House Prices: New Record High - Nationwide +1% MoM +5.3%YoY

Landofwood

ruggedtoast wrote: »

Good grief there's another one.

Another what?

buglawton

floridaman wrote: »

Rising house prices are a sign of a healthy economy.

QE pumped unbelievable amounts of £s into the British economy over the years since the financial crisis. Wages did not rise. Price rises have stopped. The economy did not grow. So where did that flood of QE cash go? To the risk averse banks who in turn have lent/are lending in the one and only direction they see as safe - to people who've already got good equity or to 100% gold star borrowers who even then might be underpinned by a help to buy guarantee. The money's being mainly lent for residential property.

Now, why I wonder why are house prices continuing to rise for longer and faster that the laws of physics ought to allow?

Healthy economy?

jacko74

HAMISH_MCTAVISH wrote: »

I'll be selling houses but keeping a house.

No need for tents...

''Selling houses'' eh? That's an interesting concept, I take it you haven't noticed how completely paralyzed the non London property market is at the moment due to greedy, deluded vendors.... let's hope you don't fit that description.;)

floridaman

I thought high house prices made people richer and spend more money?

buglawton

Doncha just hate it when you can't tell if someone's being ironic?

brit1234

floridaman wrote: »

I thought high house prices made people richer and spend more money?

No just more in debt. Lower house prices would give buyers and renters more spare cash to spend in the economy.

cells

brit1234 wrote: »

No just more in debt. Lower house prices would give buyers and renters more spare cash to spend in the economy.

House building ramping up would be a massive boost to GDP to Jobs and to taxes and wealth.

We can build 200,000 more homes than we do. If done like it is in France and Germany (where the builders build bigger better homes than the existing stock) then I would imagine the average price would be north of £300k

That is £60B added to GDP directly
Equal to over a million jobs and at least £20B off the deficit oer year


The untapped potential is larger than the north sea was at its peak. Its larger than all the car and aviation industry combined. Its just absurd that it is effective shackled and ignored

Digsby

floridaman wrote: »

I thought high house prices made people richer and spend more money?

My understanding of this (the "wealth effect") is this:

In the short term when prices rise rapidly, people feel richer and spend more money, but more importantly release equity and spend it, providing a shot in the arm for an ailing economy. The purpose of QE was to create the price inflation, and one of the purposes of the interest rate cut would have been to encourage equity release.

In the medium term, once the equity is spent, it is spent, plus the same people must curb their spending since equity release is a loan which must be paid back with interest. Another of the purposes of the interest rate cut would have been to reduce the impact of this.

In the meantime, as prices rise, would be buyers curb their spending while they save a greater amount to be able to make a purchase. Again, interest rate cut to make the prices more affordable and crucially Help to Buy to bring purchases forward and stave the impact of this off for longer.

Ultimately, the wealth effect is temporary, and there may or may not be a net gain in the strength of the economy, depending on how long the effect lasts and whether the temporary boost in spending stimulates it enough to sustain prices at their elevated level after it wears off.

chucknorris

HAMISH_MCTAVISH wrote: »

I'll be selling houses but keeping a house.

No need for tents...

I think it's a bear thing, it seems like they also like to camp in the woods too. Although I must admit that I am looking forward to taking my dog camping this summer with friends (I can't talk my wife into going camping, she likes her comfort too much), only for a weekend though)

buglawton

QE was supported by some house price shoring tricks

"In the short term when prices rise rapidly, people feel richer and spend more money,"

QE: In the short term house prices rose rapidly, people did not feel richer and did not spend more money

There!
Fixed it.