Who remembers the massive 1990’s property recession?

Some of us lies remember it very well. Everybody knew someone suffering from negative equity and the really interesting bit is that nobody forecasted the price crashes that came.

I managed to find a couple of actual newspaper articles from the time and thought I would share them here. I guess the moral of the story here is that no one is capable of predicting what will happen in this Coronavirus economic crisis.

Enjoy the read...

Year - 1989

HEADLINE “Healthy sales show life exists after the boom”

Homeowners cannot expect the huge gains of 1988 in their property values, says Kerry Stephenson (journalist??), but the market continues to tick over.

“The ￡100,000 property which gave homeowners a windfall of ￡1,000 a week capital gains in 1988 may only yield a modest ￡100 or ￡200 a week this year. Building Societies say the property boom is over. Housebuilders are working harder to sell their wares. Yet some agents are still reporting brisk business”

“But even those agents who conceded that prices have swung in the buyer’s favor say that this is seasonal and varies according to where you live”

“Agents are cautious rather than pessimistic about 1989 price levels, which the Halifax Building Society predicts will rise on average by 5%”

“London agents Foxtons believe that there is almost a collective wish to see the market plummet. When Black Monday arrived pundits said the market would suffer. It didn’t. When interest rates jumped, again more dire predictions, but no drastic downturn. Slower sales, yes, but no crisis”.

“In surrey, estate agents Carson & Co even report a record turnover in November. Developers such as Berkely Homes and Westbury say their sales are holding up so strongly they are expanding their number of offices.”

“This indicator (National Housebuilding council’s indicator of Ability to Buy) suggests that first time buyers in London especially, are feeling the heat. There is now speculation that some new starter homes prices will have to be cut by 10%. This reduction will not necessarily feed through to higher-priced properties, although chain-breaking rather than gazumping may be the buzzword this year”.

“Building Society statistics show the number of new borrowers dropped by 50,000 in the last few months of 1988 compared to 1987. Even allowing for the fact that the banks are seducing customers, it is evidence that sales are down”.

And now from the Times, January 11th 1989

“Property Vision, which acts for buyers, expects that the lower and middle sections of the market will look slightly sick this year. It says “At the top end of the market, while the excesses of last year may take a bit of time to be digested, there will be a firm market, even if it does not reach the frenzied state of 1988. The second rate will go back to commanding second rate prices, whereas the very small amount of quality will be as desirable as ever”.

These are examples of what was being said in early 1989. The maps and figures that the Sunday Times posted were still saying price growth static or positive for most regions in the prior three months (i.e. last quarter 1988) with a spread of annual growth rates between +10% to +60% (East Midlands).