Calculated Risk, my favorite blog on the mortgage mess reports from the Economist.
From The Economist: The bust begins
… finally, tighter credit and overstretched household budgets are pulling prices down.
A collective shudder ran down the spines of British homeowners on Tuesday April 8th when Halifax, a part of HBOS and the country’s biggest mortgage lender, revealed that house prices fell in March by 2.5%.
And just like in the U.S., transaction volume is declining, and inventory is increasing:
… both the Halifax and Nationwide are predicting “modest” declines in house prices this year. Forward-looking indicators suggest a gloomier picture. The number of mortgages approved for house purchase was almost 40% lower in February than a year before. According to the Royal Institution of Chartered Surveyors, estate agents have been grappling with the worst conditions—measured by the ratio of completed sales to unsold stock—since September 1996.
The housing bust is going global.
Meanwhile, in India the facade of the boom continues while the underlying fundamentals deteriorate further. Business Standard, India’s leading pink newspaper reports – (and by the way, all business & finance newspapers in India are pink):
“Apartment sales have gone down by 20 to 30 per cent in Mumbai. Developers are doling out goodies like stamp duty relief, free parking and interiors to boost sales,” said Rajiv Sabharwal, head, retail assets, ICICI Bank.
Crucially, developers are not cutting prices.
“Developers can not cut prices because once you do that, it signals the start of a downward spiral. They are holding on to the prices to maintain the momentum,” said Rajesh Mehta, a leading property consultant in Mumbai, adding: “April and May are the key months as far as property deals go. If transactions do not pick up, prices of apartments will fall at least 10 to 15 per cent”.
As I posted earlier, the numbers don’t look good. See my story on: India, Real-Estate and Some Numbers.