According to a report by Nationwide Building Society, home prices in the UK have now been falling for six consecutive months and are now also year-on-year negative by 1.1%

During 2008, the price of the average home has been falling by nearly £45 every 24 hours.

Chief economist for Nationwide, Fionnuala Earler comments:

“The latest fall in house prices follows from the steep decline in house purchase transactions over the last half
year. As a result of falling demand from first-time buyers, higher mortgage rates and tighter lending criteria, the
number of mortgages approved for house purchases has fallen to record lows. The fall in transactions has pushed
up the stock of unsold property on the market and improved the bargaining power of buyers, thus pushing down
on prices.”

The last 10 years has seen an alarming asset bubble develop in the UK, a similar if not worse situation as to that which happened in America.

The Halifax has posted a report of 2.5% house price falls month on month, the sharpest drop since the early 90s. The year on year figure is still positive at 1.1%

Martin Ellis, chief economist for Halifax said:

Overall, we expect there to be a modest fall in UK house prices this year. Any declines, however, should
be viewed in the context of the significant price rises over recent years. The average UK price has risen
by £120,860 during the past decade from £70,696 to £191,556; an increase of 171%.

Predictably there were some calls for the Bank of England to reduce interest rates but obviously, it is not the BoE’s remit to look after asset prices, rather to target inflation. Furthermore, the Bank of England’s previous interest rate cuts have not been passed on to mortgage borrowers, the private banks have instead been increasing their rates to customers.

Any such downward move in interest rates in the face of massive inflation would destroy the pound’s value against the Euro just in time for British people’s summer holidays.

The Abbey National bank deleted it’s 100% mortgage product today, the last such 100% product available in the UK.

Well, here’s to 2008.

I wish everyone the very best prosperity for this year despite our shaky looking economy and the UK credit crunch.

I also wish that our politicians should make more moves towards domestic energy security so we don’t have to send our boys and girls to fight over dusty strips of land with oil underneath.

I wonder if we will see a correction or crash in house prices this year as so many hard working people in the UK are unable to afford to live in even the most decrepit of places. I fear that the situation will once again be engineered to protect the interests of ‘buy to let’ and property developers to the detriment of the already massively-overstretched normal mortgagees and to the exclusion of the ‘first-time-buyer’.

Finally, I’d like to remind everyone that in 2008, we can look forward to the first introduction of UK National Identity Cards giving the government never before seen powers of authoritarian control over the population and a unique opportunity to lose practically every piece of information known about an individual in one go. This as other nations have a sudden outbreak of common sense and scrap their ID Card programmes. If any politician should wheel out the damned lie that ‘biometrics’ is in any way useful for preventing the wholesale physical loss/theft of identity data this year, I’ll be inclined to swing for them.

Try to have a good year. Wherever you may find one.

The Halifax has released it’s 2007 annual first-time buyers review which looks at the state of the housing market for FTBs within the United Kingdom.

They have found that the number of First Time Buyers has dropped to it’s lowest level since 1980 at the start of the 80’s house price crash.

New Halifax research estimates that the number of first time buyers (FTBs) is at its lowest since 1980. An estimated 300,000 first time buyers entered the market in 2007 – 44% less than in 2002 (532,000).

First time buyers cannot afford* to purchase a terraced property – traditionally the least expensive property type - in 71% of towns across the UK (322 out of 454). In 2002, the typical FTB could not afford to purchase a terrace in only 11% of towns across the UK (51 towns).

It seems clear that FTBs are not buying simply because they are unable to. The initial symptom was that they became priced out due to the massive house price inflation and the new symptom is that as a result of the credit crunch, they can no-longer obtain the frightening amounts of credit required to purchase a home.

It is now speculated in various circles that the prices of houses will fall as their current heady heights are the result of ‘bubble-market’ which, without the credit to support it, will collapse.

The full Halifax report can be read HERE. Watch out, it’s a Microsoft Doc format file but you can read it by downloading OpenOffice.org Note to HBoS: Portable Document Format (PDF) is your friend.

Here we have a little sketch found on Youtube from the South Bank show. Bird and Fortune do their usual interview style sketch, this time with the interviewee being an investment banker.

This actually goes a long way to explaining the realities of subprime lending in an easy to understand and rather amusing fashion for the layman.