S&P sees deepening house slump in Spain, France and Holland

Spanish house prices are to fall a further 13pc by the end of next year as the authorities flood the market with a backlog of repossessed properties, Standard and Poor’s has warned.

The agency said the housing slump is deepening across large swathes of the eurozone. French declines are “gaining momentum”, with prices likely to fall 5pc this year and a further 5pc in 2014.

ihopenot:  The problem won't go away until the bubble has deflated.  Why is there little or no recovery in this country?  Most people have all their income eaten up by paying for a roof over their heads, either renting or buying, and can't spend much on anything else.  Add inflating energy bills, council tax, business tax and extortionate VAT - no wonder nothing is moving.

benf: Which country let house prices collapse? The USA. Which country has near-serfdom conditions for young people? The UK. Guess what olds? You can't all cash out of the market because we can't afford houses at this price. They will fall, real or nominal. It's coming.

IH8LIBLABCON: Interest rates will stay at this level and QE will continue for a long long time yet, thus many olds will manage to fook over a youngen to pay for their cruises and mail order brides.

benf: Well, we are seeing the snake start to eat it's tail. Inflation continues unabated. Lack of appetite for more debt despite low rates. Falling productivity. Yes they can keep it going for much longer, and they will, but it will continue to get worse. The recent deficit review was a fantasy. A lot of one-off boosts that won't be here this time next year. The deficit is going to go up unless they do real cuts instead of fiscal expansion fauxsterity. Each can kick and the can gets a bit heavier. It's only going a few steps now… Mix in the big demographic shift and the rise of anti-immigration politics and my prediction is they can keep it going for less time than you think. Of course it will not be Bedlam, but we will be looking at more "step changes" rather than a drift.

DJPainless: Damn these politicos, they are even managing to drive a wedge between the generations. B*stards

plinkplonkdinkdonk: I am amazed that S&P dont also see problems in the overcooked and overpriced faux housing market in the UK.

IH8LIBLABCON: Why are you amazed they totally missed the debt bubble that was there for all to see before 2008.

taffia: Vince Cable asked Crash in 2004 at Wednesday Commons question time, about the levels of debts being built up. McRuin vomited derision all over him as part of his reply.

upton: And the rating agencies were busy selling AA ratings for all kinds of crap CDO and CDO squared derivatives. No-one should place any reliance on those poor performers.

petethai: The problem was, instead of turning swords into ploughshares, the Spanish spent too long turning swards into timeshares.

morgan: The conclusion is clear: Only Germany can manage its economy, banks and housing market properly. Housing booms and busts have virtually destroyed everyone elses. And yet, when the next boom arrives in the UK it will be welcomed even worshiped as the one before it.  Crazy.

Tom Tom:  Germany simply does not have mortgage lending as the base of a Financial Pyramid of Debt

kodak321: "The UK and Holland had comparable bubbles: the difference is that stimulus by the Bank of England stabilized the market." The UK has not 'stabilised' the market. The UK is actively encouraging another bubble and the consequences will hit us in a few years time.  

morgan: Luckily the Bank of England have been busy destroying our savings so we can avoid a nominal  correction  crash. In real terms the value of the average UK homes is down 30% since 2007.

Doraemon el gato cósmico: Not true.  You can only measure house prices by wage inflation.  Measure house prices by wage inflation & you start to get horrific reading.  UK house prices are 100%+ overpriced.

dustybloke: I've been wrong every year for the past 5 years in saying that UK house prices had to fall. I've misjudged how absolutely everyone fights tooth and nail to prop up prices. But you can't buck the market and the correction will become more horrendous the longer it is kicked into the future. Currently, average house prices would have to fall 50% to reach historic levels compared to the average income. Since every living soul in the UK falsely believes high house prices are a sign of a healthy economy, this could prove to be the death of the UK.

checkmate: You were doing well for two paras and then stuffed it on the third para by reverting to your entrenched belief. If rates stay anywhere near this level for the next several years the property market will do fine. Now do rates look like they are going up any time soon. Gilts will tell you the naser is no.Unemployment numbers tell you the answer is no. Indeed your belief flies in the face of the objective data.Your belief is in fact trying to "buck the market". Lenidn will continue to ease in volumes and the market has every possibility of stabilising nicely.

genghis: There is an interesting analysis that suggests that house prices are now actually below the long term (20 year) trend relative to earnings: http://monevator.com/house-price-to-earnings-ratio-2012/ Given the demographics, I would be surprised if there is a significant fall from current values. I am not expecting any large rises, just bumbling along, unless there is significant wage growth.

observer20: I frankly cannot understand  how that reporter managed to produce the graphs he did…or what they are based on. Nationwide report the average UK house price at £164,630 and the Halifax £163,656 as at March 2013. The ONS reports the average male salary at £26,500 and the average female salary at £23,100 as at November 2012. Taking best case of 163,656/26500 that gives a current price multiple of  6.176, taking an average it's probably somewhere around 6.5. Taking the same figures for 1997 the average male salary was 14,367 and the average house price 58,403…giving a multiple of  4.065. In 1997 the average base rate was 6.75% and it's now 0.25% meaning that mortgage payments back then were also significantly higher relative to the debt. Energy costs to heat that house have also risen at a rate  far higher than inflation, particularly in recent years.   Houses are way too expensive on any measure and any increase in interest rates is going to cause a major adjustment. The banks and building societies know that which is why they insist on large deposits to cover the gap. The government is pumping the market as hard as it can simply to buy the banks time to repair their books and that is for the moment holding prices up. In terms of long-term affordability house prices have a very long way to fall and we'll see just how far when the government can no longer print money to cover bond auctions without a total lack of confidence in the market and interest rates spike.

deepforest: maybe…but factor in latent demand (have you seen how many 20 somethings are still living with mum and dad?) for housing and and any economic growth will drive increased property prices…as usual. In my view the housing market in the UK is and has been  a state run racket that has distorted the UK economy since the mid 1960s

hootch: only a matter of time Dusty - the next generation of buyers simply can't afford the prices and banks know the properties are overvalued, so won't lend. A property is only worth as much as someone has actually paid for it - not what some Estate Agent guesstimates !

Bilforum: Britain has a housing market waiting to burst and the government knows this. Banks LTV book is so over valued its become toxic  and they have no way to off load it. We have the lowest interest rates of all time yet people are finding it hard to meet there payments and when rates rise are we going to see some tears. Between 1984 and 1994, eight million homebuyers were convinced to take out an interest-only mortgage. At the height of the sales frenzy in 1987, 2.3 million people took out an endowment.Many homeowners have been left with shortfalls of up to £40,000. This means borrowers effectively have to pay the bank the moment their mortgage term ends. House prices are 20 years ahead of the average salaries and every percentage point they go up its inflicting large debit  on the first time buyer. The rental market is totally out of control and the rents being charge are immoral. The government needs to bring back rent controls.   We are not working to enjoy life but to be shackled to the mortgage. Just take a look at the French housing and see what you can get for £150000.