Tuesday, Jan 29, 2008
A strong economy and strong employment will ENSUUUURRRRE that house prices cannot crash
Times: Retail sales slow as big ticket items plunge
Howard Archer, Chief UK and European economist at Global Insight, said: "Retail sales were particularly soft in January in the durable goods sector, which suggests that the housing market slowdown is having a significant dampening impact. "(This indicates) steady interest rate cuts by the Bank of England through 2008 and the first half of 2009. Specifically, we expect interest rates to be cut to 4.50% by the end of 2008 and to 4.00% in the first half of 2009," he said. Yeah sure. Folks lets sell pounds (the currency has already lost 14% on its trade w'd currency basket since February)
Posted by confused76 @ 04:30 PM (437 views) Add Comment
3 Comments
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1. new user 2007 said...
Can pretty much ignore fundamentals. It was always a liquidity issue. The recession last time followed the fall in the housing market. The trigger was interest rates that time. Now debt is much higher so the trigger requires lower interest rates, and there are more investors who are less likely to take hardship relative to how home owners would. All other so-called fundamentals applied to many other countries before their housing markets crashed.
BUT...some interesting data. Using data from the Office of National Statistics (for popn) and the UK Housing Review (for housing stock)...in 1991 there was one dwelling for every 2.43 persons. In 2005 this was one dwelling for every 2.31 persons. If we take 2006 popn data and the 2005 housing stock data (the latest), there is one dwelling per 2.33 persons (obviously houses were built in 2006 also but lets assume not).
The question then is what shortage? There are fewer people per property now than in 1991, when the last crash was in full swing. More flats being built perhaps since then, but popn growth is via immigrants and they share i.e. their patterns offset English families being smaller.
2. Fed Up said...
They are trying to make this a self-fufilling prophecy. The financial sector *wants* interest rates to be cut, so that all that mortgage debt will be wiped out by currency devalution and high inflation. Unfortunately, you only have to look at the mainstream media to see that they are setting the agenda.
Whilst common sense would suggest rates need to rise to keep inflation under control, that isn't what their agenda is.
3. Jonb said...
Sell pounds and buy what exactly?
US Dollars maybe, on the basis that all the bad news is out there now, and fully priced in? Certainly not Canadian Dollars, as they are somewhat overpriced on the basis that it is supposed to be a "safe" currency. Certainly not Euros, as the bad news is just beginning to come out, and also you might end up having them converted into some worthless Psetas or Lira.
And certainly not gold, as it is going to be a bubble every bit as bad as the house price bubble, or the dot.com bubble before it.