Tuesday, Feb 27, 2007
The fundamental problem of housing price
Bloomberg: London Home Shortage Won't Go Away, BOE's Barker Says
This article can help to understand why the housing market hasn’t crash yet (if you didn’t have a clue yet) but moreover why it keep rising. Is it a coincidence, incompetence or rather a persistence relaxed attitude from some in power toward HP inflation? Found out for yourself in this article.
Posted by anytime @ 01:02 PM (129 views) Add Comment
4 Comments
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1. paul said...
From the article:
"Gordon Brown commissioned her in recent years to make two separate studies into how to encourage the construction of new homes"
So its tackling the problem with a pre-defined answer, akin to saying "Go and solve world poverty using this banana".
Instead of Crash Gordon giving proscribed answers, why not tackle it with "manage monetary policy prudently, don't let credit grow too quickly, watch money supply growth".
For example, the price of housing is gold terms (relative to gold) has actually dropped, but because money supply has been alarmingly high, no-one's noticed that the pound is not worth the same as just a couple of years ago. This is an example of Gordon ignoring the root of the problem which has been to disguise inflationary pressures by pumping out paper money from the printing presses.
That's what Kate Barker should have talked about, but oh no that would be far too straightforward and responsible. Far easier to opine ruefully on the shortage of houses in the southeast.
2. Whiteknight said...
The housing market hasnt yet crashed because banks are now lending over 100% of mortgage value.
Nevermind sub prime lending going bad. "Prime" lending will be a disaster shortly aswell.
I am still wondering when the open letter from the FSA (the REGULATOR remember them) or the banking stability committee is sent out to the Executives of banks warning them that not only will their bonuses of recent years be a problem, but they can also look forward to some time in jail also if there is a financial crisis due to their negligence.
That will bring us quickly back to the the steady banking eara of the 3-6-3 rule. (borrow at 3%, lend at 6%, on the golf course by 3 o'clock). Well. actually it wont because we are well beyond that .. but it will allow us to get to the day of reckoning. We might aswell get on with it.
They seem very slow off the mark.
3. Rimmer said...
Well the problem is correct but a bit biased as a headline.
There is a shortage of housing in "some "areas but why when the UK population is actually predicted to decline
, its because the miracle economy has imported 4 million bodies that need to live somewhere, if that Miracle economy changed however ??????????
The bigger the problem the harder the fix, lets be honest the UK doesn't make anything any more, it doesn't build anything, just what is keeping the economy afloat?
4. japanese uncle said...
The only conclusion to be drawn is that house price is simply staged, as it is almost solely dependent on the excessive liquidity, which can well be manipulated by the actions of central banks. Only if the general public is better informed/educated, to see this causality, they should never be fooled, but unfortunately housing bubble will repeat probably around 2020 yet again.