oh dear: UK house prices have steepest drop since 1992

[AlfredJPruffock]

Halifax said prices in Scotland were 5.3 per cent higher in the first quarter

MacBoom !!!

[AtW]

UK house prices have steepest drop since 1992
By Emma Thelwell
Last Updated: 12:43pm BST 08/04/2008

House prices across the nation saw the largest monthly fall since 1992 last month, according to Halifax, prompting the country's largest mortgage lender to cut its forecast for prices for the rest of the year.

House prices: largest monthly fall since the recession in the early 90s

Halifax, which is part of the HBOS group, reported that property prices fell an average of 2.5pc overall, and as much as 5pc in some areas.

The lender, which previously had predicted flat growth for the current year, now expects a "low single digit" fall in house prices this year - indicating that prices could fall by up to 5pc.

The monthly decline is the largest since September 1992, when average prices across the UK fell 3pc and the economy was enduring its last recession. During the same month, then Chancellor of the Exchequer Norman Lamont lifted interest rates to 15pc in a vain attempt to keep sterling in the Exchange Rate Mechanism.

As shadow Chancellor, Gordon Brown accused then Prime Minister John Major of betraying the British people after making huge errors of judgement. Today's news follows February's 0.3pc slip, dragging property prices for the quarter - the three months to the end of March - down by 1pc compared to the final quarter of 2007.

Meanwhile, the annual rate of house price growth fell back to a 12-year low of 1.1pc. Paul Robinson, a former Bank of England adviser now at Barclays, said: "It's a weak number and no one can deny that. The market is slowing and it's a clear concern.

"But there's also a bit of hysteria about house prices right now. In the early 1990s housing crash people were losing their jobs but we're in a different world now. If the employment picture were to weaken that would be different."

The house price fall will add to the pressure on the Bank of England to cut interest rates by a further 25 basis points from 5.25pc to 5pc this Thursday.

However, industry experts have warned that the impact on the mortgage market may be minimal, as lenders may not pass the rate cut on to their customers. Yesterday, Abbey become the last major lender to pull its 100pc mortgage deal from the market, signalling the end of the era where people could purchase properties with no deposit at all.

George Soros on the UK economy

It came as a further blow for first time buyers, who will now need a deposit of at least 5pc - an average of £10,000 - to purchase a home.

However, Halifax stressed that today's data should be seen in context - UK house prices have risen by an average of 171pc over the past decade - up £120,860, from £70,696 to £191,556. In the last five years, average
prices have risen by 51pc.

Martin Ellis, chief economist at Halifax, said: "Sound economic fundamentals are supporting house prices. (AtW's comment: no, 'tard - what supports house prices are irresponsible people like you who justified ridiculous lending in the first place, your next job should be chief analyst at Belmarsh)

Paul Robinson on the UK economy

A strong labour market, low interest rates and a shortage of new houses underpin housing valuations.

"Our research shows that the labour market is the key driver of the housing market. Employment is at a record high and unemployment continues to fall."

Average UK property prices during March still rose in Greater London by 1.6pc, East Anglia by 1.4pc and the East Midlands, by 2.2pc.

However, there were price falls in a number of regions with the largest tumbles recorded in the West Midlands - down 5pc - and Wales, down 4.7pc.

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Source:
http://www.telegraph.co.uk/money/mai...cnhouse208.xml

My personal observation - before last few months (it should be worse now) is that local prices dropped at least 10% compared to last 12 months, pretty visible drops.