With the way UK prices have been falling (for the last 6 months) and the change in the balance of activity (mortgage lending/buyers registering with EA/property sales down 30 to 40% and inventory per Estate Agent up) the market has turned. The 1% fall should be put in perspective this is a YOY, fall average across UK.
Many of the stats coming down stream at us in the UK are scary, we look in much worse shape then the US were at this stage of their down cycle in 2006 or the UK in 1989.
To put the 1% fall in perspective. In the last crash UK prices only fell on average circa 17% (1989 to 1994). But you could take your pick from hundreds of thousands of perfectly good properties which were up for sale for between -25 to 50%+ below their previous peaks.
With prices falling and all the indicators (not just the media) predicting this to continue, the banks not lending and the economy slowing rapidly leading to big job losses, the chattering classes finally realising that borrowing lots of money (relative to historic fundamental ratios) to buy property and then borrowing against a ‘moments in time’ increase in its value, to fund lifestyle purchasers (in some cases other property), can in many cases lose you a lot of money, it’s all going to come as a shock.
For a generation used to tarting between 3 to 4% mortgage rates 5 to 7% is the equivalent of the jump in 1989 to 92 of 8 to 12% mortgage rates. And this time the debts/ domestic bills are bigger and so are the mortgages relative to salaries. Add to this that BTL is now circa 11% of the market (much added at the peak on the last 3 years) as opposed to circa 1% last time and it looks like big trouble not too far ahead.
As I’ve said before for a generation of under-40 year olds it’s going to be a whole new experience.
Nu Labours whole economic model is built on tax and spend, and is underpinned by a mountain of state, corporate and personal debt. It could never go on.