UK Housing Mortgage Meltdown for Purchases and Equity Withdrawals
Housing-Market / UK Housing Jun 24, 2008 - 07:37 AM GMT
Mortgages for home purchases and equity withdrawals continues to slump for May data released by the British Bankers Association, falling to just 27,968 approved loans down from 34,752 for April 08 and down by 56% from a year earlier. These are the worst lending figures since the BBA started recording mortgage data in 1997 and confirms that the UK housing market is trending towards a 1990's style housing market depression.
House price falls continued to accelerate and are on target for a crashette for the quarter April to June 2008. The expectation is that the housing market will move back towards trend for a 15% fall from August 2007 to August 2009. However this will mask falling housing market values in real terms as inflation continues to accelerate higher with the RPI expected to breach 5% and may even peak above 6% early next year.
A series of recent analysis pointed to the strong possibility of the UK housing market to remain depressed for as long as the next ten years as the below graph illustrates that the UK housing market is very sentiment driven, and in many ways exhibits the same sort of behaviour as that of stock market investments moving between extremes of over valuation and undervaluation against the UK's GDP growth trend. The graph clearly implies a trend towards undervaluation which could take as long as 10 years to achieve as the housing market valuations are eroded by nominal house price fall, inflation and GDP growth.
UK Housing Market Analysis:
By Nadeem Walayat
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