Home owners were left in a state of panic yesterday after news that house prices had fallen at a record rate during September according to figures releasedÂ by the Halifax.
Over Â£6,000 was wiped of the price of the average house in SeptemberÂ proving that the much touted recovery in the housing market is nothing more than hot air and wishful thinking for anyone who is exposed to the property market and in or facing negative equity.
Actually the news comes as no surprise at all to anyone with half a brain and the Â£6,000 figure includes London in the statistical methodology.
Remove London from the index and the picture is much much much worse but still the media seems to be in a state of shock that such a price fall should occur and I fail to see why the nation is in a state of shock.
After all the housing market overshot any sustainable level over 8 years ago when lenders decided that they would lend anything to anyone regardless of the sustainability in the housing market or people's ability to pay back the loan.
Because you're always safe in bricks and mortar.
Has anyone wondered why the banks are cutting back on their exposure to the property market and tightened the lending criteria for mortgages?
It's simple, they know there is an almighty crash coming and house prices will fall off the edge of a cliff.
You don't have to search to the ends of the earth to gather enough information on the internet and using more traditional forms of investigation (i.e. compare mortgage products in the banks themselves) to realise that the current gloomy economic situation and the future austerity program and cuts is not exactly conducive for any type of property recovery.
If, over the next 3 years, we see a substantial rise in unemployment and wage inflation remains subduedÂ then expect the average house price fall to levels not seen since the late seventies/early eighties.
"Bah! that will never happen!" I hear you cry.
People need to remember that prices and the uphold of them are only a reflection of the economic environment they find themselves in.
If no one can afford to raise the money just for a deposit (let alone the repayments) then no one can afford to buy a house and that puts huge downward pressure on house prices.
Then there is the spectre of forced sales, which is never pleasant for anyone and no one really wants to talk about it because in a world where the banks (should they fall on hard times) are bailed out by the tax payer, then theÂ banks take the house from said tax payer should he fall on hard times pulling the rug from under said tax payer.
But forced sales are still a reality and the end of the home-owner-ist dream.Â Foreclosure is an unpleasant by-product of cutbacks which will hit the private sector as much if not more than the public sector cuts due the huge scaling back of the private business payments that dwarfs the public sector.
There has apparently been an 11% increase (according to figures released today byÂ LSL) in house sales but that only goes to show in conjunction with the Halifax figures, home owners are in panic selling mode because houses are beginning to shift but at reduced prices and probably to the last few cash buyers out there or the cash rich who can afford to muster a deposit.
Your deposit could buy a house outright in a few years time so unless you're mortgage free I would not go near the property market (unless you get at least 50% off asking price)Â until there is full confidence in the economy and growth is observed the other side of the debt mountain.
This may seem alarmist but it looks like the powers that be are stepping back slowly from propping up the property market.
High house prices are not in the nation's best interests, in fact they are the major reason we are in this mess.
We are keen to push the liability of our debt onto our children so let us at least give them some chance and allow them affordable housing.
This will not end well.