The housing decline is spreading to the U.K. and some other European countries. Regarding Britain, the Financial Times reports:
House prices have suffered their biggest annual fall since the property slump of the early 1990s, a leading index revealed on Thursday, in news that sent shares in some of Britain’s largest home lenders and builders tumbling.Spain is just beginning to have problems:
Year on year, house prices are now 4.4 per cent below their levels of May 2007, according to the Nationwide house price index. On an annual basis, that is the biggest fall since December 1992, when the UK was in the throes of a severe housing downturn.
In May alone the index recorded a 2.5 per cent drop, its biggest one-month fall, wiping £5,000 off the average British home. The three month moving average, which smoothes out unreliable single month volatility, also slid sharply. In the three months to the end of May house prices fell by 2.9 per cent compared with the three months to the end of April.
Fionnuala Early, Nationwide’s chief economist, said the streak of falling prices has lasted seven months, the longest consecutive period of declines since 1992.
Spain's residential property market is heading for a hard landing, as tightening credit conditions exacerbate problems of oversupply and years of rampant price inflation, figures released Wednesday confirmed.The Wall Street Journal reports that Ireland property prices are declining:
Completed house sales for January dropped 27 per cent year-on-year, according to the National Statistics Institute (INE), while total lending to home-buyers fell almost 28 per cent to €13.4bn ($21bn, £10.5bn). The value of the average mortgage was down 3 per cent, to €142,794, despite higher financing costs.
Irish house prices fell by 9.2% on the year in April, compared with a 8.9% decline in March, the independent think tank Economic & Social Research Institute, and Permanent TSB bank, reported Friday. In the first four months of 2008, the average national house price fell 3.3%. From a month earlier, prices fell 1.1% in April, according to the monthly survey. The average price paid for a house nationally in April 2008 was €278,521 (about $432,500), which compares with €287,887 at the end of last year, or €71,837 in December 1996 when the house price index began.The Economist looks at global housing markets and finds prices in most countries are holding up well.
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Welcome James! Is it safe to assume you are a co-blogger and and a co-believer that there is a bubble out there that will someday burst ... effecting all prices ... and that this isn't just a normal real estate cycle and what we're seeing now is no different than what we saw in say 1980? or 1990?
ReplyDeleteThis is really interesting. So, those other countries poised to lead the world of the 21st century are experiencing the same things we are at the same time we are ... while "most countries are holding up well". Hmmm, isn't this exactly what one would expect in this stage of the real estate cycle in a economy that is now global? We still have different (and local) real estate markets, but as all are all by a global market (and global growth trends) the leading nations walking in lockstep isn't surprising ... Nor is the continuing rise in prices in the following nations as they run to catch up to us. This is good stuff James! Keep it coming!
ReplyDeleteHi Lance, thanks for the warm welcome.
ReplyDeleteJames