50% house price falls

hearts

Now that the government has made safe the banks position and there is talk of interest rate falls over the next year. What chance of a 50% increase in house prices over the next 4 years?

Guy_Montag

BobProperty wrote: »

I'll say it again here too, the mutual Building Societies must be either laughing or saying "good job we didn't sell out". Northern Rock could never have made the numbers of mortgages it did without becoming a bank. Mutual societies may have faults but lending to deposit ratios isn't one of them.

How things have changed. When I was wee, too young to remember, my folks set up a building society account (B&B) for me & my sister. Not with a lot of money, just enough to get us going, so that by the time we came to need mortgages the building society would "know" us. How things have changed.

davilown

HugoSP wrote: »

Rents will have increased by similar amounts or more over the same period, and peoples' earnings will have increased.

Where on earth are people getting these payrises from? How is their pay being increased? Look at the public sector pay rises this year. I think you'll find that in reality it is actually a pay cut thats occuring not a rise.

If people don't get paid more, there's no way they'll pay more rent.

I'm renting at the moment and plan to stay for the next 12 months at least until I see what is happening to the market - the fact I only pay £120 a month rent is beside the point.

SquatNow

Wages inflation is held down by competition from low wages in China.

Inflation cant really get out of control for long before it's the big lights out... inflation will cause the pound to fall like a stone and the UK will be unable to import electricity or gas to generate electricity.

SquatNow

I'm not doom mongering it's basic maths. Inflation simply cant happen. They got away with it in the 80s.... created hgh inflation, generated the famous "soft landing" where wages caught up with house prices.

But in the 80s we were a net exporter of oil and gas. Now we need to import huge amounts every day. If we inflate, the £ drops and we can't buy the oil/gas we need.

Queue rolling brownouts, hauliers strikes, queues at petrol stations etc etc.

Generali

SquatNow wrote: »

I'm not doom mongering it's basic maths. Inflation simply cant happen. They got away with it in the 80s.... created hgh inflation, generated the famous "soft landing" where wages caught up with house prices.

My recollection was that the landing wasn't that soft (15% interest rates and unemployment at nearly 4 million). It was 'the first white collar recession'. Even IT people were losing their jobs!

SquatNow wrote: »

But in the 80s we were a net exporter of oil and gas. Now we need to import huge amounts every day. If we inflate, the £ drops and we can't buy the oil/gas we need.

The pound diesn't necessarily drop if a little inflation is allowed into the system. The biggest driver of FX markets is investment. Perversely, inflation can cause the currency to rise in anticipation of higher interest rates. Also, there are a lot of exporters in the Far East that have a big interest in keeping the pound strong.

I'm not saying inflation is a good thing (far from it) but my experience is that when the choice is between inflation and deflation, as it is looking like increasingly, policymakers always seem to chose the former.

Interesting piece in the Times today about UK sub-prime borrowers.

...rates for an estimated 230,000 to 300,000 sub-prime borrowers will soar to unaffordable levels of more than 10 per cent when they reach the end of their current deal...

RabbitMad

Walter_J wrote: »

I have to congratulate Codger on his excellent analysis. All intellegent people will agree with him.

I don't agree wiv im, Are you calling me fick? You wanna watch it or I'll screw up my mensa certificate and frow it at you!


Acutually being serious again, I find it depressing that people are gloating about NRK's problems when their business model was one of the most envied only a few months ago. Who could have foreseen a point in time when the banks would refuse to lend money to each other at any rate. For stoogers like myself it would be as unthinkable as 0% credit card balance transfers disappearing overnight.

Running_Horse

SquatNow wrote: »

Queue rolling brownouts, hauliers strikes, queues at petrol stations etc etc.

What is a brownout?

Jonbvn

Running_Horse wrote: »

What is a brownout?

A power cut.

Use to have these when I was a lad......and we were lucky!;)

Generali

Running_Horse wrote: »

What is a brownout?

Reduced electricity supply the network because generating capacity can't cope with demand. Lights go dim, hence brownout.