UK house price slump to persist until 2012

ad9898 wrote: »

Granted Dan, we have hit the 'current bottom', the trouble is the bottom is just a glass ceiling, the 'glass' is made up of falsely low IR's and QE, when these end, the glass will shatter.

Even now mortgage lending is pathetically low at 12 billion, if we annualise that figure it comes in at 144 billion, less than 40% of the funding at peak.

Hi Ad

I can see where your coming from.

When IR's rise - why would this cause the glass to shatter? and the same for QE?

Dan: wrote: »

Hi Ad

I can see where your coming from.

When IR's rise - why would this cause the glass to shatter? and the same for QE?

[FONT=&quot]You don't think the powers that be haven't thought about this. They do know if they f@@k this QE stuff up, the last year will seem like picnic. They have a thousand eyes watching a boiling pan, it will not boil over and it will shorten this downturn and already is. It’s just a shame that our standard of living will have to dip to pay the whole thing back. Then again, maybe a redistribution of wealth in this country may not be a bad thing.[/FONT]

ad9898 wrote: »

Simply because many people are staying in their homes because of these low rates, a personal friend is one of those people, so it's not like I'm wishing it to happen, just being realistic, repo's will force prices down further especially while the recession plays out. With the massive government debt (£13 billion up this month alone), recovery will be very slow and very weak and that's when eventually comes, this event is yet to be seen on the horizon, this will also subdue prices further.

That's what I thought your answer would be.

The current 0.5% Interest Rate is helping businesses and the general economy. I'm not convinced many people are keeping their homes because of it - It will be a low majority of mortgage holders who are benefiting anyway, and furthermore what's to say they wont be able to afford the repayments they were used to a couple of years back?

The general economy IS starting to recover. I'm currently in Germany talking to people in the manufacturing industry and they are seeing growth to something approaching normal levels, so that from projections of 30-40% year on year drops in turnover they're looking at 10% for the year now which is significantly positive result under the circumstances.

Germany is the engine of industrial output within Europe and a great deal of the UK output ends up there. We currently have a significant currency advantage, so it's really quite good news for everyone. We may well find that the projections of massive unemployment are premature, which means the swathes of repossessions may not happen and people may well continue to be able to pay their mortgages even at higher interest rates. Which is certainly good news, as I hope even the bears will agree. Growth will boost the tax take, so again a problem reduced if not solved.

I think that when you get stories like in the OP, you have to ask for a definition of "slump". If that's a generally depressed and stagnant housing market then that's probably about right. If it's about a return to 2007 absolute values then that would probably be optimistic. If it's about being the same now as then with a drop in between then that'd probably be reasonable too.

Actually I feel more optimistic about general business today than at any point for the last 12 months, as do the people I'm talking to. I still think there are setbacks and probably a few nasty surprises to come. but it's much better than it might have been. Previously people were dismissing increased order rates as evidence the supply chain had emptied and needed topping up, there's something much more significant starting to happen now.