Wednesday, June 11, 2008

London Housing Falling Down

The Times of London reports:
Thousands of hard-pressed borrowers who could not afford a deposit for their home have been plunged into negative equity and thousands more could be at risk if house prices fall further, figures suggest.

More than 30,300 homeowners have taken out 100 per cent mortgage deals since January last year, figures from the Council of Mortgage Lenders (CML) show. Many of these borrowers are now likely to owe more on their property than it is worth after sharp falls in house prices....

This blow for homeowners came as Mervyn King, Governor of the Bank of England, gave warning that the risk-taking by banks and other financial institutions in recent years could have dire consequences for borrowers. Speaking at an annual meeting of British banks, Mr King said: “When the the party ends, some innocent bystanders may lose their homes altogether.”

House prices have fallen by 7.7 per cent since the market turned in September, according to Halifax.

And this comes from last Wednesday's Times:
Britain's big seven housebuilders saw more than £300 million wiped from their combined market value in early morning trading today as UBS slashed its targets across the sector, bringing to £13.5 billion the total value erased from the big builders in the past year.

Analysts at UBS today gave warning of falls of up to 20 per cent in the price of new homes.

They told clients today that housebuilders' sales volumes for the full year were likely to fall at least 30 per cent, which would put sector profitability under "extreme pressure." ...

A year ago Britain's seven largest housebuilders had a combined market value of £18.5 billion. Today's sell off diminished their combined value of the battered builders by over £300 million leaving them worth in total just under £5 billion.

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