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Debate House Prices
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Could the UK be the first to raise interest rates?
Comments
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The UK will leave it as late as possible to raise rates. If US/EU raise and we see a recovery in the UK, then we'll see internal and external inflation pressure. Eventually they'll have to raise, which in turn will kill the housing market, which in turn will kill the economy.
Can't see an easy way out.
It's not that simple but you do make a good point.
Large debts probably make the economy more sensitive to interest rate rises. If I realise that then the MPC likely does too.
Perhaps, because of higher debt levels, RPI +1% is a long term base rate rather than RPI + 1.5-2%. The MPC aren't just going to crank up rates so you can buy a house cheaply, that's not in their remit.0 -
presumably the drivers for an increase in base rates will be wage inflation, asset price inflation especially housing
Wage inflation yes...although even then only if there is no productivity miracle and wages increases are feeding through to price rises.
Asset price inflation? Do they have any remit beyond financial stability? Surely better managed via specific prudential regulation than the blunderbuss of monetary policy?I think....0 -
shortchanged wrote: »Removal of FFL one would assume.
No forgetting the extraordinary amount of liquidity that was pumped into the banking system prior as well since NR collapsed in 2007.
With the taps turned off very slowly the situation is normalising.0 -
Raising interest rates to quell house prices also has in impact on other parts of the economy. A better plan might be to limit max mortgage loan sizes to say 75% (or what ever it needs to be to keep house price inflation at what ever the bank would like).0
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Typhoon2000 wrote: »Raising interest rates to quell house prices also has in impact on other parts of the economy. A better plan might be to limit max mortgage loan sizes to say 75% (or what ever it needs to be to keep house price inflation at what ever the bank would like).
It's a hard line this one.
Effectively it closes out a huge part of the market from having the opportunity to be owners and inflates the rental market.
The problem is, the only real long term solution is to build more properties, which the government cannot afford to do.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »It's a hard line this one.
Effectively it closes out a huge part of the market from having the opportunity to be owners and inflates the rental market.
The problem is, the only real long term solution is to build more properties, which the government cannot afford to do.
Course they can.
They could build the Olympic stadium and associated village.
They can throw, £5, £10, £20bn extra at HS2 at the click of a finger.
The issue here is simple, the government building houses en masse would put banks at risk through possible negative equity etc etc. Will cause prices to fall losing some votes etc.
They (all governments) don't want to build extra houses. It's not that they cannot build extra houses.
You only have to look at who is around the table when it comes to housing policy. Banks and Builders. Both of whom don't want a glut of affordable homes.0 -
Simple minds always think they have the simple solutions.Graham_Devon wrote: »Course they can.
They could build the Olympic stadium and associated village.
They can throw, £5, £10, £20bn extra at HS2 at the click of a finger.
The issue here is simple, the government building houses en masse would put banks at risk through possible negative equity etc etc. Will cause prices to fall losing some votes etc.
They (all governments) don't want to build extra houses. It's not that they cannot build extra houses.
You only have to look at who is around the table when it comes to housing policy. Banks and Builders. Both of whom don't want a glut of affordable homes.0 -
Graham_Devon wrote: »Course they can.
They could build the Olympic stadium and associated village.
They can throw, £5, £10, £20bn extra at HS2 at the click of a finger.
The issue here is simple, the government building houses en masse would put banks at risk through possible negative equity etc etc. Will cause prices to fall losing some votes etc.
They (all governments) don't want to build extra houses. It's not that they cannot build extra houses.
You only have to look at who is around the table when it comes to housing policy. Banks and Builders. Both of whom don't want a glut of affordable homes.
How many houses can they build for £20Bn?
When you work it out, they'll need to spend about £40 Bn EVERY year, not just on one off projects.
Over a term, that's an additional £200Bn or so to find.
I think you'll find that the governments are running a deficit and are trying to cut back on spending.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
What's your simple solution?
This is a simplistic report, but one that goes a little way to explaining the issue
http://www.theguardian.com/housing-network/editors-blog/2014/feb/27/cameron-get-britain-building-housebuilding-statistics:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0
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