Manufacturing output and house sales down

UK manufacturing output declined for a fifth straight month in July, official figures showed, underscoring the weak state of the UK economy. The Office for National Statistics said that manufacturing fell by 0.2% between June and July, more than the 0.1% analysts had expected. Economists said that the figures were further evidence that the UK economy was likely to enter a recession. (BBC link)

The slump in the UK property market continued in August, with some estate agents selling fewer than one home per week in the past three months. The Royal Institution of Chartered Surveyors (Rics) said sales were at their lowest level since its monthly survey started in 1978. It said the fall in prices slowed, for the fourth month in a row, but they were still much lower than a year ago. Rics said the continued shortage of mortgage funds was "stifling" buyers. (BBC Link)

Further confirmation of slowdown in housing market

UK house prices fell by 0.9% on average last month, according to the latest survey from the Nationwide. The decline was less severe than the record 2.5% fall seen in May, but prices were now 6.3% lower than a year ago. The Nationwide survey found that the housing market in Scotland had been more resilient than elsewhere. Although prices in the three months to June had fallen in Scotland by 1.8% compared with the previous quarter, it was the only area to see an annual growth, up 0.6%. (Further details here)

This survey follows news yesterday of a record low for mortgage approvals. The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago. This is the lowest since the Bank began reporting the figures in 1993 and lower than many analysts' predictions. Mortgage lending has slumped owing to the credit crunch with institutions reducing their willingness to lend. (Click here for details)

Further evidence of economic slowdown

Numerous reports overthe past few days have confirmed a significant economic slowdown. The Chancellor, Alistair Darling, has said that there is "no doubt" the UK economy is slowing and has warned it will be a "difficult year" ahead. He warned of the dangers of allowing inflation to increase, calling for pay restraint to prevent the development of a wage-price sprial, so familiar to economics students of my generation. He pointed out that fuel and food price increases were hitting consumers. (Link to details)
This follows the warning from the CBI that 'the economy will grow at its slowest pace for 17 years.' The CBI's quarterly economic outlook shows that the employers' body has lowered its forecast for GDP growth in 2009 by 0.4% to 1.3%. The slowdown in consumer spending is set to intensify, says the report, pushing consumption growth down to 0.7% in 2009, the lowest level since 1992. (Link to details of the survey)

An indicator of the economic situation, contruction, was also under the spotlight with the news that the number of new houses being built had slipped to its lowest level since 1945. The biggest reason for this appears to be the inability of potential buyers to obtain mortgages. (Link to article)

House prices ... the fall continues

Many good articles about the housing market in the past few days. Further evidence of falling prices from the Halifax (Click here for details). It said the annual fall in prices was the biggest it had seen since 1993. If prices continue falling at the rate seen since the start of the year then they will fall by 16% over the course of 2008.

'Negative equity hits 250,000 - and there is worse to come' was the chilling headline from The Observer. (Click for the article) Larry Elliott is not surprised that prices are falling - A crash was inevitable and - despite the wailing and the gnashing of teeth - ultimately desirable as well). Also, he questions some of the myths of the housing market and suggests that interest rates are only one factor that influence housebuyers. (Click here for article)

Repossession orders up by 17%

The effects of tighter credit and more expensive mortgage payments appear to be having an effect on the housing market with the news that respossession orders are up by 17% (27,530 orders made, up from 23,438 in the same period of 2007). An order is the first stage of the repossession process and whilst many of these homes won't be repossessed the upward trend is a cause for concern. Read details here.

House price fall confirmed

UK house prices saw an annual fall of 0.9% in April, says the Halifax, the UK's biggest mortgage lender. The Halifax also said that prices dropped by 1.3% in April compared with the previous month, pushing the price of the average home down to £189,027. The lender said it now expected a "mid-single-digit" percentage decline in prices in 2008. But it expects bigger falls in Wales and the West Midlands, with Scotland bucking the trend with a modest rise. Halifax's chief economist, Martin Ellis, said the decline in prices was driven by a squeeze on consumers' spending power and the rapid rise in house prices in the last few years. BBC News

House prices down by 0.9%, says Halifax

See this interactive graphic from The Guardian charting the movement of house prices over the past two years and possible reasons for changes. Link

UK house prices in 1% annual fall

House prices in the UK have recorded their first annual fall for 12 years, according to the Nationwide. Prices fell by 1.1% in April, the sixth monthly decline in a row, and were down 1% from the levels seen in April 2007, the building society said. Nationwide said the price falls reflected a weakening market which had been hit by "poor affordability and tighter financial market conditions". BBC News Play the video clip of the Chief Economist of the Nationwide.

An interesting article in the Guardian (A house of cards) where Rob Williams argues that we mustn't bail out the housing market but give it time to 'self-correct'. 'What we are witnessing is a long, long overdue return to sensible borrowing and responsible lending at levels consistent with historic trends. For younger readers, or financial illiterates, that means mortgages at about 3.5 times salary, together with the necessity of saving for a deposit.'

Who will be hardest hit by a fall in house prices? Will anyone welcome falling house prices? Will views change if house prices continue to fall?

House prices fall at fastest rate since 1978

House prices are falling at their fastest rate since records began 30 years ago as the mortgage lending freeze continues to undermine the housing market, the Royal Institution of Chartered Surveyors says. The latest monthly snapshot of the housing market shows that 78.5% more surveyors reported a fall than a rise in house prices. The gulf has widened since February and easily eclipses the previous low of 64.5% in June 1990, when the economy was heading into recession. House prices are falling fastest in the east Midlands and East Anglia, according to an increasingly gloomy assessment of the property market by the Royal Institution of Chartered Surveyors. Few parts of the UK remain untouched by the slump as surveyors reported that prices declined at a faster pace than in the previous month across all regions in England and Wales, except for Yorkshire and Humberside, where the rate remained unchanged having fallen the most in February.

http://www.guardian.co.uk/money/2008/apr/15/houseprices.housingmarket

http://www.guardian.co.uk/money/2008/apr/15/houseprices.property

Try The Guardian's interactive guide to house prices.

http://www.guardian.co.uk/money/interactive/2008/apr/15/houseprices

Think about the reasons behind the fall in prices. Is the market likely to recover in the short term? Analyse the effect of falling house prices in individuals and the economy as a whole.

UK House Prices

Interesting video clip on the possible movement of UK house prices from John Authers of the Financial Times. Take careful note of the two charts he uses to illustrate his views.
http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=700438104&fromSearch=n

A reflection on falling prices

An interesting article by John Kay in today's FT. He considers the effect of falling prices in the light of fears of lower prices in the asset and housing markets. Should we welcome this situation rather than react in the way we have seen recently?

http://www.ft.com/cms/s/0/fff6244a-d406-11dc-a8c6-0000779fd2ac.html

House prices unchanged in January

House prices were unchanged in January compared to the previous month, according to the Halifax bank. However, the country's biggest mortgage lender said that house prices were rising at an annual rate of 4.5%. The gain in annual house price growth pushed the value of the average UK home to £197,244 - a rise of £7,628. The bank said that there were continuing signs of weakness in housing market activity and that the market would be flat during the year. The figures are the latest to highlight slowing house price growth.

http://news.bbc.co.uk/1/hi/business/7226907.stm

Housing slowdown continues

Further evidence of a housing slowdown emerged in December’s FT house index, which showed that house price inflation has slowed from the summer’s double digit rate of growth to its lowest rate this year. Click on the link below to view the FT interactive house price map.

http://www.ft.com/cms/s/2/37c59e28-a21c-11db-a187-0000779e2340.html

Property prices are falling to an extent not seen since the 1990s housing recession, a surveyors' body warns. The Royal Institution of Chartered Surveyors (Rics) said 49.1% more surveyors saw price falls in December than reported a rise. This was the gloomiest figure since November 1992.
Prices have been hit by last year's interest rate rises and tighter lending criteria, Rics said. Other surveys have also indicated the market is slowing.