Friday, Jan 12, 2007
Another Nail In The Coffin For UK House Prices
home.co.uk: Another Nail In The Coffin For UK House Prices
"Each turn of the screw takes the UK housing market closer to the brink and in a market hamstrung by affordability constraints there is very little room to manoeuvre."
To underline the seriousness of the situation, the report draws a parallel with recent events on the other side of the pond, "The current US housing slump is a direct consequence of a series of interest rate hikes in 2005, by their central bank, in an attempt to curb inflation. A similar chain of events appears to be now unfolding in the UK."
Posted by doomwatch @ 12:56 PM (140 views) Add Comment
3 Comments
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1. Ilejustwait said...
there was not three IR hikes last year as they bought it down once then put it back up again by the same value = 0.25%, and as for first time buyers we are all waiting for house prices to come down, even when the interest rate was 5% we still can not afford to get on the ladder, so with even this extra 0.25% increase does it really make any difference to FTB, i dont think so, but hopefully it will to the sellers, perhaps the asking price will have to come down,
2. David20040_0 said...
Slight difference between the USA and the UK (expecially England) they have the room to build their way out of the problem. We don't.
3. C'mon Correction said...
David - The big, big difference is UK mortgage rates are variable (even so called fixed rates are only fixed for average 2 years, less than 5% have over 10 year fixs), and US are fixed. That is why UK market will always have volatile booms and busts and create huge swings in inflation. HPI increases wage inflation (this normally takes 5-10 yrs for people to react - ie. now!) which increases inflation which in turn increases wage inflation and so on. We're near the start of that cycle now immigrations effect is warying off, and people are asking for more in order to pay a mortgage.