News from Britain’s largest mortgage lender, HBOS, suggests that house prices in the UK fell 1.7% in July – giving an annual fall of 8.8%.
But there’s some evidence that this underestimates the size of the fall. Lord Oakeshott, the Liberal Democrats’ Treasury spokesman, has argued that prices of domestic properties at auction have fallen much more steeply – by 18.7% between the second quarter of 2007 and the same quarter of 2008. Oakeshott argues that this figure has greater immediacy than the more widely published figures, since buyers at auction have to exchange contracts and pay their deposits immediately the sale is made.
If this is true – and events do seem to have indicated the Liberal Democrats, in particular Vince Cable, have read the situation much more accurately than most mainstream politicians – it is a dramatic indication of the sheer irrationality of what was happening in the UK housing market a year or two ago, and the poisonous impact of cheap credit and irresponsible bank lending. And the question remains – in what sort of society is the price of the most basic commodity of all, a roof over one’s head, left in the hands of an unstable and speculation-driven market?