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Tempus

House prices to plunge 35 per cent in no-deal Brexit

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So says Mark Carney. 

"House prices would fall by 35 per cent over three years following a chaotic no-deal Brexit, according to a briefing given by Mark Carney to the cabinet today." https://www.thetimes.co.uk/edition/news/house-prices-would-plummet-in-no-deal-brexit-says-carney-csgr9j0hj

Do we believe him on that one? 😏

 

 

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Look at the comments they all want lower prices I like this one especially 

 

Quote

 

howterriblystrange

3 MINUTES AGO

I'm a committed Remainer. But I'm also a loving father. I would wet myself with delight if house prices dropped by 35% - my son could afford a house then.

 

 

 

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I'd like to think that would happen.

However, we all know that at any sign of economic distress Carney will wet his pants and cut interest rates.  And we all know what that does to house prices.

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I think Carney's reasoning is that prices will fall in the event of a no-deal Brexit as a consequence of a disastrous economic environment (a depression, stagflation, or an interest rate hike to defend Sterling). There might be fewer people in a position to buy in such scenarios.

It would be better for the economic to avert disaster, but the housing market to get hammered, especially landlords.

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40 minutes ago, Tempus said:

So says Mark Carney. 

"House prices would fall by 35 per cent over three years following a chaotic no-deal Brexit, according to a briefing given by Mark Carney to the cabinet today." https://www.thetimes.co.uk/edition/news/house-prices-would-plummet-in-no-deal-brexit-says-carney-csgr9j0hj

Do we believe him on that one? 😏

 

 

He wants to be careful if he thinks Fear campaign 2 might work using these tactics, a couple of these young EU loving Remainers might be priced out of the property market and think "Hold on, I might have to rethink this"

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21 minutes ago, Ballyk said:

I'd like to think that would happen.

However, we all know that at any sign of economic distress Carney will wet his pants and cut interest rates.  And we all know what that does to house prices.

Cut them to what, that weapon has been well and truly used already, ammo is low this time around

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8 minutes ago, inbruges said:

He wants to be careful if he thinks Fear campaign 2 might work using these tactics, a couple of these young EU loving Remainers might be priced out of the property market and think "Hold on, I might have to rethink this"

Higher rates and lower prices would be good. But I don't think that is all that Carney expects to happen. Why is he expecting rates to rise? I haven't read the article as I don't have access, but all the negative economic consequences would affect many people who are hoping to buy. If it plays out as Carney imagines, it's not obvious whether people would be better off or worse off when prices fell. Of course, Carney's scenario might not happen in the case of a no-deal, and in any case we may have a deal.

I think more generally if prices fall because of a re-balancing of the property market (e.g.speculators face disincentives to hold property) that will benefit buyers, but if a crash is caused by a decline economic decline, there are likely to be fewer who benefit.

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Is this fake news I wonder or did he really say this?

Cannot understand why this is not bigger news if he did say it, this is BBC News cat nip

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40 minutes ago, inbruges said:

 a couple of these young EU loving Remainers might... think 

Hope springs eternal

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Remain promised us this after the Brexit vote, but quelle surprise, it never happened. It's just more Project Hysteria....

https://www.theguardian.com/politics/2016/may/20/eu-referendum-george-osborne-house-prices-brexit

... In addition to a year-long recession and 820,000 jobs lost within two years.

https://www.bbc.co.uk/news/uk-politics-eu-referendum-36355564

 

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19 minutes ago, Kosmin said:

 

I think more generally if prices fall because of a re-balancing of the property market (e.g.speculators face disincentives to hold property) that will benefit buyers, but if a crash is caused by a decline economic decline, there are likely to be fewer who benefit.

I have said that consistently what is required is a fairly rapid soft landing. If it is a crash because of a depression or a recession very few will benefit in the medium term because getting a house will be the least of their worries.

Personally don't think it will crash but over 3 years could well be down 20% - However as always good stuff in mature areas will hold its value. There are hundreds of thousands of S***hole homes like the one on the other thread that will bear the brunt of either scenario

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9 minutes ago, frederico said:

If this is his thinking, then it is really bad news, he thinks the UK needs high house prices.

I worry that if this is allowed to carry on there will be civil disobedience.

 

I worked that out ages ago and to fair he does not even hide it , and it's not just him, last 30 years of governments have been the same. 

Thou shall neglect everything else except property values and the top 10% inheritances 

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4 minutes ago, frederico said:

If this is his thinking, then it is really bad news, he thinks the UK needs high house prices.

I don't think that's necessarily implied. His reasoning could be much as I wrote in my post above.

It matters whether prices fall because people are poorer (they lose their jobs, or have less to spend on housing as other prices have increased, etc.), or price falls make people richer (as would happen if house prices crashed as landlords try to sell en masse).

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4 minutes ago, Eddie_George said:

Remain promised us this after the Brexit vote, but quelle surprise, it never happened. It's just more Project Hysteria....

https://www.theguardian.com/politics/2016/may/20/eu-referendum-george-osborne-house-prices-brexit

... In addition to a year-long recession and 820,000 jobs lost within two years.

https://www.bbc.co.uk/news/uk-politics-eu-referendum-36355564

 

 But Carney is a whole different story, if he says it and it's plastered all over the BBC, people will sit up and take note

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6 minutes ago, GregBowman said:

I have said that consistently what is required is a fairly rapid soft landing. If it is a crash because of a depression or a recession very few will benefit in the medium term because getting a house will be the least of their worries.

Personally don't think it will crash but over 3 years could well be down 20% - However as always good stuff in mature areas will hold its value. There are hundreds of thousands of S***hole homes like the one on the other thread that will bear the brunt of either scenario

Hmmm. Why would a house in London that is worth 50% more that it was in 2011 hold its value? Overpaying for something is still overpaying, good area or not.

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10 minutes ago, Eddie_George said:

Remain promised us this after the Brexit vote, but quelle surprise, it never happened. It's just more Project Hysteria....

https://www.theguardian.com/politics/2016/may/20/eu-referendum-george-osborne-house-prices-brexit

... In addition to a year-long recession and 820,000 jobs lost within two years.

https://www.bbc.co.uk/news/uk-politics-eu-referendum-36355564

 

I'm Remain. I never expected an immediate slump  (even if UK growth is rather slower than other countries). But I do expect growth to be about 0.5% below what we are used to for the long term. You might notice it over 10 years. You definitely will over 20.

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Carney is probably one of the Brexiteers' best weapons. He just keeps coming up with the goods.

Can't see this doing anything but make a lot of under thirties think long and hard about their remain votes...

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1 hour ago, Tempus said:

"House prices would fall by 35 per cent over three years following a chaotic no-deal Brexit...

Yep, to foreign buyers when the currency drops 35%, simples enit.

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Just Googled it, seems that Carney really did say prices could fall 35% and there was a threat and that interest rates could not be cut

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8 minutes ago, Eddie_George said:

Remain promised us this after the Brexit vote, but quelle surprise, it never happened. It's just more Project Hysteria....

https://www.theguardian.com/politics/2016/may/20/eu-referendum-george-osborne-house-prices-brexit

... In addition to a year-long recession and 820,000 jobs lost within two years.

https://www.bbc.co.uk/news/uk-politics-eu-referendum-36355564

The shock was immediate, but they were making predictions about the long term outcomes.

Osborne said "a Leave vote would cause an "immediate and profound" economic shock, with growth between 3% and 6% lower."

"A previous Treasury report which looked at the long-term effect of an EU exit, claimed households would be £4,300 a year worse off, and the economy 6% smaller by 2030."

 It's too soon to say they are wrong. In any case, they appear to be counterfactuals, so I'm not sure how they could be tested anyway.

 

One could have made similar predictions about the changing to landlord taxation several years ago (in fact I think some on this forum did). It's too early to judge this too.

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15 minutes ago, oatbake said:

Can't see this doing anything but make a lot of under thirties think long and hard about their remain votes...

In the -35% scenario, do interest rates rise and house prices fall, but nothing else changes?

Aren't they predicting inflation, unemployment and lower growth?

I think Carney may be unwise if he's emphasising house price falls (perhaps he isn't and that's just what The Times chose to put in the headline; perhaps because they know that their mostly middle aged readership are fixated on house prices and it's an easier metric for most people than GDP).

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1 minute ago, Kosmin said:

In the -35% scenario, do interest rates rise and house prices fall, but nothing else changes?

Aren't they predicting inflation, unemployment and lower growth?

I think Carney may be unwise if he's emphasising house price falls (perhaps he isn't and that's just what The Times chose to put in the headline; perhaps because they know that their mostly middle aged readership are fixated on house prices and it's an easier metric for most people than GDP).

Personally, I doubt many people will look into things that deeply. Most will hear that a no deal brexit could save them £50,000 (at least) on a mortgage. 

Just goes to show you how out of touch he is I guess!

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8 minutes ago, oatbake said:

Personally, I doubt many people will look into things that deeply. Most will hear that a no deal brexit could save them £50,000 (at least) on a mortgage. 

Just goes to show you how out of touch he is I guess!

As far as I can tell, Carney gave this warning to MPs and one of them leaked it. Most MPs seem to be hell-bent on keeping house prices high, so it was probably sensible to focus on them!

I suppose even if the prices fall were neutral for FTBs (i.e. the price has fallen, but lower wages, higher prices for other goods and higher interest rates mean they are no better off), FTBs would eventually become better off, as there would presumably be further falls due to landlords being forced to exit the market.

I still think a more hopeful outcome would be for the government to decide to do whatever was necessary to force out the majority of landlords and keep raising their taxes until prices had fallen to a desired level.

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  • 152 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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