Friday, May 01, 2009
House Prices to Fall At Least another 15%
Write About Property: Land Registry: UK house Price Decline Slows, Prolonging the Agony?
It does in fact seem that the rate of house price decline is slowing in England and Wales. According to the Land Registry house prices fell 0.4% in March, when the annual rate of decline slowed from 16.5% to 16.2%. So, the Land Registry says the decline slowed in March, and Nationwide said today (April 30 2009) it has slowed in April.
However, I still say that this is not necessarily a good thing, because it may just be prolonging the decline and the agony.
Posted by problem pete @ 10:45 AM (949 views) Add Comment
10 Comments
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1. Tommyweaves said...
It's a fair argument, but does the final figure concluding that a further 15% drop in house prices will reduce the FTB affordability index to sustainable levels assume interest rates will remain low?
2. paul said...
For all of the political influence that has been wreaked on the BoE since it first gained 'independence', and all of the dodgy decisions that have come from the MPC under his stewardship, Mervyn King was right about the housing market when he said recently that any attempt to slow the housing crash will only prolong the agony, prolong the recession and lead to an unnecessarily protracted downturn.
When will the rest of the economy listen?
3. crunchy said...
1. paul said...Mervyn King was right about the housing market when he said recently that any attempt to slow the housing crash will only prolong the agony, prolong the recession and lead to an unnecessarily protracted downturn.
I doubt that he had an option, never mind right. To adopt a responisible attitude now is just a matter of having to do so and trying to score some Brownie points at the same time.
4. paul said...
I know its easy to be cynical crunchy (this is one of the rare moments I'm not about the MPC), but the very fact that Mervyn king openly criticized the government (when Brown was out of the country he hastily arranged a meeting with the Queen - heaven knows what he needed to say to her) means that he's at least aware that they (the BoE and MPC) have been hoodwinked by Brown's plants in the MPC and covert political influence into prolonging the house price boom much longer than was desirable.
5. crunchy said...
3. paul, I don't buy it!
How many letters do you have to write before you finally realise that you are not effective in your position. A man with integrity would have left that post.
He was weak person in a position of power. He failed miserably. Criticism? yes!
6. paul said...
Yeah. I think overall the MPC have done a bad job. Badly guided decisions, bad estimates, bad strategy, misguided expectations.
I'm generally more ambivalent about Mervyn King himself though. Yes he is weak but only because the people around him are very powerful and use him as a puppet - this became apparent in the Treasury Select Committee's 'grilling' of King which most evidently wasn't.
I think he knows he's made mistakes and so does the MPC (I still think there's more to Blanchflower's resignation than anyone in the know lets on - Blanchflower was the main arbiter of the bad decisions) but there's not an awful lot of sense in getting the Governor to leave - who replaces him? Better the devil we know perhaps.
7. shining wit said...
Merv the Swerve and all the wasters in the MPC are like all those Nazi collaborators going along with the carnage and terror to simply save their skins or line their pockets
8. crunchy said...
Danny (better to be right too late than wrong all along) Blanchflower, D'oh! There is your true puppet I think paul.
I still think King should step down. The replacement? I would not even ponder the thought.
9. paul said...
As a last comment on this, I think there is as case that King has to answer for and that is the series of admissions that they (the Bank of England) didn't understand:
1. Financial markets
2. The relationship between house prices and the real economy
3. The severity of the downturn
That I think is probably unforgivable. It was their job to understand these things.
10. mark wadsworth said...
I too am ambivalent about King, but this is what happens when a government body interferes in 'the markets'.
The point is, we should not have an MPC setting interest rates any more than we should have a government body trying to set exchange rates or deciding how many pairs of shoes or bras we can import. Anybody* doing that job is doomed to fail (so yes, they are guilty of going along with the charade while pocketing handsome salaries, and, as Paul says, not really having a clue).
* That includes you, me, everybody, it is impossible to decide what the absolute optimum interest rate, exchange rate or limit on shoes and bras is, you will always get it wrong, too low or too high and one is as bad as the other.