Tuesday, Apr 03, 2007
HIPS and rates take their effect
Evening Standard: Double whammy could send house prices plunging
Rising interest rates and the introduction this summer of Home Information Packs could finally trigger the long-predicted crash in the property market, experts are warning.
The cost of buying a home has outpaced wage rises to such a degree that a price fall - or correction - is now said to be inevitable.
The Bank of England has increased interest rates, which are currently 5.25 per cent, three times since August.
Posted by cash_buyer @ 01:40 PM (142 views) Add Comment
10 Comments
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1. confused76 said...
I found the readers comments to the ES article as if they have been brainwashed by years of "prices can only go up" and "not enough homes" mantra:
"These predictions of housing armageddon come along about once a week. I suppose one day that one of them will be correct, but it will happen only when it happens. Interest rate rises won't have much of an effect as people can fix their mortgages for years ahead now. We have a totally different mortgage market from 18 years ago when just about the only mortage you could get was the lenders 'Standard Variable Rate'. The majority of people don't even notice when interest rates go up; or down, any longer."
This reader ignores the basic fact that prices are set when properties are sold/bought, and the interest rate which determines the affordability is the prevailing rate at that point in time
"We have one basic problem here. There are not enough houses in Britain for the amount of people resident. For all the economists can play the figures we are stuck with a simple supply and demand problem that will trump any other factors."
But how can people still believe we do not have enough homes... just look at how many empty properties are offered for rent in most areas at any point in time!
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3. Houseofcards said...
Cant agree more. Same old hackeyed arguments.
4. mrmickey said...
There's always plenty of empty properties around and there always has been there just not where people want to live. The idea that were all going to end up living on our own in sad little flats and this will increase the demand is fine but most people need two incomes now to buy a shed so that buggers up that theory.
5. dugmug said...
"Industry leaders also believe that when HIPs - effectively a logbook for the home - come into effect from June 1, the market could flounder.
They fear some homeowners will rush to sell before the £600 packs come into force, but that after then others will be reluctant to incur the cost of putting their properties up for sale - leading to a shortage of available homes."
At every other opportunity they try to brainwash us that lack of supply leads to an INCREASE in prices; if HIPS really do reduce the number of properties for sale, to be consistent they should be claiming this will boost the market/prices! But then why bother being consistent when the masses/the media are too dumb to notice you're inconsistencies, I suppose.
6. Cheekie Charlie said...
"Interest rate rises won't have much of an effect as people can fix their mortgages for years ahead now. We have a totally different mortgage market from 18 years ago when just about the only mortage you could get was the lenders 'Standard Variable Rate'. The majority of people don't even notice when interest rates go up; or down, any longer."
This is very bad news for those who have entrered the "sucker market" it means interest rates will have to increase higher and longer to have the desired effect. Whether or not these people who have taken out these fixed term mortgages can afford to service their huge debts is of no consequence! The fact alone that money supply will dry up and consequently prices have to drop and the word "investment" will be removed from the property market for a generation.
7. disgustedofyork said...
Something tells me that HIPS will be what some choose to blame for the long overdue tipping point. Affordability, rising interest rates, economic cycles, tightening credit can't possibly be to blame, it's an extra 700 quid (about a weeks worth of HPI right?) that will scupper the housing market.
Obviously there are some poeple out there in the industy who don't want this, and are doing everything they can to kick up a stink.
Just imagine how these same people would react to any proposal to 3rd party regulate EAs? I'd predict they'd say doing so would cause anything from bird flu to the meltdown of the banking system.
8. george monsoon said...
confused 76 said "supply and demand" All i know is that if it looks like the cost outweighs the worth, people will not buy!
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10. Fair_deal said...
i wonder how the banks will deal with a situation when interest rates are very high and many customers have a very low interest fixed rate mortgages. I am sure they will develop some strategies to break that chain and deceive the unsuspecting bulls......