Clarry Posted January 28, 2008 Share Posted January 28, 2008 As someone who rents, my problem is this:- House prices drop - rents increase House prices rise - rents increase House prices are stable - rents increase Greedy bastards. Link to comment Share on other sites More sharing options...
tonyh29 Posted January 28, 2008 Share Posted January 28, 2008 well slightly misleading as leviramsey used the word "collapse" in his cut and paste article :winkold: There won't be a collapse ..I'd expect houses prices growth to slow but no overall fall in prices... the US market crash was caused by lending to subprime market . ..that's people who really shouldn't be given mortgages in laymans terms .....it's about 20% of mortgages in the US ..in the Uk it's around 6% , so our risk is far far lower .. The key indicater in this is actually the Bank of England ..if they had not cut the interest rate at the last meeting , then the UK housing market would have been in danger ..but the Bof E cut it and they will no doubt cut it again within the next 6 months .. becuase they know the last thing the economy needs right now is a housing price collapse Link to comment Share on other sites More sharing options...
bully Posted January 28, 2008 Share Posted January 28, 2008 well slightly misleading as leviramsey used the word "collapse" in his cut and paste article :winkold: There won't be a collapse ..I'd expect houses prices growth to slow but no overall fall in prices... the US market crash was caused by lending to subprime market . ..that's people who really shouldn't be given mortgages in laymans terms .....it's about 20% of mortgages in the US ..in the Uk it's around 6% , so our risk is far far lower .. The key indicater in this is actually the Bank of England ..if they had not cut the interest rate at the last meeting , then the UK housing market would have been in danger ..but the Bof E cut it and they will no doubt cut it again within the next 6 months .. becuase they know the last thing the economy needs right now is a housing price collapse I agree Tony. It is almost certain that a further 0.25% cut will occur in the near future which should stabilise the 'collapse' :winkold: It wont help the £ against other currencies much though. Link to comment Share on other sites More sharing options...
Gringo Posted January 28, 2008 Author Share Posted January 28, 2008 well slightly misleading as leviramsey used the word "collapse" in his cut and paste article :winkold: There won't be a collapse ..I'd expect houses prices growth to slow but no overall fall in prices... Collapse or crash, too difficult to quantitatively define, and would have ended up arguing over people's definition - so much easier to say up or down (in real terms) Also used the term average - so not just the leafy suburbs in surrey, but implying nationally. The key indicater in this is actually the Bank of England ..if they had not cut the interest rate at the last meeting , then the UK housing market would have been in danger ..but the Bof E cut it and they will no doubt cut it again within the next 6 months .. becuase they know the last thing the economy needs right now is a housing price collapse Really? They didn't cut the rates at the last meeting. The minutes from the Bank of England's January meeting showed that the monetary policy committee's decision to leave rates steady at 5.50 percent was an 8-1 vote. Unsurprisingly, the one MPC member to vote for a cut was über-dove David Blanchflower - who has been in favor of making policy more accomodative during the past four meetings - argued that a the UK faces a "greater risk of a sharp slowdown." Meanwhile, the minutes of the meeting also showed that the BOE is becoming very concerned about inflation, as their outlook has "worsened markedly" amidst rocketing energy and food costs, as well as the drop in the British pound from the November highs, as import prices will likely rise (e.g. oil). Though it is clear that the downside risks to growth loom large, especially as Q4 GDP eased to 2.9 percent (annual) from 3.3 percent in Q3 amidst a deterioration in the housing and retail sectors, the prospects of CPI breaching the 3.0 percent level once again will likely prove too daunting to allow BOE Governor Mervyn King to cut rates again in the near-term. Link to comment Share on other sites More sharing options...
claret+blue_watch Posted January 28, 2008 Share Posted January 28, 2008 it won't crash in this country because the demand far outstrips supply and look at the number of houses that will need to be built it will be a gentle one for most as £130k for my house represents good value but at the higher ends isi where it could hit Demand and supply is one of the biggest fallacies in this whole argument, whilst it does have a influence, the biggest single reason house prices have risen is the availability of cheap and easy credit, and the willingness of lenders to lend to ANYBODY. Whilst you can never predict, with any certainty future house prices, I expect(and hope) they will fall around 20-30% over the next three years. Link to comment Share on other sites More sharing options...
tonyh29 Posted January 28, 2008 Share Posted January 28, 2008 Really? They didn't cut the rates at the last meeting. didn't know they had had one in Jan , but they cut it in Dec which was the one i was referring to .. which i thought was the last etc etc .. but the point was the same , they were under great pressure to reduce it and they did ..and they will again within the next few months so not just the leafy suburbs in surrey, but implying nationally. who cares about outside of Surrey :-) Link to comment Share on other sites More sharing options...
Gringo Posted January 28, 2008 Author Share Posted January 28, 2008 the prospects of CPI breaching the 3.0 percent level once again will likely prove too daunting to allow BOE Governor Mervyn King to cut rates again in the near-term. they were under great pressure to reduce it and they did ..and they will again within the next few months Unless the chancellor changes the remit of the MPC then they can't really vote an interest rate cut. Their primary focus is dictated to be keeping inflation at 2%. Any external pressure to vote for a cut in face of rising inflation would surely damage the appearance of an independent BoE. Link to comment Share on other sites More sharing options...
tonyh29 Posted January 28, 2008 Share Posted January 28, 2008 Any external pressure to vote for a cut in face of rising inflation would surely damage the appearance of an independent BoE. and you don't think running upto an election year that the BoE wont be under pressure not to wipe out the voting publics equity on their houses the BoE is about as independent as Tibet Link to comment Share on other sites More sharing options...
Gringo Posted January 28, 2008 Author Share Posted January 28, 2008 As I said - "the appearance of independence". No election til April 2010 - July 2008 a very outside chance - but 2009 a no no - it's the economy stupid - why go to the polls with recession all around you - you either go before it bites, or when there are some shoots of recovery to grasp at. Selections (5)Back (105.6%)Lay (96.5%) Jan - Jun 2008 26.0 (£4) 38.0 (£2)Jul - Dec 2008 26.0 (£3) 32.0 (£2)Jan - Jun 2009 3.05 (£9) 3.4 (£8 )Jul - Dec 2009 5.3 (£17) 5.5 (£11)Jan 2010 or Later 2.16 (£10) 2.32 (£57) Link to comment Share on other sites More sharing options...
tonyh29 Posted January 28, 2008 Share Posted January 28, 2008 2010 until we get shot of Gordon !! lets hope we can all do a Bobby Ewing and step out the shower and find it was all a bad dream .... Link to comment Share on other sites More sharing options...
villab0y Posted January 28, 2008 Share Posted January 28, 2008 I voted more. Cant see why they wouold go down, there too much demand. Link to comment Share on other sites More sharing options...
claret+blue_watch Posted January 28, 2008 Share Posted January 28, 2008 I voted more. Cant see why they wouold go down, there too much demand. Again, the biggest single reason for the obscene rise in house prices is the availability of cheap and easy credit.It seems Gordon, the banks, the media and the Independant(don't laugh) BoE have done a great job in peddling this great myth of supply and demand as the only/biggest factor in HPI.Seems NuLabour and Gordon's miracle HPI/MEW/debt fuelled economy isn't all it's cracked up to be.Anyway it's all America's fault, we don't/haven't had Sub-Prime(aka 7x/8x/9x salary mortgages, 125% mortgages, Lie to buy/Self-Cert mortgages)in this country have we? :roll: You'll be saying prices only ever go up next. Link to comment Share on other sites More sharing options...
bickster Posted January 28, 2008 Moderator Share Posted January 28, 2008 and so we almost reach the end of another ten year cycle Link to comment Share on other sites More sharing options...
Jon Posted January 29, 2008 Share Posted January 29, 2008 1. the availablity of easy credit (mortageb wise) has been curtailed in recent months, even more so following what has happened in the US of A. That had a detrminental affect on demand, and therefore short to mid term adversely affects house prices. 2. Interets rates have been going up for about 3 years now, and we have had only 1 slight cut a couple of months ago, which is on its own insufficient to really galvanise the market. This makes it more difficult to borrow, and adversely affects house prices. these are the 2 main factors causing the slowdown/drop in house prices in recent months, IMO. This plus the fact that we have had an unprecednted "boom" in house prices these last 8 or 9 years has lewd to this cooling down period. It's just not an ideal time to try to sell your house right now. Good time to buy though...... Link to comment Share on other sites More sharing options...
Jon Posted January 29, 2008 Share Posted January 29, 2008 and so we almost reach the end of another ten year cycle ?? has Ian finally finished his bike ride then? :winkold: Link to comment Share on other sites More sharing options...
leviramsey Posted January 29, 2008 VT Supporter Share Posted January 29, 2008 However, now you've raised the point, housing markets are by nature local, but constrained by national or international factors. The housing market in sheffield is very different to that in london, and the london market is very different from berlin. Let's not forget that the US subprime crisis is largely a result of people blindly believing that the housing markets were local phenomena. And they were, when most of the mortgages were owned by local/regional institutions (remember, the US still doesn't really have anything quite like national banking... the closest would be BofA, but they still only have branches in 40-45 states, and that's only after buying ABN Amro's LaSalle Bank). The fallacy that a national decline in a loan portfolio, if the loans had a sufficient geographic distribution, was highly unlikely was the primary justification (even more so than the subordination of the toxic tranches of the CDOs... the geography argument was what allowed the toxic tranches to provide so little armor to the investment-grade portions) for most of these securities based around tons of junky loans being rated investment grade (another major factor was the fallacy that credit ratings provide any predictive value in a market where nearly every asset is appreciating; yet another was a belief that LTV doesn't matter). The fundamentals that LR points to (house price vs salary) are wrongly balanced, and that is more of a typical UK problem - I can only think of dublin where banks lend on such multiples. It is - or it wasn't - inevitable that this would lead to a crash, a soft landing could have been experienced, as I said, with three years of zero or RPI level growth, but now that the four economic horsemen of the housing market apocalypse are saddling up, I can't see that happening. I should say that it's not so much the debt-to-income ratios but the rate at which they've expanded that convinces me that it's a bubble. IIRC, average personal debt vs. average income was 100% in the UK a decade ago (vs. 90% in the States). Now, it's somewhere around 160-170% in the UK and 130-140% Stateside (meaning a minimum growth of 60% in the UK vs. a maximum growth of 55% in the States). The poor fundamentals by themselves can be explained as the result of local market conditions, but the striking increases in both the willingness to borrow and the willingness to lend that are implied by the changes in the fundamentals are danger signs, though it should be noted that those changes may also be the result of non-bubblicious economic & social trends (among them the UK's amazing marketing to foreigners of all sorts of stripes (from artistes to despots/oligarchs to financial wizards) over the past decade-and-a-half, owing largely to the Cool Brittannia/New Labour extension and consolidation of the Thatcherite Revolution into places that Maggie would never have dreamed of). Link to comment Share on other sites More sharing options...
Poodle Posted January 29, 2008 Share Posted January 29, 2008 People, save more, spend less... sorted! Actually the complete opposite has to happen, in the short term, for the greater good. A consumer MPC of around 92-97% over the next 18 months should see a relatively 'soft' landing. Anything less than this and we're headed for a recession that has been enevitable after the unsustained growth that we have seen over the last few years. With 9,000,000,000,000 of debt, America is too close to becoming a banana republic and this number will need to be reduced significantly, exacerbating the downturn in the U.S. economy over the next two-three years. The real question is, what on earth would anybody want to be the next U.S president? Link to comment Share on other sites More sharing options...
Gringo Posted January 29, 2008 Author Share Posted January 29, 2008 Newsnight reporting that the govt are going to impose an extended deposit guarantee scheme on banks, which will reduce available savings interest rates and downardly impact available liquidity in banks. And in a period of tightened lending this will make the mortgage market even more restricted, Going down, going down. Going down, going down, going down. Link to comment Share on other sites More sharing options...
bickster Posted January 29, 2008 Moderator Share Posted January 29, 2008 Newsnight reporting that the govt are going to impose an extended deposit guarantee scheme on banks, which will reduce available savings interest rates and downardly impact available liquidity in banks. And in a period of tightened lending this will make the mortgage market even more restricted, Going down, going down. Going down, going down, going down. just been watching myself and I'm a bit confused Is this the first government in the world that thinks an enforced recession is a god idea? Its what they appear to be wanting S'pose Gordo is the financial expert being the ex CotE that he is, I must have it wrong so I'll be quiet Link to comment Share on other sites More sharing options...
bickster Posted January 29, 2008 Moderator Share Posted January 29, 2008 The real question is, what on earth would anybody want to be the next U.S president? A chimp would be a step forward imo Link to comment Share on other sites More sharing options...
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