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A U.K. HOUSING DOUBLE DIP?

We’re not the only ones on the verge of a double dip in housing.  Deutsche Bank believes the UK housing market is ready for another move lower:

“There has been further evidence published this week to suggest that the UK housing market is slowing. A number of house price indicators have fallen over recent months, while we have also seen evidence of weaker activity.

Real house prices have not fallen as much relative to their 2007 peak as they did in the early 1990s correction. In the initial adjustment they did fall more sharply, but subsequently gained ground to stand ‘only’ around 20% below their highs (they fell by a total of 35% during a period of over six years in the 1990s). However, we think there is further to go in the adjustment, and after remaining broadly static in 2010 we see a 5% nominal decline in 2011.

However, with net new lending at exceptionally low levels, our credit impulse analysis suggests that there may be resistance to house prices falling any further without an absolute decline in the level of mortgage debt. This partly explains our forecast for relatively modest price falls next year. While there is a limit to how far nominal house prices might decline, real house prices could well fall for some time thereafter.”

Source: DB

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