The UK Housing Slump in Charts
Geoff Riley
Tutor2u Economics
December 2008
40
The Housing Recession Deepens
House prices
nowchange
falling
faster
Annual percentage
in UK house
prices than in
previous property recessions
30
40
30
Nationwide
Percent
Halifax
20
20
10
10
0
0
-10
-10
-20
-20
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Source: HBOS and Nationwide Data
UK House Prices, National asking price trend
The asking price
trendwww.rightmove.co.uk
tells us it is a buyers
Source: Rightmove
200
market
200
190
180
180
170
170
160
160
150
150
140
140
130
130
Index
190
Jan
May Sep
04
Jan
May Sep
05
Jan
May Sep
06
Jan
May Sep
07
Jan
May Sep
08
Source: Reuters EcoWin
Meltdown for Builders? Construction Industry Confidence
% balance of firms saying that they are confident about the next three months
Confidence
is melting away in construction
50
50
40
40
30
30
20
20
10
10
0
0
-10
-10
-20
-20
-30
-30
-40
-40
-50
-50
-60
-60
-70
-70
Jan
Apr
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
04
05
06
Confidence indicator
Employment expectations
Jan
Apr
Jul Oct
07
Order books
Jan
Apr
Jul Oct
08
Price expectations
Source: Reuters EcoWin
Employment in Construction and UK House Prices
Jobs will go
in building
…UKcan
public
sector
Employment
(millions) and average
house prices
(£s)
investment projects limit the downside?
200000
200000
180000
180000
160000
160000
140000
140000
120000
120000
100000
100000
80000
80000
2.25
Construction Sector Employment
2.20
2.20
2.15
2.15
2.10
2.10
2.05
2.05
2.00
2.00
1.95
1.95
1.90
1.90
Q1
Q3
02
Q1
Q3
03
Q1
Q3
04
Q1
Q3
05
Q1
Q3
06
Q1
Q3
07
millions
2.25
Person (millions)
£s
Average UK House Prices
Q1
08
Source: Reuters EcoWin
Number of
United Kingdom, Housing Starts, Total in England
New housing
startsNUmber
have
collapsed – supply
per month
responding to falling demand
50000
50000
45000
45000
40000
40000
35000
35000
30000
30000
25000
25000
20000
20000
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
Source: Reuters EcoWin
12.5
12.0
12.0
11.5
11.5
11.0
11.0
10.5
10.5
10.0
10.0
9.5
9.5
9.0
9.0
8.5
8.5
8.0
8.0
7.5
7.5
Q1
Q3
00
Q1
Q3
01
Q1
Q3
02
Q1
Q3
03
Q1
Q3
04
Q1
Q3
05
Q1
Q3
06
Q1
Q3
07
billions
GBP (billions)
12.5
Capital Investment in New Dwellings
And capital
investment
inprices,
new
dwellings
is
Investment
spending at constant 2002
quarterly
data
falling sharply – a casualty of the recession
Q1
08
Source: Reuters EcoWin
for Borrowers - Mortgage Lending Rates
BaseCompeting
rates are
down
butpermortgage
interest
Monthly figures,
cent
rates have only dipped a little
Halifax
Percent
9
9
8
8
7
7
6
6
5
5
4
4
3
3
2
2
96
97
98
99
Halifax Standard Variable Rate
00
01
02
03
04
Nationwide Base Mortgage Rate
05
06
07
08
09
Policy Rates, Bank Rate
Source: Reuters EcoWin
3.4
3.3
Ratio
3.2
Lending and Affordability of Housing for FTBs
Prices
are more affordable for first time
buyers – but mortgage availability is poor
First-time buyers, income multiple
3.3
3.2
3.1
3.1
3.0
3.0
2.9
2.9
2.8
2.8
2.7
2.7
2.6
2.6
2.5
2.5
21
20
Percent
3.4
21
Interest payment as % of income
20
19
19
18
18
17
17
16
16
15
15
14
14
13
13
12
12
11
11
Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May
02
03
04
05
06
07
08
Source: Reuters EcoWin
80
Fixed and Variable Rate Lending and Remortgages
Tracker
rates have
become
more popular – I
Per cent of
total mortgage loans
wonder why!
80
70
70
60
60
Percent
Fixed
50
50
40
40
Standard Variable Rate
30
30
Tracker Rates
20
20
10
10
Discounted
0
0
Jan
Apr
Jul
Oct
Jan
05
Discounted % of loans
Fixed % of loans
Apr
Jul
06
Oct
Jan
Apr
Jul
07
Oct
Jan
Apr
08
Jul
SVRs % of loans
Tracker % of loans
Source: Reuters EcoWin
Is London Immune?
Nowhere is recession proof!
United Kingdom, House Prices, Halifax, Seasonally Adjusted, £
350000 Greater London, standardised average price 269.723k
UK, standardised average price
350000
172.027k
300000
250000
250000
200000
200000
150000
150000
100000
100000
50000
50000
0
0
GBP
300000
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Greater London, standardised average price
UK, standardised average price
Source: Reuters EcoWin
17.5
15.0
15.0
12.5
12.5
10.0
10.0
7.5
7.5
5.0
5.0
2.5
2.5
0.0
0.0
-2.5
-2.5
-5.0
-5.0
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
billions
GBP (billions)
17.5
Mortgage Equity Withdrawal
And fewer
property
owners
are
prepared
to
£ billion per quarter, seasonally
adjusted, source:
Bank of
England
extract equity from their homes
07 08
Source: Reuters EcoWin
Number of New Mortgage Loans
Mortgage supply dries up
Monthly - loans for house purchase
Number of
150000
150000
140000
140000
130000
130000
120000
120000
110000
110000
100000
100000
90000
90000
80000
80000
70000
70000
60000
60000
50000
50000
40000
40000
30000
30000
02
03
04
05
06
07
08
Source: Reuters EcoWin
Growth, Jobs and House Prices
The
property
recession
will amplify
theprices
% growth in GDP and percentage
of the labour force unemployed,
index of UK house
broader economic downturn
Index
650
650
550
550
450
450
350
350
250
Index of UK House Prices 1983=100
250
150
150
10
9
8
7
6
5
4
3
2
1
0
-1
-2
-3
9
7
Percent
Unemployment rate (%)
5
3
1
-1
Real GDP growth
-3
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
Source: Reuters EcoWin
UK House Price Inflation and the Balance of Trade in Goods
But might just help our trade deficit!
Annual percentage change in UK house prices and monthly trade balance in goods
30
25
30
25
House Price Inflation
20
20
10
10
5
5
0
0
-5
-5
-10
-10
-15
-15
-2
-2
-3
-3
-4
-4
-5
-5
GBP (billions)
-6
-6
Monthly Balance of Trade in Goods (£ billion)
-7
-7
-8
-8
-9
-9
00
01
02
03
04
05
06
07
billions
15
Percent
15
08
Source: Reuters EcoWin