Wednesday, Jul 08, 2009
Tales of the Unexpected
Bloomberg: U.K. June Home Values Unexpectedly Fall, Halifax Says
House prices "unexpectedly" fell in June. Stephen Nickell, formerly BoE, now government advisor, identifies the lack of mortgage availability as the fundamental factor(!). This is an interesting view to hold, that house prices are still likely to be determined purely by the limit of debt available going forward, or that house buyers collectively compete at maximum debt levels.
Posted by stillthinking @ 11:30 AM (1933 views) Add Comment
20 Comments
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1. need-a-crash said...
House prices "unexpectedly" fell in June - Yeah 'cos they only EVER GO UP right!
2. stillthinking said...
I don't see that there will be any requirement to raise interest rates for a long time personally, but I think the "maximum debt available" theory for house prices stands on shaky grounds. First, there might be an interest rate spike, which for many will be the first time they have had to deal with punitive interest rates in their lifetime (I don't see this happening though). Or a realisation from exposure to high levels of unemployment, whether for the individual or within their social group, that really having a 3 month buffer of available funds is the best way to prepare for unexpected employment as a defense against repossession. Or a noticeable collapse in rent which is ongoing.
Also if the UK is already at peak debt, private and public totalling 350% of annual income (a one time mortgage level), how can we possible extend debt further as there is already a huge funding gap.
3. mark wadsworth said...
"buyers collectively compete at maximum debt levels."
That is the whole point, that is exactly how it works, houses are sold to the most reckless people. Because housing is in more or less fixed supply easier debt goes straight into higher prices and vice versa
It is quite clearly not the case that car prices or TV prices have trebled over the past ten years, because it is a competing market and new suppliers will enter the market to compete away excess profits
4. will said...
absolutly expected by us.
5. japanese uncle said...
They need to dump another few million tons dose of floride into the tap water, to convince even the dumbest.
6. Neil B said...
So a government advisor and formerly BoE member has only just worked out that house prices might be linked to the availabilty of credit..... mmmmmmm
7. hpwatcher said...
I don't see that there will be any requirement to raise interest rates for a long time personally
They could well be forced to put up interest rates, due to inflation...
8. Chiefo said...
Only one way to go :)
9. techieman said...
hpwatcher - nah more likely due to funding requirements. If you aint gonna raise taxes and you aint gonna cut services then your gonna demand more money, especially of you are competing with other soverign states, and if that supply of money is disappearing because of default and lowering asset prices then ..... the market raises rates.
10. techieman said...
http://www.youtube.com/watch?v=zzaobXhzX9E&feature=related
11. mrflibble said...
There is nothing unexpected about this, it is just a little earlier than anticipated.
The great housing pyramid scheme has simply run out of greater fools to keep it moving again.
Hopefully by Christmas people will be so afraid of housing that they won't touch it with a barge pole.
The market needs fear to get the prices down to reasonable levels, at the minute we have media spun hope and delusion.
I really feel for any FTB who get sucker punched by this DCB, as they are going to be burnt badly.
12. another alan said...
Stephen "Ten Times Salary" Nickell!
13. Anon said...
As a potential buyer, from my perspective he's right. From the point of view of other "new buyers" for example, there used to be 5* mortgages at 100%. Not something we're likely to see again for a while, except with the newer homebuy schemes, but mortgage rates and availability are always going to be a limiting factor for some people.
duh
14. Looks Like The Funs Over! said...
The crash was very exciting while it lasted, but certainly based on last month, the excitements dying down.
Most of the actual figures being banded around as sign of a slump are months out of date and represent the slump in progress. More recent figures ie rightmove, land registry and several lenders indicate there's very little movement now at all, and generally for anyone losing, there's anothing gaining.
15. mark wadsworth said...
@ Another Alan.
Do you mean "Former Bank of England Monetary Policy Committe Member Professor Stephen Nickell, now Chairman of the National Housing & Planning Advice Unit"??
With people like that running the country, what can possibly go wrong ... oh, I see ...
16. mander said...
About Mr. Nickell,
Is there anyone in the goverment left still believing in supply and demand?
17. another alan said...
Mark, that's the one! One of the more misguided statements about housing in a large field.
18. This comment has been removed as it was found to be in breach of our Blog Policies.
19. 51ck-6-51x said...
mander
- maybe, but their voices are quiet in the crowd!
- Fischerspooner, Supply & Demand, Entertainment ( 2009 ) ( not their own video ) definitely some tongue in cheek lyrics:
"""
Take anything...
Take everything...
All you can be...
All that I want.
---
The more,
The best,
The better that I am,
The true,
The real,
The fine...
Archetypical man.
---
I got supplies;
You got demands -
I got the sense that you can't understand.
I got supplies;
You got the demand -
I got the feeling you don't give a damn.
---
You can have it all...
Anything you want...
You can have it all...
Everything I got.
---
Give everything...
Give anything...
All I can be...
All that you want.
---
How much,
How long,
Can you really make it last?
Too much,
Too fast -
Too little
It was really...
---
I got supplies;
You got demands -
I got the sense you can't understand.
I got supplies;
You got the demand -
I got the feeling you don't give a damn.
---
You can have it all...
Anything you want...
You can have it all...
Everything I got.
I am getting ahead...
I've paid my dues...
You can have it all
I am getting ahead
Anything You Want
Sometimes I'm not ( something I can't make out )
You got demands
Everything you want
I got supplies
I am
You can have it all.
getting ahead
Just a little bit of your time
I am getting ahead
---
Getting ahead
Just a little bit of your time
I am
I am
I'm
Getting ahead...
Anything you want.
"""
20. 51ck-6-51x said...
Hmm, that link ain't right, let me try again:
- Fischerspooner, Supply & Demand, Entertainment ( 2009 )