Bloomberg: Rates to stay at 0.5% for years, House Prices to Rise

HAMISH_MCTAVISH

The U.K. house-price recovery will continue through 2014 as low interest rates and a shortage of supply buoy the market, the Centre for Economics and Business Research said.

Prices in the fourth quarter will be 6.7 percent higher than a year earlier, rising to an average 179,000 pounds ($279,000), the London-based research group said in an e-mailed statement today. The annual rate of growth in the fourth quarter of 2011 will ease to 2 percent, it said.

The CEBR downplayed recent reports indicating the house- price recovery is fading. Mortgage approvals fell in June and data from Nationwide Building Society and Hometrack Ltd. showed prices declined in July. The market is “correcting for getting ahead of itself at the beginning of the year” and the drop isn’t a “prelude to an even steeper decline,” it said.

“The forecasted prolonged period of very low interest rates will continue to stimulate demand for housing over the coming years,” the CEBR said in the report. “Strict planning regulations and a deep recession have contributed to a tight supply of new housing on our small island and are likely to persist, thus helping to drive house prices upwards.”

Bank of England Governor Mervyn King said last week there may be a “considerable” way to go before the benchmark interest rate rises from the current 0.5 percent to a more “normal” level.

The central bank has held the rate at that level since March 2009 and former U.K. Treasury adviser Roger Bootle yesterday forecast that borrowing costs won’t be increased until at least 2012 as the government’s budget squeeze threatens a “fragile” recovery.

http://www.bloomberg.com/news/2010-07-31/u-k-house-price-recovery-will-continue-through-2014-cebr-says-in-report.html

:beer:

Malcolm.

Good news for my mortgage, not so good for peoples savings.

Ironically, the markets are now sometimes responding to bad news as good news, bad economic data means interest rates are likely to stay lower for longer.

The Government appears to be more concernd with smoothing the economy than with inflation at present.

Thrugelmir

Malcolm. wrote: »

The Government appears to be more concernd with smoothing the economy than with inflation at present.

That's because the BOE has little control over inflation. It can only influence its direction. With the banks still in intensive care there's little medicine that they can currently apply.

Exocet

Did the last MPC meeting decide to do all the votes for the next two years? To save time on future decisions? Good idea really - if they already know what's going to happen, thanks to the CEBR and Daily Maily, then they could save a few bob on expenses.

nollag2006

The Times this morning also had a good round up of economists (real ones - not Jonny Davis) all of whom concurred that the BOE base rate is unlikely to rise until 12 months hence at the earliest. Given the recent slow down in HPI in some areas, this has to be a good thing.

Exocet

nollag2006 wrote: »

The Times this morning also had a good round up of economists (real ones - not Jonny Davis) all of whom concurred that the BOE base rate is unlikely to rise until 12 months hence at the earliest. Given the recent slow down in HPI in some areas, this has to be a good thing.

Yes, as soon as my house heard the news it's price went up by 10%. I can barely afford to live in it any more, it thinks I'm a bit down market.

Malcolm.

Exocet wrote: »

Yes, as soon as my house heard the news it's price went up by 10%. I can barely afford to live in it any more, it thinks I'm a bit down market.

Your house is very wise.

brit1234

Ok the count is ONE (1) for the Hamish Centre for Economics and Business Research (CEBR) repost counter.

Expect many more threads being started by Hamish on the same information. Our team will be counting in their Aberdeen bunker.

Last CEBR news report led to Hamish creating 4,562 separate threads on same subject. Lets hope he can beat it this time before all of Aberdeen is plunged into negative equity.

brit1234 wrote: »

Why are we taking any notice of the CEBR? We all know they are funded by the building company to launch vested interest propaganda. We all know their predictions are wrong.

All this story means is that Hamish is going to start 101 threads using todays CEBR related story from various sources for the next month.

https://forums.moneysavingexpert.com/discussion/2632165

nollag2006

brit1234 wrote: »

Ok the count is ONE (1) for the Hamish Centre for Economics and Business Research (CEBR) repost counter.

Expect many more threads being started by Hamish on the same information. Our team will be counting in their Aberdeen bunker.

Last CEBR news report led to Hamish creating 4,562 separate threads on same subject. Lets hope he can beat it this time before all of Aberdeen is plunged into negative equity.



https://forums.moneysavingexpert.com/discussion/2632165

How is the 50% house price drop by Christmas 2009 working out for you brit?

Oh, I forgot you have me on ignore, as you don't like hearing dissenting voices !!

:rotfl::rotfl:

chucky

nollag2006 wrote: »

How is the 50% house price drop by Christmas 2009 working out for you brit?

Oh, I forgot you have me on ignore, as you don't like hearing dissenting voices !!

:rotfl::rotfl:

you should really look at house prices for Hounslow on LR - it brings a tear to my eye

System

brit1234 wrote: »

Ok the count is ONE (1) for the Hamish Centre for Economics and Business Research (CEBR) repost counter.

Expect many more threads being started by Hamish on the same information. Our team will be counting in their Aberdeen bunker.

Last CEBR news report led to Hamish creating 4,562 separate threads on same subject. Lets hope he can beat it this time before all of Aberdeen is plunged into negative equity.



https://forums.moneysavingexpert.com/discussion/2632165

:rotfl:No complaints about the rightmove -0.6% threads hitting double figures?

I love these eBreakdowns.