Gordon's Control Of The 'turning Point'

[LargelyIgnorant]

Hi,

Long time lurker, first poster. Have spent so much time reading other people's rambles, finally decided to throw my penny's worth in. Much of this is based on other posts and media – Apologies for repeating other people’s stuff w/out credits.

A few things have prompted me to finally post. A BTL friend of mine is now selling his last two properties - The costs of the new landlord registration were the final straw for him. A high flying accountant friend who works for one of the big five is off to India in the near future to train the 20 keen young Indians who are going to be replacing him and his fellow workers. I personally think the UK is in deep trouble, and the outlook is pretty bleak. The only saving grace is that exporting legal practice is on the near horizon (IMO Lawyers as almost as low as Foxtons EAs)

An article in today's Observer has also prompted me to post: "We're at a turning point", said, Fionnula Earley, Nationwide's chief economist. "I think we are at the stage where affordability constraints are biting - and there are other things on the horizon that will stop people splashing out: higher utility bills, rising employment" http://observer.guardian.co.uk/business/st...1739418,00.html

There appears to be a convergence of views (almost a consensus?) on the short term future of the housing market, and it's not good. When a VI's views (admittedly an extract) sound remarkably similar to those of the bears on this forum, something may be happening. Some of this site's long-term bulls are now talking about a price decline in the near future.

IMHO, Fionnula's statement is a warning to Gordon Brown - The mention of his tiny adjustment to the stamp duty threshold is a warning that his desire for power will only be satisfied if the housing market keeps chugging along.

The self interest of New Labour is astonishing - Tony Blair laying the groundwork for his future presidency of the EU has already cost the UK taxpayer £2 Billion in lost rebates. Gordon has no option but to attempt to prop up the overpriced housing market for a couple of years, until he manages to get his sticky mitts on the property of his dreams... No one should doubt that Gordon would be prepared to screw the UK in the long term to achieve his long held dream of moving next door. He has already allowed the population to become unbelievably indebted in order to finance our consumption economy, and thus his profligate spending.

When the Economist says 'The worldwide rise in house prices is the biggest bubble in history', IMO you’ve got to be a bit nuts (or a serious VI) to definitively say that prices will not fall by a substantial amount.

Here is my question (and the reason for this post): Will Gordon be able to postpone the crash? If so, using what tools, and for how long?

I personally think that the turning point in the housing market happened last year, when the public realised that house prices don't always go up. The second turning point will be when people realise that house prices can actually go down. Once the last spasms of the boom have ended in the remote areas of the UK, the average HPI calculations will no longer hide the losses that have already happened in areas such as Milton Keynes. How is our glorious chancellor going to postpone the inevitable? He has got to stop Joe Public realising that the huge amount of debt that he has taken on is never going to be erased by either HPI or inflation, that their BTL ‘pension pot’ is in fact an eternal millstone.

Was the introduction of REITS as far as Gordon is prepared to go? Given his limited ability to change interest rates, what magic tricks can we expect to see Gordon deploying over the next few years, in a bid to save his own hide?

[Jason]

Here is my question (and the reason for this post): Will Gordon be able to postpone the crash? If so, using what tools, and for how long?

Welcome.

A lot of people have been saying to me, 'they' won't let it happen. I assume 'they' means the Government (brown) and the Bank of England. But I think they have already achieved a postponement by the spin from SIPPs (thanks Gordon) and a cut in interest rates from the BoE.

Things will slow down again in the summer, and start to fall like they did last year... but will 'they' be able to pull off the same trick again? I very much doubt it.

[BandWagon]

Welcome to the site.

I think the market turned around the end of 2004,prices have stagnated or fallen slightly, but not much yet.

Gordon Brown now has the practically impossible task of managing a major slowdown in the UK economy.

He'll be a genius if he pulls it off.

I have my doubts.

Edited March 26, 2006 by BandWagon

[laurejon]

Year end property will in most regions be up 5% for 2006, and around 4% in the first three quarters of 2007 but last quarter of 2007 will see the bait hooked.

Rates will rise in earnest, no more pussyfooting around the debts will have to be repaid and I'm afraid its gonna be back to "Get on yer bikes" for many people who are not only going to be out of work, but laden with massive debts at huge huge interest rates.

4.5% fixed for 20yrs..................If hindsight was a wonderfull thing act now, cos foresight brings results, hindsight can only bring regrets.

[music man]

How are people to pay (even with this wonderful 4.5%) without the jobs that you expect people to lose.

Forsight is wonderful. Debt is real.

[laurejon]

Vote for the Labour Party and ensure you have insured your mortgage.

Also pay off all personal debt such as credit cards, bank borrowings using equity withdrawel at the cheap 4.5% fixed rate for 20yrs.

If you are unemployed then after nine months of insurance payouts Gordon will not only be paying the interest on your house, but the plasma TV, the Caravan, and the Reeboks, and the two weeks in Ibiza

These deals are open to existing customers only!!!.

I would not buy a house today, but if you bought a few years ago and need somewhere comfortable to live then make sure you protect it. In the recession, rents will go up, always have done, and always will.

[Without_a_Paddle]

Year end property will in most regions be up 5% for 2006, and around 4% in the first three quarters of 2007 but last quarter of 2007 will see the bait hooked.

Rates will rise in earnest, no more pussyfooting around the debts will have to be repaid and I'm afraid its gonna be back to "Get on yer bikes" for many people who are not only going to be out of work, but laden with massive debts at huge huge interest rates.

4.5% fixed for 20yrs..................If hindsight was a wonderfull thing act now, cos foresight brings results, hindsight can only bring regrets.

I don't see there being huge, huge interest rates this side of the next election.

Surely any govt would rather choose to increase the money supply just ahead of an election? (to create extra money sloshing around between voters)

I thought this was normal practice? Screw the long term picture to secure another term in govt.

I think prices will pretty much stagnate in 2006 and the only changes will be seasonal. Same for 2007, 2008 with maybe small nominal falls.

Your scenario may come true AFTER the election. Maybe they will call it early?

In the recession, rents will go up, always have done, and always will.

I wonder how many bears have realised this? It certainly happened in 1990. Rent inflation hit double figures.

[Guest Riser]

.........Here is my question (and the reason for this post): Will Gordon be able to postpone the crash? If so, using what tools, and for how long?

I personally think that the turning point in the housing market happened last year, when the public realised that house prices don't always go up. The second turning point will be when people realise that house prices can actually go down. Once the last spasms of the boom have ended in the remote areas of the UK, the average HPI calculations will no longer hide the losses that have already happened in areas such as Milton Keynes. How is our glorious chancellor going to postpone the inevitable? He has got to stop Joe Public realising that the huge amount of debt that he has taken on is never going to be erased by either HPI or inflation, that their BTL ‘pension pot’ is in fact an eternal millstone.

Was the introduction of REITS as far as Gordon is prepared to go? Given his limited ability to change interest rates, what magic tricks can we expect to see Gordon deploying over the next few years, in a bid to save his own hide?

Gordon Brown is a Bullsh1ting spin merchant, just consider his big announcement to raise money by selling the Tote. Do readers here really believe he didn't know that the EU were likely to block his plans?

UK govt's plan to sell Tote may be blocked by EU - report

LONDON (AFX) - The UK government's plan to sell state-controlled betting group Tote may be blocked by the European Commission, the Independent on Sunday newspaper reported, citing sources.

The EU, aware of the government's plan since last year, was planning a full investigation of the sale due to concerns it may break strict, state-aid rules, the article said.

It is expected to hand down a decision in the next five to six weeks and, privately, the government has already conceded defeat.

"There are definitely signs that it's running foul of the state-aid regulations," a source was quoted by the newspaper as saying.............

Edited March 26, 2006 by Riser

[New Bear]

Year end property will in most regions be up 5% for 2006, and around 4% in the first three quarters of 2007 but last quarter of 2007 will see the bait hooked.

Rates will rise in earnest, no more pussyfooting around the debts will have to be repaid and I'm afraid its gonna be back to "Get on yer bikes" for many people who are not only going to be out of work, but laden with massive debts at huge huge interest rates.

4.5% fixed for 20yrs..................If hindsight was a wonderfull thing act now, cos foresight brings results, hindsight can only bring regrets.

Genuine question: if the prospect is for a recession in 2007/8, why should I be tempted by a long (for me it would be a 10 year) fix at 4.5? If I can wait to buy in 2008 prices will have gone down and, in a deflationary recession, interest should be very low, especially for financially responsible citizens like me. Why not wait?

[Unexpected]

I don't see there being huge, huge interest rates this side of the next election.

Surely any govt would rather choose to increase the money supply just ahead of an election? (to create extra money sloshing around between voters)

I thought this was normal practice? Screw the long term picture to secure another term in govt.

I think prices will pretty much stagnate in 2006 and the only changes will be seasonal. Same for 2007, 2008 with maybe small nominal falls.

Your scenario may come true AFTER the election. Maybe they will call it early?

I wonder how many bears have realised this? It certainly happened in 1990. Rent inflation hit double figures.

Nice to see a bull argueing it out with an ex-bull.