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Guest Winnie

How Far Will Housing Drop?

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Guest Winnie

From the home of sober assessment - (once bulls) - these bulletins show bearishness on housing is now universal.

New home loans fall 67%.

How far will housing drop?

Dear Subscriber,

"The record low numbers of mortgages means that the whole market is likely to be at its least active since the early 1990s".

That’s the assessment of one David Dooks, statistics director at the British Banking Association (BBA). The BBA reports that 21,118 mortgages for new homes were approved last month.

That’s 23% lower than May, and a massive 67% lower than June 2007.

The weak housing market is, of course, nothing new. What we’re seeing is shades of grey getting even greyer — each month’s news being worse than the month before.

The question is, how grey will things get? No one can say with certainty, but we do have clues. They give us an inkling of what’s going on beneath the surface...

You see, keeping a roof over your head is one of the most important goals any of us has. My grandma used to say:

"Always get your rent paid before anything else. Even if you go a bit hungry, you’ll have somewhere to sleep." (She hails from an era before actually owning your home was considered vital to existence — hence the reference to rent).

It’s a fair assumption that most people will forego the majority of other expenditures to meet the basic requirement of shelter. Yet, at the margins, more are finding themselves unable to meet said requirement.

The number of repossessed properties going at auction rose 64% in the first half of the year. And the Council of Mortgage Lenders reckons total repossessions will rise to 45,000 — a jump of 50%.

The absolute numbers aren’t that big. But that’s not the important issue here. What these figures show us is that more of the strugglers are going under.

For every homeowner that can’t keep up repayments, there are many others that are only just managing. It paints a less-than-rosy picture of homeownership — something that this time last year was the dream of so many.

Commentators are quick to blame the tight-as-a-drum credit market for the lack of activity in the housing market. Reluctant lenders are certainly a factor. But far more important is the negative sentiment of would-be buyers — both those who own no home at all, and those who might, in better times, have been tempted to trade up.

Bad sentiment lingers. So even if lenders loosen their purse strings — which they’ll have to eventually to stay in business — we’ll still see depressed volumes.

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Can you imagine what 1.1 billion barrels of oil looks like?

Can you imagine what it’s worth – now we seem to be hitting a new record oil price every few days?

One undervalued company owns the port that has to be used to get this oil out.

And they’ll permit it’s removal for the right price...

Oh and the share price of this company is currently less than 30p... but when this story breaks... it looks set to double before the end of 2008.

Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. Fleet Street Publications Ltd. Customer Services: 0207 633 3600.

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Indeed, some analysts have forecast that house prices could fall another 15% by the end of the year. Not only that, they could be 30% lower by the end of 2009.

Of course, none of this matters directly if you own a home you can afford and you’re happy to continue living in it. But, indirectly, it affects us all.

Remember how I said people will cut back on most things in order to pay the mortgage? Well, that seems to be exactly what’s happening — though it’s taking time to work itself through.

This morning’s official retail figures show that sales volume rose 0.6% in the three months to the end of June. Now, that’s still growth. But it’s down from 1.6% in the three months to May. That suggests a pretty sharp slowdown in June. In fact, it’s the biggest fall in growth for 22 years.

Sad to say, but we’re still in the early days of all this.

Buckle up!

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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