Tuesday, April 08, 2008
An Ongoing Readjustment
I've just heard Evan Davis interviewing Martin Ellis, the Chief Economist of Halifax, on their latest monthly house price stats. They reveal a sharp 2.5% fall in prices, the biggest monthly drop since 1348 (the infamous Black Death correction).
Davis put it to Ellis that our huge wobbling house price bubble is bursting and that lenders like Hali have been very slow to recognise it. Ellis, who is now finally forecasting a "small" price fall this year, preferred to describe the situation as "an ongoing readjustment".
The words talking, own and book spring to mind.
The reality is that lenders are no longer prepared to bet on house prices staying where they are, let alone increasing. The wholesale withdrawal of offers to all borrowers except those with a chunky deposit tells us all we need to know.
You'd almost think Ellis worked for the Treasury.
PS The chart comes from the compulsive Housepricecrash.co.uk. It shows the life-cycle of a speculative bubble (original source: Jean-Paul Rodrigue - Hofstra University).
PPS When Mr and Mrs T bought their first home back in the seventies, you could only access commercial mortgage funds if you'd saved a sizable deposit with the lender itself. Building Societies like the Halifax and Abbey demanded years of saving membership before even considering lending you money. Do we want to return there? Don't be daft.
PPS We think Mr T Tits is so far doing pretty well on BBC R4 Today. For the first time ever, the prog has an anchor who can actually conduct business/economic interviews from a position of knowledge. He's even managing to get away from the BBC's usual position of viewing business solely through a consumer lens. Let's hope he can keep it up. As it were.