbs and adjectives.

"The message from Gordon, from Alistair, from colleagues like myself, has been the same: we've had a very good period of economic management and economic success which has, for sure, provided us with a really serious platform to weather these storms."

Asked if he could rule himself out of any leadership challenge, Mr Straw said: "Yes. There won't be a leadership challenge from me or from anybody else."

Housing market

Mr Straw refused to speculate on possible measures to bolster the ailing housing market. But he said the government had already announced plans to allow local authorities to buy unsold homes to let to tenants.

"This is actually really important. Because of the credit crunch, because of the difficulty people find in getting mortgages, there is a market in the private sector that is, to say the least, not as buoyant as it was.

"Local authorities have said to us… why can't we go into the market to buy some of these houses. We have listened and we have acted very quickly."

Evidence of House Price Crash......

House prices crash by 10.5% in just one year - faster than the crash in the 1990's
Thursday, August 28 2008 @ 06:32 AM UTC

Latest Nationwide data shows month-on-month fall on 2% bringing the yearly fall to a staggering double digit value of 10.5%, a value that was predicted for the next 3 years and also a value that was denied could ever happen by estate agents and other mortgage dependent businesses.




At this rate, 30% - 50% within the next 32 months is now almost certain. Prices only go up eh? Missed the boat? Thats one boat I am glad I did not buy a ticket for.

If you have bought in the last 18 months you are probably in negative equity.

If you are a first time buyer, who has resisted the pressure from parents and friends, well done and here are some dinner party quotes to get your own back.

Message for Declan Curry, BBC: You berk.

For a while now I have generously been giving you the benefit of the doubt, thinking perhaps your hands were tied up by Auntie. But... this morning you removed all doubt from my mind, and I am now certain you a shameless non-independent VI, no wonder they let you work at the BBC.

You haven't quite been able to admit to the fundamentals over the past year clearly showing that house price falls are going to be deep, and 12 months ago you ridiculed anyone who thought 10% would happen - well look at the data today.

Your smirky little comment "so prices have fallen, your not going to be able to get a mortgage anyway" directed at people who chose to sit out the lunacy shows nothing but a nasty jealous streak running through you.

You should also know that a lot of people are shortly going to be wiping that grin of your face when they buy properties in cash, or have a hefty deposit for a cheap mortgage.

I hope your high leveraged BTL empire is weighing you down.

Recession ~ How to walk backwards into a brick wall.

The UK is "at serious risk" of recession with the future looking "grim", business leaders have warned.

People are spending less as credit crunch bites


The British Chambers of Commerce says falling orders and rising costs are putting companies under increasing pressure.

Services firms, which account for three-quarters of the economy, saw "alarming" declines in the second quarter of 2008.

Those reporting lower orders outnumbered those recording rises for the first time since 1990.

The BCC quizzed almost 5,000 companies as part of its survey, which found business confidence was at its lowest since 1990.

BCC economic adviser David Kern said the responses showed a "menacing deterioration" in UK prospects.

Firms were equally gloomy about the prospects for the future, he added.


The outlook is grim, and we believe that the correction period is likely to be longer and nastier than anticipated

BCC's economic adviser David Kern

The BCC warned the Government against hitting firms with more taxes in an effort to boost public revenues.

Director-general David Frost said: "The temptation for the Government will be to raise business taxes because the exchequer is running out of money.

"This would be a catastrophe.

"To put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on - confidence."

Firms are facing soaring costs from rising electricity bills and raw materials as oil approaches $150 a barrel, while banks hit by the crunch clamp down on lending.

This has put cashflow among UK firms under the most pressure since 1992, the BCC said.


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Can Caesar survive a Brutus?

Can Brown survive his very British Brutus?
From Monday's Globe and Mail

E-mail Doug Saunders Read Bio Latest Columns
August 4, 2008 at 3:56 AM EDT

LONDON — It is a very British coup that has broken out on the beaches of Europe as Prime Minister Gordon Brown's cabinet members begin their summer vacations with talk of insurrection.

Very British in its thrust, which has been both nasty and secretive: Mr. Brown is guilty of "hubris and vacuity," his leadership "a lamentable confusion of tactics and strategy," said a letter, apparently from former prime minister Tony Blair, that was leaked to the London tabloids this weekend in an apparent bid by Mr. Brown's cabinet challengers to undermine him.

And very British in its subtlety: It began with a newspaper article, written by one of Mr. Brown's closest colleagues, that seemed innocuous and even laudatory in its language, but whose coded messages were quicky interpreted by the entire country to be regicidal.

At its centre is a most unlikely Brutus, a 43-year-old child of Eastern European Jewish refugees whose freshman demeanour and intellectual, wonkish bearing seem out of place both in the aristocratic circles of Westminster and in the calloused world of Labour politics.

David Miliband, the Foreign Secretary, is both the youngest member of Mr. Brown's cabinet and, until a few days ago, considered among its most loyal. While this widely admired politician had frequently been listed as a potential successor by many, notably by Mr. Blair's allies, he had turned down bids to run against Mr. Brown.

That all changed on Wednesday, when Mr. Miliband published an article in the Labour-linked Guardian newspaper that, to outsiders, looked like a benign call for Labour Party unity and renewal following a terrible by-election loss to Scottish separatists in the formerly safe Labour riding of Glasgow East.

But the article, written without the permission of 10 Downing St., immediately sent shock waves across British politics and media. This, everyone agreed, was the launch of a mutiny.

To insiders, its message stood out in bright red. First, while arguing that Labour could beat the Tories, it did not in any way defend the Prime Minister's leadership, or even mention his name.

Second, it was written in the language of a political campaign speech: "The times demand a radical new phase ... New Labour won three elections by offering real change, not just in policy but in the way we do politics. We must do so again."

The Times of London, on its front page, called it "the launch of his leadership bid." Most other media outlets followed, and the Ladbrokes betting agency immediately raised its odds on Mr. Miliband becoming Labour leader to 5 to 2.

Mr. Brown sent his loyal MPs - a dwindling group - to counterattack. "I would have sacked him. I think he's been grossly disloyal," MP Geraldine Smith said in an interview apparently authorized by Downing Street, calling Mr. Miliband a "non-entity." Her Labour colleague, Bob Marshall-Andrews, described the article as "pretty contemptible politics" and "duplicitous."

Those words might have worked better against an older and more battle-scarred challenger. But Mr. Miliband, formerly considered a brilliant policy mind but hardly a celebrity, has managed to capture the eye of the nation in a stunningly short period of time, and will be harder to dismiss.

He entered Labour politics 20 years ago as an office assistant, bringing with him a name that opened doors on the left. Mr. Miliband is the son of Ralph Miliband, the Marxist scholar who founded the New Left Review in the 1960s and whose works are known to almost everyone in the Labour Party. David's brother, Ed Miliband, is another member of Mr. Brown's cabinet.

At a moment when British politics, even in the Labour Party, is turning hostile to refugees, Mr. Miliband's experience provides a counterbalance. His parents, both Polish Jews, had fled Hitler's Holocaust across Europe, finally finding themselves in Belgium.

As the tanks approached, they tried to enter Britain legally, but were rebuffed by the Home Secretary, who happened to be the Tory MP for the riding Mr. Miliband now represents.

Fearing for their lives, the Milibands crossed into England as illegal immigrants, using forged papers. Despite this experience, the Milibands quickly rose in British academic life.

Their political dynasty has been pegged as a source of future leaders since David Miliband played a key role in drafting the New Labour manifestos that brought Tony Blair to office in 1997.

On Thursday, in a move widely seen as an effort to quell the unrest, Mr. Brown ordered Mr. Miliband to cancel a planned trip to India in early September, calling him and the rest of his cabinet to his official country residence to announce a large-scale cabinet shuffle.

Mr. Brown's aides said he hopes to rebuild public support for the party before the Labour and Tory conferences at the end of September, possibly by timing the shuffle to coincide with a special windfall tax on energy companies, a populist move likely to please beleaguered British voters.

The stakes are extremely high. Mr. Brown's popularity has fallen in the year since he succeeded Mr. Blair to the point that even Labour's safest seats are now up for grabs. Observers are seriously discussing the possibility that Mr. Brown, should he ever face a general election, worried he might lead his party to the sort of decimating defeat that completely eliminated Britain's Liberal Party a century ago or Canada's Progressive Conservatives 16 years ago.

While polls show that if an election were called today, Mr. Miliband would not beat Conservative Leader David Cameron - another youthful and unorthodox figure in British politics - he would stand a better chance of holding the party together and keeping its core of seats.

On the other hand, there is a strong desire to prevent the Labour conference in September from turning into a full-blown campaign against Mr. Brown, in which groups of MPs raise motions to unseat him in front of national TV cameras.

That would be almost unprecedented in modern British political history.

It would also likely be ineffective: The Labour constitution makes it almost impossible to unseat a sitting prime minister.

Mr. Brown, who succeeded Mr. Blair last year and does not have to call an election until 2010, shows no signs of wanting to step down voluntarily.

But Mr. Miliband's gambit, if that's what it was, seems to have had the desired effect: It has put him at the centre of national attention, ahead of more senior colleagues such as Justice Minister Jack Straw and cabinet member Ed Balls.

As Britain's most volatile government in a generation tries to relax on Europe's beaches, people are talking about the "prosecco plot" or the "cava coup," as the Prime Minister's downfall is planned over glasses of the fizzy wines. And the first name mentioned, thanks to a clever act of newspaper understatement, will be David Miliband.

Recession just keeps rolling along.

Rolling Recessions Bring Paralysis to Bernanke, King, Trichet

By Rich Miller and Simon Kennedy

Aug. 4 (Bloomberg) -- Recessions are threatening to crash over the world economy in waves, as one country after another turns down a year after the onset of the global credit crisis.

Such rolling recessions pose a quandary for central bankers Ben S. Bernanke, Jean-Claude Trichet and Mervyn King:

If the whole world were clearly slumping, they'd be united in cutting interest rates. Instead, with some countries still booming, they can't ignore the inflation threat. Paralyzed between slowing growth and accelerating prices, U.S. and European policy makers this week are set to fall back on keeping rates unchanged.


``We're in a peculiar situation where, a year from now, we're likely to look back and say that monetary policy makers have made a very, very serious error,'' says David Lipton, head of global country-risk management for New York-based Citigroup Inc. ``The problem is, we don't know whether we're going to say they were too loose or too tight.''
A lot's at stake. If central bankers leave rates too low, they risk stoking global inflation that's already projected by the International Monetary Fund to be the fastest in nine years. Keep rates too high and the world could fall into its first recession since 2001-2002.
In the past, when the U.S. economy weakened, the rest of the world usually followed quickly, and inflation eased as demand for oil and other commodities fell. U.S. recessions in 1990-1991 and 2001 brought global growth down by half, sending fuel prices tumbling.

Slowdown Delayed
That didn't happen this time. The world expansion barely slowed last year and oil prices surged, even as the U.S. economy shrank in the fourth quarter. Only now -- two years after the U.S. housing boom went bust -- is the slowdown spreading worldwide and the price of oil showing signs of receding.

The world may avoid a recession, deemed by economists to be global growth of 3 percent or less, and still end up with what Allen Sinai, chief economist at Decision Economics in New York, calls a ``witches' brew'' of ailments: declines in the housing and stock markets, a credit crunch and commodity-driven inflation.
The energy and credit crises may have permanently weakened the global economy by making production and investment costlier. Deutsche Bank AG economists say long-term growth may fall to 4 percent from 5 percent.

`Weaker for Longer'
While the world rebounded from its last slump to record the strongest expansion since the 1970s, Richard Berner, co- head of global economics for Morgan Stanley in New York, says that ``growth will have to stay weaker for longer'' this time if central banks are to curb inflationary pressures. ``Investors should consider these developments as a regime change,'' Berner says.
The U.S. risks a relapse after bouncing up in the second quarter as consumers spent some of their $91 billion in tax rebates. ``I don't see recovery'' on the horizon, says Harvard University's Martin Feldstein, who serves on the National Bureau of Economic Research committee that determines when recessions start and end.
The big concern is that consumers -- whose spending accounts for more than 70 percent of the economy -- will cut back after their splurge. The omens aren't good: Overdue payments at the six largest credit-card lenders rose in June after falling the two previous months.

Division at Fed
Chairman Bernanke and his Fed colleagues are divided over what to do next after cutting rates to 2 percent from 5.25 percent a year ago. Some, including Dallas Fed President Richard Fisher, favor tighter credit now to contain inflation. A majority prefer to wait and see how the economy develops.
Kenneth Rogoff, a Harvard economics professor and former IMF chief economist, says Fed policy makers are ``stuck.'' While they may want to raise rates to 3 percent to head off inflationary pressures, they can't for fear of upsetting still- fragile financial markets. Consequently, they'll hold borrowing costs unchanged for ``an extended period,'' he says.
European Central Bank President Trichet's dilemma is similar. After dodging the U.S. slowdown last year, the 15- nation euro-area economy may have shrunk in the second quarter for the first time since the common currency's introduction in 1999. As in the U.S., housing booms in Spain, Portugal and Ireland are collapsing, while the euro's appreciation is hurting companies that export.

Recession Risk
``The risk of a recession is no longer negligible,'' says Holger Schmieding, chief European economist at Bank of America Corp. in London.

When a worldwide slump last began in 2001, the ECB cut interest rates. Not this time.


With inflation the fastest in more than 16 years, the bank raised rates to a seven-year high of 4.25 percent last month. Officials warn they'll do more if workers win big wage deals. Employees at Deutsche Lufthansa AG, Europe's second-biggest airline, last week ended a strike after winning a 5.1 percent pay increase retroactive to July 1, and an additional 2.3 percent increase next year.
``The ECB is clearly walking a tightrope,'' says Martin van Vliet, an economist at ING Bank in Amsterdam, who predicts the bank will keep its key rate unchanged until 2009. ``It has to balance the lingering risk of a wage-price spiral with prospective disinflationary pressures emanating from the downturn,'' he says.

Sharp Debate
The debate is sharper at Governor King's Bank of England. The U.K. is slipping toward its first recession since 1990 as house prices slide after tripling in the past decade. With inflation almost twice the bank's 2 percent target, King's policy panel split three ways last month; the majority voted to keep rates at 5 percent.

Japan, too, is at risk of a recession. Exports fell in June for the first time since 2003 and unemployment reached 4.1 percent, almost a two-year high. The Bank of Japan has little room to act, with its benchmark interest rate of just 0.5 percent and consumer prices rising at the fastest pace in a decade.

``The fog hanging over Japan's economy will stick around for the time being,'' bank board member Atsushi Mizuno said July 24.
Even Asia's rapidly growing emerging economies are showing signs of slowing. The region's policy makers are at odds over how to react as inflation remains high.
Chinese officials suggest they may seek to bolster their economy after growth slowed in the second quarter by the most since 2005. Others remain intent on curbing inflation. India has raised rates three times since May while suffering the weakest growth in five years. Surging food and energy costs prompted Indonesia, Thailand and the Philippines to tighten credit in July.

``There's a kind of stagflation marching over the world economy,'' Sinai says. ``I hope policy makers are able to figure it out and make the right decisions to fight it.''
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.netSimon Kennedy in Paris at skennedy4@bloomberg.net Last Updated: August 3, 2008 18:00 EDT

Are you about to become NEGATIVE?

Negative Equity To Hit 1.7m UK Homeowners?

Wednesday 30th July 2008

One in seven UK homeowners may face the threat of negative equity throughout the next year as the UK housing market takes a stranglehold, according to a report conducted by Standard & Poor..
The world’s largest credit rating agency’s findings suggest that around 70,000 of the UK’s 12m borrowers currently find themselves in negative equity mainly due to house prices falling in value at an alarming 26%, leading to a further 14% of homeowners slipping into negative equity due to their outstanding mortgages.


Such depressing figures could replicate the dark days of the 1990’s housing crash, where huge numbers of home owners were left financially crippled due to house price declines. Never has establishing the best financial mortgage package been so imperative.
The 70,000 predicted to suffer is already a far larger sum than first envisaged and this figure is expected to rise further with the news that the house price slump has upped its speed, falling 9% on last year, judged on S&P’s Nationwide and Halifax figures.
The ratings agency calculated that for with every percentage point drop in house price from now on, around 60,000 to 80,000 borrowers could realistically enter the dreaded realms of negative equity, with the high loan-to-value mortgages most at threat.
While Standard & Poor’s report agreed that prices are currently heading in a downward direction, with a further 17% fall forecasted, many experts predict a more optimistic outlook with many home owners taking up a mortgage worth more than 90% of the value of their home, allowing the chances of going into negative equity slim, even if house prices fell a realistic 10%.
The report declared, “The current run of house price declines raises the prospect of negative equity for a large number of homeowners, a situation not seen since the 1990’s house price recession.”

House Price Crash ~ GOOD GOOD VERY GOOD

Everybody talks as if falling house prices are a bad thing, nay, a national disaster.

Rising house prices, the logic runs, are therefore a good thing.

But the reverse is true.

Right now, falling house prices are exactly what we need. You know it, I know it.

House prices dropped a record 8.1% over the past 12 months, according to Nationwide, the biggest drop since it started collecting figures in 1991. Other reports suggest that the value of your home could drop by as much as 30% by 2010.

Everybody pretends this is terrible news, but quite frankly, it isn't.

I would argue that most of us are delighted at the thought, and rightly so.
The press, of course, is revelling in all the doom and gloom, but headline-hungry journalists aren't the only ones getting excited by the housing market collapse.
Hoping for the worst
Many of us, not just first-time buyers and rivals for Gordon Brown's job, actively want prices to fall. We would be disappointed if they stabilised, and the housing market became tediously becalmed.
The forthcoming collapse has been so widely predicted that if it doesn't happen, we would all be crushed by the anti-climax.
There is also a collective – and very sensible – horror at the way house prices have spiralled beyond all logic in recent years. We're all financial puritans at heart.
Even people who have cashed in to the tune of hundreds of thousands of pounds have been appalled by this scarcely credible surge in values. If house prices can behave so irrationally, how rational is the rest of our financial system?
The party's over
Add to that widespread distaste at the orgy of debt the UK has indulged in lately, and you can see why many people have been howling for the party to come to an end. It may leave many of us nursing sore heads and negative equity, but we knew all along it would end in tears.
So who gets hurt by a crash? Some will find it painful, but not as many as you think. Existing homeowners may see up to 30% lopped off the value of their home, but their next property has also fallen by 30%, so where's the problem?
Even the 1.7 million that Standard & Poor's estimate face negative equity will only suffer if they absolutely need to move home in the next few years. If you are among their number, you have my sympathy.
Other homeowners will have a shrinking amount of equity to dip into, too. But given that the nation collectively owes £1.4 trillion, the last thing we need is more borrowing.
In my opinion, those who missed out on the house price bonanza should be popping champagne corks. Or better still, saving the money towards a deposit, to allow them to enter the property market at more affordable levels in a year or two.
Any fall must be set in the context of the astronomical gains in recent years. As Nationwide quickly points out, the average house is still worth £11,000 more than three years ago – although admittedly, maybe not for much longer.
So let's not get too carried away, it's not the end of the world as we know it, just an abrupt halt to its wilder excesses.
Short, sharp shock
A short, sharp property crash might do us all some good – and I do believe it is likely to be short and sharp.
Although unemployment is set to rise, it still remains at modest levels. Personal insolvencies and repossessions will increase, but many people will hang on by the skin of their teeth until the recovery comes.
There are also one or two pieces of good news floating around, overlooked in the current carnage.
Swap rates are falling and lenders are cutting their fixed-rate mortgages, which might ease some of the pain for those facing payment shock. Plus there is still a good chance that interest rates could start falling by the end of the year.
Reality bites
Add the fact that we live on a small, squeezed island with a pent-up demand for houses, and you can see the ground is clear for a relatively speedy recovery. But let's hope it isn't too speedy, because we don't want to find ourselves repeating the blunders of the past decade (and the decade before that).
Arguably, the crash is a much-needed jolt of economic reality, and is the first step towards restoring common sense to the property market, and the rest of the economy.
I'll say it again. Falling house prices are a good thing. Enjoy it while it lasts.

Dramatic house price falls in UK

House prices likely to fall by a quarter in two years
Richard Wachman, City editor
The Observer,
Sunday March 30 2008
Article history
About this articleClose

This article appeared in the Observer on Sunday March 30 2008 on p1 of the Business news & features section. It was last updated at 09:16 on March 31 2008.

House prices in Britain could crash by 25 per cent before mid-2010, forecasters at Capital Economics have warned. That would wipe £45,000 off the value of an average house, currently worth £180,000.
Ed Stanford, property economist at Capital, said it was 'entirely plausible' that house prices would fall by between 20 per cent and 25 per cent in the next two years, particularly if the economy continued to be buffeted by the credit squeeze, financial markets' turbulence and sliding consumer confidence.
Capital has already published forecasts that flag a 5 per cent fall in house prices in 2008 and 8 per cent in 2009. It also expects unemployment to rise from 5.3 per cent of the working population to 7.5 per cent.
Last week, Nationwide building society revised its forecast of no change in prices this year to a modest fall. It changed its prediction after publishing figures that showed UK house price annual inflation at its lowest rate for 12 years. Prices fell for the fifth month running; March was down 0.6 per cent on February. If the trend continues Britain's housing market will soon record annual falls for the first time since 1996.
Other UK housing bears include David Miles, chief UK economist at Morgan Stanley. He reckons the market is due a 20 per cent correction. If he and Capital are broadly correct, a significant number of people who bought two years ago will find themselves in negative equity by 2010.
Not everyone is as pessimistic: JP Morgan's Malcolm Barr envisages a 6 per cent fall in 2008, but then a slow recovery.
The Royal Institution of Chartered Surveyors reports that new buyer inquiries at estate agencies are sharply down.
The market is being depressed by the credit crunch, with banks hoarding cash and demanding that borrowers put down huge deposits.

Post code Burglaries

The top 10 most-burgled cites are:
1 - Nottingham (63.3% above average)
2 - London (50.8% above average)
3 - Bristol (50.7% above average)
4 - Stockport (49.8% above average)
5 - Leeds (46.3% above average)
6 - Manchester (46.0% above average)
7 - Hull (39.4% above average)
8 - Cambridge (35.6% above average)
9 - Sheffield (27.6% above average)
10 - Reading (25.9% above average)

And the biggest surprise for me is Cambridge!!

Eathquake in Market Rasen