The bright side of the credit crunch

I know that people are hurting out there and I genuinely feel for them. Bart wrote about it in a way that I wish I could have on his blog. For Bart and I this credit crunch thing may have a silver lining. House prices in MK have always been high due partly to our close proximity (just 45 minutes by train) to London, and the great range of leisure and business opportunities within the city.

We have lived in the same house close to ten years now and we are both getting itchy feet, but we do not have the purchasing power to move up the housing ladder. Maybe now things are moving in our direction. Over the past couple of months we have seen houses that a year ago would have been close to the £300,000 (or $600,000 at the exchange rates of the time) mark are now much more realistically priced - almost affordable, assuming that you are able to get a new mortgage. I understand that this is a nightmare if you bought at the top of the market, but it's good news for people like us who have stayed put for some time and are not in negative equity (only just), and have reasonably safe employment.

The story below gives a view on how the housing market is being affected here today.


UK house prices 'continue fall'

The fall echoed the monthly drop in August
UK house prices have fallen for an 11th consecutive month, dropping by 1.7% in September, according to the Nationwide.

The lender recorded a 12.4% annual drop in prices, pushing the cost of the average UK home down to £161,797, more than £20,000 less than a year ago.

Nationwide said the pace of house price falls had stabilised, but warned the next year or two would be "difficult".

House prices were down year-on-year across the UK, with southern England suffering worse than the north.

The rate of fall, which was the same as in August, has remained relatively unchanged in the past three months.

"Casting back one year, there have been some astonishing and unpredictable developments in the housing and financial markets," said Fionnuala Earley, Nationwide's chief economist.

But she added that in the long-term there was no reason why house prices would not continue to grow in real terms even though there was a "sharp correction" now.

How long the correction lasts and how deep the fall in prices is depends largely on sentiment, as well as an end to the turmoil in the financial markets, she says.

Her analysis comes shortly after the Council of Mortgage Lenders suggested that predicting the short term course of house prices was "futile".

Regional breakdown

The Nationwide has also released figures showing prices during the third quarter of the year in different areas of the UK.

Ms Earley said that a distinctive feature of the July to September period was the accelerating fall in house prices in the south of England compared with the north.

Four of the six regions registering double-digit price declines were in the South, with East Anglia and the South West showing the biggest annual drops - both 11.4%.

Northern Ireland showed the steepest decline in house prices across the UK, which are now 29.8% lower than a year ago.

So when you next come to visit we may have taken advantage of this situation and be in a new home.