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Realistbear

E S R I Think Tank Issue House Price Crash Warning Today

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http://www.breakingnews.ie/2006/03/24/story250750.html

Overheated housing market may burst, warns think tank 24/03/2006 - 07:13:34

The housing market was overheating and could suddenly burst with the impending interest rate rise, a leading think tank warned today.

A survey conducted by leading research bodies across the EU, including the Economic and Social Research Institute in Ireland, said interest rate rises would help cool down prices.

Dr Alan Barrett, ESRI economist, said: “We are not being negative but there are warning signs.

“What we are saying there is that the interest rates are certain to go up. Some people are saying 1%, we say 0.5%. Our concern is that the property market is overheating.

Interest rates are "certain" to go up. Bubble markets are hyper-interest rate sensitive in which case we can take this as another warning to dump interest rate assetts that have been bloated by inflation in the property market. 167% rise in HPI is, by any definition, dangerous inflation.

http://www.rte.ie/business/2006/0324/economy.html

European interest rates set to rise modestly

March 24, 2006 07:41
Ten of the most respected economic forecasting institutions in Europe have warned that interest rates will continue to rise modestly over the next 18 months.
The European Forecasting Network says the European Central Bank - which sets the rates - will proceed cautiously, but that they will be about
half of one per cent higher by the middle of next year and will rise further again after that.

What if Japan raises the rates? Rising further will become IR going up up and awayyyyyyyyyyyyyyyy.

Seems as if everyone and their cat are warning that IR are going up--except the UK of course where Gordon hopes to preside for a few more years while the "Miracle Economy" keeps HPI going forever.

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RB,

If Japan raises by say, .25% what do you estimate are the knock on effects for the the US,UK and ECB?

I ask because I do not fully understand the relationship between the West's and Japan's monetary policy.

Thanks

P.S When Japan does start raising what are the likely increments?

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RB,

If Japan raises by say, .25% what do you estimate are the knock on effects for the the US,UK and ECB?

I ask because I do not fully understand the relationship between the West's and Japan's monetary policy.

Thanks

P.S When Japan does start raising what are the likely increments?

I am not an expert but can see how the ripple effect will begin in japan at, say, .25% and by the time it reaches the consumer the rate could have been marked up several times to yield a rate of 1% higher. Any banking experts that can help?

Japan has flooded the world's financial markets with Trillions of dollars of surplus cash (because Japan produces and is the world's 2nd largest economy) at very low rates. They are now tighening their fiscal policy as their economy comes out of recession/stagflation. If they don't put up IR they will have inflation. The UK has been a principle benficiary of all that cheap money and that is what is propping up the highest house prices in the world (in relation to earnings). We have not produced enough to warrant such high prices and thus the "value" of the property is based on debt. And debt has to be repaid whereas the "value" of a house is just opinion as Mervyn King has warned.

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Blimey - my other halfs parents own 3-self built bungalows in County Antrim - how do I tactfully tell them to sell sell!

I suggest you keep quiet as County Antrim is in Northern Ireland, not the Republic, and hence subject to UK interest rates. That said prices in NI are just as mad as anywhere else relative to local incomes.

Edited by The_Equalizer

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Japan's rates are .1% at the moment. If they went up to .2% does that double the cost of borrowing to UK lender or is there some other intermediary who also marks up the .2% before it gets here?

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Blimey - my other halfs parents own 3-self built bungalows in County Antrim - how do I tactfully tell them to sell sell!

Hmm, Antrim is in the North, and so actually governed by BoE IR's not ECB ones. They'll presumably crash when ye over there do.

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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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