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The Masked Tulip

The Core Aim Of Uk Economic Policy – To Stop House Prices From Falling

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http://www.moneyweek.com/blog/uk-economic-policy-prop-up-falling-house-prices-00292.aspx

Today's economic policy is almost entirely aimed at stopping house prices from falling – if it wasn't, having the RPI at nearly 5% would have prompted a rate rise by now. So the fact that there isn't going to be a change to the way in which houses are taxed isn't a surprise. However that doesn't mean it isn't a mistake.

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They're not doing a very good job of it...

Isn't the recovery LOCKED IN???

*looks for some spray-painted twigs* B)

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I think we should look at things from outside the box and think of ways of how the price of housing can be increased...then sit back whilst watching it fail to happen. ;)

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Guest UK Debt Slave

High house prices are just about the only thing left in the UK that maintain our fantasy 'feel good' factor so it's hardly surprising they will do ANYTHING to save the housing market.

If house prices really do crash (and I believe it will be nigh on impossible for this illusion of wealth to be sustainable) than the whole rotten edifice of lies and manipulation will collapse with it

All the champagne socialists and morons who thought property ownership was a universal one way ticket and panacea to financial stability will have the veil lifted from their eyes..................to reveal a blank wall...........and very little else besides.

I can't wait!

It'll be pretty interetsing seeing so many illusions shattered.....on such a huge scale

I think I'd prefer to watch it all unfold from a safe distance, however.

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Isn't this obvious? Isn't the banking system in the UK entirely dependent on house prices?

indeed, the last domino to fall.

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High house prices are just about the only thing left in the UK that maintain our fantasy 'feel good' factor so it's hardly surprising they will do ANYTHING to save the housing market.

If house prices really do crash (and I believe it will be nigh on impossible for this illusion of wealth to be sustainable) than the whole rotten edifice of lies and manipulation will collapse with it

All the champagne socialists and morons who thought property ownership was a universal one way ticket and panacea to financial stability will have the veil lifted from their eyes..................to reveal a blank wall...........and very little else besides.

I can't wait!

It'll be pretty interetsing seeing so many illusions shattered.....on such a huge scale

I think I'd prefer to watch it all unfold from a safe distance, however.

That will not happen it doesn't have to happen....but much of the easy free money that once created so much illusionary wealth will slip through fingers, many will come back down to earth with a bump...back to life, back to reality. ;)

http://www.youtube.com/watch?v=MDrtvnBmZBQ

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High house prices are just about the only thing left in the UK that maintain our fantasy 'feel good' factor so it's hardly surprising they will do ANYTHING to save the housing market.

If house prices really do crash (and I believe it will be nigh on impossible for this illusion of wealth to be sustainable) than the whole rotten edifice of lies and manipulation will collapse with it

All the champagne socialists and morons who thought property ownership was a universal one way ticket and panacea to financial stability will have the veil lifted from their eyes..................to reveal a blank wall...........and very little else besides.

I can't wait!

It'll be pretty interetsing seeing so many illusions shattered.....on such a huge scale

I think I'd prefer to watch it all unfold from a safe distance, however.

The MPC don't know which way to turn do they?! If they raise interest rates now as they should, to quell the obvious inflation in the system (rising and will rise further) then they ate damned - it will hasten the HPC. If they do nothing, on the self deception that we need to allow the 'recovery' to stabilise, then inflation will go higher still and later need even higher interwst (sorry developed a lisp in my excitement) rates to stop it!!

Frankly, they should recognise that longer term, we need higher rates and lower house and land prices and proper lending policies to work towards a competitive, exporting economy, not driven simply by waves of house price inflation and endless remortgage and spendism. Do we feel wealthy compared to Germany??? I don't think so.

It is interewting to note that house prices are falling now, despite record low IR's and even before the brunt of cuts have actually been enacted. Just wait until April. Will it be better then? Well, on my scale we may be on the way to seeing more permanent falls and continuing FSA tightening of the mortgage lending rules. So that will be good. But the Daily Express had better get ready for some dire headlines on house prices, because this current fall will gather pace through winter into next year.

Edited by plummet expert

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:lol:

I sort of disagree though. By rights house prices should be cratering. Instead they're barely dropping at 0.x% a month.

Plenty of reason to believe that along with fixing inflation figures, holding down interest rates, massive forbearance by lenders to prevent a repo fire sale and this (i believe feasible) possibility -

"A Banking Conspiracy To Stop "below Market Value" Sales?" might account for it.

This has been a credit fuelled retail economy. You cannot force people to borrow or spend.

High house prices are just about the only thing left in the UK that maintain our fantasy 'feel good' factor so it's hardly surprising they will do ANYTHING to save the housing market.

If house prices really do crash (and I believe it will be nigh on impossible for this illusion of wealth to be sustainable) than the whole rotten edifice of lies and manipulation will collapse with it

All the champagne socialists and morons who thought property ownership was a universal one way ticket and panacea to financial stability will have the veil lifted from their eyes..................to reveal a blank wall...........and very little else besides.

I can't wait!

It'll be pretty interetsing seeing so many illusions shattered.....on such a huge scale

I think I'd prefer to watch it all unfold from a safe distance, however.

Edited by athom

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Guest UK Debt Slave

The MPC don't know which way to turn do they?! If they raise interest rates now as they should, to quell the obvious inflation in the system (rising and will rise further) then they ate damned - it will hasten the HPC. If they do nothing, on the self deception that we need to allow the 'recovery' to stabilise, then inflation will go higher still and later need even higher interwst (sorry developed a lisp in my excitement) rates to stop it!!

Frankly, they should recognise that longer term, we need higher rates and lower house and land prices and proper lending policies to work towards a competitive, exporting economy, not driven simply by waves of house price inflation and endless remortgage and spendism. Do we feel wealthy compared to Germany??? I don't think so.

It is interewting to note that house prices are falling now, despite record low IR's and even before the brunt of cuts have actually been enacted. Just wait until April. Will it be better then? Well, on my scale we may be on the way to seeing more permanent falls and continuing FSA tightening of the mortgage lending rules. So that will be good. But the Daily Express had better get ready for some dire headlines on house prices, because this current fall will gather pace through winter into next year.

Yup

Your first paragraph sums it up really

They are caught between a rock and a hard place

It's just a case of how bad inflation will get before they concede defeat and raise interest rates....................with predictable and painful consequences for the housing market

The alternative.............doing nothing and allowing inflation to really take hold will be even worse in the long run

What a bloody shambles

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And what about us savers? Eh? Eh? Eh?

Oh for those days in the sixties when interest rates matched inflation!

Yep, negative real interest rates are a real drag on your savings, however, history has shown that, pretty much without exception, negative real rates are positive for the gold price.

I realised I couldn't trust the government with my money 2 years ago and decided to protect my wealth with gold. Up 35% since then.

Nowadays news like today's inflation stats are nothing but good news :ph34r:

Don't expect to be saved, you are being sacrificed for politicians votes and the bankers future. Your future is up to you.

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The MPC don't know which way to turn do they?! If they raise interest rates now as they should, to quell the obvious inflation in the system (rising and will rise further) then they ate damned - it will hasten the HPC. If they do nothing, on the self deception that we need to allow the 'recovery' to stabilise, then inflation will go higher still and later need even higher interwst (sorry developed a lisp in my excitement) rates to stop it!!

Sometimes it is hard to tell whether TPTB really know what they are doing or are just very lucky..

Should asset prices correct: Yes. Result.. they are doing.

Should that correction be slow or fast: Slow (debatable). Result.. it's happening painfully slowly

Would it be good to have had an upswing at election time: Yes. Result.. we had one

Would a bit of inflation make the debt more manageable: Yes. Result.. we have highish inflation

If this was all part of their plan, rather than just lucky happen-stance, then I'm actually quietly impressed.

If this IS the case I hope their plan involves much more in the way of future asset price correction :D

Edited by libspero

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She is exaggerating it. All signs are that the government policy is to try to land "this sucker" as gently as possibly, but landing it will. They don't want a full blown crash, but they do want prices to fall.

They have indicated very clearly that the aim is for a -25% correction. I think they mean real prices (10-15% nominal, plus 10-15% inflation?), and I guess they will prefer to get it over with with at least 1 year before the next election, preferably a little more. And I think this time they can do it, as they control the banks, and Mervyn and the FSA are on board.

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Sometimes it is hard to tell whether TPTB really know what they are doing or are just very lucky..

Should asset prices correct: Yes. Result.. they are doing.

Should that correction be slow or fast: Slow (debatable). Result.. it's happening painfully slowly

Would it be good to have had an upswing at election time: Yes. Result.. we had one

Would a bit of inflation make the debt more manageable: Yes. Result.. we have highish inflation

If this was all part of their plan, rather than just lucky happen-stance, then I'm actually quietly impressed.

If this IS the case I hope their plan involves much more in the way of future asset price correction :D

Exactly! And they have said they would do it. Now it is happening. Here: http://www.moneymarketing.co.uk/mortgages/coalition-ready-to-let-property-values-fall/1015197.article

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According to ONS about 40% of the value of UK Plc is house prices. It is our main industry and even bigger than bankstering which feeds on it. A crash will pull our entire economy down. That is why:

1. IR are dangerously low

2. CGT is being kept low at 28%

3. Tax breaks for 2nd home owners are still in place

4. Liar loans were invented and BTLers revered as "entrepreneurs" on property porn shows

5. Reposessions are being discouraged

We are hooked on HPI and even Brown recognised our boom and bust cycles and thought he had broken them with a boom only paradigm.

Edited by Realistbear

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According to ONS about 40% of the value of UK Plc is house prices. It is our main industry and even bigger than bankstering which feeds on it. A crash will pull our entire economy down. That is why:

1. IR are dangerously low

2. CGT is being kept low at 28%

3. Tax breaks for 2nd home owners are still in place

4. Liar loans were invented and BTLers revered as "entrepreneurs" on property porn shows

5. Reposessions are being discouraged

We are hooked on HPI and even Brown recognised our boom and bust cycles and thought he had broken them with a boom only paradigm.

Therein lies the rub...

Fecked.

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She is exaggerating it. All signs are that the government policy is to try to land "this sucker" as gently as possibly, but landing it will. They don't want a full blown crash, but they do want prices to fall.

They have indicated very clearly that the aim is for a -25% correction. I think they mean real prices (10-15% nominal, plus 10-15% inflation?), and I guess they will prefer to get it over with with at least 1 year before the next election, preferably a little more. And I think this time they can do it, as they control the banks, and Mervyn and the FSA are on board.

Yes... But:

1. They have mentioned 3.5% several times as the expected short term CPI level. Personally, I think they are aiming for a ceiling of 4-5%. Over about 3 years, this might give about 12 - 15%.

2. On the ground, we have already dropped about 10% on national nominal HPs from the 2010 peak. The only stat showing anything like this is Rightmove, for obvious reasons. Without further intervention, the new year is going to show a continuation of the sine wave downturn. If this is left to run its natural course it will end about 25% down from the most recent peak (not a prediction, just a very rough plotting of a continued sine wave). I think we would see Plan B being implemented long before this happened, which would be stoke further inflation.

So my money is on further falls being more real than nominal.

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things have changed massively imo

the real boom came when the banks were throwing

money at any idiot who could put his pawmark on paper

without having to prove a single penny of income

we know how the media drummed it into the psyche

of the masses on tv and papers not just for the uk market

but for the uk citizens subjects to leverage that house

to possess one in Spain Dubai Ireland....or even a holiday

lodge back home

until the banks stop the theft from savers and investors

the money shall move to where it grows or at least remains a constant

the biggest player tho is sentiment

and that has vanished even amongst the majority of the media

the subjects are now being drip fed the bad news

give the bbc time and they will turn tail

especially when they think the blame can be transferred to the Conservatives

the house price debt cannot be carried by the young

the banks cannot lend to the same amount of people

125% to 80% and the end of (erics catchphrase) sorted that

the debt thats out there needs paid

you can fool all of the people some of the time

you cant fool all the people all the time

a lot of fools are being gently awoken

cant buy wont buy have to sell

crash on!

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  • 309 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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