The bust begins

mystic_trev

Gordon Brown says the slump in the UK housing market is "containable", after the sharpest monthly decline in prices since the early 1990s. We don't believe you!

The prime minister said a 2.5% fall in March, recorded by the Halifax, should be seen in the context of 10 years in which property prices had risen 180%. He acknowledged a "difficult situation" but said the UK was better placed to cope than in previous slowdowns.We don't belive you!

http://news.bbc.co.uk/1/hi/uk_politics/7336642.stm

FOR years the housing market in Britain has defied gravity. For a few months in 2004 and 2005 house prices moderated, before taking off again. But now, finally, tighter credit and overstretched household budgets are pulling prices down.
A collective shudder ran down the spines of British homeowners on Tuesday April 8th when Halifax, a part of HBOS and the country’s biggest mortgage lender, revealed that house prices fell in March by 2.5%. The monthly decline recorded by the Halifax house-price index was the biggest since September 1992, when the housing market was enduring an agonisingly prolonged bust.

A period of falling house prices has been long overdue and may be welcomed by those who have been priced out of the market. But past experience suggests that it is likely to inflict economic damage by slowing consumption and GDP growth. When the market slowed in 2005 household spending rose by only 1.5%, its lowest since 1992. That augurs ill for Britain’s economic prospects—and for Gordon Brown’s increasingly beleaguered government.

Full artice - worth a read.

http://www.economist.com/displaystory.cfm?story_id=11001376&fsrc=RSS

m00m00

this is the same gordon brown who said in 1997 he wouldn't let house prices get out of control .....

dean_ham

Lets hope the housing market corrects itself to the trend level....

20% drop in the next 12 months will be nice.

sundog

mystic_trev wrote: »

http://news.bbc.co.uk/1/hi/uk_politics/7336642.stm






Full artice - worth a read.

http://www.economist.com/displaystory.cfm?story_id=11001376&fsrc=RSS

what do you mean 'we don't believe you'?

mystic_trev

NO MORE BOOM OR BUST

tomstickland

IT'S DIFFERENT THIS TIME

Rover

Who'd a thunk it!

Zammo

No one could have predicted the so called "credit crunch"!!








MY ARS3.

RichyRich

A 180% rise over ten years is the equivalent of a 1.5% rise per month, so how the hell is a 2.5% fall supposed to be insignificant, as intimated by GB?

House prices will remain out of control until government policies stop preventing the market providing an adequate supply. "Bubbles" might make a quick(ish) profit feasible but certainly do nothing for economic stability. This article examines the compatibility of current housing policy and green belt policy, being a nice example of one reason for the ridiculous state of the housing market.

m00m00

the actual quote

Mr Brown said: "I will not allow house prices to get out of control and put at risk the sustainability of the future." He said he was determined that the UK should not return to the "instability, speculation and negative equity" of the 1980s and 1990s.

from

http://www.bbc.co.uk/politics97/budget97/live/housing.shtml


(thanks to ghpc for the link)

Paul_N_4

He recently said house prices have risen 180% over the past ten years. As a man of economics, who wanted to see the end of boom and bust, and stability in the economy, why did he sit back and allow that level of speculation in the first place? Two faced IMO.