Friday, Dec 07, 2007
Despite interest rate cuts
Reuters: Halifax predicts 0% house price growth in 2008
Halifax have predicted annual house price inflation will fall to zero next year, even if interest rates fall to 5 percent.
However, it said high employment and sound economic fundamentals would prevent widespread house price falls.
Posted by little professor @ 01:25 PM (1213 views) Add Comment
17 Comments
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1. Davros said...
Hhhm, the convenient no growth, as opposed to a fall.
Considering prices are already falling, it doesn't seem very likely does it?
2. shipbuilder said...
Sound economic fundamentals, eh? Someone had better tell the BoE!
3. jack c said...
To put a balance on the High employment statement we also have over 2 million people claiming income support, over 855,000 claiming job seekers allowance, over 2.6 million people claiming incapacity benefit and over 2.7 million people claiming disability benefit (covermagazine.co.uk). Furthermore there are a lot of people in low paid part time jobs propped up by working/child tax credits.
As for sound economic fundamentals approximately 70% of UK GDP is reliant upon consumer spending and hence yesterdays 0.25% cut with no doubt a further 0.5% to come in 2008.
4. confused76 said...
Is this a joke?
5. Dohousescrashinthewoods said...
Maybe it's a coded message, yes, yes, see? They say "sound economic fundamentals would underpin the housing market", see, but they don't say that there are any. I think it's very cunning. It's a conspiracy, see, like the aliens that kidnapped Bush and Tony Blair's association with astral beings..
Erm, on a more down to earth note, it's a lying toad of a VI who put their perceived intrests ahead of the facts, thus obfuscating reliable information and creating an inefficient market.
6. dave said...
What complete and utter nonsense. Are these economists on work experience?
7. uncle tom said...
Of course they'll fall to exactly 0% - for a millisecond or two - before they fall further..!
8. Dave said...
Tell you what else....what is the point of reducing interesting rates when there is a credit crunch? Is that going to suddenly free up a load of liquidity to get the market going again? Me thinks not.
The BoE have shown themselves wanting in the understanding department and are only concerned with the demand (borrower) side of the equation. I would have thought that they knew (but clearly do not) that reducing interest rates will drive down the desire to save (what, for example the Rock's new owners may wish to do to save over-reliance on the money markets) and simultaneously make the UK look an unattractive place to invest. All this, without the considering the impact of higher inflation. The OECD says that UK inflation won't be a problem, because the economy is going to cool rapidly. I am not so sure.
9. New User 2007 said...
It was 0% growth even when everyone thought the BoE rate would be 5.25% by the end of the year and remains 0% now that everyone thinks they will be at 5% at the end of next year. That means the same people begging for a BoE interest rate cut to save the world are also implying it will not make any difference to their house price growth forecast.
Also, if house prices remain at November levels of £194,895 during December and all of 2008 i.e. assuming their OPTIMISTIC scenario that prices will on average see no month on month changes from now until 2009, then prices will average £194,895 in 2008, compared with £195,134 (assuming no change in prices in December). This would be a year on year fall in 2008 of 0.5%.
10. Littledeb said...
Hang about... weren't these guys predicting a 12% fall in 2008 only a couple of days ago. My, what a difference a quarter percent rate cut makes!
11. speculatorone said...
'However, it said high employment and sound economic fundamentals would prevent widespread house price falls.'
Obviously Mr Bean has his bullies working at Halifax too, 'sound economic fundamentals'.
What a joke!
12. Mrreality said...
Wow, now that interest rates have lowered I'll finally be able to afford that new 4 bedroom house and a 50" plasma tv for each room.
A reality check here for the BoE, the only thing lowering interest rates is going to do is to make my money move abroad earlier, as everyone
without a brain is already flat out broke with mounting debts and on the verge of bankruptcy. The pyramid scam is over move on.
13. Sold My Soul To The Never Never Never said...
Jack C - With regards to people in low paid part time jobs propped up by the Tax Credit System - actually there are a lot of people in full time work in my home town propped up by the Tax Credit System - including my own family after my husband lost his well paid job (work moved to China - he was an engineer) and made redundant in Feb with the statutory minimum redundancy payment - out of work for 7 months and is now on a casual contract with the Civil Service who appear to be abusing employment law and as soon as his 50 weeks casual contract is up they will be getting rid of him to take on more new staff. He is 48 years old so that may be the problem with him finding work. Also we would have moved if it had been a few years ago when house prices were reasonable but to move South where the work is (and not that well paid to make it worthwhile) house prices are astronomical and so there we have it. Social immobility caused by a Labour Government - thank you very much!
14. Stevie Dee said...
Well.. I work in a supermarket part time.. 2 things to report.. very quiet for a friday, and i mean less quiet than a normal friday... and before christmas.. so these rate cuts have spooked people.
Furthermore, my boss told me she has just remortgaged last month, and now they cut the rates, poor lass.. the day we have this crash and ther stockmarket too. and these indiciduals are strung up, will be a satisfying one.. In relation to the city, the lunatics have taken over the asylum and literally causing mahem.. yesterday watching bushes speech, were he got the HOPE number wrong.. normal mistake he makes... he also said something very interesting in one of his lines.. something about if the mortgage company reduces the amount of mortgage, like say drops the mortgage price by $5,000, this would be classed as taxable income.. I could not, well actually I could believe what he was saying.. utterly incredible though.. coming up to christmas.. sleepless nights for the countless millions..Glad I am not an american citizen.
So to many of us who are bears on here.. lets just hope that the victims, who are the single homeowners don't get to hurt in all of this, but I believe it is wishful thinking. God, how did we let these guys into power.. Bush, Blair.. etc, etc.. frightening
15. Bystander said...
But, in the Committee’s judgment, the balance of risks implies that a modest further increase in interest rates is necessary to meet the inflation target of 2½% in the medium term.
6 november 1997
Against that background, the Committee judged that a decrease in Bank Rate of 0.25 percentage points to 5.5% was necessary to meet the 2% target for CPI inflation in the medium term.
6 Deceember 2007
Found this data on the BoE website...nice to see controling inflation is still the goal, but the way it is managed is quite different.
16. it_is_going_with_a_bang said...
Ilt seems looking after your own ass comes before all
17. who stole my pension? said...
Unemployment is a lagging indicator. As the company profits fall (especially EA's) they will lay of people. Nope next year house prices will go down and unemployment will go up. Other things going up next year are food prices, oil prices and taxes! Booming house prices, Booming debt and Booming taxes - The Darling Gordon's miracle!