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NEW HOPE FOR END TO SLUMP

Fears of falling house prices lead to widespread gloom

Saturday May 17,2008

By Martin Evans

Comment Speech Bubble Have your say(18)

THE country began its recovery from the credit crunch last night as the economy showed the first significant signs of improving.

After weeks of gloom, compounded by fears over falling house prices, rising food bills and soaring fuel costs, markets finally began to rally, offering the promise of financial relief for millions.

Shares ended a miserable period on the stock market, finishing on a four-month high, up 52.5 points on the day. At one point the FTSE 100 index soared to its highest peak this year, and by the end of trading £13billion had been added to the value of our top quoted companies.

*** CLICK HERE FOR THE DAILY EXPRESS' COST OF LIVING INDEX ***

CONFIDENT: Estate agent Russell Quirke

The long overdue rally signalled good news for savers, borrowers and those who have invested in their futures through pension funds.

It also pointed to a desperately needed return of confidence in the worldwide economy. There was further welcome news for the housing market, a day after the Daily Express revealed that major lenders were finally beginning to cut their loan rates.

Figures to be released on Monday are likely to show that the average asking price for new properties increased by 1.2 per cent last month, up by £2,879 to a new record of £242,500.

The market’s been incredible lately

Colin Morton

*** CLICK HERE FOR THE ALL THE LATEST CREDIT ADVICE TIPS ***

The figures from Rightmove indicate that, nationally, the market is defying pessimistic forecasts.

The stock market performance took some investors by surprise. It coincided with impressive annual results from companies such as British Airways, which announced profits up 44 per cent to £680million after tax.

Analysts were last night predicting that the financial thaw is likely to continue, shoring up confidence and spreading the belief that the predicted financial crisis may have been overplayed.

Colin Morton, an investment director at Rensburg Fund Management, said: “The market’s been incredible lately. People are getting a bit more optimistic that life is getting a little better.”

Carsten Klude, chief economist with MM Warburg, agreed: “Optimism seems to have returned. We are more positive for the coming weeks and months.”

Henk Potts, an equity strategist with Barclays Wealth, said the stock market performance had been encouraging and there remained much to be optimistic about. He said: “The market has taken its lead from the US. Retail sales were higher than expected, inflation has proved to be less of a problem and housing numbers have been better than anticipated.

“So with things looking more encouraging in America, confidence is higher.” He added: “There is a lot to be positive about. The doom and gloom may have been overplayed a little and there is a growing optimism that banks can win the war against the credit crunch and that is filtering through to the stock market.”

But some experts were more cautious. Justin Urquhart Stewart, director of Seven Invest Management, said: “The indicators are still that there will be a recession in some parts of the economy.”

A spokesman for Capital Economics, an independent economic research consultant, said it was too simplistic to state that the whole country would be affected by a downturn in house prices.

He said: “Our view is that there will be an eight per cent drop in house prices by the end of 2008 and a further 10 per cent by the end of 2009, but that is a national average. Regionally, things vary.”

Estate agent’s confident gamble on rising market

ONE estate agent is so confident the housing market will bounce back he has offered to refund buyers if their home falls in value.

Russell Quirke, above, has promised to make up the difference for anyone who buys a house through him but finds the value has dropped when they come to sell in five years.

Mr Quirke, who helps to run the branch of estate agents Quirke Deakin in Thurrock, Essex, said: “We are confident that prices will not dip significantly.

“My family has been in this business since 1957 and in my experience prices have never gone down and stayed down.”

Property experts believe Mr Quirke’s confident predictions could be borne out, since the South-east is likely to escape any significant housing crash.

A BIT OF EDUCATION FOR THE PEOPLE PT 2!

18.05.08, 1:02pm

And lurking behind the subprime crisis is the spectre of negative equity. City economists have been making increasingly bleak predictions about house prices which have now fallen for five months. A note by ABN AMRO, the investment bank, said — I quote for its full gore — ‘The UK looks more vulnerable to a housing correction than the US. The degree of overvaluation looks more acute, nearing 50 per cent in the UK compared with 25 per cent in the US. The ‘prosperity’ which Gordon Brown has boasted about for the last 11 years was bought on the never-never, a ‘golden age’ on tick. Householders were encouraged to borrow against their inflated house prices — with euphemistic phrases, like ‘equity withdrawal’, making such transactions sound like a visit to a cashpoint. Now, the ten-year debt binge is ending in the hangover which, with each morning’s headlines, becomes that bit more painful. Let’s spell it out: British households are not just more indebted than their counterparts in America, but more than in any other western European or G7 economy.

• Posted by: Serious • Report Comment

A BIT OF EDUCATION FOR THE PEOPLE!

18.05.08, 12:50pm

Britains housing boom has been one of the biggest in the western world and it is highly likely that once the dust settles in some 2-3 years time, it will turn out to be one of the biggest housing busts in the west. The Housing bust of 2008 will be followed by a sharp slow down in economic activity during 2009 towards recession.
“Merrill's figures were worse than expected. People are now immune to the numbers because they know there is worse to come.”

• Posted by: Serious • Report Comment

JUST TYPE THIS IN THIS WEB ADDRESS

17.05.08, 7:39pm

Below is the Express article on it all being good in March. Just copy & paste it into your web address.

http://www.dailyexpress.co.uk/posts/view/39552

To have an article headed "New hope for end to slump" don't you need to report a slump first. You just want to keep writing its all ok. But its not. Just look at all the other news papers, TV news etc. Your the only paper saying its ok. You can't just stick your head in the sand & pretend its all going to go away.

• Posted by: ChrisMoy • Report Comment

HANG ON A MINUTE.

17.05.08, 7:22pm

Didn't you guys say that there was no slump, crash thing going on at all. So whats the good news. I thought it was all ok. You really need to get your story straight. Not just make it up to suit your needs. This isn't news.... Is it. Just check out the BBC website for the real story.

• Posted by: ChrisMoy • Report Comment

THE IMPROVING REGRESSIVE.

17.05.08, 6:38pm

Much as I respect the 'Express' for all it stands for, I was disappointed with his article. For sure everyone and his dog will be trying to negate out as many bad effects as possible from this slump/depression/political bad management, but it's going to take time and bloodletting. Hey!! I appreciate optimism llike any positive thinking guy - but dish out the news as you know to be realistic.

• Posted by: bluenote • Report Comment

MAN EATS HAMSTER

17.05.08, 5:27pm

I have seen a few headlines in my time but this one takes the biscuit. Despite all the clear evidence of imminent stagflation and an imminent economic slowdown, the Express maintains that the "slump" has not only already arrived but is now rapidly going away! Well I must have missed it. Lucky old me! If the Express is hardup for a headline there are a few I might suggest eg "Savage Murderer Walks Out of Open Prison" or "Speaker Martin Should Resign". I agree absolutely that we should not talk ourselves into a recession but this kind of day-dreaming by desperate optimists is not going to help anyone.

• Posted by: panadero • Report Comment