Wednesday, Dec 12, 2007
Sellers’ confidence in the market misplaced
home.co.uk: Asking Price Index
December’s cut in interest rates by the Bank of England has served to increase home
sellers’ confidence. A majority of sellers have opted not to cut their asking prices in
the belief that the IR cut is just the first of several and that the market will soon
recover from the current downturn. This wave of renewed confidence in the market,
coupled with a continued surge in 3+ bedroom properties delayed by HIPs
legislation, has resulted in a rise of 1.1% for the mix-adjusted average house price in
England and Wales. However, sellers’ confidence in the market may be misplaced,
since mortgage lenders, still in the midst of the credit crunch, have given no
indication that they will relax their lending criteria over the coming months.
Posted by doomwatch @ 01:28 PM (358 views) Add Comment
5 Comments
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1. Submedia said...
This is nuts. IR aren't driving the economy any more as LIBOR seems to have decoupled from it - at least presently. Confidence would be increased thats obvious but what about inflation. What are BOE going to do about that? Where are people going to find the extra money for food and fuel (basic life things)? Interest rates are important but not the deciding factor anymore for housing market. It is LIBOR and inflation that are, and they are increasing. We should have keep interest rates on hold, this is just breathing life into the monster. One last gasp.
2. confused76 said...
Oooopppsssss....
"In 2005 the MPC voted for a 0.25% cut during a minor downturn and the
market took off again at breakneck speed. This time its different: the stakes are so
much higher and the UK Government has a multi-billion pound vested interest (loans
to the Northern Rock) in resuscitating the housing market cash machine."
wooooooooooooooooow that is rich!!
3. Angrywithbrown said...
Reflecting on the interest rate cut, I think it could actually accelerate HPC.
Reason being: if people are think that rates are on the way down they may be inclined to wait and see. Result is even less buyer interest thus lower prices. With descending prices and chance of further rate cuts, buyers are even more likely to sit it out. starting the panicked spiral downwards.
This is in reverse to what happened in 2006 when rates where on the way up when the herd were panicked into buying.
BTW in my view the unaccountable part of the house price increase was due to 'herd' action.
4. handle_it said...
".........to increase home sellers’ confidence". Well yer it would,wouldn't it, but lets see how they feel this time next eh.
5. Icarus said...
How does the "surge in 3+ bedroom houses" affect the MIX-ADJUSTED average?