High house prices are a risk to the economy, UK warned

Graham_Devon

The UK's high house prices are creating dangerous levels of household debt that present a risk to the economy, European Union officials have warned.

In a report on the performance of all EU member states under increased monitoring powers in the wake of the economic crisis, the European Commission highlights 'high levels of household debt' and the 'insufficient and rigid' housing supply in the UK as risks to the economy.

The report says: 'The high levels of household debt accumulated over the past decade are linked closely to high house prices and represent an important imbalance in the UK economy.'


It said household debt has been rising steadily for the past ten years, and highly indebted households are 'vulnerable to rises in interest rates or in unemployment, with potentially destabilising effects on the economy at large'.

First real warning about how high house prices are detrimental to the UK economy from those with a bit of power.

Unfortunately, for myself, who likes this article, it comes from the bloody EU Officials.

http://www.thisismoney.co.uk/money/mortgageshome/article-2152173/EU-High-UK-house-prices-risk-economy.html

Still, something at least, for the government to mull over. Shame it's had to come from the EU incumbents.

MrRee_2

It means NOTHING.

The UK housing market is so different to any other model in the world - it is immune to the usual market forces ..... this has been proved in the last 5 years.

We have seen the world economic situation get progressively worse, generally, yet the UK Housing Market has hardly moved one jot to all intents and purposes.

REJOICE!!!

CLAPTON

I'm sure they meant to write that the low level of house building in the UK means that people live in substandard housing and pay too much for the privilege.

As usual the useless people in the EU got it wrong again

Thrugelmir

Graham_Devon wrote: »

First real warning about how high house prices are detrimental to the UK economy from those with a bit of power.

I suspect that many people have held a similar view for at least 5 years now. Little that can be done to accelerate unwinding the position though. Except wait and pray..........

MrRee_2

If they work hard and save up they can move out of that sub-standard housing ................. simples.

Itismehonest

Funny how they only start to worry about UK house prices when their own citizens start taking Euros out of EU banks & buying properties over here as investments, eh?

chucky

Graham_Devon wrote: »

Still, something at least, for the government to mull over. Shame it's had to come from the EU incumbents.

If it comes from the EU; it's either political motivated, they're trying to distract attention from their current economic issues or they've missed completely the potential housing crisis in Spain.

MrRee_2

The accurate point is made above .... Europe is buying up our property.

Where better to put your Euro's while you still have them?

Rent the property for a 7% yield ... with capital growth guaranteed over the medium term.

It's not rocket science ... and why our housing market will just increase and increase as the EU situation gets worse and worse.

AndyGuil

MrRee wrote: »

It means NOTHING.

The UK housing market is so different to any other model in the world - it is immune to the usual market forces ..... this has been proved in the last 5 years.

We have seen the world economic situation get progressively worse, generally, yet the UK Housing Market has hardly moved one jot to all intents and purposes.

REJOICE!!!

That's what makes it dangerous. I'm very wary of things that move like this. A bubble waiting to pop.

Graham_Devon

The EU Officals are very good at one thing. Stating the bleeding obvious, a long time after the event.

What they, and all governments to be fair, are not so good at is providing a solution.

The solution is staring us all in the face, but we must pretend that it isn't. We must pretend that we need to pay people 30,40,50x my income each year, to jet all over the world, meeting up to come up with solutions. Instead, they just announce "hey, we found we have an issue"...."We'll meet up in 3 months time to see if we still have an issue".

The solution, which none will offer, as it's a big no no is simple.

I'll offer my solution for free. I won't even ask for keyboard wear expenses.

- Use some of this endless money these people seem to come up with to build houses. This will employ people.

- In turn, this will increase GDP & reduce welfare dependancy through employment.

- House prices will fall due to the new supply of homes. This in turn means more people can afford to buy and can take on less debt to do so, will also decrease welfare going forward thanks to lower housing benefits.

- Supply problems will be fixed, by, well, doing the above.

Thats the supply issue, the high house price issue and the debt issue solved. Cherry on the cake is that it reduces welfare imediately, and also in the future going forward by loweting housing benefits thanks to lower house price / rents.

However, I'm not stupid, and I realise my solution is worth jack, as the problem with all of this, is those spouting we have problems, don't actually want to actually see any solution implemented.

All I need to do now is figure how I get 50x my salary to undertake the demanding role of playing ignorant and stating the news 4 years after the event.

CLAPTON

one simple action we can take that costs nothing except press hysteria is to abandon the 'affordable' housing target