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Pauly_Boy

How Far Will Hps Fall Whilst Interest Rates Are 0.5%?

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As per the topic really, if IRs stayed at 0.5% for ever, how far do you think prices will fall?

Also, with everyone saving hard and paying down debt, how long until the economy roars back into life with excess credit. I've heard numberous reports of compaines sitting on piles of cash waiting to see how the spending cuts pan out, if they all start spending could we see a boom?

I know it's not exactly the usual bearish theme that everyone creams over, but i'm just putting it out there ;)

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IRs at 0.5% ling term would be the sign of a seriously dysfunctional economy with very little money being lent

House prices would tend towards the cash price

So massive falls

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Far because of other pressures, like inflation seriously cutting in to pay.

Unless the printers get turned on which they will be

Yes, inflation due to sky rocket out of control (due to printing money).........don't tell anyone though, panic and all that. Pretty sure there's lot's of people on a knife edge just now and the low interest rate has just delayed the inevitable (because of the election).

Got to raise interest rates to control inflation - unless you want to buy bread for £1,000,000 as they do in Zimbabwe :D

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0.5% IRs don't matter if you can't get a mortgage.

If IRs don't rise it means the economy is still in trouble. So nothing to support house prices there.

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As per the topic really, if IRs stayed at 0.5% for ever, how far do you think prices will fall?

Not very far at all.

You won't see many BTL'ers selling the places they bought over the last 10 years when they are getting a 4% return and only paying 1.5% (ish) interest.

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gents, its quite simple.

if the money can get much better yield abroad then thats what it will do. This will cause a UK HPC.

if its zirp as far as they eye can see all over the world then back up UK house prices go.

right now the former appears to be the case, which will last precisely as long as it takes these hot money flows to drive down rates in emerging economies like australia to near zero, no doubt triggering local financial crises in the process.

So expect gradual HPC until zirp rules the world and/or the brics have insituted capital controls to prevent hot money inflows or the new world order have implemented the bancor or the central bankers start listening to willem buiter.

One of these outcomes is going to happen within the next few years at which time the money comes back here and up we go again.

So when we're at the bottom you'd better get some balls and buy in otherwise you can kiss that house good bye for the time being.

Edited by scepticus

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As per the topic really, if IRs stayed at 0.5% for ever, how far do you think prices will fall?

Also, with everyone saving hard and paying down debt, how long until the economy roars back into life with excess credit. I've heard numberous reports of compaines sitting on piles of cash waiting to see how the spending cuts pan out, if they all start spending could we see a boom?

I know it's not exactly the usual bearish theme that everyone creams over, but i'm just putting it out there ;)

10% falls before a change of IR.

0.5% IR is the wait-and-see setting for the Bank of England, waiting for someone else to flinch first.

10% falls and someone else will flinch first.

The CSR may have been that someone flinching, at least on paper.

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Assuming low wage inflation (which looks likely imo):

Low base rate = high inflation = less disposable income = forced sales.

Higher base rate = less disposable...etc etc.

Take your pick..

Oh and SVRs (which many are stuck on) are steadily rising - currently averaging around 4.7% iirc.

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As per the topic really, if IRs stayed at 0.5% for ever, how far do you think prices will fall?

Also, with everyone saving hard and paying down debt, how long until the economy roars back into life with excess credit. I've heard numberous reports of compaines sitting on piles of cash waiting to see how the spending cuts pan out, if they all start spending could we see a boom?

I know it's not exactly the usual bearish theme that everyone creams over, but i'm just putting it out there ;)

If you look at the policies they are trying to re-balance the economy towards savings/investment and exports. The last lot were trying to carry on as usual and in hindsight imo they appear to have been clueless. As the economy re-balances house prices should fall as we get domestic deflation. This should also help competitiveness. I am a little more optimistic though the media will shout housing recession even if the economy is recovering.

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This should also help competitiveness. I am a little more optimistic though the media will shout housing recession even if the economy is recovering.

Falling house prices are part of the recovery, the media need to catch on and start reporting house price falls as a positive. A slow unwinding is my best bet, 3-5% falls annually + inflation at 3%~, 6-8% a year falls for 4 or 5 years in real terms, 30-40% in total.

Interest rates will rise much sooner than most predict. Merv and Co are not as stupid as they look. The last thing we want is more debt / consumption from having 0.5% rates for too long, HPI from QE. These policies we cause long term damage.

Economic policy 2008-1h2010 seems to have been mainly aimed at the general election rather than our long term future.

Savings, Investments, High Tech manufacturing and exports are what is required. A long hard deleveraging slog.

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gents, its quite simple.

if the money can get much better yield abroad then thats what it will do. This will cause a UK HPC.

if its zirp as far as they eye can see all over the world then back up UK house prices go.

right now the former appears to be the case, which will last precisely as long as it takes these hot money flows to drive down rates in emerging economies like australia to near zero, no doubt triggering local financial crises in the process.

So expect gradual HPC until zirp rules the world and/or the brics have insituted capital controls to prevent hot money inflows or the new world order have implemented the bancor or the central bankers start listening to willem buiter.

One of these outcomes is going to happen within the next few years at which time the money comes back here and up we go again.

So when we're at the bottom you'd better get some balls and buy in otherwise you can kiss that house good bye for the time being.

Money HAS to get a better yield or Pensioners are going to be flat broke.

Money will move away....Im afraid that in saving the banking system...which is broken, will take the economy down....

Scepticus is turning Austrian. apart from the last line....unless he beleives at that point, we are in for the crack up boom.

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Money HAS to get a better yield or Pensioners are going to be flat broke.

there is no law of nature saying pensioners must get yield.

yield can't be decreed by fiat any more than wealth can.

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Falling house prices are part of the recovery, the media need to catch on and start reporting house price falls as a positive. A slow unwinding is my best bet, 3-5% falls annually + inflation at 3%~, 6-8% a year falls for 4 or 5 years in real terms, 30-40% in total.

Interest rates will rise much sooner than most predict. Merv and Co are not as stupid as they look. The last thing we want is more debt / consumption from having 0.5% rates for too long, HPI from QE. These policies we cause long term damage.

Economic policy 2008-1h2010 seems to have been mainly aimed at the general election rather than our long term future.

Savings, Investments, High Tech manufacturing and exports are what is required. A long hard deleveraging slog.

Agree with you and Ash 4781 on this one. The Coalition policies are intended to re-balance the economy and have a chance of working - but international policies to re-balance exchange rates re. US and China continue to influence the position re interest rates.

BoE interest rate policy has been detached from mortgage interest rates for some time now and, in my view, have had little direct influence on the housing market. The government spending during 2008 and 2009 was what prevented the hpc that showed signs of starting at that time - the motivation for which was political survival with the general election imminent.

It's a long hard slog from here - I expect the bottom to be at least four or five years away.

The media have been slow to change their tune regarding hpi but they might be overtaken by public sentiment and fall into line as a group of individuals benefiting from lower house prices grows. Remember it's not just younger people who benefit, but their parents who won't have to use (waste) their savings to help their children "get on the ladder" anymore and we will start to hear stories how lower housing costs (rent and new mortgagees)are keeping people financially afloat during a period of low wage rises. You might even start to see less sympathy for those who got greedy during the boom times and are now facing negative equity, but that might be me getting carried away........!

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there is no law of nature saying pensioners must get yield.

yield can't be decreed by fiat any more than wealth can.

sure thing, but a good portion of our earnings go into the pit that is pensions....why pay into them if you arent getting anything out? And Lo, we are about to be forced to join one in 2012 I beleive....

of course, public sector workers have this enormous gripe about THEIR pensions...they say they are funded....but of course, although there is an entry in the books to say there is a balance in the account, the current account says no...and any funds that actually have been invested elsewhere, will be yielding WAY below the 7.5% the financial industry claimed it could yield.

But, pensioners do need an income....its a human right that if you, as a Government, demand people pay for things with FIAT, that sufficient FIAT is available to provide a basic living.

If it isnt coming from savings, then its coming from taxation...which of course is where the squeeze on disposable is coming from.

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Not very far at all.

You won't see many BTL'ers selling the places they bought over the last 10 years when they are getting a 4% return and only paying 1.5% (ish) interest.

Technically you are correct.

BUT, HMRC will start to investigate the finances, double check the tax paid any any amounts of CGT which ought to have been paid.

So with back tax and fines the 4% becomes massively reduced.

Owning BTL's may become a total liability IF there are mortgages on those properties

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Money HAS to get a better yield or Pensioners are going to be flat broke.

Money will move away....Im afraid that in saving the banking system...which is broken, will take the economy down....

Which is part of the plan! Old people get knobbled by ZIRP and low pensions. Therefore they cannot afford heating or food, therefore they starve to death. Therefore saving the government a ton of pension money.

It's easier than say a convenient nuclear accident in eastborne or something.

2045 a hitman will come round your house the second you hit retirement age which will be something like 160.

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there is no law of nature saying pensioners must get yield.

yield can't be decreed by fiat any more than wealth can.

Firstly,y like your view that things are just happening in cycles. 1997 - asian bust, 2007 developed world bust. Think 2017 we will get a EM burst again.

There is no law to say that debtor must get zirp either. As rates are set by central bank, it is just a matter of who win and who lost. Either way,

such meddling will have serious unintended consequences.

As for HP boom, with basel III and bank's new found cautious, I think above real wage growth in house price will not occur for a long long time.

Also, maybe the return flow of money currently in EM will bid up Sterling and we have a nice dose of increase of standard of living instead (I think this

is a better term than deflation).

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Which is part of the plan! Old people get knobbled by ZIRP and low pensions. Therefore they cannot afford heating or food, therefore they starve to death. Therefore saving the government a ton of pension money.

It's easier than say a convenient nuclear accident in eastborne or something.

2045 a hitman will come round your house the second you hit retirement age which will be something like 160.

And to free up houses? Is that what they are doing in Japan ?

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There is no law to say that debtor must get zirp either.

zirp (or near zirp) on savings is the only possible stable solution to a fiat money economy. It was baked in since 1971.

As for what debtors get that is a matter of chasing yield.

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zirp (or near zirp) on savings is the only possible stable solution to a fiat money economy. It was baked in since 1971.

As for what debtors get that is a matter of chasing yield.

OK, they have saved FIAT again...now we are at ZIRP, whats next to save things?

the last cycles have ALL returned interest rates UP....so, it looks like UP is the way forward, but...next time?...cant go negative...next time its CRACK UP BOOM TIME.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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