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House prices 'to fall another 15 per cent'
Evening Standard15 Oct 2008
A REPORT today claimed Britain is "halfway through" the housing market correction, with prices likely to fall by a further 15 per cent.
Estate agent Knight Frank said the average property will lose 30 per cent of its value from the market's peak in late 2007, pushing prices back to their September 2003 level.
It came as figures revealed the gap between the cost of tracker mortgages and official interest rates has soared five-fold during the past year.
Arrangement fees on the mortgages, which move in line with the Bank of England base rate, have also trebled, say mortgage group mform.co.uk.
In October last year, lenders were charging an average of 0.3% more than the then base rate of 5.75%. But in October this year the average lifetime tracker rate was 0.95% above the base rate.
Reader views (5)
It would not be the least bit surprising if house prices continued to slide in the UK, even beyond an additional 15 percent.
As of late 2007, the Median Multiple (median house price divided by median household income) was more than 80 percent above its historic norm. This increase has mostly occurred over the past 10 years and the principal cause (as indicated in the Barker reports) has been the far too strict land use regulations. It was all made possible by the more liberal mortgage lending policies. But the extent of the increase --- the housing bubble --- was exacerbated by excessively strict land use regulation.
In US and Canadian markets with UK-style land regulation, the similar increases occurred. However, in markets without UK-style land regulation, there has been little change in the Median Multiple, even with profligate lending practices.
As the world financial crisis shows, the consequences of overly strict land use regulation range far beyond housing markets.
- Wendell Cox, St. Louis, USA, 18/10/2008 18:49
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It's not all bad news then! I personally reckon we are 3/16ths through the downturn and my figures are correct according to a report I wrote yesterday!
- Frederick, London, UK, 16/10/2008 07:59
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At least if house prices go down then people might be able to afford to live proper lives and not be stuck at home swilling lager from a can and continually stressing paying the bills.
That is, if people actually have jobs to buy the houses which will be cheaper but still not cheap for your average Jo Schmo.
- Sarah West, Tooting, 16/10/2008 06:24
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And they will continue to drop until prices are affordable and realistic, hence further record drops should be expected, just like the record rises we experienced.
- Brandon Thomas, London UK, 16/10/2008 02:22
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As always the VI's are optimistic. We are supposedly half way through, yet in the boom it took 10 years to peak. Just trying to get buyers to the market before the imaginery price rises start again,
- David B, eastbourne uk, 15/10/2008 16:46
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