Blanchard Consultancy – the independent construction consultant

Homeowners will have to wait a decade before property prices return to 2007 levels, a leading estate agent said yesterday.

Average house prices are tumbling at a rate of £78 a day and are set to fall in total by 16 per cent this year and 11 per cent by the end of 2009, according to a forecast from Savills. This will bring the average value down from £182,080 in December 2007 to £136,123.

The London-based agent does not expect the market to show signs of recovery for another two years, with a full rebound to 2007 levels not likely until at least 2018.

It cautioned that only buyers with adequate cash will be able to take advantage of cheaper prices in the meantime, because of the lack of availability of mortgage deals.

Read more at Times online

Labels: Housing market, property prices, UK recession, uk repossesions

Banks are seeing an increase in the numbers of homeowners deciding voluntarily to hand back their properties because they cannot afford to keep up mortgage payments.

Voluntary repossessions involve the bank selling the property at auction but this will not show up in official figures as a repossession because there has been no court order.

The phenomenon is widespread in the US, where it has been nicknamed jingle mail because homeowners often post their keys to lenders if they cannot make the payments and no longer have any equity in their homes. It was also common in the UK recession of the early 1990s when homeowners were in negative equity.

Article continues at Financial Times Online

Labels: credit crunch, uk mortgage market, uk repossesions

Land Securities, the UK’s largest property company, has reported a pre-tax loss of £1.74bn as the deepening decline in the property market forced the group to cut the value of its assets.

The company, which made a profit of £365.2m in the same six months last year, suffered writedowns of £1.74bn amid an “unprecedented period of financial instability”.

The plan to demerge Land Securities will be stopped because of the economic conditions, the group said, although it is still working on the sale of outsourcing arm Trillium.

Halting the demerger plan was widely expected among analysts because of the downturn and the departure of chairman Paul Myners to become the Government’s city minister. Land
Securities announced today that Mr Myners will be replaced by Alison Carnwath, the present chairman of MF Global.

Read more at Telegraph online

Labels: House market, Land Securities, property prices

Confidence and credit have deserted the housing market. The Monetary Policy Committee will be hoping that the lowest borrowing rates for 53 years will help residential property prices to recover from one of their steepest challenges since the Second World War.

However, according to estate agents and consultants out in the field across the UK, the depths of the slump in parts of the market is worse than the research from the various lenders and property websites suggests.

At an auction organised by Allsop last Monday, a flat in an upmarket area of Leeds that was bought for £400,000 in July 2007 sold for just £159,000. A reduction of 60pc. At the same auction a flat in the city centre of nearby Wakefield, bought for £189,000 on October 31 2007, sold for just £69,000. They were not the only bargains on offer. The auction was originally planned to run for two days but was extended to four because of the number of repossessions.

Article continues at Telegraph online

Labels: House prices survey, uk mortgage market

Despite the growing clamour for stricter rules-based regulation, Mr Flint urged policymakers to stand by – and increase – principles-based oversight when they eventually turn their attention to banking reform.

"Supervision is about having more principles," he said. "We have moved towards regulation and away from supervision and now we need to move back. The challenge will be to resource it, as it's more expensive to supervise the banks."

He added that regulators were more likely to demand greater "standardisation" of banking products, curtailing profitable but often ill-conceived "bespoke" creations, and end the shadow banking market of over-the-counter derivatives, where the vast majority of "toxic" assets have proliferated.

Stuart Gulliver, head of global banking and markets, said moving such derivatives on to an exchange – operating much like the traditional stock market – would be "incredibly welcome".

Read more at Telegraph online

Labels: FCC, HSBC, uk mortgage market

The UK's largest building society today said it expected house prices to continue to fall next year as it announced it had cut lending by more than two-thirds.

Nationwide Building Society's chief executive Graham Beale said house prices would continue to fall by 1% to 1.5% a month for the rest of the year and there would be further price drops in 2009-10.

Last month, the society said prices were down 14.6% year on year, with the average price of a home now almost £30,000 less than a year ago.

Beale said interest rate cuts, which Nationwide has so far passed on to customers in full, would help the market.

"Rate cuts will help to minimise payment difficulties and alleviate payment shock as borrowers reach the end of their existing deals.

"Reducing prices will improve affordability, which should bring about a recovery in the first-time buyers' market."

Releasing its interim results for the six months to September 30, Nationwide said it had advanced £1bn worth of mortgages, when repayments and redemptions were taken into account.

Read the full article at Guardian online

Labels: credit crunch, House market, Mortgage rates, Nationwide

Which banks have passed on the base rate cut and which haven't?

Heroes

HBOS, owner of Halifax, the UK's biggest lender

Market share: 20.1%; Gross mortgage lending in 2007: £73.1bn

HBOS bowed to immense pressure and passed on Thursday's 1.5 per cent cut to its SVR across all four of its mortgage brands — Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance. It was also one of the first to pass on last month's half-point cut in full to borrowers on a variable rate. HBOS is one of the three banks accepting taxpayers cash as part of the Government's £37 billion bail-out of the banking industry.

Lloyds TSB, owner of Chelthenham & Gloucester and Scottish Widows

Market share: 8.1%; Gross mortgage lending in 2007: £29.5bn

The first to pass on Thursday's 1.5 per cent, Lloyds TSB is reducing its standard variable rate (SVR) by the full amount to 5 per cent from December 1. The move will reduce monthly repayments by £187 on a £150,000 interest-only mortgage. Scottish Widows, the mortgage lender which is part of the Lloyds TSB group, also said it was reducing its SVR today by 1.5 percentage points to 4.99 per cent.

Abbey

Market share: 9.8%; Gross mortgage lending in 2007: £35.6bn

The bank, which is owned by Spain's Santander and is the UK's second biggest lender, was the second to cut its SVR on Thursday by the full 1.5 per cent, reducing it from 6.94 per cent to 5.44 per cent from December 1.

Bradford & Bingley

Market share: 3.9%; Gross mortgage lending in 2007: £14bn

The nationalised lender cut its product variable rate (PVR) by 1.5 per cent on Friday morning. However, as its PVR is pegged to the base rate, Bradford & Bingley had no choice but to pass it on to borrowers. Around 15 per cent of Bradford & Bingley's mortgages are on the PVR. The lender also passed the full 1.5 per cent cut to a small number of borrowers on its standard variable rate .

Nationwide

Market share: 9.3%; Gross mortgage lending in 2007: £33.9bn

Britain's biggest building society and third biggest lender was the first to cut its base rate by the full amount following a meeting with the Chancellor attended by Nationwide and the major high street banks on Friday morning. Its SVR will fall from from 6.19% to 4.69% to December 1.

Royal Bank of Scotland (RBS) and its sister NatWest

Market share: 6.2%; Gross mortgage lending in 2007: £22.6bn

RBS announced it was cutting the SVR by the full 1.5 percentage points from December 1. RBS was under particular pressure to cut its rates as it is set to take the biggest share of taxpayers cash in the Government's £37 billion bail out of the UK's banking industry. It's SVR has fallen from 6.69 per cent to 5.19 per cent.

Read the full article at Times online

Labels: credit crunch, HBOS, HSBC, LLoyds, RBS, UK Interest rates

The balance of surveyors reporting demand for commercial property in Q3 has fallen at the fastest pace in a decade, says RICS’ Commercial Property Survey published today (3 November 2008).

52% more Chartered Surveyors reported a fall than a rise in demand compared to 50% in Q2 2008.

All sectors remain firmly in negative territory for the fourth consecutive quarter with the industrial and office sectors dropping to the lowest balance in the survey’s history.

The worst hit area continues to be the retail sector with 59% more Chartered Surveyors reporting a fall than a rise in retail demand, a slight improvement from 63% in Q1.

The continuing financial turmoil and a slowing housing market is clearly weighing upon both retailer and consumer confidence.

The net balance of surveyors reporting new occupier enquiries in Q3 declined at the fastest pace in the survey’s history.

Read more at the RICS newsroom

Labels: commercial mortgages, credit crunch, property prices, RICS

Taylor Wimpey, the crisis-hit housebuilder, will issue a grim trading statement this week, revealing an alarming drop in sales at a time when it needs all the cash it can muster to survive.

The firm, struggling under the weight of a £2bn debt mountain, will say that increased incentives to persuade buyers to commit to one of its homes have significantly reduced margins at a time when sale volumes have plunged.

Sales and house prices have weakened further since the company, led by chief executive Peter Redfearn, last gave the City an update in August.

Taylor Wimpey was worth £4.3bn midway through last year but it is now valued at just £142m. The firm is willing to sell off large chunks of its land bank as it struggles to meet its onerous bank obligations.

Taylor Wimpey's statement comes as analysts at Panmure Gordon expect write-downs at the firm to total £1.2bn, with £690m already accounted for. The company is expected to say that it has failed to reach agreement on a refinancing with banks and bondholders, which are now involved in talks to ensure the firm keeps on trading. Lenders are considering basic terms for restructuring the company's finances that would give it breathing space to trade through the crisis until 2012.

Article continues at Guardian online

Labels: credit crunch, Housebuilders, Taylor Wimpey