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House Prices 'to Keep On Rising'

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http://www.bbc.co.uk/news/business-23231520

9 July 2013 Last updated at 03:29

House prices to keep on rising, say Rics members

Surveyors are expecting house prices to keep rising as the UK housing market starts to record some momentum following a sluggish few years.

Members of the Royal Institution of Chartered Surveyors (Rics) expect prices to go up by 1.5% over the next 12 months, its latest survey found.

This comes after a prediction of static prices at the start of the year.

Over the next five years, they predict a 4% a year average increase in property values.

At the beginning of 2013, they said there would be a 2.5% rise.

'Long wait'

The Rics survey follows data from lenders and house builders suggesting that activity and house prices have risen in the last few months.

Last week, the Halifax said that house prices were rising at their fastest annual rate for nearly three years. The lender said prices in the three months to the end of June were 3.7% higher than in the same quarter last year.

This rise in prices had mainly been fuelled by increasing numbers of prospective buyers returning to the market, Rics said.

"After what has seemed like a very long wait we are finally starting to see what looks like the beginning of a recovery in the housing market," said Peter Bolton King, global residential director for Rics.

"It is important to remember that activity levels still remain depressed by historic standards but the various initiatives designed to encourage the provision of finance into the market do appear to be paying dividends."

These schemes include Funding for Lending, under which banks and building societies are able to borrow money cheaply from the Bank of England, as long as they lend it out to individuals and businesses.

Although prices are rising on average, according to these surveys, the increase has been driven by London and the South East of England. Other areas have seen significant falls in property values in recent years, leaving some ground to make up.

Sneaked this headline on to the front page, is this journalism or VI ramping?

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I've seen a chart (sorry, can't remember where) which showed this RICS figure against actual YoY house prices six months later. The correlation was scarily striking, especially given that this is a survey of sentiment. I hate to admit it, but I think these predictions could well turn out to be true, based on some very low volumes, the London effect and a heck of a lot of govt support in the run up to the election.

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I've seen a chart (sorry, can't remember where) which showed this RICS figure against actual YoY house prices six months later. The correlation was scarily striking, especially given that this is a survey of sentiment. I hate to admit it, but I think these predictions could well turn out to be true, based on some very low volumes, the London effect and a heck of a lot of govt support in the run up to the election.

Why? It is obvious that the government will do everything in their power to prop-up house prices until the election, but the election is less than two years away. Who, in their right mind, would put a load of money into an illiquid asset that is being propped-up for short term political gain.

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http://www.bbc.co.uk/news/business-23231520

9 July 2013 Last updated at 03:29

House prices to keep on rising, say Rics members

Surveyors are expecting house prices to keep rising as the UK housing market starts to record some momentum following a sluggish few years.

Members of the Royal Institution of Chartered Surveyors (Rics) expect prices to go up by 1.5% over the next 12 months, its latest survey found.

This comes after a prediction of static prices at the start of the year.

Over the next five years, they predict a 4% a year average increase in property values.

At the beginning of 2013, they said there would be a 2.5% rise.

'Long wait'

The Rics survey follows data from lenders and house builders suggesting that activity and house prices have risen in the last few months.

Last week, the Halifax said that house prices were rising at their fastest annual rate for nearly three years. The lender said prices in the three months to the end of June were 3.7% higher than in the same quarter last year.

This rise in prices had mainly been fuelled by increasing numbers of prospective buyers returning to the market transactions from higher earners against a backdrop of falling sales at lower prices, Rics said.

"After what has seemed like a very long wait we are finally starting to see what looks like the beginning of a recovery in the housing market," said Peter Bolton King, global residential director for Rics.

"It is important to remember that activity levels still remain depressed by historic standards but the various initiatives designed to encourage the provision of finance into the market do appear to be paying dividends."

These schemes include Funding for Lending, under which banks and building societies are able to borrow money cheaply from the Bank of England, as long as they lend it out to individuals and businesses.

Although prices are rising on average, according to these surveys, the increase has been driven by London and the South East of England. Other areas have seen significant falls in property values in recent years, leaving some ground to make up.

Sneaked this headline on to the front page, is this journalism or VI ramping?

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I've seen a chart (sorry, can't remember where) which showed this RICS figure against actual YoY house prices six months later. The correlation was scarily striking, especially given that this is a survey of sentiment. I hate to admit it, but I think these predictions could well turn out to be true, based on some very low volumes, the London effect and a heck of a lot of govt support in the run up to the election.

Beware. RICS makes lots of predictions. What you saw may have been very selective, omitting the predictions that were later proved wide of the mark.

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Beware. RICS makes lots of predictions. What you saw may have been very selective, omitting the predictions that were later proved wide of the mark.

There's usually a marked difference between their headline points and the comments section, although I don't think we can access that any longer.

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Why? It is obvious that the government will do everything in their power to prop-up house prices until the election, but the election is less than two years away. Who, in their right mind, would put a load of money into an illiquid asset that is being propped-up for short term political gain.

They're targeting the young. They think the young won't notice. When the young are consistantly fed the BS about 'bricks and mortar' by the Government/MSM/their own parents they usually don't stop to think 'is this potentially financial suicide? '.

I was talking to my 83 year old grandfather last night who said he'd be terrified to be young now. He couldn't understand why anyone would take on a 25+ year mortgage now with no job security and insane costs. A very wise man indeed.

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Absolutely ... They will keep on rising... Till they can't..

If they can't go down, they go up.

If they can't go up, they go down.

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Why? It is obvious that the government will do everything in their power to prop-up house prices until the election, but the election is less than two years away. Who, in their right mind, would put a load of money into an illiquid asset that is being propped-up for short term political gain.

Couple of things there.

1. We had the same point made prior to the LAST election.

2. The British are ******ing thick.

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I was talking to my 83 year old grandfather last night who said he'd be terrified to be young now. He couldn't understand why anyone would take on a 25+ year mortgage now with no job security and insane costs. A very wise man indeed.

Indeed. I am sure that most people in their 60s feel the same way, but would never admit it. I think they would be scared off of buying their 70s starter homes if they cost 10x their income rather than 2x and even more so if their next step was 15x rather than 3x with no sign of the massive wage inflation that they benefitted from on the horizon.

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Most home owners in their 60s could never afford to buy the property they have now if they were starting out today. They see nothing wrong in this, it's just that property is now more expensive than it used to be and they expect prices to continue to rise and make them wealthy. Who will they sell to? ... well if they are a shop worker they will sell to a doctor, if they are a doctor they will sell to a company director, if they are a company director they will sell to a banker and bankers will just sell to each other.

And now the economy is fixed, prices can start soaring again ... strange how the market needs all these props ... still it's all OK really as prices continue to rise.

Good point.

I was around at a house the other day which must be 'worth' £1.5m. It is a nice commuter belt location, so this is just a nice 5 bed detached house, not a mansion or anything like that.

The owners have lived there for years. They are now retired, but when working they lived on one good salary probably the equivalent to earning about £100k today. Obviously that is a fairly senior role and they just equate that type of house with someone who has earned that type of salary for quite a few years. They certainly don't consider it an exceptional house by any means.

Because I know that they hold this view, I have never really ventured onto the subject, but I very much doubt they realise that if they were 30 years younger they'd be struggling to buy a delapidated 3 bed semi in a road much inferior to theirs and would have absolutely zero chance of buying anything further up the ladder unless they tripled their earnings and still took a big mortage.

It is just totally different value system now as you say. Those houses are for the super rich now, not just the higher earning middle classes, and even the small terraced houses and flats that would have been shunned by low earners in that generation are unaffordable by those earning less than £40k+

Edited by worried1

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I was talking to my 83 year old grandfather last night who said he'd be terrified to be young now. He couldn't understand why anyone would take on a 25+ year mortgage now with no job security and insane costs. A very wise man indeed.

Pre-boomers are old enough to remember a time when maxing out on mortgage debt to buy as much residential property as you possibly could wasn't a good financial strategy. 99% of people younger than them have completely forgotten or were never aware that such a time existed. It will be a painful lesson to re-learn.

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Why? It is obvious that the government will do everything in their power to prop-up house prices until the election, but the election is less than two years away. Who, in their right mind, would put a load of money into an illiquid asset that is being propped-up for short term political gain.

We're never going to be more than five years away from an election. Surely, no government would willingly let house price fall if they could avoid it?

Believe me, I'd quite like them to let go and for a little modest correction to take place (or a honking whopper of a correction, if not), but I do wonder if it's going to be slow grind all the way, with a nominal drifting sideways at best allowing inflation to nibble away at house price (and, unfortunately, savings too).

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Still Carney will have had time to fill up the printer with ink and change the settings to 'turbo-print' ready for next month or probably September if he wants to present a more considered approach.

I just don't think the markets are going to give him that option.

Edited by Secure Tenant

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I do wonder if it's going to be slow grind all the way, with a nominal drifting sideways at best allowing inflation to nibble away at house price (and, unfortunately, savings too).

Inflation is currently making it harder to buy a house, not easier, because nominal wages are almost flat while the cost of living is rising. The greater the proportion of income each household needs to spend on food/fuel/transport/education etc, the less it can afford to spend on housing.

If the government's plan really is to use monetary policy to close the gap between incomes and house prices, the plan is failing at present. This could change if nominal wages start to increase significantly, but there is zero sign of that so far.

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But mortgages rates are crashing through the floor so even with inflation and no wage rises mortgages are more 'affordable' and represent a smaller % of take home pay. This is why people say it is cheaper to buy than to rent, and they are correct .... for now

It is odd that so few of them decide to buy though, against this VI-described "no-brainer" situation. It's almost as if... they're missing out something important.

Edited by cheeznbreed

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In the long term in real terms they'll fall

But they'll rise a little for the election

Both conservatives and labour have their problems, but absent a psychopath, neither of them wants to destroy the economy for a shot at being prime minister, so long run we will deleverage, which will either be quite painful or very painful

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Why? It is obvious that the government will do everything in their power to prop-up house prices until the election, but the election is less than two years away. Who, in their right mind, would put a load of money into an illiquid asset that is being propped-up for short term political gain.

I did! :lol::blink:

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House prices can only rise if borrowing costs fall or wages rise above inflation.

Any rise at present can only have been caused by government interest free loans which end after 5 years.

Real wages are falling.

The only other possible cause of price rises could be cash rich foreign buyers in localised areas.

So basically the best they can possibly hope for is a small blip from help to buy. Unless wages go through the roof on a national scale which doesn't seem very likely to me.

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  • 246 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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