Jump to content
House Price Crash Forum

Nationwide Warns Of Recession As House Price Drop Doubles


Recommended Posts

0
HOLA441

http://www.timesonline.co.uk/tol/money/pro...icle4433925.ece

Nationwide, the UK's biggest building society, today gave warning that a recession could be on the way after the average house price in the year to July plunged to a three-year low of £169,316.

The average price of a home is now £15,000 lower than in July last year.

Nationwide said that over the course of this year, house prices have fallen nine months in a row, and in July declined by 1.7 per cent, more than double June’s 0.8 per cent fall.

Yesterday, it emerged that 1.7 million homeowners in the UK face falling into negative equity if house prices plunge by an expected 17 per cent.

.................

Fionnuala Earley, chief economist at Nationwide, said the risk of an economic recession in the UK is now “clearly rising” and that the recent fall in the oil price from record levels of $147 to around $126 could provide scope for an interest rate cut.

She said: "If oil prices continue to fall and the MPC is satisfied that its inflation credentials are intact, the possibility of earlier rapid cuts in interest rates increases, which would be good news for borrower.”

Howard Archer, chief UK and European economist at Global Insight, said: "The Nationwide data indicate that there is ongoing major downward pressure on house prices from extremely weak market activity, stretched buyer affordability and tight lending conditions.

"It seems odds-on that house prices will continue to head rapidly south, given that the Bank of England reported extremely low mortgage approvals for house purchases in June, while latest survey evidence shows that house sales are depressed, buyer interest is weak, it is taking longer to sell a house, and sellers are achieving a falling percentage of their asking price."

It seems all the bullishness from the mortgage lenders is fast disappearing.

Odd that house prices will continue to head rapidly south!!!!! :blink::blink:

Link to comment
Share on other sites

1
HOLA442
2
HOLA443
3
HOLA444
forget the rate cut, Fionulualauala - haven't you heard about gas prices?

The momentum this crash is gathering is quite awesome, I have to say...panic phase warp one, captain!

"Borrower" - is this a typo, or factually correct in that she sees only 1 person being able to get a mortgage in the coming months ?! :lol:

Link to comment
Share on other sites

4
HOLA445
5
HOLA446
6
HOLA447
forget the rate cut, Fionulualauala - haven't you heard about gas prices?

I note that the equivalent BBC online coverage quotes her on the topic of gas prices.

Seems the BBC provides more complete and accurate cover than the Times ;)

[Retires under hail of brickbats for daring to say anything like this about two of HPC's pet hate objects]

Link to comment
Share on other sites

7
HOLA448
http://www.timesonline.co.uk/tol/money/pro...icle4433925.ece

It seems all the bullishness from the mortgage lenders is fast disappearing.

Odd that house prices will continue to head rapidly south!!!!! :blink::blink:

To give some credit to Fionnula Earley, I went back to the July 2007 release expecting to find that her opinion would now be proved totally wrong by events, but to my surprise, her comments don't seem to out of line with what has happened. Her June and July 07 comments were not as bearish as some on here might wish to see, but were fairly well pointing in the bearish direction.

Link to comment
Share on other sites

8
HOLA449
I note that the equivalent BBC online coverage quotes her on the topic of gas prices.

Seems the BBC provides more complete and accurate cover than the Times ;)

[Retires under hail of brickbats for daring to say anything like this about two of HPC's pet hate objects]

Sorry, that is in the Nationwide report, it's why there are no quotation marks in the bbc version except the double-edged bit. They are paraphrasing her.

In fact your misunderstanding only reinforces the poor choice of indirect quoting. :)

http://www.nationwide.co.uk/hpi/historical/July_2008.pdf

“Continued mild wage growth and the sharp fall in retail sales in June will give the MPC some comfort, as will the

slide in oil prices in the last week. But, the impact of the sharp rises in food prices and further news of rises in

gas and electricity prices have the double edged effect of pushing up inflation while at the same time slowing the

economy as disposable incomes are squeezed. In our view the latter effect will begin to dominate, eventually

giving the MPC enough comfort to begin cutting rates.

http://news.bbc.co.uk/1/hi/business/7534052.stm

If oil prices continued to fall, this could increase the possibility of

rapid cuts in interest rates, which she described as good news for

borrowers. Ms Earley said that sharp rises in food and fuel prices

were having a "double edged" effect of pushing up inflation while

slowing the economy by squeezing disposable income.

This would also point to an eventual interest rate cut by the Bank

of England's Monetary Policy Committee, she said.

Link to comment
Share on other sites

9
HOLA4410
To give some credit to Fionnula Earley, I went back to the July 2007 release expecting to find that her opinion would now be proved totally wrong by events, but to my surprise, her comments don't seem to out of line with what has happened. Her June and July 07 comments were not as bearish as some on here might wish to see, but were fairly well pointing in the bearish direction.

I've got all the stuff since around the middle of May last year and I was meaning that the banks where taking a positive spin on the potential falls, ie it won't be a serious crash just a few percent over the day, nothing to worry about just a slight house price correction and the economy will generally be fine.

For me that's being bullish, although it probably doesn't fit in with want is generally referred to as a bull.

Link to comment
Share on other sites

10
HOLA4411
There are still bulls on the ADVFN message boards for construction PLC's - still spinning the old bulldung stuff, about underlying demand and recovery just round the corner.

I suppose that`s a bit like many of us on this forum. I, myself, have been predicting a crash for a few years. I had to "get it right" in the end. The bulls will "get it right in the end" too.

Pity though, why do we have to put up with all this boom/bust cr@p. Why can`t we just makes lives more comfortable for ourselves, steady house price growth (in line with wages/general inflation) and no "dog eat dog" attitude ?

Link to comment
Share on other sites

11
HOLA4412
I suppose that`s a bit like many of us on this forum. I, myself, have been predicting a crash for a few years. I had to "get it right" in the end. The bulls will "get it right in the end" too.

Pity though, why do we have to put up with all this boom/bust cr@p. Why can`t we just makes lives more comfortable for ourselves, steady house price growth (in line with wages/general inflation) and no "dog eat dog" attitude ?

Greed, why settle for 1-3% if you can get 10-15%. Too many people are obsessed with money and how many noughts they have after it. That's why the US invented the money billion just so someone could be a billionaire. A thousand million just makes you sound poor.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    • No registered users viewing this page.




×
×
  • Create New...

Important Information