House prices have a lot further to fall

If you own property, look away now because what follows is ugly reading. Those green shoots Margaret Beckett thought she saw in the property market were illusory, and the 2.0 percent upswing in house prices that Halifax recorded for January has been more than offset with a 2.3 percent fall last month. So far they are down 20 percent from their peak, and it won’t get any better. Sure, mortgage rates are falling – but banks are wisely demanding huge deposits now. So the actual cost of getting into the market – ie, he deposit required as a share of average income – is the highest since data began 35 years ago.

Anyone thinking of buying a property should heed this sentence in note today from Citi:
 “We doubt that house prices have yet reached their low, and expect that prices will fall a further 10%, and perhaps 20% from here.”