Tuesday, Mar 06, 2007
Property could slump warns IMF
Daily Mail 6th March 2007: Property could slump warns IMF
Homeowners were warned last night that the property market is 'overvalued' and could be heading for a slump.
The respected International Monetary Fund warned that last year's resumption in the property boom was raising the threat of an abrupt slide in homes values.
Making matters worse, the Washington-based group warned that rising wage demands and inflation could force the Bank of England into a fourth interest rate increase.
Posted by ukuser1 @ 12:08 PM (150 views) Add Comment
13 Comments
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1. paul said...
Articles been removed
?
2. Camem said...
front page news here
http://www.thisismoney.co.uk/news
and article here
http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=418120&in_page_id=8&ct=5
3. geed said...
If this is genuine, why is the article now not avaiable?
4. Needle said...
There was a similar headline in the Telegraph yesterday - although at 2am that article is still not accessible.
5. sirgoogle said...
Try this:
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=440304&in_page_id=1770
With the Mail - make sure that you copy the shortcut from the link and not the URL from the browser.
6. sirgoogle said...
The comments on this article in the News paper are great !
I feel sorry for all those people who have bought buy to let properties to act as their pensions in future years. If the market crashes they will be left with negative equity on these properties.....
... I think house prices in the UK are at least 40% over the reality of salaries and that means another big crash. It's only a matter of time. I remember, (I was in the UK) during the final days of the last crash, being told by speculators "buy now, every day you don't you lose value" it's a no brainer you cannot lose". Within a year it had all fallen down like a pack of cards.
When the crash hits, I'll buy. I especially hope this brings misery to the greedy buy-to-let bunch. You deserve this lesson in economics more than anyone else. It's YOUR FAULT we're in this mess in the first place
About time said something about the the Emperor's New Clothes. The housing market is a mess and unless something is done a whole generation will suffer. Actually, more than one generation, as anyone who is still renting at retirement will need the state to pay their rent. And whose pocket will that come from? I don't expect thgeir pension will cover the cost, do you?
7. Cwelsh said...
I blame the government. They have raided everyones pensions, therefore ordinary people have bought BTL as last resort. Therefore causing a shortage of supply for first time buyers.
8. japanese uncle said...
UK properties are a least 50%, probably 60% overvalued, while the imminent credit crunch will severely restrain affordability (people would not be able to buy houses without 30% deposits) to result in an exaggerated short term decline in the market, i.e. house prices could be reduced by over 70% from today's level temporarily, then it will rebound. The same old story.
9. maddison said...
Lets not forget that the cost of owning a house ie mortgage repayments, maintenance etc relative to incomes is significantly less than it was prior to the 90's crash so I dont see any crash for a long time. A correction of 10% maybe as happened in Sydney another city that saw stellar growth from investing in buy to let.
10. Chilli said...
It bothers me that people refer to this increase in prices as 'growth'. Really???? Where's the growth? Same number of houses. Perhaps what they mean is growth in rental demand. Unfortunately I agree with maddison. In 1992 the crash was ignited by 'Black Wednesday' which was an economical abnormality. (Or it should be anyway.) Surely this time we are not so vulnerable (I guess), which makes me wonder what is going to trigger the next great crash. If nothing triggers it, what we have to look forward to is years of people paying mortgage costs, and the super rich city boys buying up all of london.
yippieeee
11. geed said...
Maddison, sorry don't get you.
"Lets not forget that the cost of owning a house ie mortgage repayments"
Interest rates are currently 5.25%, they were roughly 15%ish (for a very short period) back in the early 90's. Property has tripled in value therefore so its reasonable to assume you need to borrow triple the amount, so 5.25% is the same as 15.75% back in the 90's.
50K at 15.75% = 7875 in interest
150K at 5.25% = 7875 in interest
Exactly how is this cheaper?? Interest rates mean absolutely nothing unless they are applied to the principle sum that is borrowed or invested. INTEREST RATES ARE NOT HISTORICALLY LOW!!!!!!!!!!!
Does your job back in the early 90's pay over triple the amount now? Lets say the salary for any given graduate discipline is capped at the RPI so 4%ish over the last 15 years. This means that the graduate who earned 10K back in 92 would now get just under 19K, not triple, and not the 30K required to keep up with the ratio of HPI and the cost of servicing a mortgage today.
maddison go back and do your sums before quoting some Daily mail journo's dribble....
12. geed said...
oh and dont forget Australia has a tax system that massively encourages BTL by writing investment property costs (read "losses!") as tax deductable. Thats up to 48.5% of your loss paid back by the government in some cases and western Sydney (a huge, cheap BTL area) is still suffering continual huge losses of over 40% in the majority of cases. The only thing that has stopped the Aussie market from having nationwide meltdown is the natural commodities sector (mines in Western Australia), if it wasnt for this Australia would be in recession dragging all property down with it.
Melbourne's outer surburbs have just recorded up tyo 20% yoy loss for 2006, only prime Real estate is bucking the trend.
13. This comment has been removed as it was found to be in breach of our Blog Policies.