HOUSING PRICES ANALYSIS

Housing Prices Analysis

Housing Prices Analysis

Introduction

UK housing prices have fell by more than 20% from the top of August 2007, which has fulfilled much of the initial outlook made in August 2007 for a smallest drop of 15% for the UK lodgings market and 25% for London, thus this investigation hunts for to task the outlook tendency for UK housing prices for the next 3 years into 2012.

Fig 1: UK house price forecast August 2007 to 2009

The housing market took off into what would be its last spike higher with numerous commentators affirming at the time a new paradigm, with numerous causes put ahead as to why housing prices could be sustained indefinitely.

Reasons Given as to Why the Housing Market would not Fall

Immigration - There had been a large influx of over 800,000 migrants from the Accession states who assisted in the direction of the purchase to let market bubble.

Lack of Home Building - Up until early 2007 there had not been a construction rise in the UK housing market in the pattern of customary terrace and semi-detached properties (Tirtiroglu 2006 206).

Strong UK Economy - The UK finances at the centre of the worlds borrowing bubble proceeded to outperform mainland Europe, not taking part in the borrowing rise did not help them as numerous of the European banks become belatedly suckered into buying U.S. subprime mortgage backed toxic securitized liability as one the last to fling themselves up on the liability derivatives pyramid.

The position came to a head throughout July 2007 with the assault of the Bear Stearns hedge capital at a cost of $5 billion and subsequent directed to the borrowing crunch happening in August 2007 which to derivatives market participants inferred that the housing market could not increase any farther under these situation and had in detail peaked in the month of August, which is what really happened on issue of subsequent housing cost facts and numbers (Chinloy 2008 37).

HBOS - Britain's Biggest Mortgage Bank

In August 2007, I alerted about the precarious state of Northern Rock Bank and how the prospects for its survival throughout the imminent housing accept market were not looking good (www.realtytimes.com). It was the short trading of HBOS in the direction of economic nothingness that compelled the FSA to ostracise short trading of economic supplies some 3 days later.

Fig 2: HBOS Crash

Vested Interests Try to Talk the Market Higher

To designated day the Nationwide and Halifax have not made a outlook for 2009, which is not astonishing granted the malfunction to designated day to unquestionably pathway the housing market down turn as all mortgage banks have a vested interest in conversing up the market just as happened in the early phases of the 1990's housing accept market as I emphasised in the September 2007 item - UK Housing Market on Brink of Price Crash - Media Lessons from 1989! The entire of the down turn for 2007 was affiliated with the saying 'Soft Landing' which proceeded into early 2008 after which the saying ...