It looks like it really is the beginning of the end for Britain's decade-long housing boom.
Figures released by Nationwide this morning revealed that house prices suffered their biggest monthly fall in twelve years between October and November.
The average house price fell 0.8% from £186,000 to £184,100. The decline is the first since February 2007 and the largest since June 1995. Meanwhile annual growth slid sharply to 6.9% from 9.7% last month.
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Nationwide's chief economic Fionnuala Earley attributed the fall to poor affordability, weaker house price growth expectations and the effect of earlier increases in the housing market.'
As Capital Economics reminds us today, monthly numbers do tend to be volatile. However, the Nationwide data adds to an already substantial body of evidence that suggests a period of sustained house price falls is likely over the next couple of years.'
Over the past two months, figures from Hometrack, Rightmove, RICs and the Halifax have all pointed to slowing house prices (for a round-up of the latest data and forecasts from the major indices, see: What the housing indices say).
Land Registry data released yesterday showed that even the (until-now) resilient London market is beginning to weaken. Prices dropped 0.6% in October - the first monthly decline since April 2006.
Mortgage approvals down 30%
And just to reinforce the evidence that the housing market is now well-and-truly in slowdown mode, the Bank of England today announced that the total number of mortgages approved in September was down 22% on the same period a year ago.
Even more worryingly, mortgages for new house purchases had slumped from already downwardly-revised figure of 100,000 in September to 88,000 on October. That's an overall fall of 30%.
MoneyWeek has long warned that housing was in a bubble and heading for a crash - and it now seems that the mainstream media is coming round to our way of thinking.
BBC economics editor Robert Peston wrote in his blog this morning that as the decrease revealed in the Nationwide figures occurred before we all began to feel the effects of tighter credit conditions, we could be about to see the most prolonged downturn in the market for 15 years.'
Of course, the Council of Mortgage Lenders told the BBC that the slowdown wasn't as sharp as it seemed, adding that the house price falls were being exacerbated by problems in the credit markets. CML director general Michael Coogan urged the government to step in to unblock the funding log-jam', i.e. by injecting money into the market.
However, the government has already been burned on that score witness the blame-storming frenzy over who was responsible for mishandling the Northern Rock crisis. And with Bank of England governor Mervyn King clearly still concerned about inflation, rapid interest rate cuts on this side of the Atlantic are by no means a foregone conclusion.
As the cheap money dries up, and the buy-to-letters realise that their rents no longer cover their mortgage repayments, conditions are only going to get tougher. It looks like the housing bubble has popped.
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