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Is An Absence Of Hpc Really Due To Low Interest Rates?

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I keep hearing that one of the main reasons for the absence of an HPC in the UK is that interest rates continue at an all time low. But this is the same in America, and they have the mother and father of crashes.

So whats really holding up the UK prices, and I dont want to hear the discredited supply and demand chestnut.

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I keep hearing that one of the main reasons for the absence of an HPC in the UK is that interest rates continue at an all time low. But this is the same in America, and they have the mother and father of crashes.

So whats really holding up the UK prices, and I dont want to hear the discredited supply and demand chestnut.

The yanks can largely just walk off from their bad investment.

The brits don't have the option, better to hold on and hope.

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So whats really holding up the UK prices, and I dont want to hear the discredited supply and demand chestnut.

A quarter of a million homes claiming SMI having their mortgage paid makes quite a difference.

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A quarter of a million homes claiming SMI having their mortgage paid makes quite a difference.

Two year limit though. Is it a like no return within 2 hours parking limit or once you have used up two years you can't claim for it again say a year later? Please tell me it doesn't get reset.

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A quarter of a million homes claiming SMI having their mortgage paid makes quite a difference.

Read yesterday that it is expected in the budget the Osborne will expand the availability of SMI although no details were given

http://www.thisismoney.co.uk/Budget-2011

MORTGAGES

Osborne will extend the Support for Mortgage Interest scheme, saving from eviction 100,000 families struggling to make home loan payments.

Edited by Bob Loblaw

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Sentiment - the penny hasn't dropped fully yet. More falls = more media coverage of falls = more fear = bigger falls.

Look at 07/08 - prices peaked late summer 07 but the proper falls didn't begin until early summer 08.

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There is a crash. Just not quite the crash most of us are hoping for.

Some regions, led by Northern Ireland, are down significantly.

Terraced houses and flats are down.

And inflation is nibbling away at real house prices too, currently eroding them at about 5% a year.

But to see substantial falls in the nominal prices of decent family homes in the south, we'll need a massive increase in repossessions. These are still only at approximately half the levels of the 1989/95 crash. Without repossessions and distress sellers the "crash" will become a "correction" stretched over many years and with inflation doing most of the work.

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yeah i think others have covered the main points.

whatever the difference in falls from peak is might be roughly equally explained by the following:

(1) more housebuilding/houses in the US [the importance of this factor is, as we know, risibly overplayed by certain VIs but it is, y'know, not nothing, it's relevant certaintly];

(2) ability to 'hand back the keys' in the US when in NE;

(3) far more UK regulations & subsidy to stop reposessions; and

(4) probably a myriad of other, smaller, factors.

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Sentiment - the penny hasn't dropped fully yet. More falls = more media coverage of falls = more fear = bigger falls.

Look at 07/08 - prices peaked late summer 07 but the proper falls didn't begin until early summer 08.

houses are overpriced, they should be lower ... however a lot of people dont have to sell at the moment - until we get a lot of forced sales then prices wont fall quickly - i think a lot of people will just stay put....however if(when!) unemployment rises, interest rates rise and govt/banks pull the rug on supporting the house of cards then it will all come tumbling down...but then those three things have to occur in order for larger falls (some to a greater or lesser extent..)

as a bit of anecdotal evidence property is down ~25% in the area I live in (East Herts) - not including inflation over the last 2-3 years either, which would make the figure higher... so if we have property even staying still and inflation increasing 5% or so pa then could be looking at ~40% in a few years time - quite a large fall but not having the dramatic affect I'd hope for .. however this is on extremely lower volumes of property being sold over last few years compared to the pre 2007/8 'peak'.

in terms of valuing property - very hard - for me personally i've stayed in same house for 14 years .. initially mortgage as a % of take home salary was about 20%, now its about 5% - would be ~15% if bought house today with no deposit - so slightly cheaper for me now (higher salary, lower interest rates)..appreciate this is a specific case and not a general case, but most people i work with/live near are in a similar position - ie overpaid mortgage a lot, mortgage is lower cost than council tax or travel now!!

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The £ has been devalued instead of housing.

It's very regional - there are still jobs in the SE so no real changes here yet.

More people in the UK are on tracker type mortgages so at the moment are benefiting from a 'get of jail free' card. Most US mortgages are fixed for the entire term so the Fed dropping rates doesn't have as much direct effect?

SMI keeping those on the borderline away from repossession -> so no 'price discovery' is happening.

Public sector cuts have only just started to bite in the UK. In the US the various states have been cutting left right and centre.

London-centric media myopically thinks if London is ok, the country is ok.

Take your pick.

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If you look at flats in your area they will have crashed. Builders were churning flats out but now have switched to family homes. Now all sorts of neighbourhood and construction problems. Some lenders will not touch them.

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Read yesterday that it is expected in the budget the Osborne will expand the availability of SMI although no details were given

http://www.thisismoney.co.uk/Budget-2011

MORTGAGES

Osborne will extend the Support for Mortgage Interest scheme, saving from eviction 100,000 families struggling to make home loan payments.

Which also means that a 100,000 families who could have afforded to buy a home will have to pay more tax to help keep those who cannot afford a home in a home which they now will be unable to buy because of the tax taken from them.

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I keep hearing that one of the main reasons for the absence of an HPC in the UK is that interest rates continue at an all time low. But this is the same in America, and they have the mother and father of crashes.

So whats really holding up the UK prices, and I dont want to hear the discredited supply and demand chestnut.

Supply and Demand rules havent been discredited. I know that many governments have tried to overcome the iron laws of supply and demand, and some have succeeded, but only for a while. Mugabe had a good crack at it with price controls, and that caused the currency to hyperinflate.

Currently this government is doing the same as the previous government, taxing seven bales out of the working man and using the tax, plus an awful lot of borrowed money as well, to keep demand strong and the bubble inflated. There is a cost though of this policy, as seen in a reduction of the incentive to work, and a growing deficit, after all nothing comes for free. Keep this up for long enough, and the housing market ceases to be one where people effectively trade their saved and future income gained through labour, but future and saved income from a tax on the labour of others. That isnt a market that is going to be sustainable.

Supply and Demand has yet to be beaten, anywhere.

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houses are overpriced, they should be lower ... however a lot of people dont have to sell at the moment - until we get a lot of forced sales then prices wont fall quickly - i think a lot of people will just stay put....however if(when!) unemployment rises, interest rates rise and govt/banks pull the rug on supporting the house of cards then it will all come tumbling down...but then those three things have to occur in order for larger falls (some to a greater or lesser extent..)

as a bit of anecdotal evidence property is down ~25% in the area I live in (East Herts) - not including inflation over the last 2-3 years either, which would make the figure higher... so if we have property even staying still and inflation increasing 5% or so pa then could be looking at ~40% in a few years time - quite a large fall but not having the dramatic affect I'd hope for .. however this is on extremely lower volumes of property being sold over last few years compared to the pre 2007/8 'peak'.

in terms of valuing property - very hard - for me personally i've stayed in same house for 14 years .. initially mortgage as a % of take home salary was about 20%, now its about 5% - would be ~15% if bought house today with no deposit - so slightly cheaper for me now (higher salary, lower interest rates)..appreciate this is a specific case and not a general case, but most people i work with/live near are in a similar position - ie overpaid mortgage a lot, mortgage is lower cost than council tax or travel now!!

See your logic but there's a few facts need considering:

1. Number of repos in the UK was actually lower in 2008 (when prices were falling) than 2009 (when they were rising).

2. As far as I understand there have been very few repos in Ireland where prices have fallen a lot.

3. Stagflation has had the same effect as IR rises but affecting all home owners, not just those on variable rates.

4. SMI has been halved now.

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Another 100,000? So half a million tax supported homeloaners then. Happy days.

How did I miss this, what acomplete load of crap, more support for people who didnt do their numbers :angry: :angry:

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Two year limit though. Is it a like no return within 2 hours parking limit or once you have used up two years you can't claim for it again say a year later? Please tell me it doesn't get reset.

I thought that the majority of SMI claimants were pensioners, who are politically untouchable. Their SMI continues until they die, or more correctly, when someone notifies the authorities of their death. Speaking of which, there are more and more incentives building up everywhere for people not to notify the authorities about the deaths of pensioners. It isnt going to be long before dead people are going to be occupying houses for a long time until the fraud is discovered. Probably a lot of it is going on now in the UK. As for UK claimants abroad, I understand that particular fraud is already out of hand.

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I thought that the majority of SMI claimants were pensioners, who are politically untouchable. Their SMI continues until they die, or more correctly, when someone notifies the authorities of their death. Speaking of which, there are more and more incentives building up everywhere for people not to notify the authorities about the deaths of pensioners. It isnt going to be long before dead people are going to be occupying houses for a long time until the fraud is discovered. Probably a lot of it is going on now in the UK. As for UK claimants abroad, I understand that particular fraud is already out of hand.

On the plus side Electrolux and Whirlpool shares will go through the roof

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So whats really holding up the UK prices, and I dont want to hear the discredited supply and demand chestnut.

We have a better breed of twig

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A quarter of a million homes claiming SMI having their mortgage paid makes quite a difference.

Go to other places that suffered a massive housing market bubble, and you generally find a surplus of housing that came about in response to surging house prices. In Britain it is not like that. Here, you will still pay a lot more to rent a specific property than the monthly mortgage payments, regardless of what the interest rates are (providing they dont turn into anything silly).

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Another 100,000? So half a million tax supported homeloaners then. Happy days.

The thing is the people who bought with over extended borrowed money get their interest paid and get to keep a home they can't afford to live in....the ones who would like to buy are priced out and are unable to secure the finance.......so if SMI was withdrawn, where would people/families live? there is little or no council, local authority housing to put them, putting them into private rented could well cost more overall... :huh:

Some people are having to consider living in static caravan park homes....is this the way of the future? :unsure:

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The thing is the people who bought with over extended borrowed money get their interest paid and get to keep a home they can't afford to live in....the ones who would like to buy are priced out and are unable to secure the finance.......so if SMI was withdrawn, where would people/families live? there is little or no council, local authority housing to put them, putting them into private rented could well cost more overall... :huh:

Some people are having to consider living in static caravan park homes....is this the way of the future? :unsure:

SMI withdrawn, people repossessed, house prices crash, thjose priced out buy and those repossessed take the place renting from those who have bought. Bit of a mess in the short term, but there is no painless way out of this.

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  • 311 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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