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House Prices Fall at Fastest Rate Since 1931
House prices are falling at the fastest rate since the Great Depression, with the number of owners in negative equity trebling in the last month alone.
Figures from the Halifax show the average house price slumped by 12.7 per cent since August last year – leaving the average price at just £174,178.
This is a fall of more than £25,000 over the last year and is the fastest rate of decline since Halifax started collecting its monthly data in 1983.
But leading City economists said that the housing market has never witnessed an annual fall of more than 10 per cent except for in 1931 – the year when Britain was hit by the aftermath of the Wall Street crash and sterling collapsed.
David Owen, chief European economist at Dresdner Kleinwort, said: “It is a major collapse. The last correction in house prices was around 20 per cent from peak to trough. What we are seeing in terms of declines at the moment – those sorts of falls are absolutely unprecedented, certainly in living memory; you would have to go back to the 1930s to find anything similar.
“There is still not an awful lot of evidence of mass distress selling. If unemployment starts to rise and distress selling happens, this will become very nasty indeed.”

Agency Sales Fall to Just One a Week
The number of homes changing hands has plunged to a record low — with some estate agents selling only one home per week — according to new figures from Rics.
It said that, on average, estate agents made 12.7 sales in three months to August, the lowest activity since it began tracking transactions in 1978.
And it blamed the slump on speculation surrounding the Government’s recent changes to stamp duty as well as the difficulty in securing an affordable mortgage.

Fannie and Freddie: The World’s Biggest Bail-Out The world's biggest financial bail-out has been staged by the American government in a bid to ease the global credit crisis.
The country's two biggest mortgage companies were nationalised amid fears that their bankruptcy would have triggered economic collapse.
And the multibillion-dollar rescue of Fannie Mae and Freddie Mac - dwarfing the UK nationalisation of Northern Rock - will be funded by the American taxpayer.
It represents a potential liability of £2,900 billion.
The move has been welcomed by mortgage experts in the UK, who said it should inject some confidence into the British housing market.
Jonathan Cornell, managing director at Hamptons mortgage broker, said: "I don't think we should expect a white knight to come riding to the rescue of the UK market as a result of this. But it should help give confidence to international lenders to lend to British banks and building societies. And anything that supports the UK mortgage market has to be welcome. It's a slow step to recovery."

Darling Set to Thaw UK Mortgage Freeze
Alistair Darling is preparing to intervene to stimulate Britain's dormant mortgage market, according to senior government officials.
The Chancellor, who said the nationalisation of Fannie Mae and Freddie Mac would help the British economy, is waiting for publication of the Crosby Report at the end of the month before acting.
But it seems Darling is considering most closely ideas to renew or extend the Bank of England's Special Liquidity Scheme (SLS) and another to create a government guarantee for high-quality mortgage securities.
The SLS, established in April, allows banks to swap mortgage-backed bonds issued before the end of 2007 for much more tradable Treasury bills that can then be used to raise funds in the markets. Mr Darling is understood to favour, as a minimum, a renewal of the existing scheme beyond its scheduled October close. He is also said to be contemplating a multi-billion-pound plan for the government itself to guarantee temporarily high-quality mortgage-backed securities.

SH Note: This could genuinely help. But it doesn’t alter the fact that FTBs are still lumbered with having to find impossibly high deposits and nor does it mean they’ll want to buy into a declining market.

Mortgage Rates Fall Back to Pre-Credit Crunch Levels… Mortgage rates have fallen back to the level they were before the credit crisis.
The average interest rate on a two-year fixed-rate mortgage - the most popular deal taken out by homeowners - has dropped from a peak of 7.08 per cent at the beginning of July to 6.39 per cent, according to Moneyfacts.
Two-year rates have not been this low since July 2007, before Northern Rock was forced to borrow £26 billion from the Bank of England, and the phrase ‘credit crunch’ became a household term.
The figures confirm that while the economy and the housing market continue to slide downwards, the worst seems to be over in the mortgage market. They follow two months of steady rate cutting from the UK's leading banks.
Lloyds TSB and its mortgage lending arm Cheltenham & Gloucester as well as Abbey and the Royal Bank of Scotland are cutting fixed rates this week, with other leading providers are expected to follow suit.
However, while mortgage rates have retreated to the level they were a year ago, finance experts point out that last summer the Bank of England base rate was 5.75 per cent - considerably higher than the current 5 per cent.
The best deals are only available for buyers with 10 per cent or even 25 per cent deposits.

Repossessions and Arrears hit Middle-Class Families Most Mortgage arrears and home repossessions are rising fast among higher earning households, a report by Moody’s suggests.
The finding indicates that serious housing debt problems caused by the credit crisis are not limited to those on low incomes. Moody's, examined the situation of people who on average owed 66 per cent of the value of their home - far less than millions of riskier borrowers. The proportion of homeowners in arrears for 90 days or more has risen by half, the report found. It stood at 0.9 per cent at the end of June, compared with 0.6 per cent at the same point in 2007.

The Impact of Government’s Housing Measures? “Bugger All”… Alastair Stewart, housing analyst at Dresdner Kleinwort, said of the government’s stamp duty holiday housing measures announced last week: “This will have the square root of bugger all impact - that is if it doesn’t make things worse. This suite is so complex and so hazy that any first-time buyers could be put off.”
The government has already admitted it may miss its targets for affordable housing, despite its £1bn housing rescue package.
Richard McCarthy, director general of housing and planning at CLG, admitted the government might not be able to build the number of affordable homes it planned to over the next three years because the amount of subsidy needed for each home was likely to rise. And the £400m affordable housing programme announced as part of the package last week does not allocate any new money, but rather allows the department to spend money planned for 2011 now.
Andrew Wells, director of new homes and sustainable development at the department had previously admitted: “More generous grant rates will be available to organisations building affordable homes. We will be prepared to fund to a higher level.”

SH Note: If McCarthy himself admits the targets will be missed then Alastair Stewart’s robust analysis is almost certainly accurate.

Redrow Sees Profits Slump
Redrow saw its annual profits almost halve as it battled "unprecedented market conditions".
The firm reported pre-tax profits of £65.5m in the year to 30 June, while revenue dropped 22% to £650m during the period. It cut the value of its land bank by £260m and warned that the squeeze on mortgages could continue until 2010. But it said it had secured access to an extra £450m of debt as it tried to cope with the gloomy conditions. The access to the new debt would help it manage the business "through these exceptional markets", the firm confirmed.
The firm's chairman, Alan Bowker, called on the government to act to boost the availability of mortgages to try to stimulate the housing market.
"It is our view that there may be no meaningful increase in the availability of finance in the wider mortgage market before 2010," said Bowker.
The slowing demand for new homes also dented the value of its land bank. The firm said that that when this write-down was taken into account, it had seen an annual loss of £193.9m.
Redrow has announced it has struck a deal with its banking partners until 2011, allowing it a £450m debt facility to cover the next three years.
It also confirmed that it had made more than 500 redundancies, reducing its headcount by approximately 40%.

Taylor Wimpey sells Taylor Woodrow to Vinci Taylor Wimpey has sold its Taylor Woodrow construction business to Vinci PLC for £74m in cash. The firm says the cash from the disposal will be used for “general group purposes”.
Pete Redfern, chief executive of Taylor Wimpey, told the press: "The construction business has developed an excellent reputation in its chosen markets and has been a valued part of Taylor Wimpey. However, given Taylor Wimpey's focus on its core housebuilding activities, we have been talking to Vinci since February this year and I'm pleased to announce a successful conclusion. The opportunities for the construction business are greater within a group focused on construction and facilities management, which will benefit its clients, staff and other stakeholders."
In the year ending 31 December 2007, operating profit for the UK business of Taylor Woodrow construction was £17.8m.

Crest Lenders’ Deal “Imminent”
Sources close to the talks between Crest Nicholson and its banks have suggested that a deal to relax its lending covenants is imminent. It is understood the £676m-turnover company handed a plan to its lenders last week to persuade them to relax the arrangements and the reaction was favourable.

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