House price crash is here, say City banks.

WTF?_2

From thisismoney.co.uk:

http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=441326&in_page_id=8&ct=5

Britain is now in a full-blown 'housing crash', two leading City banks warned in the wake of the Bank of England's decision to hold interest rates at 5%.

Analysts at Citigroup and Dresdner Kleinwort said the UK has entered a property slump rivalling that in the US because the supply of mortgage credit has dried up.
'A serious housing crash is now under way,' said Citigroup economist Michael Saunders. The shocks hitting Britain from the credit crunch and rising inflation are 'very severe'.


It's not all bad news for hard pressed homeowners though as apparently the BoE will be forced to cut interest rates to prevent a 20% housing slump according to one economist :

Roger Bootle, economic adviser to accountants Deloitte, said the MPC will eventually have to cut rates 'dramatically' because there's a danger of a 20% house-price slump.

'By deciding not to cut interest rates today, the MPC risks presiding over the deepest and longest economic downturn since the recession of the early 1990s,' he said.

Whew- lower interest rates will fix everything! One wonders why we just don't set them permanently at 0% and enjoy a successful, booming economy from now to eternity :rotfl: Hmmmm, there must be some reason, can anyone think of one?

ruggedtoast

Eventually even "Joe Prole" is going to realise that interest rate cuts arent making the money banks lend to him any cheaper, its just allowing them to pay far less for money he lends to them (deposits).

PasturesNew

The toruble with a house price crash is it's a slooooooow drawn out thing. Like watching paint dry.

Reports like this are only really written for organisations to get some free publicity and exposure. But then they end up on places like this where they are argued over... and really .... nobody can provide one piece of hard fact/evidence about what will specifically and guaranteed happen and the timeframes in which it will specifically occur. So more argy bargy.

Generali

PasturesNew wrote: »

The toruble with a hosue price crash is it's a slooooooow drawn out thing. Like watching paint dry.

Reports like this are only really written for organisations to get some free publicity and exposure. But then they end up on places like this where they are argued over... and really .... nobody can provide one piece of hard fact/evidence about what will specifically and guaranteed happen and the timeframes in which it will specifically occur. So more argy bargy.

DKB and Citibank write this stuff mostly for the benefit of their clients and hope to get more brokerage fees off the back of providing 'free' research to them along with other value added services. One of the investment banks even runs a recruitment desk for their clients!

Of course, anyone can make a prediction about anything they choose. I find that the Goldmans stuff is pretty good (and not as dry as some others'). They don't write much about the UK housing market but they were spot on the money about $100/barrel oil (they predicted that maybe 18 months ago) and are now predicting $200/barrel. I guestimate that's petrol at maybe £1.60/litre.

The best headline on a broker note has to be HSBC about a December election in Turkey entitled 'Turkey Votes for Christmas'.

thriftybabe

There is certainly evidence of this in the Construction Industry. My OH is a Sub-contractor and there is very little work coming our way after June as a few of the housebuilders he is working for are paying off staff and stopping building. We are hoping that it will not be too long before things are back on track.

fc123

Generali wrote: »

Of course, anyone can make a prediction about anything they choose. I find that the Goldmans stuff is pretty good (and not as dry as some others'). They don't write much about the UK housing market but they were spot on the money about $100/barrel oil (they predicted that maybe 18 months ago) and are now predicting $200/barrel. I guestimate that's petrol at maybe £1.60/litre.

So IF this happens, when do you think it will kick in??
As the novice 'financial analyst' on the board, as fuel prices affect nearly everything, is this going to push all prices up further? And, so increase inflation?

And how will it affect prices of imports?
No more super cheap things any longer?

Sorry for the Q's, but this seems to me to be one of the biggest problems UK is facing.

WTF?_2

fc123 wrote: »

So IF this happens, when do you think it will kick in??
As the novice 'financial analyst' on the board, as fuel prices affect nearly everything, is this going to push all prices up further? And, so increase inflation?

And how will it affect prices of imports?
No more super cheap things any longer?

Sorry for the Q's, but this seems to me to be one of the biggest problems UK is facing.

Fuel prices indeed push the price of everything up. But most especially, food. Not only is much of our agriculture highly mechanised (requiring huge amounts of oil to fuel the machinery) but pesticides and fertilisers are derived from oil and natural gas.


We have been living through an amazing decade where everything has been optimal. Cheap money, cheap oil, cheap food, cheap imports, immigrant labour working cheaply, low inflation, booming economy. This has largely been wasted as people just built up debts in a credit-fuelled orgy of consumptionand a housing bubble developed which has swallowed an awful lot of wealth and which will destroy that wealth as the market crashes.

We are now heading into uncharted waters with just about everything going wrong (economically speaking) at the same time. There will be a massive fall in living standards for the West and a lot of adjusting to do.

Generali

fc123 wrote: »

So IF this happens, when do you think it will kick in??
As the novice 'financial analyst' on the board, as fuel prices affect nearly everything, is this going to push all prices up further? And, so increase inflation?

And how will it affect prices of imports?
No more super cheap things any longer?

Sorry for the Q's, but this seems to me to be one of the biggest problems UK is facing.

It is an if and IIRC, Goldmans were talking about oil going up to $200/barrel in about a year.

The thing is, things aren't static. What happens if oil prices rise? People buy smaller cars and buy English rather than NZ lamb. Holiday in Brighton rather than Benidorm and build nuclear reactors rather than oil burning power stations. Eventually that pushes the price of oil back down again.

It seems to me that the UK consumer is slowly being squeezed from all sides. Taxes are highish in historical terms and look likely to rise further as multinationals leave the UK for more business-friendly countries, petrol's expensive, food bills are rising rapidly (albeit from a very low base), houses cost the earth and I've not been mailed a 0% interest card offer in ages.

I really hope things work out well economically but I'm increasingly having serious doubts about the ability of the economy to weather the storm.

Generali

chucky wrote: »

this is totally right - the problem is that !!!!!! will not understand what you have posted and try to find a link somewhere else to post on another thread. and try to cloud the issue.

fees are key for the banks at the moment - they're not making much profit from margins on trades or saving/loans so they have to raise revenue by other means, this being by brokerage fees, writes issues (RBS) etc...

I was chatting to a mate who works for a bank yesterday and he had some interesting insights into what's happening in banking right now.

The policy seems to be slash costs (they've fired some very brilliant people) and don't lose money (ie don't take risks).

ianmr65

thriftybabe wrote: »

There is certainly evidence of this in the Construction Industry. My OH is a Sub-contractor and there is very little work coming our way after June as a few of the housebuilders he is working for are paying off staff and stopping building. We are hoping that it will not be too long before things are back on track.

Yes been banging on at my electrician to come and finish installing an electric gate at ianmr65 towers, that he started last october!! (i got a deal) Out of the blue last week he, and his partner, turned up alone, and finished it. No assitants or subbies. they do a lot of work in newbuild contruction... Asked him how business was and he said slow....

Generali

mr.broderick wrote: »

Jesus 5 thanks for this tosh...what am i doing wrong ?

Perhaps you're too highbrow.