Saturday, Aug 30, 2008
David Smith, now you know it didn't take most on HPC by surprise!
Sunday Times: Speed and severity of downturn have taken everyone by surprise
Is this the worst housing recession of modern times? In the past year, mortgage approvals have plunged by two-thirds while house prices, according to Nationwide and Halifax, have recorded double-figure percentage falls since last summer. How does this compare with the peacetime housing slumps in the 1930s, the 1970s and the early 1990s? Government figures, which go back to 1930, suggest house prices fell by 10% in 1932, during the Great Depression, and continued dropping for a couple more years, for a fall of 15% in all..........
When inflation is taken into account, the drop was even more pronounced. From peak to trough, Nationwide’s index fell by a staggering 37% in real terms. In cash terms it took until 1998 before prices got back to their 1989 peak. In real terms it took until 2002. .
5 Comments
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1. gardeniadotnet said...
from the article...
Two things have to happen to halt the slide — an easing of the credit crunch and a recovery in confidence. Neither is on the immediate horizon.....
No David, you can't stop the ride and no, you can't get off.
2. voiceofreason said...
He still trots this out ..."Other measures take a different view, with Hometrack down 5.3% and some indexes yet to show significant annual price falls."
But at least he didn't trot out the "sound fundamentals, crowded island, increasing population, demographics, immigration etc etc" falsities that he has peddled for the last 2 years or so.
OK, so Darling wants to crash the market ASAP; get a step drop in prices back to sustainable levels; to restart transactions; to save 500K jobs; to save £10bn of treasury revenue.
Well then he needs to recruit journos like Smith. So keep sniffing the coffee David, you could be of some use yet.
3. taffee said...
good to know you are on the ball dave
4. Dr Ray said...
"If you believe that a big, 10%-15% fall in house prices (which I don't expect) would take us back to the negative equity of the early 1990s, and leave banks with dodgy mortgage books, fine, but it is not true." David Smith Dec 2007
5. paul said...
@Dr Ray
Bravo (I said that just like Stewie from Family Guy too). The exact words were:
"If you believe that a big, 10%-15% fall in house prices (which I don't expect) would take us back to the negative equity of the early 1990s, and leave banks with dodgy mortgage books, fine, but it is not true. As Goldman Sachs points out, housing turnover in the final phase of the boom was 40% lower than in the late 1980s. Loan-to-value ratios have been kept under control, so mortgage books are insulated from quite a big fall in prices."
http://www.economicsuk.com/blog/000619.html
What a plonker.