Possible No Housing Market Bubble-boe's Nickell

[Boom'n'Bust]

http://today.reuters.co.uk/news/newsarticl...AIN-NICKELL.xml

Possible no housing market bubble-BoE's Nickell

The housing market, which rose 123 percent between early 1999 and the middle of last year, may well not have been in a bubble, Bank of England policymaker Stephen Nickell said on Tuesday.

[El_Pirata]

My jaw is almost literally on the floor...

[El_Pirata]

"The rise in household debt over the past several decades, meanwhile, can be explained by a rise in home ownership and the proportion of households with a mortgage, Nickell said."

So there are now twice as many home-owners since Nu-Lab came to power???

[lowrentyieldmakessense(honest!)]

[url=http://today.reuters.co.uk/news/newsarticle.asp

"Of course, there is a good deal of uncertainty here, but it is clear that it may be legitimately argued that there has been no housing bubble whatever," Nickell told an academic audience.

this person must be on a different planet to me.

how did he get to be on this committee and what qualifications has he got.

if he can put forward a convincing arguement that there has been no housing bubble i'll show my a**** in debenhams window.

[Boom'n'Bust]

if he can put forward a convincing arguement that there has been no housing bubble i'll show my a**** in debenhams window.

<{POST_SNAPBACK}>

I don't think we'd like to see that mate

ASS-PRICE-CRASH!

Edited September 20, 2005 by Boom'n'Bust

[El_Pirata]

"In my view, incorporating house prices directly in a consumer price index is not a good idea. It is hard to argue that asset prices of this kind belong in a cost of living index and ... I am not in favour of targeting asset prices when setting rates," Nickell said.

Since when is the roof over your head not a cost of living?

Does this man have free accomodation?

He may have a long list of degrees, but with one comment he's shown himself to be an utter f***ing moron.

[Casual Observer]

My jaw is almost literally on the floor...

<{POST_SNAPBACK}>

Surely you mean"figuratively", not "literally"

[BandWagon]

Stock prices have reached what looks like a permanently high plateau.

Irving Fisher 1929

Another one for the history books.

This man has a seriously impressive CV (as do the other BOE members).

http://www.bankofengland.co.uk/about/peopl...ies/nickell.htm

That didn't help Irving Fisher.

Edited September 20, 2005 by BandWagon

[El_Pirata]

"Nickell also said that low inflation, the rise in two-salary households and increased levels of job security and rapid prospective earnings growth may also make it more sensible for households to borrow more now than they have in the past."

[1] I would be far more comfortable borrowing money in a high inflation environment, as the debt would be quickly eroded.

[2] The rise in two-salary households is a result of higher housing costs, not a cause of them. You need two wage earners to service the massive mortgage.

[3] Increased levels of job security - I have seen plenty of evidence to show that job security is weakening by the day.

[4] Rapid prospective earnings growth. Where? For who? The general public? Didn't Merv tell us that immigration had kept wage inflation low?

[BandWagon]

"Nickell also said that low inflation, the rise in two-salary households and increased levels of job security and rapid prospective earnings growth may also make it more sensible for households to borrow more now than they have in the past."

[1] I would be far more comfortable borrowing money in a high inflation environment, as the debt would be quickly eroded.

[2] The rise in two-salary households is a result of higher housing costs, not a cause of them. You need two wage earners to service the massive mortgage.

[3] Increased levels of job security - I have seen plenty of evidence to show that job security is weakening by the day.

[4] Rapid prospective earnings growth. Where? For who? The general public? Didn't Merv tell us that immigration had kept wage inflation low?

<{POST_SNAPBACK}>

Very good points.

I ask people, what would you rather have?

A mortgage of £100k at 15%, or a mortgage of £300k at 5%, both costing £15k a year.

The answer is clear to me, obviously not to others.

[lowrentyieldmakessense(honest!)]

Another one for the history books.

This man has a seriously impressive CV (as do the other BOE members).

http://www.bankofengland.co.uk/about/peopl...ies/nickell.htm

That didn't help Irving Fisher.

<{POST_SNAPBACK}>

he really should know better

[Guest growl]

I wonder how much Brown has promised this man?

[Red Baron]

Presumably Nickell is a Government appointee on the MPC and therefore one of Brown's Botty Boys.

How else would one explain the tripe he has just come out with?

Edited September 20, 2005 by Red Baron

[farmerdring]

this lifts the lid totally for me.

the mpc (in my opinion of course!) are, in the main, mere political placements.

i no longer believe in the MPC as the fabulous brave new world independent commitee. it is like the so called 'war on terror', an utter political farce to hide a very dirty truth indeed.

this is the last time i will post or visit HPC, it is causing me so much anxiety that it is just affecting my everyday life.

i take back all those comments i made about believing that inflation was not apparent and that CPI was a reasonable way of measuring broad-based price pressures.

what a fool!

so long and thanks for all the useful info HPC, i may never buy a house, period; this whole oil thing has taken the fight out of me and i would never dare get into debt for anything - i'm off to try and live my life for today instead of getting involved in all this cr@p.

[Mushroom]

"He who pays the piper calls the tune".

Seriously though, people such as this have to advance this sort of argument.

Why?

They cannot conceive of a situation where our economy might go completely down the pan.

They have to believe that there is a future.

They, therefore, construct theories to support that.

Oh, and whatever Nickell thinks, I don't consider my house an asset.

I need somewhere to live. That's a house.

[Guest Guy_Montag]

I am extremely worried about this - we can all make flippant comments about this chap, but people in his position don't just spout off without a plan, he is paving the way for something else.

& I'm worried about what that something else is.

[Golden Shower]

Wake up and smell the coffee people. Interest rates are coming down again, they are also paving the way for Gordon to become PM (I would bet next year).

F*ck the pensioners/pensions or anyone who is trying to save - we're getting blagged. Just save people with huge amounts of debt.

NASA have announced that they want to go back to the Moon, I nominate the MPC and Gordon Brown to go there - on a one way ticket!!!

[Ides of March]

Wasn't it Paul Krugman in the US who reckoned the dot-com boom was a new paradigm - i.e. arguing that the huge rise in stock prices was in fact a new equilibrium and entirely sustainable.

I think Nickell is arguing along similar lines. I for one expect the eventual outcome will be similar as well.

Edited September 20, 2005 by Ides of March

[Starcrossed]

Wasn't it Paul Krugman in the US who reckoned the dot-com boom was a new paradigm - i.e. arguing that the huge rise in stock prices was in fact a new equilibrium and entirely sustainable.

I think Nickell is arginging along similar lines.  I for one expect the eventual outcome will be similar as well.

<{POST_SNAPBACK}>

But how much damage will they do to the British economy in the meantime?

To me it seems like the consequence of the spin culture. Those that spin end up believing their own stories. And if reality threatens to interfere they spin all the harder in the belief the problem will then disappear.

I wonder what Mervyn King thinks of Mr Krugman given that he voted against a rate drop last time. There may just be open warfare between the Brown placemen and the others in the next few months. It'll be interesting, that's for sure...

[the end is a bit nigher]

it does make me depressed to think that our finances are being governed by some of the most financially stupid people on the planet

[bears all]

Interesting that Nickell thinks increased debt doesn't matter, because assets have increased disproportionately more. As someone else said somewhere else on the forum, asset values are a matter of opinion - debt is real. What if asset values fall? How much does debt matter then?

And if there's no housing bubble, why can't FTBs get on the ladder? How can the market function normally without FTBs?

The key surely lies in the last question. The market can't function without them. Seems to me it's in the process of demonstrating that. And what does Nickell think is going to happen to the market as the economy falters?

[HomeAlone]

He's right ofcourse, the real cause of the rise in house prices is a mixture of Voodo and Gypsie curses. It takes market and business savy to realise these things though so people like us would be forgiven for thinking it was a bubble.

I can only thank the powers that be for putting this genius, this utter God of banking in his policy making position to keep us safe from ourselves.

[boom_and_bust]

Hi,

During his writings on housing, I thought it to be really telling that a home is another financial assest, a balance sheet figure, investment, no real mention of 'roof over your head', 'stable base' anything to do with social reasons for housing. I guess that is all we are in Britain now, units of consumption in the economic model. Even the good old US has social legislation on housing like rent rate control contracts, mortgage security indemnity,ie., some EU nations take the subject of housing into a far deeper tranche of political importance (look at the French and German constitutions). They can admit that the market is less than perfect, can be prone to corruption, speculation and lobying. Housing CAN have social consequences. Britiain is slowly returning to the dickension era by the looks of things with Brown's VI pandering. And even if this bubble has generated a new swathe of fresh-build appartments in the city centres, how many of them do you think will not require major renovation work 10-15 years down the line to keep the cheap, shoddy constructions standing up.

Still, it was a pleasant summer this year.

Boomer

[brainclamp]

Of course the market can function without FTBers. All it needs is BTLers making up the gap and would be FTBers renting! Which is precisely what will occur.

Why should asset prices be targeted? The reality is of course that - as in ireland too much money(credi/debt)t always ends up in asset prices first, but then moves into the rest of the economy as someone has to be on the other side of the transaction. The econmoy historically 'overheats' and inflation expectations rise.

Yet with unlimited immigration we have not seen any overheating, so there is no limit to 'moneytary accomodation'.

I expect this may soon end in a bust as non-labour costs carry on spiralling upwards with rising unemployment. These costs are hitting peoples incomes already and I suspect have more to do with the fall in consumer spending than the BOE will admit.

Edited September 20, 2005 by brainclamp

[sign_of_the_times]

Of course the market can function without FTBers. All it needs is BTLers making up the gap and would be FTBers renting! Which is precisely what will occur.

Why should asset prices be targeted? The reality is of course that - as in ireland too much money(credi/debt)t always ends up in asset prices first, but then moves into the rest of the economy as someone has to be on the other side of the transaction. The econmoy historically 'overheats' and inflation expectations rise.

Yet with unlimited immigration we have not seen any overheating, so there is no limit to 'moneytary accomodation'.

usual mantra..."rentier society" blah blah blah

I expect this may soon end in a bust as non-labour costs carry on spiralling upwards with rising unemployment. These costs are hitting peoples incomes already and I suspect have more to do with the fall in consumer spending than the BOE will admit.

<{POST_SNAPBACK}>

HOLD THE FRONT PAGE ! bit bearish for you this last bit ?

Edited September 20, 2005 by sign_of_the_times