The first firm evidence of a slowdown in the housing market in the wake of the
The first firm evidence of a slowdown in the housing market in the wake of the terror attacks emerged yesterday as new figures showed parts of London had ground to a halt.Meanwhile, a separate survey revealed the number of new mortgage applications had fallen sharply before the attacks in the US which demolished the World Trade Centre and damaged the Pentagon.A quarter of the capital’s boroughs saw no increases in house prices during September, according to Hometrack, a property website. This is the first survey since the attacks.Hometrack said house prices in the capital had started to “wobble”. John Wriglesworth, its housing economist, said: “There is no doubt house price rises are slowing across London.”Hammersmith and Fulham suffered a 0.3 per cent fall while Lewisham, Kingston, Richmond, Barking, Harrow and Merton were at a standstill.A poll of more than 900 London estate agents found that prices rose by 0.3 per cent to take the rise since the start of the year to 7.7 per cent.The monthly rise compared with a surge of 1.5 per cent in August across the UK, according to the UK’s largest mortgage lender Halifax.Halifax and Nationwide building society will publish national and regional figures for July to September next week, which will be scanned for signs of a slowdown.Hometrack said there had been a “dramatic” fall in sales activity in the immediate aftermath of the terror attacks.”The World Trade disaster has sent a shudder through the market, with agents reporting a strong drop in buying enquiries,” Mr Wriglesworth said.However, he said with unemployment at a 26-year low and mortgage costs at their lowest levels for more than 40 years, the housing market was still fundamentally positive.
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“The prospect of war in Afghanistan does not stop people desiring to own their own homes,” he said.Meanwhile, the British Bankers’ Association, which represents most high street lenders, said the number of mortgage applications fell by 7,748 or 8 per cent between July and August.The amount loaned for house purchase, rather than remortgaging or equity withdrawal, fell 10 per cent and the average loan size dipped by £1,400.Ian Mullen, chief executive of the BBA, said demand for homes usually weakened in August. “So it is probably too soon to gauge whether market sentiment is falling further than the seasonal picture,” he said.Adam Cole, an economist at HSBC, saidmortgage approvals usually fell by up to 15,000 in August. “In underlying terms, these data represent a further substantial strengthening of loan approvals,” he said.
He said the data suggested house price inflation was set to hit 15 per cent.. The number of Americans signing on for jobless benefits surged to a nine-year high in the first full week after the US terrorist attacks, figures showed yesterday. The number of Americans signing on for jobless benefits surged to a nine-year high in the first full week after the US terrorist attacks, figures showed yesterday.
A total of 450,000 made first-time claims in the week to 22 September, the highest since July 1992 when the US was emerging from recession The figure was 58,000 higher than the previous week. Economists said it was the first sign of the impact of the US attacks, warning it was a harbinger of recession.The data came as a leading UK employers’ group, the Institute of Directors, also warned the world was “teetering” on the brink of recession.The US Labor Department said the jobless data included an 11,000 increase in New York. Economists warned the rise in jobless claims could accelerate as an estimated 140,000 redundancies in the airline industry was fed into the data. Hugh Johnson, chief investment officer at First Albany, said the US was “either in a recession or very close”.The report came a day after the chief economist at the International Monetary Fund, Kenneth Rogoff, said a US recession was a “done deal” before retracting the remark.Yesterday in London he said a US recession was “clearly a possibility” but added there was a “reasonable chance” of significant recovery in world growth in 2002.
He said some central banks – including specifically the Bank of England – might be “happily” raising interest rates next year.”The UK is doing very well comparatively and there are many things looking more happy in the UK, including labour market flexibility, than in Europe,” he said. “There have been a lot of sharp interest rates cuts and possibly, even if there are no further cuts, there may be a case looking ahead to 2002 where central banks are happily raising interest rates.”Mr Rogoff stressed he was “talking about 2002 and not next Thursday” – the day the Bank sets interest rates. A poll of City economists found 16 out of 25 expected a quarter-point cut.Ruth Lea, head of policy at the IoD, said the attacks had “almost certainly” tipped the US into recession. “To talk of global recession is no longer absurd and the situation looks quite the bleakest since the 1970s,” she said, adding that government spending would prevent a slump in the UK.But she said, with manufacturing and farming both in recession: “Job losses are sure to increase and that, for many people, is recession.”.