Monday, Dec 28, 2009
While the value of the pound plunges house prices will rise 2-4% according to CEBR
Telegraph: Pound could soon be worth less than euro, warns CEBR
The parlous state of Britain's finances and the uncertainty over UK fiscal policy could push the pound below parity with the euro in the next few months while UK house prices will continue to grow in 2010!
Posted by enuii @ 10:41 AM (854 views) Add Comment
6 Comments
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1. M Meg said...
Given the choice save the pound or save the housing market the BOE will not be too worried about housing. Besides a fall in the pound would force all those international investors to re-think keep their money in british property. We're realy just waiting for the trigger that will start the next phase of the crash .... lets hope sooner rather than later
2. dill said...
The unwritten rationale for this forecast from the CEBR is probably based on the expectation that foreign interests will continue to compete for London and SE property due to favourable exchange rate. And, hence push up the averages - as has been the case in H2 2009. Question is - why buy assets here when foreign sentiment to the currency is negative? Credit will still be tight next year. Cash rich local Sterling holders will also "move out" to safer havens. Private sector wages flat or falling while Public sector increases are subsidised by the very government borrowing that's pressuring confidence in Sterling. So the domestic market is unlikely to support house price growth in the context of a collapsing pound. Besides, in the CEBR's scenario, interest rates would probably be forced up. Have they thought this through, properly?
3. markj69 str05 said...
If we take the UK as a whole, surely, it's better to have more money entering the system, than is leaving?
Threfore, would not devaluing the pound work to support the above?
1. Making it difficult for investors to leave.
2. Making it harder for those investing outside the UK.
3. Making it more attractive for external investors, (Incl' cheaper labour rates)
4. Making it more attractive for UK residents to holiday in the UK
The only issues to consider then, is how we keep the internal mechanisms going. Low interest rates, low taxes, Throw money at it???
4. Mmeg said...
The currencies Iceland and Zimbawae have crashed recently
5. alan said...
@markj69 str05,
Won't your suggestion jack up food inflation? We seem to import almost everything these days. Think - Kenyan beans, Spanish tomatoes, Danish bacon, German pils, Cyprus potatoes, French camembert etc., etc.
Plus, clothing from India, washing machines from Germany, cars from Sweden would go up in price etc.
Don't you mean that we would be forced to holiday in the UK (4) above. Going abroad would be very expensive ...its already getting dearer, as I found out when I went to Stuttgart earlier this month. The pound has dropped a lot since I lived in Germany in the good old days of the DM.
6. markj69 str05 said...
Oh dear, maybe we'll have to start producing/manufacturing, again!!!
And yes, I did mean 'forced' to holiday in uk.