Tuesday, 8 April 2008

Crash


(click on the chart for a crisper image)

This is no soft landing. Today, the Halifax released their house price index for March. It shows that the UK housing bubble peaked in August. Since then, prices have come crashing down faster than anyone expected. Prices are down over 5 percent in just 8 short months.

The real,inflation adjusted crash is even more dramatic. Since the peak recorded last summer, the Halifax RPI-adjusted price index is down almost 8 percent. Moreover, since January 2005, prices are up just 5 percent in real terms.

The market is now falling apart. Banks are withdrawing their mortgages, the BLT market is dead and prices are crashing.

8 comments:

Anonymous said...

Hey losers, house prices are still far higher than ten years ago. Just suck it up and move on.

Panos Konstantinidis said...

Finally :) And the worst is yet to come. Just wait a coupel of years and prices will be down as much as 30%.

Anonymous said...

Alice,

Your blog must be widening its audience if it's attracting its trolls.

I'm sticking to my prediction that the UK crashes far faster than the US due to it tipping when the banking crisis is further flung and public sentiment is more receptive to doom and gloom.

Overall, I'm picking 50% drop in real terms peak to trough over four years.

How about some comment on the hilarious spin in the Halifax report. The front page says some regions will report a "moderate" loss in 2008, then goes on to call 5% notional drop "moderate".

Christ! What would be severe?

Nick

Alice Cook said...

Nick,

I have my forecast - a 9 percent nominal drop from the peak over 12 months. We are most of the way there. (It was in an earlier post).

As for the trolls, everyone is welcome so long as they don't use bad language and post spam.

Alice

Anonymous said...

Alice,

Ever thought about becoming a Chief Economist somewhere?

Nick

Alice Cook said...

Chief economist; no time what with the shopping, the dishes and the kids.

Anonymous said...

The BLT Market is dead.
You mean I can't ee get a sandwich on credit

traderboy said...

"prices have come crashing down faster than anyone expected."

[cough] doesn't surprise me! like i posted some time long ago in a comment on your site, this market will come down faster and further than anyone is expecting! it's simple...rental yields look to be ~4%...they need to be ~8%...so the market is coming down 50%. will take years to finally get there (2015, based on the last peak to trough being ~7-8 years or so in the 90's?), but this is my call.