Nationwide. 29 May 2008. -2.5 (month) -4.4 (year)

obsessed_saver

BBC_News wrote:

Despite this, Ms Earley argued that the market was not heading for the same sort of crash as that seen in the early 1990s.
"First, fewer homeowners bought at the top of the market in this cycle," she said.
"This means a much smaller proportion of borrowers face the full effect of falls in prices than was the case in the 1990s. "Secondly, today's borrowers have typically put down a larger deposit than their 1980s counterparts," she added.

They're forgettting/ignoring the fact that prices of everything (cost of living) has gone up so much that it's putting a very real strain on people.

JonnyBravo

obsessed_saver wrote: »

Against the peak price in Oct 07, that means it's actually undergoing an annual drop of -11.48%!!!

Something wrong with my calculations?

I hope not, seeing as I put my money where my mouth was and backed the "at least 10% drop" with Ladbrokes by year end. No chance of getting 5/6 now eh?

Treadmill

Thats a big drop, still not up to U.S levels though and they are the trendsetters....

Midas

Nationwide's latest figures are the headline in the guardian, here: http://www.guardian.co.uk/business/2008/may/29/housingmarket.houseprices

They say:

"House prices have now been falling for the last seven months, but analysts were startled by the extent of the downturn over the last few weeks.
"The 2.5% plunge in house prices in May reported by Nationwide is a real shock and will fuel concern that we are now headed for a sharp correction in house prices," warned Howard Archer of Global Insight."

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poppy10_2

obsessed_saver wrote: »

They're forgettting/ignoring the fact that prices of everything (cost of living) has gone up so much that it's putting a very real strain on people.

Also, this bit is pure balls:

In 1988-89 about 85% of loans were
on an interest-only basis. In comparison in
2006-07 only 30% took out interest-only loans

merlinthehappypig

obsessed_saver wrote: »

They're forgettting/ignoring the fact that prices of everything (cost of living) has gone up so much that it's putting a very real strain on people.

True, and the fact that there is way more personal unsecured debt than there was in the 80's/90's as well.

The report yesterday showed that mortgage defaults are already on the rise so payments to loans/credit cards are not going to be a priority.

What many people don't realise is that it's actually easier for the lender to get an unsecured debt charged against a house than a mortgage, though the lender can't force you to sell.

merlinthehappypig

poppy10 wrote: »

Also, this bit is pure balls:

In 1988-89 about 85% of loans were
on an interest-only basis. In comparison in
2006-07 only 30% took out interest-only loans

Endowment mortgages were more fashionable back then so I would expect the interest only figure to be much higher. Given the problems with the endowments most people would stay clear of them now.

What the Nationwide quote has absolutely no relevance though. I bet the percentage of mortgages that are interest only with no repayment vehicle in place are much higher than back then as people have looked to HPI to provide the money to pay the mortgage off.

Both lenders we spoke to this year gave us that option and it sure wasn't available in the 80's/90's.

dannyboycey

PasturesNew wrote: »

http://www.nationwide.co.uk/hpi/review.htm
http://www.nationwide.co.uk/hpi/historical/May_2008.pdf

Discuss.

It's a little more than I expected - Will there now be a momentum effect, with next months figures being even higher? That would certainly be a wake up call for many of the "I don't think there'll be a crash even though it's happening right in front of my eyes brigade"!

phil_b_2

I was a buyer at SSTC a couple of weeks ago, pretty glad I pulled out really...

Do the figures distinguish between areas and type of house at all? Or is it just simply a complete average?

I just wonder if the 'average' home has actually dropped by that amount, or whether the big non-average homes have dropped considerably pulling the average down.

I.E, you have 5 houses, 4 of which cost £180k, and one of which costs 500k. The 180k houses drop to £179k (0.5%) and the £500k house drops to £420k (16%).
The overall average drop is pretty huge, but it wont be of any benefit for 'mr average'.

Not trying to put a spin on it, just curious.

A LOT of stupidly overpriced dumps (who were competing with the nice houses) have been hammered in price around me, pulling the average down I'm sure, but the few nice houses that I really want havent budged in price . Ah well, the headlines and negative sentiment alone should certainly increase the 'flexibility' of these sellers when it comes to their prices.

baby_boomer

Now that this snowball has gained momentum, it is going to start to impact even on those reluctant sellers who had got it into their head that their house is "worth" £xxx and a buyer would turn up eventually.

And so it builds pace.

It's hard to get a big mortgage, so how do you afford a high house price given that we haven't been saving as a nation and the next generation of students will be £35K in debt?

And what happens when the repossessions or buy-to-let sales kick in?