If prices are perceived as falling, more people will want to sell now to get top prices, while fewer people will want to buy as the expect a cheaper deal in the future. Classic deflation.
Prices are up a measly 0.1pc compared to February, the smallest margin ever
recorded at this time of the year, when prices have never fallen month on
month, according to property website Rightmove.
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The near standstill in prices has fuelled concerns that a decline in the housing
market could lead to a slowdown in the wider economy as
unemployment, public sector spending cuts and potentially higher interest
rates hit the consumer.
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“We expect house prices to fall further,” economists at Capital
Economics said.
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It remains unclear whether February’s data was a blip caused by the severe
weather conditions in the UK or a more long term trend, but commentators are
warning that the outlook is far from bright.
Read more at www.telegraph.co.uk |
The number of mortgages issued in January slumped by nearly half, as UK homebuyers deserted the market after stamp duty relief ended. |
The lack of confidence in the market was further laid bare by the level of people remortgaging falling by 15 per cent to 24,000 in January – the lowest level for eight years. |
| The Council of Mortgage Lenders said that house purchase loans plummeted by 49 per cent to 32,000, worth £4.7bn, in January compared to the previous month. |
The data will reinforce concerns that the UK housing market may be set to suffer its own double-dip recession, following the Halifax last week reporting a 1.5 per cent fall in house prices between January and February. Nationwide also reported a 1 per cent fall in house prices in January. |
Discretionary spending is further threatened.
The recession may be officially over, but more than a quarter of home owners
risk losing their homes after admitting they are still living on a
“financial precipice”.
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Latest research suggested 26 per cent of borrowers aged between 35 and 44
would be unable to meet their mortgage repayments if they saw a £300 drop in
their monthly income.
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And one in eight adults in this age range has deliberately over-inflated their
income to secure a larger loan, according to the YouGov research,
commissioned credit reference agency Callcredit.
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Graham Lund, managing director of Callcredit, said: “These statistics are
extremely alarming. A significant proportion of these people, many with
families to support, are living on a financial precipice where just one
negative event, such as a reduction in paid overtime or an unexpected
expense, could have disastrous financial consequences.”
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| At the end of this month, the US Federal Reserve is due to freeze its programme to purchase Fannie and Freddie agency MBS that it implemented in the wake of the financial crisis. Logic might suggest that could potentially deliver a jolt to the market. |
| he degree of assistance that the Fed has provided has been eye-poppingly large: right now it is holding some $1,200bn of MBS |
| in the past couple of years, the Fed (and others) have poured so much money into the system, that this has made it painfully hard for mainstream fixed income investors to get returns, without taking very wild risks. |
| During the past two years, the full impact of the collapse of the securitisation market has been largely concealed from most investors – let alone American politicians – because of the sheer scale of government assistance on offer. |
| investors have been lulled into something of a false sense of security |
“Addressing homelessness (in all its forms) should be the number one priority of any compassionate society.”
– EdmundBurke | Although people 50 and older are traditionally a small part of the homeless population, their numbers have grown as the economy has stagnated. |
A snapshot of the Sacramento area’s graying homeless population shows a group that came to the streets as a result of midlife job loss and health problems, not chronic addiction and mental health issues. |
And at the Gathering Inn, which feeds and shelters Placer County’s homeless, 27 percent of people seeking services each night are age 50 to 62 – up from 10 percent in 2004. |
Growing subsidence risks, apart from being expensive for owners, are liable to drive down prices on properties built on clay or sand. | Extreme weather possibly linked to climate change, as well as construction on less stable ground, have provoked unprecedented foundation failures in houses nationwide. Foundation repair companies report a doubling and tripling of their business in the last two decades with no let-up even during the recession |
| Clay soils, like those beneath the houses of Mr. Derse and Ms. Wilson, shrink during droughts and swell during floods, causing structures to bob. And because sandier soil loses its adhesive properties in dry conditions, it pulls away from foundations. Heavy rains cause it to shift or just collapse beneath structures. |
Data from the National Oceanic and Atmospheric Association indicates that since the 1990s there has been an accelerating trend nationwide toward more extended dry periods followed by downpours. Whether due to random climate patterns or global warming, the swings between hot and dry weather and severe rain or snow have profoundly affected soil underneath buildings. Read more at www.nytimes.com |
1. Both consumer confidence and sentiment have fallen unexpectedly.
2. After-tax personal incomes adjusted for inflation have flattened.
3. Sales of both new and existing homes took a surprising stumble.
4. Orders for most durable goods are down.
5. Manufacturing has slowed.
6. Jobless claims are up.
7. Fourth-quarter GDP growth came largely from a slower pace of inventory liquidation, not from an increase in consumer spending.
8. And, as a matter of fact, consumer spending weakened last quarter. |
Kellner also points out that consumer confidence has dropped to a nearly 30-year low, new home sales hit record lows, existing home sales are at a seven-month low, and even unemployment claims rose six of the past eight weeks. Read more at dailyreckoning.com |
Banks must be getting very worried again. That’s when they stop lending and make things worse. Delinquency and foreclosure rates among US homeowners climbed to their highest levels on record in the fourth quarter of last year, as the Obama administration unveiled its latest effort to aid the housing market’s hardest hit areas. |
The Mortgage Bankers Association said that 15 per cent of all home loans were either in foreclosure or late on a payment, the highest proportion since the group began surveying the housing market in 1972.
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“The pattern of mortgage delinquencies now very much follows the pattern of unemployment,” said Jay Brinkmann, MBA’s chief economist. “Until the issue of this large segment of long-term unemployed is resolved, many of the longer-term mortgage delinquencies will remain a problem with a strong likelihood of turning into foreclosures.” Read more at www.ft.com |
The more educated people walk away, the poor stick it out to the end. Prices are still falling. So the extent of losses banks and investors will have to take on mortgages that are still being paid every month, but may not be for longer, hangs large over the US economy. Without a recovery in house prices, consumer spending and confidence in the US is expected to remain muted, reducing the potential for economic growth. |
| Further losses on mortgages could result in more pain for banks, too, reducing the amount of new credit that they can make available to consumers and businesses. This, in turn, would have knock-on effects for the global economic outlook, |
| higher the negative equity, the higher the rate of non-payments. |
Particular concern surrounds defaults by people who merely face negative equity rather than monthly funding problems. These “strategic defaults” may be accelerating as more people shrug aside societal pressure to meet debts if they can. |
| landlords already have signs out saying “bad credit accepted”. |
It will be blockbuster, too, I fear. Figures on Tuesday showed that consumer confidence in the US fell to the lowest level in 10 months on fears about a slow labour market recovery. |
The weaker than expected report likely reflects the grim political climate and volatility in the financial markets, argues Ted Wieseman, an economist at Morgan Stanley. More worrying, Mr Wieseman said, is that the weak jobs outlook could bode poorly for next week’s employment report. |
US house prices meanwhile continued to bump along in December, notching a small monthly fall while recording slowing annual declines, while consumer confidence fell sharply on fears about the labour market. |
Home prices in the 20 largest US cities fell by 0.2 per cent between November and were off by 3.1 per cent from the same month a year ago, according to the closely -watched Case-Shiller home price index. The annual price decline has eased each month this year. Read more at www.ft.com |
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Sell now, buy later - House market stalls, fuels double-dip recession fears
