Jump to content
House Price Crash Forum
Sign in to follow this  
Cornish Pasty

Excellent Article, As Usual,

Recommended Posts

- "Mild peril" is the warning put onto DVDs and videos too gentle to get a certificate, but scary enough to terrify toddlers. There's a box full of it next to your editor's TV at home.

- Dumbo's mother, chained up for lunacy...Nemo's dad escaping an angler fish...Mickey Mouse near-drowned as the Sorcerer's Apprentice...

- "Mild peril" is also what the UK economy has just been through, say the newspapers. "Mortgage lending picked up last month," reports the FT today, "leading lenders to predict that a housing market crash had probably been averted."

- Phew! C'mon everybody - onto the next big adventure in the property market!

- "House prices have had the soft landing the Bank of England intended," added the Mail on Sunday last week, while The Sunday Times gave "six signs the worst is over and that house prices are set to stabilise." Thus our heroes is reunited with their loved ones and everyone lives happily ever after. In fact, it was all just a bad dream.

- But just as Mr Benn used to find mementos of his adventures in his pin-striped suit pocket on returning to Festive Rd, evidence that something strange has been happening just keeps turning up. British housing values have lost £40 billion already this year, according to analysis by the FT. Property sales this summer dropped to a 7-year low. Unemployment is rising, sales of 'white goods' have collapsed, and High Street spending - driven as ever by the 'wealth effect' of house prices - has turned sharply lower.

- Even Tesco is feeling the pinch and the punch, despite reporting pre-tax profits for the half-year up to £908m yesterday, on a 14.1% increase in turnover. But shielding its eyes, the nation's No.1 grocer thinks oil prices are playing the bully.

- "Tesco has generally managed to avoid the impact of the slowdown in UK consumer spending that is hurting many High Street stores," the BBC says, "although rocketing oil prices remain a worry. The company warned [yesterday] that oil-related costs could be as much as £60m above budget this year."

- "The accumulating effects of rising oil-related costs, both on consumer confidence and on our business, are a cause for concern," said chief executive Terry Leahy.

- No doubt yesterday's slip in Brent crude to $64.20 per barrel brought cheer at Tesco HQ at the Hoover Building.

But in the City, investors took fright at Leahy's concerns, and sold Tesco shares 3% lower. Overall the FTSE100 dipped 13 points to 5,416. The Retail Sector en masse lost 0.8% for the day. If we were able or minded to give investment advice, we'd say 'Sell'.

- "Spending on credit cards fell again in August," says the British Bankers Association. Borrowing fell by £146m as card holders paid down their debts, the second monthly fall in spending this year, and a trend not seen since 1994. Readers tired of hearing the song should spare a thought for their editors, but the thighbone of house prices is giving jip to the kneebone of consumer spending. The ankle and foot bones of unemployment and looming recession are starting to ache.

- But never mind. Here comes Stephen Nickell to kiss all better yet again. Our favourite policy wonk at the Bank of England last night rehashed his theory - that house prices won't crash from here. In fact, says he now, UK house prices haven't even been in a bubble!

- "Concerning the role of asset prices in monetary policy," said Nickell in this year's British Academy Keynes Lecture, "here we have analysed the implications of the 2002-4 UK housing boom. The overall conclusions are first, it is impossible to tell whether or not there has been a house price bubble in the light of the fall in UK long-term real interest rates from around 4% in the mid 1990s to around 2% by 2000."

- Ha! Hahahaha, in fact. Lower interest rates may have caused house prices to DOUBLE in the five years to 2004.

But there's nothing to fear, since cheap money has made mortgage rates CHEAPER. Thus Nickell's absurd "long-run equilibrium price" has shot through the roof, putting a floor under house prices and securing the nation from a crash in the future.

- Not that the Fed's decision to raise US interest rates could matter, nor the rising rate of inflation here in Britain, never mind soaring energy prices. The risks to UK house prices - and thus the economy...and your income

- have been and gone. "Almost every expert is predicting prices to plateau over the next 12 months," gushes the Mail on Sunday. It's all very different from the last property slump. But it ain't.

- House-price experts quoted in the press said house prices would rise EVERY YEAR during the crash of 1989- 1995. It took more than a decade for property to regain its peak. At the bottom, average prices stood 40% lower, adjusted for inflation. The economy slipped into recession. Unemployment doubled. Nearly a third of million families had their homes repossessed.

- Can you afford for your home to drop 40% or more by 2011...and then wait until 2016 to get even again? The average property in England and Wales has lost £7,000 since June last year says data from Nationwide, the UK's largest mortgage lender. Buyers now demand discounts of more than 6% off the asking price. Estate agents have a record number of unsold properties on their books. It's taking almost 75 days on average for new sellers to get an offer they feel they can accept.

- It's only going to get worse, we guess. We could be wrong, of course. But history, today's data, the crumbling economy and a contrarian itch say otherwise.

If you're been thinking about selling your home in the next 5 years, it might be worth bringing your decision forward.

- Don't have nightmares, dear reader. But do wake up to what's happening.

Share this post


Link to post
Share on other sites
Guest Charlie The Tramp
House-price experts quoted in the press said house prices would rise EVERY YEAR during the crash of 1989- 1995. It took more than a decade for property to regain its peak. At the bottom, average prices stood 40% lower, adjusted for inflation. The economy slipped into recession. Unemployment doubled. Nearly a third of million families had their homes repossessed.

How many more times have you got to be told.

It`s different this time, :D isn`t it? :unsure:

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.