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OK so people are now pretty sure interest rates are going to rise.

SO what happens if interest rates do rise and house prices still keep rising??

does that not mean we are in a doubley worse position!!

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OK so people are now pretty sure interest rates are going to rise.

SO what happens if interest rates do rise and house prices still keep rising??

does that not mean we are in a doubley worse position!!

And this would happen because ....?

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In the short term yes - but houses get very (much more) unaffordable very quickly, so the rises cannot be sustained. (Lenders could lower lending standards even more; but they can only go so far.)

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OK so people are now pretty sure interest rates are going to rise.

SO what happens if interest rates do rise and house prices still keep rising??

does that not mean we are in a doubley worse position!!

IR rises are likely to create some downward pressure on the market, so from this point that might not be feasible. However what I do find plausible is the possibility that rates might rise and prices stay stagnant for an extended period. Or that new-build prices might fall significantly but the rest of the market might stay broadly stagnant.

That would be a real fall in prices of course, because of inflation, but it wouldn't be much help if you're waiting for serious falls.

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I agree that it is quite possible that rates will creep up whilst house prices stay stagnant i.e. no dramatic falls.

In which case you might as well shut this site down or re-name it www.PrayingForBirdFlu.co.uk

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OK so people are now pretty sure interest rates are going to rise.

SO what happens if interest rates do rise and house prices still keep rising??

does that not mean we are in a doubley worse position!!

Can we please just accept that in the majority of the UK (excluding NI, Scotland, some nothern counties) prices have not gone up since mid 2004 - nearly 2 years. There has perhaps been some seasonal spring bounce, perhaps in part due to London bonuses but the fact that the market stagnated two years ago shows that the affordability constraints have stopped the market going any higher.

Therefore, please explain how prices would go higher if interest rates did?

And who is pretty sure that interest rates are going to rise? The markets and economists are almost 100% in agreement that they will fall.

Rememeber that inflation hit 2.4% (above 2% target) last year but interest rates didn't go up. This is because the BoE looks ahead - approx 2 years into the future and the future predictions are for inflation to fall below 2%. Somehow they are keeping the large inflationnary figures out of the headline figures and managing to keep a forward prediction of inflation below 2%.

Guessing what inflation is going to be in 2 years is not an exact science, they could be completely wrong but while it suits the governments agenda you can bet that those future predictions will remain below 2%. A fiddle? You bet.

Edited by munimula

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And who is pretty sure that interest rates are going to rise? The markets and economists are almost 100% in agreement that they will fall.

Good point. But it has recently become a bit of an article of faith to some here that rises in international rates will lead (via falling £) to rises in UK IRs, and that this is a likely trigger for falls in house prices.

So you could take the question as a conditional one - what if IRs do go up but house prices either rise or continue their current stagnation? Fair question as two of the three previous crashes involved prices stagnating rather than falling.

Rising IRs clearly are one of the possible future causes of downward pressure on house prices so I see why people talk about the possibility, although it is really still quite unclear what will happen to IRs next.

Personally when I do the sums and leave the IRs level, I find that buying now is a better option than buying in a few years if prices stagnate or only drop 1% or so a year. But that really depends on your overall financial position and how much you are saving by renting rather than buying at this stage.

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OK so people are now pretty sure interest rates are going to rise.

SO what happens if interest rates do rise and house prices still keep rising??

does that not mean we are in a doubley worse position!!

Then ALL my money goes into Debt Management Shares.

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Good point. But it has recently become a bit of an article of faith to some here that rises in international rates will lead (via falling £) to rises in UK IRs, and that this is a likely trigger for falls in house prices.

I have no faith in higher IRs in the forseeable future. The BoE wants to reduce the pound to stimulate exports. It probably needs to fall in value by 10% to have the required impact, so you can expect zero IR rise.

The UnrealistBear is trying to deceive everyone on here that rates will rise - personally I think he's planning on doing a Monkey.

If the economy was to stall, and there is no sign of this either, then this would only encourage BoE to reduce rates. I would say it's 80% certain rates will stay at 4.5%, 18% likely to fall and just 2% chance of a rise. Time will tell of course, but my advice is do not back an IR rise - it remains highly unlikely.

Please, please, do your own research, don't believe some of the nutters on here (me included if you like!). There really is no trigger on the horizon, high house prices are here to stay for a while I'm afraid to say.

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Please, please, do your own research, don't believe some of the nutters on here (me included if you like!). There really is no trigger on the horizon, high house prices are here to stay for a while I'm afraid to say.

At least the "£ is crashing" threads seems to have taken a backseat to the more obviously risible "Birdflu will make house prices fall 50%" ones in the last week or so...

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Can we please just accept that in the majority of the UK (excluding NI, Scotland, some nothern counties) prices have not gone up since mid 2004 - nearly 2 years. There has perhaps been some seasonal spring bounce, perhaps in part due to London bonuses but the fact that the market stagnated two years ago shows that the affordability constraints have stopped the market going any higher.

Therefore, please explain how prices would go higher if interest rates did?

And who is pretty sure that interest rates are going to rise? The markets and economists are almost 100% in agreement that they will fall.

Rememeber that inflation hit 2.4% (above 2% target) last year but interest rates didn't go up. This is because the BoE looks ahead - approx 2 years into the future and the future predictions are for inflation to fall below 2%. Somehow they are keeping the large inflationnary figures out of the headline figures and managing to keep a forward prediction of inflation below 2%.

Guessing what inflation is going to be in 2 years is not an exact science, they could be completely wrong but while it suits the governments agenda you can bet that those future predictions will remain below 2%. A fiddle? You bet.

Err, the average price has risen, in fact if you check figures on any website (rightmove etc) the market nationwide has seen some growth and is expected to do so for the forseeable future.

Remember growth is a measure against the last year, if house prices are said to be down by 1% it just means they haven't risen as fast, doesn't mean that prices have fallen.

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Remember growth is a measure against the last year, if house prices are said to be down by 1% it just means they haven't risen as fast, doesn't mean that prices have fallen.

Would you like to clarify that statement?

As far as I was aware, 99% (i.e. 100% - 1%) of a price is less than 100% of a price, no?

I think you're confusing yourself with changes to HPI, maybe, which could indeed be negative with prices still rising? Or are you talking about CPI and not HPI?

(or are you being sarcastic?)

Edited by Henrik

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Would you like to clarify that statement?

As far as I was aware, 99% (i.e. 100% - 1%) of a price is less than 100% of a price, no?

I think you're confusing yourself with changes to HPI, maybe, which could indeed be negative with prices still rising? Or are you talking about CPI and not HPI?

(or are you being sarcastic?)

Hi There,

No not being sarcastic, say for april 2003-apr 2004 there was a rise in property prices of 5%, when it comes to apr 2005 price growth would be compared to the previous year.

So if between apr 2004 -apr 2005 property had risen 4% then the market analysis would be that prices have fallen by 1%.

Although in reality they have still risen, just at a slower rate.

Hope that makes sense!

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Hi There,

No not being sarcastic, say for april 2003-apr 2004 there was a rise in property prices of 5%, when it comes to apr 2005 price growth would be compared to the previous year.

So if between apr 2004 -apr 2005 property had risen 4% then the market analysis would be that prices have fallen by 1%.

Although in reality they have still risen, just at a slower rate.

Hope that makes sense!

So you are saying that the "1% fall" is about the "absolute change to HPI", rather than just house prices on it's own?

I don't think that this is correct, I think the 1% fall is to house prices per se, not the change.

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Err, the average price has risen, in fact if you check figures on any website (rightmove etc) the market nationwide has seen some growth and is expected to do so for the forseeable future.

Remember growth is a measure against the last year, if house prices are said to be down by 1% it just means they haven't risen as fast, doesn't mean that prices have fallen.

I think you'll find the ODPM report said average UK prices [not the rate of house price inflation, but actual prices] fell in Feb by 1.2%

As for taking notice of Rightmove's 'asking price'/kite-flying figures, you posting from Fantasy Island? [or Rightmove? :lol: ]

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So you are saying that the "1% fall" is about the "absolute change to HPI", rather than just house prices on it's own?

I don't think that this is correct, I think the 1% fall is to house prices per se, not the change.

E.g. refer to this link http://news.bbc.co.uk/1/shared/spl/hi/in_d...ces/html/ag.stm

Are you saying that house prices in Camden are higher this year, than they were a year ago?

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Well maybe i am mis-understanding, but the actual sale prices of houses has risen.

If you read the rightmove figures, they are based on actual sale prices not asking prices.

I haven't read any report that states sale prices have fallen, quite the opposite, the sale price increase slowed in february but as far as i am aware they didn't drop?

I must admit i haven't read the ODPM results, i shall take a look.

Cheers

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Well maybe i am mis-understanding, but the actual sale prices of houses has risen.

If you read the rightmove figures, they are based on actual sale prices not asking prices.

Doh! The whole point about Rightmove is that it's based on asking price not sale price.

Some of the indices that take real selling prices into account have shown falls over tha last year, notably Hometrack, which was in negative YOY territory for much of last year.

It's probably really just a sign of stagnation or slow growth, and variable results in different areas. The ODPM ones showed falls last month but aren't seasonally adjusted. If you scan round old threads you'll find way too much information on how all the indices work.

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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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