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Fears Of A Renewed House Price Spiral Were Growing Today After Figures From Nationwide Building Society Showed An Alarming 1.2% Rise

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Fears grow of house prices spiralPatrick Collinson imagines what house price stories might look like if Britain wasn't under the sway of estate agents

Nationwide House Price Figures

Previous Blog home Fears grow of house prices spiralPatrick Collinson imagines what house price stories might look like if Britain wasn't under the sway of estate agents

House prices: Is Britain under the influence of estate agents? Photograph: Sarah Lee

Fears of a renewed house price spiral were growing today after figures from Nationwide building society showed an alarming 1.2% rise in the cost of the average British home. The increase, the worst in 19 months, provoked warnings that the Bank of England will be forced to raise interest rates, choking off an early recovery in the economy.

It is the second time in three months that Nationwide has reported worse-than-expected inflation figures. After nearly two years in which house prices have moderated, there are signs the reductions enjoyed by millions of buyers may soon be over.

The three-month on three-month rate of change – a smoother indicator of price trends – fell from a welcome -3.0% in April to just -0.5% in May. Hopes that prices would return to sustainable long-term averages also appear to be waning: Nationwide said the average house in Britain now costs £154,016, close to seven times median income.

An economist at the Good Building Society said: "First-time buyers will be understandably dismayed at today's figures, which will force many to take on huge and possibly unsustainable loans to purchase a property.

"But it remains too early to call a turn in the market. Prices have risen in just two of the last 12 months, and May's increase in inflation may be just a blip in an otherwise welcome downward trend."

He warned that the Bank of England's monetary policy committee may take the rise in inflation as a signal to raise interest rates. "Households will have to recognise that the improvements we have seen over the last year are probably now over and they should start preparing for an inevitable increase in mortgage interest costs."

But some experts welcomed the surge in inflation. A spokesperson for Bad Bank Ltd said: "Many high net worth individuals who enjoyed a doubling or even a tripling in their wealth from property price inflation have been hit hard by the fall in prices over the last year. Any rise in prices will help them secure more properties for their portfolios and will be an opportunity to impose rent increases."

Bad Bank Ltd added that it will be withdrawing from conventional mortgage lending to focus on higher-margin lending to property investors.

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Excellent work!

But a sad vindication of fears that the printing of money could plunge us into a Zimbabwe style hyper inflation, with millions on the streets dying of starvation and cholera by the year end.

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It still amazes me that so many people seemingly view it as a right that they should be able to own and afford their own home.... it isn't.

In fact if less people were afflicted by this delusion it would probably solve the problem of house prices often racing out of control becasue demand would be more controlled.

I wonder if it wouldn't be healthier for people to told they couldn't buy without at least a 20% deposit and with earnings of at least £30,000..... many would never qualify, but I suppose being harsh you could argue buying is likely to give them nothing but heartache so its just as well.

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It still amazes me that so many people seemingly view it as a right that they should be able to own and afford their own home.... it isn't.

In fact if less people were afflicted by this delusion it would probably solve the problem of house prices often racing out of control becasue demand would be more controlled.

I wonder if it wouldn't be healthier for people to told they couldn't buy without at least a 20% deposit and with earnings of at least £30,000..... many would never qualify, but I suppose being harsh you could argue buying is likely to give them nothing but heartache so its just as well.

People intuitively feel they have a natural right to live in liberty, not in someone else's domain and therefore abiding by their rules and preferences.

Such a sense of entitlement is probably inconvenient.

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It still amazes me that so many people seemingly view it as a right that they should be able to own and afford their own home.... it isn't.

In fact if less people were afflicted by this delusion it would probably solve the problem of house prices often racing out of control becasue demand would be more controlled.

I wonder if it wouldn't be healthier for people to told they couldn't buy without at least a 20% deposit and with earnings of at least £30,000..... many would never qualify, but I suppose being harsh you could argue buying is likely to give them nothing but heartache so its just as well.

this is ********, remove planning permission and 99% of people could buy/build with 1-2x income

renting is the new idea, being a landlord is only really possible due to planning permission and all the other regulations (by that i mean you can only rent out a 70sq meter house for £1k pm due to planning permission, if we had no PP there would still be buildings to rent but the price wouldn't be ultra ridiculous like it is today. more likely £300pcm for a 3 bedder)

what do dumb animals do? Pigeons can and do build their own nests. what makes you less able to provide shelter for yourself than a dumb bird?

remove planning permission and everyone can own a nice house build by themselves or someone else.

Spain in 5 years time will be proof of this. homes will be ultra dirt cheap and the young will be able to buy mortgage free or with very small mortgages.

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