Thursday, Apr 12, 2007
Datamonitor is worried about housing crash
Reuters: Bust on the cards for the housing market?
Datamonitor report of the UK housing market says... "Such buoyant housing activity cannot be sustained in the long-term and, undoubtedly, house prices cannot keep going up forever. The mortgage market stalled in 2005, and house price growth slowed significantly, suggesting the market was heading for a soft landing. But strong performance in 2006 and almost double-digit house price inflation have renewed fears of a housing crash"
Posted by confused76 @ 11:06 AM (148 views) Add Comment
8 Comments
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1. paul said...
Yeah, well I'm sceptical that the Bank of England is going to let market forces run their course on this.
Mervyn King has been trying very hard to shape expectations, warning people not to ask for too much money in their pay rises, giving out soothing words to those who fear a house price crash (basically "don't worry we'll bail you lot out if it gets nasty") and sticking to their remit of diong nothing about rising inflation.
The base rate would be a worry if competent economists were looking after it. Instead we have bought and paid for shills looking after that one.
2. tyrellcorporation said...
'Datamonitor does not believe the housing market is on the road to a house price crash, mainly because the economy remains healthy'. The thing is, I'm sure the economy looked healthy at the end of the 80's - by definition, generally, a credit fuelled boom does give the impression of a healthy economy! Doesn't stop it going tits up though does it?!?!
3. royston said...
"Datamonitor does not believe the housing market is on the road to a house price crash"
I really don't see why - I have a simple and foolproof solution. We can attract lots of immigrants (= buyers) to this country. Then we can issue each of them with a "golden hello" (= enough money to buy a house). This way the market will never run out of buyers and the party can go on forever, and we can all become infinitely rich as the value of our houses grows. So that if any of us need money, we can take a mortgage equity withdrawal. See - foolproof!
4. Scott said...
Datamonitor eh? Reminds me of that little Britain sketch; "computer says no".
5. confused76 said...
Datamonitor did the research to get visibility in the press. I think their opinion is probably balanced, but then added the comment "does not believe the housing market is on the road to a house price crash" for the sake of PR.
I think everybody with a little of market knowledge now fears a crash. At the time of the crash, I bet, Datamonitor position will be "we told there were signs of a crash... had the BoE let the market soft-land after the 2005 slowdown the crash would have not happened".
I went back to the comments of these folks (Datamonitor, The Economist...) in 2005, and they were much more open to talk about a slowdown... listen, if you want, to this vintage radio interview...
http://www.npr.org/templates/story/story.php?storyId=4531732
6. Fahrenheit451 said...
Datamonitor is just covering its back. They know exactly what's going to happen, and saying "boom & bust" is just a threat, does not mean its not going to happen.
If its a credit squeeze with 5.25% Base Rate and they think its going up to 5.5% soon and 6% is not unrealistic, then of course there going to be credit problem, not just morgages, but also credit cards. And if there is no correction in the market by the time it gets to 6%, they will push rates up further, 7% is not unrealistic and even 8% is possible if the economy recovers in a post war boom.
But even if there is no war to pay for GB(H) will still keep putting up taxes. And he hasn't even started to tax capital gains on equity release yet.
Lovely - loads of BTL with masses of tax due when they all bail out next year.
Straight into the GB(H) pension fund no doubt.
7. bidin'matime said...
Confused76 - thanks for the link - I shall play that to my wife to show that I wasnt completely mad to STR in mid-2005...
8. speculatorone said...
I think you are all fooled, crash grodon and his fiscal rules are doing an outstanding job of our economy.................
think not!