From: "Saved by Windows Internet Explorer 7" Subject: House prices suffer worst decline since 1996, says Halifax - Business News, Business - The Independent Date: Mon, 5 May 2008 11:41:11 +0100 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0031_01C8AEA4.EACB22F0" X-MimeOLE: Produced By Microsoft MimeOLE V6.0.6000.16545 This is a multi-part message in MIME format. ------=_NextPart_000_0031_01C8AEA4.EACB22F0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.independent.co.uk/news/business/news/house-prices-suffer-worst-decline-since-1996-says-halifax-820454.html
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Saturday, 3 May 2008
Further confirmation that the economy is entering its worst slowdown = since=20 the early 1990s came yesterday, as the Halifax index showed that house = prices=20 fell by another 1.3 per cent in April.
It follows a 2.5 per cent drop in March, and came as the Insolvency = Service=20 reported a 58 per cent jump in the number of companies going into = administration=20 in the first quarter of this year.
The Halifax data will be of most immediate concern to householders. = Property=20 values are down 0.9 per cent on the year, the worst performance since = 1996, with=20 only Scotland bucking the trend.
The figures are in line with those from Nationwide, and demonstrate = how badly=20 the credit crunch is hitting the British economy as banks and building = societies=20 choke off lending to homebuyers and businesses.
March witnessed a rush of banks withdrawing products as interbank = lending=20 rates (Libor) soared and the Bank of England reported worsening credit=20 conditions for companies.
Personal insolvencies rose to 25,264 in the first quarter of this = year, up=20 1.7 per cent on the last quarter, and at 3,210, corporate liquidations = rose by 4=20 per cent on the year. The tally of 858 firms placed in administration = was one of=20 the highest in two decades.
Analysts also predicted that the situation would not improve quickly: = Liz=20 Bingham, head of corporate restructuring at Ernst & Young, said: = "Insolvency=20 may be the only option available for increasing numbers of individuals. = Credit=20 will be expensive and in short supply just as debts hit record highs =96 = over 160=20 per cent of post-tax income, versus around 100 per cent in 2001.
"Meanwhile, price falls are reducing options for home equity = withdrawal and=20 inflation is eating into disposable income."
Malcolm Barr, UK economist at JP Morgan, added: "House price declines = are=20 running at just over a 7 per cent quarter-to-quarter annualised rate. = There is=20 no evidence that the decline in prices is tempting potential buyers back = into=20 the market, and the fall in house prices is gaining momentum."
Concern is increasingly focusing on the scale of the slump. The = economist=20 David Blanchflower, a member of the Bank of England's Monetary Policy = Committee,=20 suggested on Thursday that "a correction of one third in house prices = does not=20 seem implausible in the UK over a period of two or three years if house = price=20 to-earnings ratios are to be restored to more sustainable levels."
Leading indicators also suggest a hefty drop. Martin Ellis, chief = economist=20 at Halifax, said: "The number of new buyers interested in home purchase = fell for=20 the 16th successive month, highlighting the decline in housing demand." = This=20 month the Royal Institute for Chartered Surveyors put expectations for = house=20 prices at their lowest since 1978, while mortgage approvals are running = at half=20 last year's rate.
Repossession orders =96 which usually herald more actual = repossessions and=20 evictions =96 totalled over 100,000 in 2007, the highest since 1990. An = increase=20 in lending by the banks may come with the Bank of England's =A350bn = Special=20 Liquidity Scheme, but few expect rapid relief. Problems in the housing = market=20 are having a knock-on effect on the construction industry. According to = the=20 Chartered Institute for Purchasing and Supply, confidence dropped to its = weakest=20 levels in 1998 as levels of housing and commercial construction activity = "fell=20 markedly".
Evidence of continued weakness in the economy will increase the = chances of a=20 cut in interest rates when the Bank of England makes its next = announcement on=20 Thursday, although most observers expect no = change.
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