Thursday, December 30, 2004

All the mortgage lenders and housing agents are starting to report their December data, and it's looking like a sharp slow down in the UK housing market.
U.K. house prices fell in December, with annual inflation slowing to the lowest in almost three years as higher borrowing costs end a boom that has tripled home prices since 1995, Nationwide Building Society said.

The average value of a home climbed 12.7 percent from a year earlier to 152,623 pounds ($293,000) after a 15 percent annual increase the previous month, the Swindon, south England-based lender said today. On the month prices slipped 0.2 percent after a revised 0.9 percent gain the previous month, according to Nationwide, the U.K.'s third biggest provider of mortgages.
According to Nationwide, which generally offers more rosy data than does Halifax, average prices are -1.1% from their July peak. This is still better than where they were in October and not a terribly sharp fall all things considered. Rightmove's survey of asking prices shows a much larger drop, and Halifax will report next week.

As in Australia, it appears that eliminating the first-time buyer from the market is the sure-fire first step in popping a housing bubble.
House prices have tripled since 1995, while wages have risen by 50 percent, forcing first-time buyers out of the market, Nationwide said. Fewer people bought their first homes in 2004 than in any other year since the mid 1980s, the lender said.
One can see why first-time buyers are disappearing from places like London where the average price they are paying in 2004:IV is �207,900. At that price I can't imagine you can buy anything but a flat, and at an average monthly mortgage payment surely in excess of �700.

With this last report for the year, all the quarterly regional data is in as well. Among all regions, London's y-o-y price inflation (2003:IV-2004:IV) is the lowest at 7.6%, just around half the national figure of 14.8%, and for 3 of Greater London's 33 boroughs y-o-y prices fell. In the second half of 2004 London house prices rose a mere 1.3% (2.7% nationally) and fell 0.7% in 2004:IV.

When the Halifax data comes out, I might just make a graph.

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