Capital Economics expects a 35 per cent nominal fall and a 41 per cent decline in rea

Edale

HammersFan wrote: »

That's the thing - there are plenty of areas that aren't depreciating by anywhere near that. Also, you ignore sensible gearing as a factor in long-term returns. My view is that when BTL finance hits the low 5% on a fix-rated there will be lots returning (even at prices near where they are now).

Unfortunately the state of the money markets mean that banks are massively constrained on the amount they can lend. If prices keep falling they will only become more cautious and some could quite possibly go bust. This will only serve to continue the downward spiral and make them even less willing to lend.

My point being that even if investors want to return to btl, banks may not lend to them either at rates that are viable or at sufficient ltv to give them any significant leverage.

Leighthal

HammersFan wrote: »

If true, this will create a massive scramble for Buy to let, slugging it out with FTBs and ignite an even more massive bubble. Fortunately, I doubt it will come to pass.

Agreed.For the cash rich.:beer:

Leighthal

ad44downey wrote: »

You don't need to have any economics qualifications to see that house prices are only going one way from herein, DOWN!!

Are you a gypsey with a special crystal ball?

WTF?_2

Edale wrote: »

I think we need sharp reductions in interest rates and quickly, the downside to the economy presents a much greater threat than inflation IMO.

Yes - Rocketing price inflation and cost-of-living should really help people pay back their debts. Should be pretty good for the retail sector too. And the resulting industrial discontent should be welcome by businesses who must have been getting bored of the relatively harmonious state of labour relations over the last decade. The rises in the cost of their energy and imported raw materials will be the icing on the cake.

And I'd like to put a special mention in for savers who prudently and sensibly avoided getting over-borrowed during the crazy times and instead lived within their means and saved some of their income. They'll especially relish seeing less return on their savings at a time of rising costs of living.

HammersFan

!!!!!!? wrote: »

Yes - Rocketing price inflation and cost-of-living should really help people pay back their debts. Should be pretty good for the retail sector too. And the resulting industrial discontent should be welcome by businesses who must have been getting bored of the relatively harmonious state of labour relations over the last decade. The rises in the cost of their energy and imported raw materials will be the icing on the cake.

And I'd like to put a special mention in for savers who prudently and sensibly avoided getting over-borrowed during the crazy times and instead lived within their means and saved some of their income. They'll especially relish seeing less return on their savings at a time of rising costs of living.

This is a very polarised view of the state of affairs isn't it? The relaity is likely to be a mix of both scenarios / somewhere inbetween. This will present decent opportunities, but risks for those over-exposed to debt or over-committed to hoarding cash.

justpurchased

!!!!!!? wrote: »

And I'd like to put a special mention in for savers who prudently and sensibly avoided getting over-borrowed during the crazy times and instead lived within their means and saved some of their income. They'll especially relish seeing less return on their savings at a time of rising costs of living.

Look I have a mortgage and live within my means. I will deal with whatever happens in the worldwide economy. Your decision not to buy was not a decision, saving money was. Live with the concequences like I will have to everyone is going to suffer somehow.

HammersFan

justpurchased wrote: »

Look I have a mortgage and live within my means. I will deal with whatever happens in the worldwide economy. Your decision not to buy was not a decision, saving money was. Live with the concequences like I will have to everyone is going to suffer somehow.

Well said. Me and my other half saved like mad to get our house deposits together, we work hard to pay down the loans (thus netting me well over 6% on money I pay off the loan). My decision is to pay it down and live rent free asap.

Edale

!!!!!!? wrote: »

Yes - Rocketing price inflation and cost-of-living should really help people pay back their debts. Should be pretty good for the retail sector too. And the resulting industrial discontent should be welcome by businesses who must have been getting bored of the relatively harmonious state of labour relations over the last decade. The rises in the cost of their energy and imported raw materials will be the icing on the cake.

And I'd like to put a special mention in for savers who prudently and sensibly avoided getting over-borrowed during the crazy times and instead lived within their means and saved some of their income. They'll especially relish seeing less return on their savings at a time of rising costs of living.

We definitely don't want inflation but I think on balance we won't have it. Most of the pressure is coming from fuel and food and by this time next year fuel could well be deflationary. Bear in mind the effect of interest rate movements on inflation take a year to work through. Producers appear to have little pricing power and are having to absorb most of their raw material increases. Wages are being constrained by people who feel positive about having a job at all rather than those miffed at not getting a massive increase and this feeling will only increase as unemployment increases.

I think the housing market is in serious trouble that could get much worse and if the government think the tinkering yesterday will sort it all out they are deluded. The BOE need to start cutting now to avoid the situation Japan got into in the early 90s, the BOJ were voicing the same worries about inflation and held rates too high for too long. When they did start cutting it was too little too late and in the end rates of 0% did not revive the economy. I would prefer less interest on my savings rather than the UK going the way of Japan in the 90s.

WTF?_2

Edale wrote: »

I think the housing market is in serious trouble that could get much worse and if the government think the tinkering yesterday will sort it all out they are deluded. The BOE need to start cutting now to avoid the situation Japan got into in the early 90s, the BOJ were voicing the same worries about inflation and held rates too high for too long. When they did start cutting it was too little too late and in the end rates of 0% did not revive the economy. I would prefer less interest on my savings rather than the UK going the way of Japan in the 90s.

As I said in another thread here - there's no magic bullet for the problem caused by the out of control credit/house price boom.

We're just going to have to deal with it. Interfering with inflationary policies like the japs did is not a practical solution. Either it will fail (like they did) or we will stoke massive inflation.

Better to let the market take its course, do what needs to be done to keep the system from imploding and then get back to rebuilding the economy with hopefully sensible policies in place to prevent a repeat. The 'learning from the mistakes' bit won't happen though - never does.

Edale

!!!!!!? wrote: »

As I said in another thread here - there's no magic bullet for the problem caused by the out of control credit/house price boom.

We're just going to have to deal with it. Interfering with inflationary policies like the japs did is not a practical solution. Either it will fail (like they did) or we will stoke massive inflation.

Better to let the market take its course, do what needs to be done to keep the system from imploding and then get back to rebuilding the economy with hopefully sensible policies in place to prevent a repeat. The 'learning from the mistakes' bit won't happen though - never does.

You can't turn back the clock, so the situation we have to deal with is a massive debt burden that is threatening to implode putting the whole banking system under strain. Reducing interest rates would help this strain and put something of a floor under property prices. It is not about reinflating property more damage limitation.