House prices must be kept up at all costs

julieq

stueyhants wrote: »

Sterling would drop and there would likely be some carry trade (borrow in £ and invest in Euro). Not sure how that would help our problems. Why invest in the UK when you get a better return in other countries.

Take that argument to its logical extreme and no-one would invest anywhere except the highest returning place. Anyway there are limits to what you can invest anywhere.

In fact there are other factors, the principal being diversification against risk. You're also betting on social attitudes in the countries involved. There are structural problems in for example health care in France, and pensions in Germany, which are well beyond ours. We have (currently) better labour flexibility. If this government should be damned for anything, it's just that, that they have willingly increased the burden of regulation to a point where we've lost the competitive advantage we had here of flexibility.

If you want to believe that all is doom and gloom, then no-one will stop you. But outside the closed confines of this board where the worrymeisters wind themselves up into more and more worry on the basis of things they can't control anyway, it may not be easy but it's not the apocalpsyse.

Rotor

I've a question for the sage amongst us - When QE is withdrawn ( as opposed to just stopped)does this have the same effect on the economy as raising interest rates ie it reduces the amount of money chasing the same assets?
If so will the govt not choose QE withdrawl before interest rate rises?
Thoughts?

Turnbull2000

HAMISH_MCTAVISH wrote: »

Errr, no they weren't. And 5% is not a historical low, it is the long term, 400 year, average.

It seems rather silly to average rates over 400 years, considering that inflation was very little to zero (under the gold standard was it?) right up until the FIAT system was introduced in the 20th century. Since then, inflation and rates have been substantially higher.

mpg

I'm no financial expert(not really an expert in anything). But didnt the goverment bail out the banks, Reduce VAT, Guarantee loans amongst other things. Because house prices started to fall and repossesions started to rise. A lot of people were in negative equity with rising mortgage costs that they couldnt afford.

Well if interest rates start to climb aren't we going to be in the same situation again.

Surely keeping interest rates low but make the grounds for getting loans much harder is what we need.

Like I said no expert

CLAPTON

mpg wrote: »

I'm no financial expert(not really an expert in anything). But didnt the goverment bail out the banks, Reduce VAT, Guarantee loans amongst other things. Because house prices started to fall and repossesions started to rise. A lot of people were in negative equity with rising mortgage costs that they couldnt afford.

Well if interest rates start to climb aren't we going to be in the same situation again.

Surely keeping interest rates low but make the grounds for getting loans much harder is what we need.

Like I said no expert

No the government and BoE didn't bail out the banks at enormous cost to stop the fail in house prices.

They looked at the 30s depression and realised that unless they could stop a catastrophic fall in credit (for businesses etc) we would be looking at huge collapse of the economy and massive un-employment.
Which is why virtually every western country /USA did the same whether or not they had a house price deflation.

Milliewilly

phil_b wrote: »

Holy cow! I can get a mortgage at 0.5%??? :eek:

I've got 0.67% but that was set two years ago! My mortgage has never been cheaper.

stueyhants

Rotor wrote: »

I've a question for the sage amongst us - When QE is withdrawn ( as opposed to just stopped)does this have the same effect on the economy as raising interest rates ie it reduces the amount of money chasing the same assets?
If so will the govt not choose QE withdrawl before interest rate rises?
Thoughts?

The BoE will probably remove QE before IR rises, as if they don't they will have to pay increasing interest on the existing QE money which is being held on deposit at the BoE.

HAMISH_MCTAVISH

Spartacus_Mills wrote: »

Yes, we currently have an oversupply of housing in the market. 650,000 houses on the market. 90,000 sales per month. 7 months stock on the market at any one time. Serious oversupply.

:rotfl:

Zero stock on the market = no choice = waiting lists for housing and prices rising faster than you could imagine in your worst bear nightmares.

650,000 houses on the market = very restricted choice and prices rising at 10% in just 10 months.

HAMISH_MCTAVISH

Spartacus_Mills wrote: »

It is no more reputable or disreputable than any opinion piece. Just because it is a blog post. So what. It is well thought out, well written, and gives a rationale for its conclusions.

It's nothing more than a compendium of every HPC myth that has already proven to be false. The same, or similar, myths were used to explain why house prices would not rise this year, and would fall to 50% from peak instead.

Care to try to deconstruct it instead ?

House prices up 10% in 10 months.

No need mate... The market has deconstructed it for us.

brit1234

HAMISH_MCTAVISH wrote: »

It's nothing more than a compendium of every HPC myth that has already proven to be false. The same, or similar, myths were used to explain why house prices would not rise this year, and would fall to 50% from peak instead.


House prices up 10% in 10 months.

No need mate... The market has deconstructed it for us.

Yeah right, the crash is still on or have you not noticed the halifax nationwide figures leveling out or starting to fall. You are bragging about increases at a period when interest rates were slashed 4.5% to 0.5%, QE, VAT cut, stamp dutyt holiday.

Is that really signs of sustainable growth, now this stimulas is gone and NI is increases?

As I said early repossession rose through your wonder 2009 and are still rising. Unemployment is rising still as well.

Its a myth of supply and demand, house prices in Japan didnot rise for 20 years after there crash and they had one of these so called shortages of housing supply. All we have here is people reluctant or unable to sell due to negative equity not a shortage of houses. As rates go up forced sales will increase further and foriegn investment will shrink.

Come on Hamish talk about the issues.