The Royal Institution of Chartered Surveyors (RICS) has released a report today showing that house prices fell last month for the first time in nearly two years. Demand is also falling, with the number of new buyer inquiries declining for the ninth consecutive month and at the fastest pace since August 2004. The largest falls were in West Midlands, North West and East Anglia, although in London, prices are still going up. The number of four-bedroom homes on the market has also declined by 51 per cent on a year ago, as the effect of Hips kicks in.
Councils in London are furious that the latest official immigration figures from the Office for National Statistics (ONS) do not include at least a further 24,000 people, resulting in a shortfall of £18 million in their funding. Westminster City Council has published research indicating that at least 11,000 short-term migrants and 13,000 illegal migrants are living in the borough at any one time, whereas the figures from ONS have shown a reduction of 15,500 in their number. As local councils are allocated money on the basis of the number of residents, at least 25 councils along with Westminster CC are attending a meeting today and are expected to call on the government to address the shortfall the councils face and to hold up their hands and admit they have ‘lost count’ of the number of migrants.
In an interview with the Daily Telegraph, the chancellor Alistair Darling, accused banks of lending recklessly and called on them to return to ‘good old-fashioned banking’, as consumer debt spirals to record levels with 1.7 million people affected according to Citizens Advice. Darling believes that banks need to know who they are lending to, how much they’re lending and what the risk is, saying that: ‘Institutions have in some cases been prepared to lend to people without checking if they were ever going to repay it.’ But he shied away from suggestions that the Government might intervene with tighter regulations.
Responding to this, the Bank of England governor, Mervyn King, said that the cost of borrowing was likely to rise whatever the Bank did with the official base rate. Mr King attacked the banks himself for their ‘risky and reckless lending’, and warned ‘the new element introduced by the recent turmoil is that effective borrowing rates facing households and companies will rise somewhat’. The Bank of England has no intention of bailing out irresponsible bankers, however, believing that it would only encourage them to make further speculative and risky decisions, although the Bank would still protect the public from the turmoil by ‘continuing to maintain economic stability’.
LPW’s story into the link between US sub prime market and UK lenders (Raging Bull, May 2014) will be the focus of a File on Four investigation on lending due to be aired on Radio 4 on Tuesday 25 September. Subscribe to LPW today and save 20% on the annual price. Get your own copy of LPW for £35 or an organisational subscription for £64.