Housing Market to rescue UK economy...

HAMISH_MCTAVISH

Very interesting piece in FT-Alphaville.....

Some excerpts...

This said, the UK’s recovery will come, and moreover it will come thanks to events unfolding in its housing market.

With the UK base rate set to remain where it is for what could be another eighteen months, and with mortgage availability certain to improve, it is more than likely that residential transactions and prices will continue their recent rebounds.

If anything the speed of recovery in volumes is likely to be restrained as much by lack of stock for sale (certainly of new build) as weakness in the UK labour market. Some may see an inconsistency in claiming that prices for UK residential property will increase as wider inflation conditions remain benign. We do not.

http://ftalphaville.ft.com/blog/2009/09/08/70511/housing-market-to-rescue-the-uk/?source=rss

bumpoowee

The housing market will correct the vast problems in the UK economy? that sounds very economically plausible.

HAMISH_MCTAVISH

bumpoowee wrote: »

The housing market will correct the vast problems in the UK economy? that sounds very economically plausible.

No. The article makes a case that the housing market rebound will buffer the UK from any future wobbles of the global economy before recovery is fully embedded.

As an example of this theory in action, look at todays results from Kingfisher Group, owner of B&Q.... Profits significantly better than expected, which wouldn't have happened if confidence wasn't rebuilding, which wouldn't have happened if house prices were still tanking.

Yakubu22

Been sniffing glue again while the forums were down, Hamish?

bumpoowee

HAMISH_MCTAVISH wrote: »

No. The article makes a case that the housing market rebound will buffer the UK from any future wobbles of the global economy before recovery is fully embedded.

As an example of this theory in action, look at todays results from Kingfisher Group, owner of B&Q.... Profits significantly better than expected, which wouldn't have happened if confidence wasn't rebuilding, which wouldn't have happened if house prices were still tanking.

Ok, I partially accept that argument. However it seems to be more a case that it has given us a temporary respite, rather than doing anything to solve the underlying issues.

HAMISH_MCTAVISH

bumpoowee wrote: »

Ok, I partially accept that argument. However it seems to be more a case that it has given us a temporary respite, rather than doing anything to solve the underlying issues.

Fair enough. But the underlying issues work both ways. There are competing influences on house prices, and at the moment, the underlying pressures upwards seem to be winning.

It seems obvious that unemployment, lack of mortgage funding, recession, etc all have a downwards pull on prices. But equally, shortage of supply has an upwards pressure.

Prices are rising, and have been for most of the year. What does that tell you about which influence is stronger?

bernard_shaw

This isn't analysis, its advertorial!

From the article:

Here’s an alternative view on the UK economy from ResearcH2, the analytical arm of real-estate advisers BH2.

In other news...

Fishmonger says "Eat more fish!"
Cameron says "Vote Conservative!"

Yakubu22

HAMISH_MCTAVISH wrote: »

Fair enough. But the underlying issues work both ways. There are competing influences on house prices, and at the moment, the underlying pressures upwards seem to be winning.

It seems obvious that unemployment, lack of mortgage funding, recession, etc all have a downwards pull on prices. But equally, shortage of supply has an upwards pressure.

Prices are rising, and have been for most of the year. What does that tell you about which influence is stronger?

Yes but the upward pressure on prices is mostly down to a shortage of good housing on the market. A lot of poeple while IRs are low are staying put and not selling. They are doing this because of the underlying downward pressures you mentioned (unemployment, lack of mortgage funding, recession, etc). In the short term there has been a mini recovery, but the actual causes of all this have not been dealt with yet. IMO we wont see a true (and full) recovery until "unemployment, lack of mortgage funding, recession, etc" is addressed.

HAMISH_MCTAVISH

In other news...

Fishmonger says "Eat more fish!"
Cameron says "Vote Conservative!"
Housepricecrasher says "house prices will crash"

Finished that for you.....;)

Cannon_Fodder

HAMISH_MCTAVISH wrote: »

...results from Kingfisher Group, owner of B&Q.... Profits significantly better than expected...

...as lots of people do DIY to improve where they already are, because they cannot, or do not want to, move...

http://www.mirror.co.uk/advice/archive/homes/2008/04/18/don-t-move-improve-your-home-instead-98487-20387271/
http://www.independent.co.uk/life-style/house-and-home/property/houses-as-homes-dont-move-improve-1333106.html
http://www.newsoftheworld.co.uk/lifestyle/186364/Dont-moveimprove-The-best-ways-to-add-value-to-your-home-with-Louisa-Fletcher.html

chucky

Yakubu22 wrote: »

Yes but the upward pressure on prices is mostly down to a shortage of good housing on the market. A lot of poeple while IRs are low are staying put and not selling. They are doing this because of the underlying downward pressures you mentioned (unemployment, lack of mortgage funding, recession, etc). In the short term there has been a mini recovery, but the actual causes of all this have not been dealt with yet. IMO we wont see a true (and full) recovery until "unemployment, lack of mortgage funding, recession, etc" is addressed.

so if this continues by definition of what your saying house prices will continue to increase.

if there are not many forced sellers there will be no drop in prices.
the forced sellers that are being forced onto the market are being diluted over a longer period of time which has little or no impact on house prices.