The UK Housing Slump in Charts Geoff Riley Tutor2u Economics December 2008.
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Transcript of The UK Housing Slump in Charts Geoff Riley Tutor2u Economics December 2008.
The UK Housing Slump in Charts
Geoff Riley
Tutor2u Economics
December 2008
House prices now falling faster than in previous property recessions
Annual percentage change in UK house prices
The Housing Recession Deepens
Source: HBOS and Nationwide Data
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
-20
-10
0
10
20
30
40
Pe
rce
nt
-20
-10
0
10
20
30
40
Nationwide
Halifax
The asking price trend tells us it is a buyers market
Source: Rightmove www.rightmove.co.ukUK House Prices, National asking price trend
Source: Reuters EcoWin
Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep04 05 06 07 08
130
140
150
160
170
180
190
200
Ind
ex
130
140
150
160
170
180
190
200
Confidence is melting away in construction% balance of firms saying that they are confident about the next three months
Meltdown for Builders? Construction Industry Confidence
Confidence indicator Employment expectations Order books Price expectationsSource: Reuters EcoWin
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct04 05 06 07 08
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
40
50
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
40
50
Jobs will go in building … can public sector investment projects limit the downside?
Employment (millions) and average UK house prices (£s)
Employment in Construction and UK House Prices
Source: Reuters EcoWin
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q102 03 04 05 06 07 08
mill
ion
s
1.90
1.95
2.00
2.05
2.10
2.15
2.20
2.25
Pe
rso
n (
mill
ion
s)
1.90
1.95
2.00
2.05
2.10
2.15
2.20
2.25Construction Sector Employment
80000
100000
120000
140000
160000
180000
200000
£s
80000
100000
120000
140000
160000
180000
200000Average UK House Prices
New housing starts have collapsed – supply responding to falling demand
NUmber per month
United Kingdom, Housing Starts, Total in England
Source: Reuters EcoWin
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
20000
25000
30000
35000
40000
45000
50000
Nu
mb
er
of
20000
25000
30000
35000
40000
45000
50000
And capital investment in new dwellings is falling sharply – a casualty of the recession
Investment spending at constant 2002 prices, quarterly data
Capital Investment in New Dwellings
Source: Reuters EcoWin
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q100 01 02 03 04 05 06 07 08
bill
ion
s
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
GB
P (
bill
ion
s)
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
Base rates are down but mortgage interest rates have only dipped a little
Monthly figures, per cent
Competing for Borrowers - Mortgage Lending Rates
Halifax Standard Variable Rate Nationwide Base Mortgage Rate Policy Rates, Bank RateSource: Reuters EcoWin
96 97 98 99 00 01 02 03 04 05 06 07 08 09
2
3
4
5
6
7
8
9
Pe
rce
nt
2
3
4
5
6
7
8
9Halifax
Prices are more affordable for first time buyers – but mortgage availability is poor
Lending and Affordability of Housing for FTBs
Source: Reuters EcoWin
Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May02 03 04 05 06 07 08
11
12
13
14
15
16
17
18
19
20
21
Pe
rce
nt
11
12
13
14
15
16
17
18
19
20
21Interest payment as % of income
2.5
2.6
2.7
2.8
2.9
3.0
3.1
3.2
3.3
3.4
Ra
tio
2.5
2.6
2.7
2.8
2.9
3.0
3.1
3.2
3.3
3.4First-time buyers, income multiple
Tracker rates have become more popular – I wonder why!
Per cent of total mortgage loans
Fixed and Variable Rate Lending and Remortgages
Discounted % of loans Fixed % of loans
SVRs % of loans Tracker % of loans
Source: Reuters EcoWin
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul05 06 07 08
0
10
20
30
40
50
60
70
80
Pe
rce
nt
0
10
20
30
40
50
60
70
80
Standard Variable Rate
Tracker Rates
Discounted
Fixed
Nowhere is recession proof!United Kingdom, House Prices, Halifax, Seasonally Adjusted, £
Is London Immune?
Greater London, standardised average price UK, standardised average priceSource: Reuters EcoWin
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
0
50000
100000
150000
200000
250000
300000
350000
GB
P
0
50000
100000
150000
200000
250000
300000
350000 Greater London, standardised average price 269.723kUK, standardised average price 172.027k
And fewer property owners are prepared to extract equity from their homes
£ billion per quarter, seasonally adjusted, source: Bank of England
Mortgage Equity Withdrawal
Source: Reuters EcoWin
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
bill
ion
s
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
GB
P (
bill
ion
s)
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
Mortgage supply dries upMonthly - loans for house purchase
Number of New Mortgage Loans
Source: Reuters EcoWin
02 03 04 05 06 07 08
30000
40000
50000
60000
70000
80000
90000
100000
110000
120000
130000
140000
150000
Nu
mb
er
of
30000
40000
50000
60000
70000
80000
90000
100000
110000
120000
130000
140000
150000
The property recession will amplify the broader economic downturn
% growth in GDP and percentage of the labour force unemployed, index of UK house prices
Growth, Jobs and House Prices
Source: Reuters EcoWin
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
-3-2-10123456789
10
Pe
rce
nt
-3
-1
1
3
5
7
9
Real GDP growth
Unemployment rate (%)
150
250
350
450
550
650
Ind
ex
150
250
350
450
550
650
Index of UK House Prices 1983=100
But might just help our trade deficit!Annual percentage change in UK house prices and monthly trade balance in goods
UK House Price Inflation and the Balance of Trade in Goods
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08
bill
ion
s
-9
-8
-7
-6
-5
-4
-3
-2
GB
P (
bill
ion
s)
-9
-8
-7
-6
-5
-4
-3
-2
Monthly Balance of Trade in Goods (£ billion)
-15
-10
-5
0
5
10
15
20
25
30
Pe
rce
nt
-15
-10
-5
0
5
10
15
20
25
30
House Price Inflation
