Housing market continues to slow....

deemy2004

The world could go into a deflationary spiral similar to the 1930's ..... As the USA , Britain and most major countries are mortgaged to the hilt and just cannot pump any more extra money into the financial system....

Offcourse they may try to just print money without any thought to the consquences in which case the world will go into an out of control inflationary spiral...

DAMN ! Which way is it going to go ?????????

Either way means lower REAL house prices.

A credit crunch is coming - batton down the hatches.!

Sput2001

So estate agents are basically saying that the MPC should cut interest rates so that the house price "feel-good" factor will start again, encouraging more people to borrow even more money against the paper profit they have made in their house. This spending will then provide a short term boost to the economy, at the expense of its long term future. The money has to be paid back at some point!

Cutting interest rates may encourage people to borrow, but that's only part of the reason why a cut would boost the economy from the consumer's point of view.

1 - Most people who already have a mortgage have their monthly repayments reduced, allowing them to spend their extra money elsewhere.

2 - If interest rates are low, then saving money becomes less attractive. As a result, people become more likely to spend than save.

ManAtHome

NickMidgley wrote:

2 - If interest rates are low, then saving money becomes less attractive. As a result, people become more likely to spend than save.

Too true - then we get a Pensions Crisis.... Although low interest rates don't seem to have done the Japanese too many favours over the last 10 years or so.

deemy2004

ManAtHome wrote:

Too true - then we get a Pensions Crisis.... Although low interest rates don't seem to have done the Japanese too many favours over the last 10 years or so.

And why is that ?

It is because OF BAD DEBTS !

The reason why japanese interest rates are so low is to stop companies from goign bankrupt as they are technically bankrupt ! What happened to Japan has a significant probability of happening over here and the USA though Europe looks more along that road than where we are in fact Italy IS now where Japan was... with other major european countries not far behind... Only probably Germany looks good, hence the reason why the euro is much stronger than it should otherwise be !

Kenny4315

Flynt

So kenny are you going to sell?
I spoke to a adviser last night, he said professional investors that he knew had been selling their properties for last 18 months

I have sold up all but my main residence in the past couple of years. Have been looking at some large scale projects, looking at one currently but can't get it for sensible price, given the amount of work required and the state of market. There are plenty of fish in the sea and I am happy to see what happens if I don't buy at the price I want, I don't buy.

Kenny4315

Investing in stocks, bonds, houses, etc is all a matter of timing and a bit of luck. I invested in in FTSE tracker fund (lowest charges - as most investment managers are sheep anway no point on paying extra for a sheep (unless your a farmer or have some strange fetish)), invested at the time of the Iraq War when market at its very lowest think is was about 3350 or something like that, knew it weren't going down any further, I don't really follow it to cloosely but in a couple of years with no effort its gone up to 5100 or so. That's nearly 50%, so in answer to all you folk worrying about portfolio's etc timing/luck is the key. Like timing is the key to getting in and out of property, now is the time to run and hide, or negioate very hard bearing in mind the downside risk.

ReportInvestor

Hard times for the lenders?

There are at least five building societies offering 2 year fixed rate mortgages at less than 2.5%, with the accompanied extended tie-ins to 2010/11.

Business Week

It sounds a similar story in the USA.

"The Mortgage Trap

Lenders are cranking out an ever-growing array of financing schemes and lowering standards to keep the housing boom going......"

KrazyFool

ive heard lots about houses at 260-290 being offered at 249k, are the sellers accepting this? its making it difficult to work out as ive seen a house thats just come on the market at 290 so probably theyre not in a great rush and wont accept such an offer. Just wondering what figure i should come up with...

KrazyFool

also seen, pay full price but vendor pays stamp duty. Been trying to work it out but how does that make any difference - i cant see it

meanmachine_2

KrazyFool wrote:

also seen, pay full price but vendor pays stamp duty. Been trying to work it out but how does that make any difference - i cant see it

Vendors try to offer this in order to break through the 250K stamp duty threshold.

Houses are very rarely put on the market at £275K these days with the expectation that they'll sell for this price. No seller would offer more than £25OK, because of stamp duty rising from 1% to 3% at this point.

By offering to pay stamp duty a vendor is hoping that a buyer will be prepared to pay above this threshold.

Fat chance in today's market.

By the way, passed a local EA today - they're having a special "open house" weekend with dozens of houses at special "reduced prices". You can smell the panic in the air....