Plunging house prices and the economy

andybenw

Quote -
No rush back in at the bottom history shows house prices stagnate at the bottom for a while. And we will not see the very bottom until interest rates are back to normal levels.

Get Real, I must disagree with your signature. Stagnation will indeed continue for a considerable time. However this is engineered. We will at some point start to get small nominal rises in house prices. This is when interest rates will start to creep up very slowly. We will get back to more normal interest rates - But - We will not see a nominal price crash because of this merely more stagnation. Of course by the time it all pans out we will have had a huge 'real terms' crash.

Get-real-buy-real

andybenw wrote: »

Quote -
No rush back in at the bottom history shows house prices stagnate at the bottom for a while. And we will not see the very bottom until interest rates are back to normal levels.

Get Real, I must disagree with your signature. Stagnation will indeed continue for a considerable time. However this is engineered. We will at some point start to get small nominal rises in house prices. This is when interest rates will start to creep up very slowly. We will get back to more normal interest rates - But - We will not see a nominal price crash because of this merely more stagnation. Of course by the time it all pans out we will have had a huge 'real terms' crash.

We can not see the bottom until the elephant in the room (huge repossessions of people living in houses they can't afford to pay the true interest on) is faced.

Mallotum_X

Get-real-buy-real wrote: »

We can not see the bottom until the elephant in the room (huge repossessions of people living in houses they can't afford to pay the true interest on) is faced.

But its clear that Bank and Government policy is not going to allow that to happen.

There has been significant efforts to prevent repos, this downturn has seen lower repo levels than previous ones.

Stagnation and inflation - which will eventually give some wage inflation combined with low interest rates is preventing the repos and will keep people in their homes.

By the time the economy improves and interest rates rise the majority of people at risk will be safe.

andybenw

Get-real-buy-real wrote: »

We can not see the bottom until the elephant in the room (huge repossessions of people living in houses they can't afford to pay the true interest on) is faced.

Most of those on ultra low interest base rate trackers bought at normal interest rates and were able to pay at normal rates. What's to say they won't be able to once again as interest rates slowly creep back up.

Anyone buying recently will have had their borrowing much more stringently assessed by the lenders.

Government and banks are working hand in hand with this real terms realignment of house prices. The banks cannot force a crash through repossessions as this will destroy their balance sheets.

Everything points towards a slow drawn out real terms fall, nominal stagnation.