Posted: Sat Nov 17, 2007 4:37 pm
Looks like the 4th year EQ release is going to be peanuts for creditors from next year. Maybe a 1st year release is better for them before values in properties fall.
As quoted.
"The house price boom has ended, the Nationwide said today(16th Nov) Price growth will collapse next year from the current annual rate of nearly 10% to zero.
That will make next year the worst year for house prices in more than a decade.
The dire warning from the biggest building society comes amid fears of a severe economic downturn, with the turmoil of the global credit crunch biting the British consumer.
House prices in London and the South-East are forecast by the Nationwide to rise by just 1% against the roaring double digit inflation of recent years. The values of many homes across large parts of England - mainly in the North but also in the West Country - are even likely to fall.
'A number of factors suggest that house price inflation will drop from its current rate of 9.7% to nothing by this time next year,' said Fionnuala Earley, Nationwide's chief economist.
Ms Earley said a number of factors are piling up to bring a chill blast into the housing market. 'There is a subdued outlook on the demand side of the market, including lower buy-to-let demand, a slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations.
'A global economic boom allowed London to benefit from being an international financial centre. But economic tailwinds are being replaced by headwinds.'
The Nationwide is calling on the Bank of England to cut interest rates by three quarters of a per cent.
Prices are also set to fall by 2% in the North and North West, while they will slide by 1% in the South West, Wales and Yorkshire and Humberside.
Nationwide added that higher interest rates and house prices were also likely to cool the booming buy-to-let sector, which has replaced some of the demand from first-time buyers in recent years. It said with lower rental yields, investors had been relying on house price growth to deliver good returns, but with this now slowing there was likely to be less interest in new buy-to-let investments, particularly among those with shorter investment horizons.
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As quoted.
"The house price boom has ended, the Nationwide said today(16th Nov) Price growth will collapse next year from the current annual rate of nearly 10% to zero.
That will make next year the worst year for house prices in more than a decade.
The dire warning from the biggest building society comes amid fears of a severe economic downturn, with the turmoil of the global credit crunch biting the British consumer.
House prices in London and the South-East are forecast by the Nationwide to rise by just 1% against the roaring double digit inflation of recent years. The values of many homes across large parts of England - mainly in the North but also in the West Country - are even likely to fall.
'A number of factors suggest that house price inflation will drop from its current rate of 9.7% to nothing by this time next year,' said Fionnuala Earley, Nationwide's chief economist.
Ms Earley said a number of factors are piling up to bring a chill blast into the housing market. 'There is a subdued outlook on the demand side of the market, including lower buy-to-let demand, a slowing economy, tighter credit conditions, stretched affordability for first-time buyers and lower house price expectations.
'A global economic boom allowed London to benefit from being an international financial centre. But economic tailwinds are being replaced by headwinds.'
The Nationwide is calling on the Bank of England to cut interest rates by three quarters of a per cent.
Prices are also set to fall by 2% in the North and North West, while they will slide by 1% in the South West, Wales and Yorkshire and Humberside.
Nationwide added that higher interest rates and house prices were also likely to cool the booming buy-to-let sector, which has replaced some of the demand from first-time buyers in recent years. It said with lower rental yields, investors had been relying on house price growth to deliver good returns, but with this now slowing there was likely to be less interest in new buy-to-let investments, particularly among those with shorter investment horizons.
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