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House Prices And Interest Rates-what Do You Think?

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We have been having an argument about the furture direction of house prices and interest rates in this post http://www.housepricecrash.co.uk/forum/ind...pic=15922&st=60 and as an analyst i see there are a massive difference of opinion. Some bullish, most bearish (as should be expected on this site).

I would like to get a consensus of opinion about where people think interest rates and house prices (as per the hometrack survey http://www.hometrack.co.uk/index.cfm?fuseaction=news.news ). Please don't put down your arguments other than a consise one liner, its just so that we can come back in July next year and see where the reality is compared to what we all feel and who was closest.

BoE interest rates are currently 4.5% after being cut by .25% in August.

The national average house price stands at £161,000, down from a peak of £167,700 in June last year and down over 2.7% in the past 12 months.

My view is by the close of June 2006 is:-

BoE Interest rates will be at 3.75%

National average house price will be £163,000 - £165,000.

Please take a minute to enter in a figure, i am interested to see exactly how bearish some people are and what the range of opinons are. If you want to have a rant about it please do it in the other forum.

Thanks for humouring me

ES :)

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Reaction based on my misunderstanding of economic fundamentals to date and gut feel about where I think the economy is headed... given this is what you've asked for.

June 2006:

IR: 4.5%

Avg House price: £158k

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IR 4.5% kept low against their better judgement by the MPC because of zero growth...

CPI 3.2% and goalposts on target inflation shifted :rolleyes:

House prices 150K and sliding, as all surveys go negative YoY and unemployment continues rising.

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IR 4.5% kept low against their better judgement by the MPC because of zero growth...

CPI 3.2% and goalposts on target inflation shifted :rolleyes:

House prices 150K and sliding, as all surveys go negative YoY and unemployment continues rising.

IRs 4.25%

House price: £154k

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Guest prudence
We have been having an argument about the furture direction of house prices and interest rates in this post http://www.housepricecrash.co.uk/forum/ind...pic=15922&st=60 and as an analyst i see there are a massive difference of opinion.  Some bullish, most bearish (as should be expected on this site).

I would like to get a consensus of opinion about where people think interest rates and house prices (as per the hometrack survey http://www.hometrack.co.uk/index.cfm?fuseaction=news.news ).  Please don't put down your arguments other than a consise one liner, its just so that we can come back in July next year and see where the reality is compared to what we all feel and who was closest.

BoE interest rates are currently 4.5% after being cut by .25% in August.

The national average house price stands at £161,000, down from a peak of £167,700 in June last year and down over 2.7% in the past 12 months.

My view is by the close of June 2006 is:-

BoE Interest rates will be at 3.75%

National average house price will be £163,000 - £165,000.

Please take a minute to enter in a figure, i am interested to see exactly how bearish some people are and what the range of opinons are.  If you want to have a rant about it please do it in the other forum.

Thanks for humouring me

ES :)

No rant. I am just interested that you do not seem to entertain the possibility of IRs and house prices falling at the same time (see Japan model). You also seem to be paying scant attention to the issue of long-term affordability, concentrating instead only on the short-term. The truth is that an affordability ceiling has been reached and even lower IRs won't be sufficient to breach that. The smart money will chase the market down

Edited by prudence

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No rant.  I am just interested that you do not seem to entertain the possibility of IRs and house prices falling at the same time (see Japan model).  You also seem to be paying scant attention to the issue of long-term affordability, concentrating instead only on the  short-term.  The truth is that an affordability ceiling has been reached and even lower IRs won't be sufficient to breach that.  The smart money will chase the market down

Thats my mistake to make if i am proved wrong. Japan has been in a world of its own for 10years despite strong global economic growth. Every country has a different mode of operation, just because Japan had its problems why does that mean that will happen here.

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5% IR Mid 2006

Average house price £130k and falling.

Rising unemployment

Invasion of Iran

Gordon Bling in No 10

Phoney Tony assasinated by White convert muslim fanatic who is in negative equity.

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Guest wrongmove

IRs @ 12%, HPs @ £98k :P

And then the alarm clock went off..........

Sigh,

IRs much the same, 4.25% - 4.75%

HPs down a bit, £150kish

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all depends on time frame,

I'd go with most answer here for 2006

~5% IR's

165k average house

long term I'd say a much lower house price average IR's 7%+

Population will start to fall in 15-20 years time just as the next cycle 'should' start push prices up, causing houses to keep falling,

peak oil should also be well in effect so I'd expect agriculture to suffer and so many shortages, without cheap oil we can't sustain our population even if it is falling

overall out look:

This was the last Housing Boom, invest in other markets.

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Autumn 2005

The BoE come under increased pressure to cut rates from the CBI who predict tough trading conditions to come for xmas.

With core inflation & energy prices rising they forestall until the quarterly inflation report.

December 2005

The report does not make pretty reading with CPI now lying 2.6-2.8 % the BoE have been proved right to hold off despite the relentless growth in unemployment and continued slowdown of consumer spending.

Unfortuanately the fed has continued its 'measured' rises and rates are now level which because of the higher costs to business in red tape and labour means Uk is struggling to attract enough foreign investment to contain its trade deficit.

BoE raises to 4.75%.

January / February 2006

Two more quarter point raises to 5.25% now make UK plc more attractive as Greenspan's successor thrusts his name into the limelight by doing something out of the ordinary and holding rates at 4.75%.

Unfortunately the dollar is coming under increased pressure as the worlds reserve currency as signs of recovery in Japan and Germany slightly reduce the savings surplus they have to invest in USA.

March 2006

In a final attempt to maintain the dollar and their empire the US invades Iran which is poised to launch its Oil Bourse and allow oil to be traded against a basket of currencies.

Needless to say pressure on IR's is upwards.

June 2006

IR's 5.25 - 5.75 % depending on the war outcome.

House prices 9 % lower at around £145, 000

Edited by assetpriceinflation

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Guest prudence
Thats my mistake to make if i am proved wrong.  Japan has been in a world of its own for 10years despite strong global economic growth.  Every country has a different mode of operation, just because Japan had its problems why does that mean that will happen here.

I used the Japan example to indicate that falling IRs can be a sign of a economic weakness and that with the housing market already being in boom territory I think it is very naive to think that lower IRs will keep the market stable or even push it up further. Weakness equals greater unemployment which in turn should suppress wage rises and boom territory means that prices have lost contact with fundamentals already so who will be able to afford to push them higher especially if mortgage providers tighten their lending criteria.

Edited by prudence

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  • 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%



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