Property !!!!!! A Nation Hypnotised? Blog Discussion

LizEstelle

Chrysalis wrote:

I wont dispute that the housing market is a driving factor in the economy why is this? people releasing their equity so they have spending money to hide a recession?

But what you need to realise is that interest rates are their to control the value of the currency and this will always take priority over house prices. If they find inflation going out of control then interest rates will go up, this is whats already happening as we are seeing with fuel costs and even official inflation figures are on an upward trend and predicted to break 3%,

No. Interest 'rates' all derive from the BoE base rate which is set by its MPC. Their guiding directive is to control inflation and has nothing to do with currency values which have now been floating since the dark days of the last, inept Tory administration.

Yes, quite clearly factors other than the housing market - oil and raw material indices, war and the international situation etc - CAN have their own contribution to make to the committee's thinking but the property sector has grown into an ever bigger player, quite rightly.

Nationwide reckons house price inflation is currently running at an annual 8.2%. YOU can bet against the BoE ignoring that, if you like. Speaking personally, I shan't.

LizEstelle

vishpatel wrote:

Core Purpose 1 - Monetary Stability
"Monetary stability means stable prices and confidence in the currency. Stable prices are defined by the Government's inflation target

http://www.bankofengland.co.uk/about/corepurposes/index.htm

Yes, indeed... and the MPC knows very well what a runaway housing market could DO to the government's inflation target.

Get it now?

vishpatel

LizEstelle wrote:

Yes, indeed... and the MPC knows very well what a runaway housing market could DO to the government's inflation target.

Get it now?

How did this all of a sudden become problem? IF they were so concerned about housing, why wait until now? 8.2%? Pffttt, thats small time compared to years gone by.

LizEstelle

vishpatel wrote:

How did this all of a sudden become problem? IF they were so concerned about housing, why wait until now? 8.2%? Pffttt, thats small time compared to years gone by.

My guess would be, as mentioned, that the housing market and its effects on the economy have been growing in importance... but you'd better ask them... don't shoot the messenger.

vishpatel

LizEstelle wrote:

My guess would be, as mentioned, that the housing market and its effects on the economy have been growing in importance... but you'd better ask them... don't shoot the messenger.

But you're not their messenger....

Growing in importance? Oh, so they've ONLY JUST realised that Britons have been spending huge amounts of equity from their homes?? I believe that trend is now actually in decline....

Please give them some credit. Certainly more than you give yourself.

A_Fool_&_His_Borrowed_Mon

vishpatel wrote:

Comedy.

I guess you have to be 'in the know'.

However, I'll take the aims of the MPC at face value thanks. I think they care a helluva lot more about the value of the pound, than they do about the price of your home.

Core Purpose 1 - Monetary Stability
"Monetary stability means stable prices and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions on interest rates taken by the Monetary Policy Committee, explaining those decisions transparently and implementing them effectively in the money markets."

http://www.bankofengland.co.uk/about/corepurposes/index.htm

I Concur with the above.

What use is a home worth millions?, If the value of the Pound has tanked to that of the old Lira??

Currency Value is the No1 Target of the BoE. Not House Prices.

LizEstelle

vishpatel wrote:

But you're not their messenger....

Growing in importance? Oh, so they've ONLY JUST realised that Britons have been spending huge amounts of equity from their homes?? I believe that trend is now actually in decline....

Please give them some credit. Certainly more than you give yourself.

Yes, I give them a lot of credit for doing what they're doing. It's you who won't accept that they're doing it for the reasons that I and virtually every other 'messenger' credit them with.

If you won't face reality then I refuse to sink to the level Martin was asking us to avoid in his opening post - and this tiresome and futile stubbornness to acknowledge historical fact will henceforth be ignored. My aim is to remain 'nice' - with people who can debate the issues from accepted common ground.

If you insist on believing that the Earth is flat, it won't be me who rushes to stop you from sailing off the edge. I'll be too busy planning my round-the-world trip... financed by my property income, naturally.

vishpatel

LizEstelle wrote:

Yes, I give them a lot of credit for doing what they're doing. It's you who won't accept that they're doing it for the reasons that I and virtually every other 'messenger' credit them with.

If you won't face reality then I refuse to sink to the level Martin was asking us to avoid in his opening post - and this tiresome and futile stubbornness to acknowledge historical fact will henceforth be ignored. My aim is to remain 'nice' - with people who can debate the issues from accepted common ground.

If you insist on believing that the Earth is flat, it won't be me who rushes to stop you from sailing off the edge. I'll be too busy planning my round-the-world trip... financed by my property income, naturally.

absolute comedy!

I see there is another exception to virtually everyone else (messengers or whatever) above your post. I don't see a peopl rushing to agree with you though. Anyone out there?

So.... I'm not sure which reality you're living in but in mine, as I said, I'm quite certain that the MPC's primary aim is to quote:

".....set interest rates so that inflation can be brought back to target within a reasonable time period without creating undue instability in the economy."

House prices are simply a part of that equation, and not something that they care to have a direct impact on.

tonyhamm

Inflation is massive over the past few months in the things I consume. Thats Food, Utilities etc.. I am starting to think I should be borrowing money to spend now as a form of saving if this nonsense carries on.

As to houseprices, although every other major european country is staggering the impact over a number of years of millions of e. european workers driving down wages and driving up property prices, allowing people to adapt to change an plan capacity, we have a labour party who believes in driving down the rate of pay for labour by mass immigration.

Just today we hear that millions of people in Romaina and Bulgeria are also allowed total access to our labour market, unlike most other european countries before christmas starts.

The BOE is now printing huge huge amounts of money, this year 16% of all money held. Being a saver in sterling and a renter, undergoing frugality and sacrifice on a daily basis because you trust the currency is looking like a major mistake. I carry a 50,000 greek drackma note in my motheaten wallet, now worth about 10p, and often wonder how savers who started off with 1 drackma to 1 dollar fared under a constant deluge from the central bank.

Although many ordinary people have taken on a vast amount of debt in todays terms, and they are stuggling to cope, this government has removed tax breaks from ordinary homeowners and ramped up tax breaks for investors and the rich (like the SIPPS 40% off giveaway). This means Houseprices will carry on up, yet they will just join the millions of people locked out forced to rent.

Eventually these families will become renters feeding thier lives to the landlord class.

Underlying this is the most massive immigration in history, helped with quite a few millions in loans bunged to Labour no doubt and spun as racist to question.

ReportInvestor

The Independent

Halting house price inflation would induce a recession - learn to live with it

The rules of the game have changed, making old measures of valuation less reliable.

"....Of course, there must be a level of interest rates that would cause house prices to fall. Yet it is likely to be a good deal higher than the couple of extra quarter-point rises the markets have factored in for the current phase of monetary tightening. If, on the other hand, rates were to rise back to above 6 per cent, that would begin seriously to hurt, and at 8 per cent, many households would experience a similar degree of distress in servicing mortgage payments as occurred in the early 1990s.

In those circumstances, house prices would indeed fall, but so would the rest of the economy too. No one would thank the Bank for inducing a recession when the level of general price inflation doesn't require one....."

So we will have to put up with inequalities and the government will have to address the issue of social housing.

Meanwhile affordability is not an issue judged by historic standards.