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Alfie Moon

Ft Article: Firm House Prices Belie Rocky Foundations

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Anyone got access to this(you need FT subscription)?:

Firm house prices belie rocky foundations

By Jamie Chisholm, Economics Reporter

Published: April 15 2006 03:00 | Last updated: April 15 2006 03:00

Looks like it could be an interesting read.

Edited to give the link:

https://registration.ft.com/registration/ba...20abe49a01.html

Edited by Alfie Moon

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Anyone got access to this(you need FT subscription)?:

Firm house prices belie rocky foundations

By Jamie Chisholm, Economics Reporter

Published: April 15 2006 03:00 | Last updated: April 15 2006 03:00

Looks like it could be an interesting read.

Edited to give the link:

https://registration.ft.com/registration/ba...20abe49a01.html

Not really worth the effort, as the FT change their minds every week. Just have a scan through the subject headers on their last few Housing Section items. Still, they know the same as we do: current house prices are unsustainable. The end is here.

Nomadd

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Here's some extremely interesting stuff from it, not the article in full...

........

Mr Jervis's comment encapsulates what some commentators perceive to be a battle of wits being played out between the consumer and the Bank of England - one which may determine the progress of the market in the coming months.

While not wishing to dent consumer sentiment Mervyn King, the Bank's governor, has shown he is prepared to intervene to restrain an overly vigorous market.

At the end of 2004, Mr King predicted "house prices may fall modestly for a period", a comment blamed by many estate agents for further curtailing activity that was already slowing following four interest rate increases that year.

In turn, consumers recognise that the Bank may intervene to apply the brakes and damp their effusiveness accordingly so as not to provoke the monetary authorities. If true, the outcome of this game would be subdued and stable price growth.

But James Carrick at ABN Amro disputes this benign scenario, arguing that the Bank does not command the influence needed to maintain equilibrium because it "cried wolf" when it last increased the cost of borrowing.

"As soon as the market got tough the external members [on the monetary policy committee] bottled out and argued for a reduction in interest rates," says Mr Carrick.

"This sent the message to the consumer that at the first sign of trouble the Bank will bail them out."

............

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"As soon as the market got tough the external members [on the monetary policy committee] bottled out and argued for a reduction in interest rates," says Mr Carrick.

"This sent the message to the consumer that at the first sign of trouble the Bank will bail them out."

"external members" = Brown's sock puppets.

It has also sent the message that the lady will always be able to bail them out. I'm not sure this will always be the case.

I give it six years until UK is on it's knees begging to join the euro.

btp

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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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