House prices will plummet 10 percent

free4440273

perhaps the .25 base rate cut (already priced in*) today will give additional impetus to house prices. Just like 2005, when the fools cut rates when house prices were actually still increasing. Are these guys completely inept?? We shall find out in two hours or so.
*GBP/USD 2.0274

Generali

free4440273 wrote: »

perhaps the .25 base rate cut (already priced in) today will give additional impetus to house prices. Just like 2005, when the fools cut rates when house prices were actually still increasing. Are these guys completely inept??

It is generally accepted that interest rate changes take 18-24 months to feed through entirely to the rest of the economy. If it were as simple as looking at the Halifax/Nationwide Bumper Book of House Prices and adjust rates accordingly then I'd be on the MPC.

They are trying to predict what will happen in the future, no easy task.

I've been saying for years that house prices are too high and have been consistently wrong in that they haven't come down yet.

Amitoocautious

I do think prices are very expensive however i also think there are a number of people who can still afford them. We have basically bought at the peak w(with our eyes wide open) but we had to move from where we were and yes we could have rented but when we could afford a 3 bed semi with garage even if one of us lost our jobs we decided to go for it.

We are on good salaries and have saved very hard to get a decent deposit so hopefully that will insulate us a bit and we are overpaying like crazy too at the moment. Anyway i guess what i am trying to say is there are plenty of people like us that still have the money and can get credit on normal multiples so it may hold up a little longer. All of our friends are in 3 or 4 bed houses and bar a stupid couple who have overextended on 5 times joint income the majority of them cab afford them easily.

I think the situation is harsh and i have thought how unfair it is for years but i think if it does crash then its not jsut the homeowners in trouble but the whole economy

free4440273

Generali wrote: »

It is generally accepted that interest rate changes take 18-24 months to feed through entirely to the rest of the economy. If it were as simple as looking at the Halifax/Nationwide Bumper Book of House Prices and adjust rates accordingly then I'd be on the MPC.

They are trying to predict what will happen in the future, no easy task.

I've been saying for years that house prices are too high and have been consistently wrong in that they haven't come down yet.

I too have been saying that house prices (and house price increases) are at absurd levels; so too have many on this forum; so too did Martin Wolf of the FT on Newsnight. And once again - and I make no apologies for bringing this up again - savers get shafted by rate cuts (again); we should be encouraging saving and encouraging prudence. A Hold would be the 'correct' decision. Unfortunately the BofE will pander to vested interests (I suspect).

Generali

Don't know. I think this is going to be a tight one.

Looking at the LIBOR chart in The Times this morning, if the credit crunch continues savers will do very well - LIBOR is 1% (100bps if you prefer) over the base rate.

A change in the way savers are taxed to get rid of double taxation (on income and then again on interest when you save some of that income) would be far more beneficial than leaving base rates on hold IMO.

If a 25bp change in interest rates is make-or-break for the economy then we're aaall doooomed anyway.

Romani_Ite_Domum

Generali wrote: »

If a 25bp change in interest rates is make-or-break for the economy then we're aaall doooomed anyway.

Best quote of the day! :T

dolce_vita

Generali wrote: »

If a 25bp change in interest rates is make-or-break for the economy then we're aaall doooomed anyway.

Fiddling with interest rates like this is just like re-arrainging the deckchairs on the titanic

caveatvenditor

Changing the base interest rate is completely irrelevant.

banks are nolonger lending.

This rate cut is to keep the sheeple from panicking because they know no different - its going to make no difference.

There's too much in level 3 assets that no one can value and until
they do banks are lending nadda....zip....nowt....NOTHING

cut interest rates all you like GB!!! LIBOR and base rate have decoupled.

merlinthehappypig

Generali wrote: »

A change in the way savers are taxed to get rid of double taxation (on income and then again on interest when you save some of that income) would be far more beneficial than leaving base rates on hold IMO.quote]

Completely agree.

IveSeenTheLight

carolt wrote: »

IveSeenTheLight, I'm more than happy to stick my neck out and say that yes, I believe prices at the address quoted in Aberdeen will fall to at or below their 2005/6 prices. Aberdeen was one of the last places to have felt the full impact of rising prices that hit the rest of the UK much earlier, and as such, will be one of the first to fall.

But that's not what you want to hear, is it?

I'm open to debate and willing to listen to other side of an argument.

We'll see however as caveatvenditor reckons that in 5 years time (Dec 2012) that the prices will be lower than they were in 2005 / 2006

As you rightly stated, Aberdeen and Scotland have lagged behind the rest of the UK in terms of house prices and Scotland is still one of the cheapest places to buy in Britain. It is because of this that I dont think there will be massive price drops in Aberdeen, maybe a small drop, more likely a period of stagnation

We'll see who bumps this thread in Dec 2012 to say I told you so