'HPI should be capped at 5%' - RICS

IveSeenTheLight

chucky wrote: »

Nice articles but how do they implement this across regions?! How would you stop Hamish's HPI in Aberdeen at 6% while in Wigan Percy's house has lost 3% of it's value.

The Bank of England don't have the power to be so accurate in their policy or management of house prices.

Hey, Leave Aberdeen out of it.
Were not captured under the LR

chucky

IveSeenTheLight wrote: »

Hey, Leave Aberdeen out of it.
Were not captured under the LR

But you would be affected by Bank of England policy right?

IveSeenTheLight

Graham_Devon wrote: »

Good stuff.



How can anyone suggest that's a bad thing!?

The question is Graham, how would they cap HPI?

Options are: -

1. Increase Supply (Build more properties)
2. Decrease demand (restrict opportunities to purchase)

Do you believe that they will be able to suddenly increase supply sufficiently?

If not, then you must be advocating limiting the opportunity to buy

Ronaldo_Mconaldo

Isn't this worrying for many? What they are saying is that they might use a different method to raising interest rates to prevent rising house prices. So in that case the housing market would be in full swing in savings rates would still be low. Who's going to be happy about that?

chucknorris

Ronaldo_Mconaldo wrote: »

Isn't this worrying for many? What they are saying is that they might use a different method to raising interest rates to prevent rising house prices. So in that case the housing market would be in full swing in savings rates would still be low. Who's going to be happy about that?

It won't suit everyone but I'd be happy with that because I am moving away from holding cash anyway, and if house prices are allowed to rise at a lower level but without the 'bust' (personally I can't see that but a softer landing is possible) that is far better than boom/bust, bring it on.

System

2 things don't sit right with me.

1) The people who have spent 6 years warning us of a crash are now complaining about a boom without so much of an acknowledgement that they were talking plop for 6 years.

2) Artificial stimulus is bad but artificial downward suppression of the market is to be lauded. I can't get my head around this either.

N1AK

Graham_Devon wrote:

How can anyone suggest that's a bad thing!?

This may seem odd given that one of our few points of agreement is that a house price bubble would be bad but: I could, and will.

If house prices are rising by 8% pa and the only step being taken to slow it is restricting lending then it will be people who don't own yet, on low incomes, with little savings etc who will lose the ability to borrow.

There's no point in limiting house price growth if doing so negatively affects the very people we want to limit it to help.

wotsthat

Joeskeppi wrote: »

2 things don't sit right with me.

1) The people who have spent 6 years warning us of a crash are now complaining about a boom without so much of an acknowledgement that they were talking plop for 6 years.

2) Artificial stimulus is bad but artificial downward suppression of the market is to be lauded. I can't get my head around this either.

The irony will be lost on them....

N1AK

Joeskeppi wrote:

1) The people who have spent 6 years warning us of a crash are now complaining about a boom without so much of an acknowledgement that they were talking plop for 6 years.

RICS have been warning about a further crash for 6 years?

Joeskeppi wrote:

2) Artificial stimulus is bad but artificial downward suppression of the market is to be lauded. I can't get my head around this either.

I'll do you a deal. Drop all the stimulus measures including QE for lending, HTB etc and I won't support measures to slow the market

What I find interesting is that you say you can't understand that, but seem to have no issue with understanding the idea of throwing huge stimulus at a market and driving it into a bubble without thinking it is a bad idea.

chewmylegoff

Unless the bank is given the remit to either build houses itself or at least control government housing policy, it is difficult to see how it could really control house prices in an effective way without having serious knock on consequences to the rest of the economy. Monetary policy is a blunt instrument which cannot just target one specific element of the economy.

If HPI is at 10% but general economic growth at 0.5%, would you want the BOE to ramp up interest rates in order to being HPI down to 5%? If you do then you might change your mind when you lose your job...