Halifax UP 1.2% *gulp*

meanmachine_2

Surprised by that.

I'm amazed at how there is such a direct correlation between int rates and house prices. If rates nudge up, house prices come down etc. People are very shortsighted, it seems, and look only at the monthly payback.

Anyway, in the interests of balance, I thought I'd post this.

But Halifax, with its Northern bias, does seem to be going in completely the opposite direction to all the other indices. Not that it should be questioned in any way, you understand...

loanranger_4

There is a direct relationship between the cost of money and the cost of houses. Cheaper borrowing means more expensive houses.

People will continue to budget based on what they have coming in each month. I recall a member of the public saying after the last rate cut that "now we can get a better house" ?! Short sighted I agree, but if ever the rates when up by only a little there would be the biggest almighty bang.

Muzza_2

loanranger wrote:

I recall a member of the public saying after the last rate cut that "now we can get a better house" ?!

I think I saw the exact same news report as you.

It's insane, if they were at their limit already, why use up the little buffer zone the rate reduction gave them??

Bestthingsinlifearefree

Its came as no big surprise to me mean machine, to see annual house inflation / price growth remaining strong at 3%

http://news.bbc.co.uk/1/hi/business/4314754.stm

Mortgages for new approvals are at 15 month highs, interest rates and unemployment levels are at historical lows, massive FTB pent up demand, increased immigration,the economy is still growing (all be it more slowly than before).........you don't need to be a rocket scientist to realise these are hardly the conditions for a house price crash.

What we have seen is a rapid & inevitable slow down in house price GROWTH many people have wrongly confused this with a house price crash.

As a home owner with no intention to buy or sell in the next 5 - 10 years I am not bothered if the prices went up 20% or down 20% I am just telling you how I see the market based on current and forseeable economic conditons.

I expect stable / stagnant price in 2006 / 2007 perhaps with slight price growth.

MattLG

Bestthingsinlifearefree wrote:

Its came as no big surprise to me mean machine, to see annual house inflation / price growth remaining strong at 3%

http://news.bbc.co.uk/1/hi/business/4314754.stm

Mortgages for new approvals are at 15 month highs, interest rates and unemployment levels are at historical lows, massive FTB pent up demand, increased immigration,the economy is still growing.........you don't need to be a rocket scientist to realise these are hardly the conditions for a house price crash.

What we have seen is a rapid & inevitable slow down in house price GROWTH many people have wrongly confused this with a house price crash.

I expect stable / stagnant price in 2006 / 2007 perhaps with slight price growth.

LOL! Nice one :-D

MattLG

GDB2222

Nevertheless, people are taking out 50 year mortgages based entirely on what they can afford given today's interest rate. No apparent thought about how interest rates have varied over the last 50 years and can presumably be expected to do so over the next 50.

meanmachine_2

Bestthingsinlifearefree wrote:

Mortgages for new approvals are at 15 month highs, interest rates and unemployment levels are at historical lows, massive FTB pent up demand, increased immigration,the economy is still growing

This was all true about 6 months ago.

But a fall from 3.5% projected to just 1.5% equals...guess what? Tax rises.

And it also equals ...guess what? Retailers offloading thousands of jobs.

So I'm glad you're so confident about the economy.

But mortgage approvals are still massively down on where they were in 2004.

I also saw that crazy woman on the BBC news report when rates were cut. She must have been about 60. "Oh yes now I can afford a bigger house". Can you luv? And I suppose wen rates go back to their historical average you'll simply downsize to a smaller house. Or reduce the size of the one you're in? Silly cow.

Bestthingsinlifearefree

Everything I say mean machine is not based on 6 month old data. I am taliking about this months interest rates, this months mortgage appoval figures, this months economic projected growth etc etc.


However I know what you are saying meanmachine yep the economy may hit a shaky patch (or it may not) even if it hit negative growth for 2 quarters or so would it realy matter after 50 or so consecutive quarters of growth ???

Sure the retailers are hurting a bit but do they really think they can sell more stuff than the year before forever ? They have had a good run so so what if they hit a tighter period, all industries do at different cycles.

I know not everything in the garden is 100% rosy (it never is) but the key things interest rates (are low and stable) employment is at historically low levels I just don't see these changing much in 2006.

Mortgage approvals are only about 10% lower than in 2004 (if I recall correctly).

What i am saying its not boom time and its certainly not bust time. Hence thats why house prices are stable / stagnating in 2005 and 2006.

This time next year we will see, but I doubt prices will be much lower or much higher come October 2006 just as in general they are not much higher or lower now than they were in October 2004.

After a slow down in house price inflation it is stability / stagnation but the good newssis house prices WILL get cheaper in real terms as wage inflation is above house price inflation (this is also good news for home owners to as their wages grow their mortgage is cheaper in real terms / proprtionately).

meanmachine_2

I don't disagree with you.

Provided the economy doesn't slide then current house prices are sustainable.

I do think you need a shock for there to be a crash - last time it was the end of mortgage tax relief coupled with the ERM shambles etc etc.

And I do think the retail problems are overplayed. Some businesses simply aren't viable anymore. Why get your meds at Boots when Tesco sell the same for 30% less?

Why buy at HMV when I can get the same online for 40% less?

I was surprised that the rise was over 1%, when the other indices point slightly downwards is all. Nothing you've said suggest WHY prices should have leapt in that fashion. In fact, as you say, the current economic picutre points to 0% growth or small falls, as we've been seeing elsewhere

Bestthingsinlifearefree

I agree with your post to. House prices are clearly by definition sustainable at current levels as they have held firm for over 12 months.

In terms of why the Halifax is up 3% I think these surveys are all up a bit some times, down a bit some times, which to me indicates stability / stagnation. I think Land Reg Q3 figures J/A/S are out in Ocotber and it will be interesting to see how the average house price is compared to earlier quarters in 2005 etc etc

Well we both agree after all Meanmachine.

I love a happy ending.

Lets just watch this space and see what happens.

I enjoyed the debate. Us British obssessed with house prices, the weather etc etc. etc

wibble68_2

Bestthingsinlifearefree wrote:

Well we both agree after all Meanmachine.

I love a happy ending.

You'll have me reaching for the tissues in a minute.

That reminds me. Did anyone see Sarah Beany on Property Ladder this week.

Even the lovely Sarah had to admit that prices could take a long time to pick up in certain area's.

With the Halifax reporting strong house price growth in the last few months, this could deter the BOE from further rate cuts.

Looks like FTB's have got some more waiting to do.

But don't forget the early 90's 'crash' didn't exactly happen overnight.