In an ominous sign of things to come in other over-valued housing markets, fresh data emerged from Britain overnight showing house prices fell a record 1.7% in September and are down 13% from their peak almost a year ago. The Nationwide's house price index showed the average British property was worth 161,797 pounds, the lowest seen since February 2006 and down from a peak of 186,044 pounds in October last year. Global Insight economist Howard Archer was quoted as saying in The Times that he expected UK house prices to fall 16% this year and a further 15% in 2009. Overall, he saw house prices there dropping almost 30% from their October 2007 peak to be 130,005 pounds by the end of 2009. "Affordability ratios are still very stretched despite the double digit falls in house prices seen so far, while lending conditions are tightening even further due to the heightened financial market problems," Archer was quoted as saying. All sounds familiar. We have forecast a 30% fall in New Zealand average house prices between the peak in November 2007 to the end of 2009. The fall in UK house prices will have some impact here, given a significant amount of buying interest usually comes from returning expats or new migrants cashed up with the proceeds of UK house sales. It was a significant factor in 2002, 2003 and 2004 as expats returning in the wake of the last financial market slowdown post 9/11 spent up large in New Zealand. Those returning expats included yours truly and now I wish I didn't spend up so large.
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