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Realistbear

Telegraph: Houses Are Overvalued, Bankruptcies Are Problematic

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http://www.telegraph.co.uk/money/main.jhtm.../ixcitytop.html

TELEGRAPH.CO.UK

King sounds warning over economy

(Filed: 10/05/2006)

House prices are overvalued and consumer bankruptcies risk becoming a large social problem
, the Bank of England Governor Mervyn King has warned.
Speaking at the launch of the Bank's May Inflation Report Mr King said: "The level of house prices still seems remarkably high relative to those measures that put it into context.
"In the last month or two you've seen some
slowing in mortgage approvals
."
Recent gains in house prices had been more than the Monetary Policy Committee, which sets interest rates, had expected but Mr King warned this may not carry on as house prices are still "remarkably" high compared with average earnings.
Mr King warned a potentially
large social problem
of consumer bankruptcies may be materialising.
The country's current account deficit at around 4pc of GDP would need to be addressed, according to Mr King, but he was unsure over what time-frame this would need to be tackled.
He said:
"We keep running current account deficits which means that we're spending as a country more than we're producing.
And there is a limit in the long run to that."

Bottom line, we have much the same problem as our former colony and their house prices are already correcting as IR rise. Mervyn sees what we all see, a Miracle Economy based on HPI and borrowing cannot last without social probelms and deficits emerging.

Guardian's analysis:

http://business.guardian.co.uk/story/0,,1771798,00.html

Bank forecasts short-term rise in inflation

Mark Tran

Wednesday May 10, 2006

Inflation is likely to rise in the short term, the Bank of England said today,
setting the stage for an interest rate increase.
In its latest quarterly inflation report, the Bank said that inflation (currently at 1.8%) was expected to rise from the impact of higher energy prices and import costs, before falling back to a point close to its 2% target.
"The latest increases in energy prices are likely to push inflation back above the target in the short term," the report said.

And Japan has not begun, officially, yet! :)

http://www.breakingnews.ie/2006/05/10/story258120.html

BREAKING NEWS

Bank of England warn of interest rate rise

10/05/2006 - 14:42:19

Homeowners in the UK were today braced for an interest rate rise by the end of the year after the Bank of England revealed it would miss a key inflation target if it failed to act within a year.
The Bank said inflation would be above 2% in two years if borrowing costs remained at their current level of 4.5%.
But its quarterly inflation report reined in expectations that the Bank would soon ditch its wait-and-see approach, especially after gas and electricity prices surged since February and import costs grew at their strongest level for five years.
Although the City believes a
rate hike in August alongside the next report is possible
, most economists are pencilling in November as the most likely date for the next move on rates.
Edited by Realistbear

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Looks like Mr King is trying to talk down the market again. Been a while since he did that.

Can't seem to find his comments on the BoE website though, annoying.

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It would be more interesting to know what he is saying behind closed doors.

Are not high house prices a good thing for it means the Nation is "wealthier" and did not the Chancellor say this recently?

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It would be more interesting to know what he is saying behind closed doors.

Are not high house prices a good thing for it means the Nation is "wealthier" and did not the Chancellor say this recently?

Sounds like something Miracle Economy Gordon would say. After all the value of houses is high whereas debt can be borrowed away! Wealth based on borrowing and opinion is illusory.

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Sounds like something Miracle Economy Gordon would say. After all the value of houses is high whereas debt can be borrowed away! Wealth based on borrowing and opinion is illusory.

Just my point, I am intrigued to know if the two men ever debate these issues, only them, no minions.

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You can blame all of this on that idiot George - he stated a little house price inflation never does any harm (or words to that effect) whilst stoking one of the biggest asset bubbles in history. Of course, he left Mervyn to be the bad guy, people will always remember how the good times rolled while Eddie was in charge - bl**dy pompous clown. Knew nothing about finance.

Mervyn at least is one of the credible players, but he has a real mess to sort for sure.

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Bankruptcies!!! at this daily rate no problem. ;)

list_bankruptcy.pdf

repeated at every county court in the country!

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Guest Charlie The Tramp

repeated at every county court in the country!

Yes, Q2 stats for personal bankruptcy and company winding up orders will surpass Q1 and will be shocking.

We are getting very close now IMO where the Enterprise Act will have to be amended to stop this total p**s taking.

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I was wondering, is the prospect of a coming rate rise likely to create a mini-boom in the preceeding months, or will the banks raise their rates before the event? Could hinting at a rate-rise backfire and actually fuel demand?

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Guest Baffled_by_it_all

Aren't fixed rates already going up marginally. You can't get the drop on the lenders...

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Yipee!!

Mr Kings comments will stall the housing market and cause HPI to drop off again like he did in mid 2004.

Except this time the economy will not allow for a rebound

At least he is fighting our quarter, and who better than the Governor himself, he carrys more weight than any chancelor or MP when it comes to setting things right with the populas

Three cheers for king!!!!

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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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