nimmmm Posted May 17, 2006 Share Posted May 17, 2006 We have seen chaos on the markets for the past few days (or weeks if you look further afield). But, most importantly, what will be the effect on house prices? Historically, probably little in the short term. But have people geared up to buy shares? Will the decimation of ISA's & pensions cause a knock on lack of confidence in the consumer? Does the avergae Joe even care about the stock market? Do you subscribe to the theory that with all the bad news about, the Bank of England cannot raise rates now? Or does history tell us that worsening economic conditions usually go hand in hand with interest rate rises? Your views please..... Quote Link to comment Share on other sites More sharing options...
BuyingBear Posted May 17, 2006 Share Posted May 17, 2006 Look at the underlying causes (inflation) and the consequences (higher rates), of course these are impacting the equities and bond markets first as they're the most responsive. Does higher rates and tightening liquid also affect the outlook for the housing market? Err... ToTRTRight it does. Quote Link to comment Share on other sites More sharing options...
nimmmm Posted May 17, 2006 Author Share Posted May 17, 2006 Look at the underlying causes (inflation) and the consequences (higher rates), of course these are impacting the equities and bond markets first as they're the most responsive. Does higher rates and tightening liquid also affect the outlook for the housing market? Err... ToTRTRight it does. I cannot agree more. Look at what the Fed has said and judge for yourself whether they are really going to stop raising interest rates. No chance. They cannot. Inflationary pressures are too high. Once more, I cannot believe (irrespective of CPI figures) that the UK is immune. I also think that the B of E keep half an eye on the RPI figure when they consider putting up interest rates. I do not think that it will necessarily happen next meeting, but I cannot believe that it will be too long beofre they raise the rates. Once interest rates go up, the housing market will surely flatten once more. Quote Link to comment Share on other sites More sharing options...
Realty Cheque Posted May 17, 2006 Share Posted May 17, 2006 (edited) F A yet, give it 6 months As Gordons economic miracle has been built on consumer's putting their hand's into others pockets and their properties, how much more can be purged? Little I think. Edited May 17, 2006 by Realty Cheque Quote Link to comment Share on other sites More sharing options...
vinny Posted May 18, 2006 Share Posted May 18, 2006 We have seen chaos on the markets for the past few days (or weeks if you look further afield). But, most importantly, what will be the effect on house prices? Historically, probably little in the short term. But have people geared up to buy shares? Will the decimation of ISA's & pensions cause a knock on lack of confidence in the consumer? Does the avergae Joe even care about the stock market? Do you subscribe to the theory that with all the bad news about, the Bank of England cannot raise rates now? Or does history tell us that worsening economic conditions usually go hand in hand with interest rate rises? Your views please..... Stock market action, at any time, is a measure of social mood. The lack of confidence CAUSED the drop - the reverse of your supposition - the drop will cause loss of confidence. Declines in real estate tend to follow stock market corrections BTW. The fear of inflation may well have influenced the "mood". Interestingly (to some?) the higher inflation goes - the higher the stockmarket should eventually trend!!!! Corrections have generally marked the beginning of credit tightening and/or periods in which inflation was observed to drop. Quote Link to comment Share on other sites More sharing options...
Golden Shower Posted May 18, 2006 Share Posted May 18, 2006 If we move into a bear market, I expect many companies to start cutting back on their spending (like they normally do in bear markets). IMO the eventual net result will be cuts in IRs in order to stimulate growth again. The reaction may well be similar to the post dot com thing. Quote Link to comment Share on other sites More sharing options...
Pablo-silver or lead? Posted May 18, 2006 Share Posted May 18, 2006 (edited) Infation in US UP = US IR UP. The UK is not immune our IR should have continued to rise steadily (and now be at 5%). Instead they were dropped last year .25% to stand at 4.5%. The longer the BOE MPC delay the tightening the longer and higher rates will have to increase. Meanwile no ammount of tough talk from the Gov of BOE is preventing lemmings getting sucked in. I make a prediction IR will not go above 9% in the next 3 years but they will probably get to between 6 and 7% in the next 2 to 3 years. It will be much worse than last time. The've only just started to shake the tree! Anyone who's got in BTL in the last 4 years and is heavily geared . Any Ftb who bought in the last 4 years and's borrowed a shed full. If you've buit equity sold, turned the leverage property into paid off debt and cash, great, 90% have'nt and you're ****'d. The more paper equtity you've built up due to artifficially low IR the more the paper value of you're property will drop. Negative equity will be the headlines soon (Express, Mail etc). I said when I joined the course is set its out of TB, GB and the BOE MPC control. The N/E and N/W with their prices stretched from market fundimental will lead the way. See you at the bottom. We've all had plenty of warning. Pablo Silver or Lead? Edited May 18, 2006 by Pablo-silver or lead? Quote Link to comment Share on other sites More sharing options...
nimmmm Posted May 18, 2006 Author Share Posted May 18, 2006 (edited) The FTSE is in freefall once more (-1%). I think that the stock market will have to lose another 7-12% before this correction can be considered really significant. I completely agree that the level of the stock market reflects sentiment. But will this cause (or relfect in) a slowdown in HPI or the levels of completions for May/ June? I rather doubt it unless we carry on dropping for some time yet and the message finally gets through..... Edited May 18, 2006 by nimmmm Quote Link to comment Share on other sites More sharing options...
simon99 Posted May 18, 2006 Share Posted May 18, 2006 the worry is that the housing boom has been linked to the fact investors have lost faith in shares and so piled into property. Quote Link to comment Share on other sites More sharing options...
Flash Posted May 18, 2006 Share Posted May 18, 2006 the worry is that the housing boom has been linked to the fact investors have lost faith in shares and so piled into property. Spot on. I've lost count of the people that have told me that 'property is safer than shares'. The latest events will just reinforce that belief.....for those that cannot join the dots anyway. Quote Link to comment Share on other sites More sharing options...
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