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Rinoa

Rising Unemployment = Falling House Prices...

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The erosion of debt was very handy during 83 - 86, but even if we accept that the rise in real prices was none existent, there was no real price fall either during the period.

So the rising unemployment in those years didn't acheive what HPC thinks it will do this time round.

;)

How many people lived in council houses in `83?, How many had bought their council houses? how many had debts on ten credit cards? You cannot compare 1983 with now and get anything but nonsense. It was a one off credit bubble, it has burst, all the other factors will just make the carnage worse, you can`t change it, whatever shite you post.

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Sunday Times. David Smith.

Whateveaaah.

Ha ha. David Smith. Was about to read it, but then found out it was David Smith.

Rinoa and McTavish, David Smith said in 2007 there was absolutely nothing wrong with our housing market and prices couldn't drop.

He's about as credible as Piggy Allslop.

:P:P:P:P

Don't post any more of his rubbish on here as 'proof'. You might as well quote Miss Piggy. Krusty says she sees green shoots, blah di blah di blah.

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It's worth noting that while the Benefits Agency will pay mortgage interest if you become unemployed, they won't be paying anything towards any MEW'ed BMWs or holidays in South Africa etc and this is going to catch a hell of a lot of people out.

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... has no basis in reality. Says Sunday Times

Yet another HPC myth bites the dust.

Surely the bulls need to be asking some serious questions of themselves if they have to resort to the use of a David Smith article as proof of their argument? Thought even Rinoa would have known better than that....

ummm maybe not.

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Recessions are usually caused when the BoE raises rates to prevent inflation or protect the pound. High mortgage rates cause people to stop buying houses and some to have their houses repossessed. This adds to the supply. Together these factors cause house prices to fall.

At the same time businesses cut costs which usually means jobs. Unemployment rises as a result. But is it the actual unemployment which causes house prices to fall, or the base rate hike affecting the housing market?

If base rates are hiked this affects the entire housing market, but if an extra 2/3% are made unemployed and mortgage rates do not increase, the market is not affected to the same degree.

97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

This sums up what is happening right now. Prices are stabilising and even threatening to rise whilst unemployment soars.

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:blink:

There were 58,000 sales last month. Do you really think a few bored STR's made any difference?

I got cold called last week form the office I bought my latest house through. Desperate for properties, not enough stock and too many buyers.. Yes it's anecdotal, and admittedly the Scottish selling season is different and runs later into summer, but still, thats something that just wouldn't have happened last year at all.

Pure marketing tactic....get panic into the market...must buy shortage..no on ebelieves this drivel any more...eAs are teh same as MPs just property spivs

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Ha ha. David Smith. Was about to read it, but then found out it was David Smith.

Rinoa and McTavish, David Smith said in 2007 there was absolutely nothing wrong with our housing market and prices couldn't drop.

He's about as credible as Piggy Allslop.

:P:P:P:P

Don't post any more of his rubbish on here as 'proof'. You might as well quote Miss Piggy. Krusty says she sees green shoots, blah di blah di blah.

Smith is just a VI property ramper.

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Recessions are usually caused when the BoE raises rates to prevent inflation or protect the pound. High mortgage rates cause people to stop buying houses and some to have their houses repossessed. This adds to the supply. Together these factors cause house prices to fall.

At the same time businesses cut costs which usually means jobs. Unemployment rises as a result. But is it the actual unemployment which causes house prices to fall, or the base rate hike affecting the housing market?

If base rates are hiked this affects the entire housing market, but if an extra 2/3% are made unemployed and mortgage rates do not increase, the market is not affected to the same degree.

97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

This sums up what is happening right now. Prices are stabilising and even threatening to rise whilst unemployment soars.

No. Wrong again. A one off credit bubble allowed excess money to flow into property, driving the prices sky high, the only way people could keep buying property was with LIAR LOANS, when the credit was turned off the numpties who had bought at the inflated price were left high and dry with no choice but to hold out for prices they will never realise. In the absence of credit house prices will drop to the levels affordable to the unemployed and the low paid for the most part as this is who makes up the majority of the country. I assume you agree with me that the way people financed their rain shelters in the 80`s differs so much from recent years that trying to use comparisons with the two is pointless.

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Recessions are usually caused when the BoE raises rates to prevent inflation or protect the pound. High mortgage rates cause people to stop buying houses and some to have their houses repossessed. This adds to the supply. Together these factors cause house prices to fall.

At the same time businesses cut costs which usually means jobs. Unemployment rises as a result. But is it the actual unemployment which causes house prices to fall, or the base rate hike affecting the housing market?

If base rates are hiked this affects the entire housing market, but if an extra 2/3% are made unemployed and mortgage rates do not increase, the market is not affected to the same degree.

97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

This sums up what is happening right now. Prices are stabilising and even threatening to rise whilst unemployment soars.

More unemployed and more people with threat unemployed equals less buyers equals lower prices. Anyway the economic mismangement has generated a massive goveernement debt which will mean interest rate rises, tax rises and cuts in spend. Any chance of HPI then (unless we go to hyperinflation)?

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97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

It's not everyone becoming unemployed that causes the problems, 75% of working age people employed is a

good level for the UK. Unemployment doubling from 5% to 10%, that's what causes problems, as you go

beyond that each rise becomes more and more important until around 20% when it doesn't matter anymore.

10% Unemployment doesn't mean 90% of people are working.

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More unemployed and more people with threat unemployed equals less buyers equals lower prices.

Also, many people are having pay cuts imposed on them, and having overtime curtailed. It is a complete nonsense for Rinoa to imagine there is no correlation between an economy in severe recession and the monetary value of property.

I can never understand wht the bulls argue with the Law of Economics- they may as well argue with the Law of Gravity.

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Recessions are usually caused when the BoE raises rates to prevent inflation or protect the pound. High mortgage rates cause people to stop buying houses and some to have their houses repossessed. This adds to the supply. Together these factors cause house prices to fall.

At the same time businesses cut costs which usually means jobs. Unemployment rises as a result. But is it the actual unemployment which causes house prices to fall, or the base rate hike affecting the housing market?

If base rates are hiked this affects the entire housing market, but if an extra 2/3% are made unemployed and mortgage rates do not increase, the market is not affected to the same degree.

97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

This sums up what is happening right now. Prices are stabilising and even threatening to rise whilst unemployment soars.

How's your £1.38bn house going?

Central banks are usually reactive, which means the economic clouds have gathered long before they act, meaning interest rates don't cause recessions.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandoment of further credit expansion, or later as a final catastrophe of the currency system involved" ----- Ludwig Von Mises

“William McChesney Martin Jr. vividly described the Fed's role as to "take away the punch bowl." In essence, the Fed was supposed to be the "adult chaperone" at an economic party that was likely to get out of hand. Thus, the Fed was supposed to allow, even induce, if necessary, the occasional recession to cleanse the excesses of the economyâ€

However the Fed failed as did the BoE to act as a good chaperone, you fail to realise house prices have only got to the current insane levels by lax lending practices.

When Genius Failed - Roger Lowenstein

P42

...But liquidity is a straw man. Whenever markets plunge, investors are stunned to find that there are not enough buyers to go around. As Keynes observed, there cannot be "liquidity" for the community as a whole. The mistake is in thinking that markets have a duty to stay liquid or that buyers will always be present to accommodate sellers. The real culprit in 1994 was leverage. If you aren't in debt, you can't go broke and can't be made to sell, in which case "liquidity is irrelevant. But a leveraged firm may be forced to sell, lest fast-accumulating losses put it out of business. Leverage always gives rise to the same brutal dynamic, and it's dangers cannot be stressed too often.

Leverage destroys everything.

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In the absence of credit house prices will drop to the levels affordable to the unemployed and the low paid for the most part as this is who makes up the majority of the country.
More unemployed and more people with threat unemployed equals less buyers equals lower prices.
It is a complete nonsense for Rinoa to imagine there is no correlation between an economy in severe recession and the monetary value of property.

Any of you want to explain why prices are stabilising but unemployment soaring?

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Recessions are usually caused when the BoE raises rates to prevent inflation or protect the pound.

Please prove that there is a correlation. If your assumption is correct, why would the BOE be talking about raising interest rates once recovery resumes if this would simply put us back into a recession?

High mortgage rates cause people to stop buying houses and some to have their houses repossessed

Interest rate hikes gradually erode the ability to service mortgage debt. Unemployment has a much more immediate effect.

97/98% of those who are able to can still buy. In fact, the numbers tempted to buy with lower rates, and currently lower prices, should easily outnumber those 2/3% who are taken out of the market by unemployment.

Firstly, your figures are woefully inaccurate, and secondly, you are looking at this ****-about face.

The unemployment rate for April 2009 was 7.2%, while those reported as 'economically inactive' was 20.8% of the population of working age.

Increases in unemployment lead to increases in forced sales / reposessions, and as we know - house prices are set at the margins.

This sums up what is happening right now. Prices are stabilising and even threatening to rise whilst unemployment soars.

No it doesn't. It sums up your delusionary beliefs.

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Central banks are usually reactive, which means the economic clouds have gathered long before they act, meaning interest rates don't cause recessions.

Not so. Remember John Major saying "If it isn't hurting, it isn't working".

A precise example of how recessions are caused deliberately by raising ir's to slow growth.

Edited by Rinoa

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Please prove that there is a correlation.

Prove that there isn't

Interest rate hikes gradually erode the ability to service mortgage debt. Unemployment has a much more immediate effect.

So why isn't it affecting prices currently?

The unemployment rate for April 2009 was 7.2%, while those reported as 'economically inactive' was 20.8% of the population of working age.

97% of those who were employed last year are still employed.

Increases in unemployment lead to increases in forced sales / reposessions, and as we know - house prices are set at the margins.

If 3% more people are unemployed, 3% more repossessions may takle place. But if rates have fallen to 300 year lows, many who would have been repossessed now won't be.

No it doesn't. It sums up your delusionary beliefs.

Not me who's delusionary.

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Not so. Remember John Major saying "If it isn't hurting, it isn't working".

A precise example of how recessions are caused deliberately by rising ir's to slow growth.

Fail.

In the 80s/90s it was assumed interest rates worked immediately but now interest rates take 12 - 24 months to work.

Both propositions can't be correct.

http://www.timesonline.co.uk/tol/news/poli...icle6210010.ece

The years 1989 and 2009 are bookends to a fascinating period in Britain’s political and economic history. Profound changes have happened, and for most of the intervening period the country enjoyed unprecedented economic prosperity and stability. In many respects, however, we have come full circle: the outlook now is as uncertain as it was in 1989.

For the economy, 1989 was all about clearing up after the boom years. The 1980s, for so long a decade of rising unemployment and industrial strife, had given way to the full flowering of the Thatcherite economic revolution.

Income-tax rates had been slashed, most notably in Nigel Lawson’s 1988 budget and, free from the old controls on bank lending, people had been free to borrow at will.

But there was, not for the first time, too much economic exuberance and the return of inflation, something the Thatcher government had vowed to destroy.

Although she held office right up to November 1990, 1989 was the year that saw the writing on the wall for Britain’s first woman prime minister. Her demotion of Sir Geoffrey Howe from his position as foreign secretary in July 1989, followed by the resignation of Lawson as chancellor of the exchequer in October, provided further evidence of a disintegrating government, torn apart from the top by a leader who had become increasingly stubborn and out of touch.

Lawson’s successor as chancellor, John Major, had a phrase for what the economy needed to go through.

“If it isn’t hurting, it isn’t working,†he said. It was hurting; interest rates had been pushed up to 15% and stayed there for a year, and house prices had begun to fall. The boom had come to an abrupt end, and among those hurt was the prime minister.

It doesn't appear that interest rates caused the problem here does it?

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Any of you want to explain why prices are stabilising but unemployment soaring?

Have prices really stabilised or are you just quoting what the media says?

four-bears-large.gif

Can you see how prices stabilised in all of these bear markets? Many recoveries followed by another collapse.

If prices need to stay at their current levels for several years before anyone can claim prices have stabilised.

If over consumption mixed with easy credit has ended what will keep house prices up?

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Any of you want to explain why prices are stabilising but unemployment soaring?

They aren't stabilising, we are simply in the bull trap. Very little is being bought by FTBs because they cannot afford to buy at current prices, now that liar loans have disappeared. Until FTBs re-enter the market, prices will continue to fall, and this Autumn and Winter will see relentless falls in property values.

I am sure you would agree that more easily affordable housing is a good thing for all, with the possible exception of estate agents such as yourself.

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It doesn't appear that interest rates caused the problem here does it?

It does to me. Your example appears to bear out that the economy was booming and had to be slowed. IR's were pushed up and house prices started to be affected.

Any dates or graphs to show otherwise?

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It does to me. Your example appears to bear out that the economy was booming and had to be slowed. IR's were pushed up and house prices started to be affected.

Any dates or graphs to show otherwise?

Fail

Read again, what caused the economy to boom in the first place. Then you have the cause of the recession, when you read it again you'll realise it wasn't interest rates.

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Have prices really stabilised or are you just quoting what the media says?

I'm looking at the indices, don't you believe them now?

They aren't stabilising, we are simply in the bull trap.

That's just a weak and convenient bear excuse completely without foundation or any facts to back it up.

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