H S B C Call A Housing Correction For 2007

[Realistbear]

http://www.housefund.co.uk/2006/08/house-p...at-in-2007.html

House prices likely to retreat in 2007

A Reuters poll has suggested that property will cool off later this year and into next, thanks to with rising interest rates and overvalued property.

The poll of 29 economists and property analysts reports that house price growth will slow to 3.5 percent in 2007. That's down from forecasts of 6% - 9% for 2006.

7 of 22 questioned told Reutersthat the market was overvalued.

It appears that with interest rates going up, house prices will go down. Gavin Redknap, UK economist at Standard Chartered told Reuters: "The key factor is mortgage rates, and the fact they have risen substantially will start to have an effect on the housing market in a pretty short period of time."

But he added that there is still some momentum in the market.

John Butler, economist at HSBC said: "Interest rates have risen, are likely to rise a bit further, and most of that, if not all of that has been passed on by banks at a time when unemployment is rising and real income growth is being squeezed."

"That is a

bad mix

for the housing market and .... there is a bigger chance now that we get a correction in 2007 than there was the last time interest rates were rising."

Things should get very interesting as Winter begins to set in. *

______________________

*

[OnlyMe]

It's the debt that is the problem, its the bank that are the creators of the problem, they have stuffed the economy good and propper this time with the help from their mates at the BOE.

Another 200 jobs go at Daewoo in NI, how many of the new jobs created 20 or so years ago are left?

Edited August 29, 2006 by OnlyMe

[sign_of_the_times]

"The key factor is mortgage rates, and the fact they have risen substantially will start to have an effect on the housing market in a pretty short period of time."

substantially ?

[Realistbear]

substantially ?

Perhaps they are referring to the low intro rates dissappearing? Or, a .30% hike in percentage terms is substantial with so many on the edge with huge mortgages? For the biggest bank to be worried it seems that Gordon's HPI-MEW party may well be over and now its time to pay the Tallyman.

[dnd]

How quickly things turn...

Interesting use of the phrase "REAL income"

[Scooter]

http://www.housefund.co.uk/2006/08/house-p...at-in-2007.html

House prices likely to retreat in 2007

A Reuters poll has suggested that property will cool off later this year and into next, thanks to with rising interest rates and overvalued property.

The poll of 29 economists and property analysts reports that house price growth will slow to 3.5 percent in 2007. That's down from forecasts of 6% - 9% for 2006.

7 of 22 questioned told Reutersthat the market was overvalued.

It appears that with interest rates going up, house prices will go down. Gavin Redknap, UK economist at Standard Chartered told Reuters: "The key factor is mortgage rates, and the fact they have risen substantially will start to have an effect on the housing market in a pretty short period of time."

But he added that there is still some momentum in the market.

John Butler, economist at HSBC said: "Interest rates have risen, are likely to rise a bit further, and most of that, if not all of that has been passed on by banks at a time when unemployment is rising and real income growth is being squeezed."

"That is a

bad mix

for the housing market and .... there is a bigger chance now that we get a correction in 2007 than there was the last time interest rates were rising."

Things should get very interesting as Winter begins to set in. *

______________________

*

Only 7 out of 22 said property was overvalued? 70% think its about right then? Barking...

[neitherbullnorbear]

Only 7 out of 22 said property was overvalued? 70% think its about right then? Barking...

I've a feeling that Housefund (who the buck are they?) have got this wrong. I'm pretty sure the reuters story I saw said 80% think housing is overvalued, although only a minority think that there will be a "crash", with most City economists still predicting a "GSD".

this is all of the top of my head - this story is a bit old now - so may be talking b*******.

[Realistbear]

I've a feeling that Housefund (who the buck are they?) have got this wrong. I'm pretty sure the reuters story I saw said 80% think housing is overvalued, although only a minority think that there will be a "crash", with most City economists still predicting a "GSD".

this is all of the top of my head - this story is a bit old now - so may be talking b*******.

80% is right:

http://today.reuters.co.uk/news/articleinv...OUSING-POLL.xml

'Overvalued' housing market to cool next year

Thu Aug 24, 2006 12:25 PM BST139

By Ross Finley

LONDON (Reuters) - A revival in the housing market is set to cool off later this year and into next, with rising interest rates and overvalued property preventing further big price rises, a Reuters poll showed on Thursday.

A poll this week of 29 economists and property analysts showed median forecasts for just six percent house price inflation by year-end compared with nearly 9 percent by some measures at present.

They predicted that would slow to 3.5 percent in 2007.

Nearly 80 percent of the analysts who answered the question -- 17 of 22 -- said the market was overvalued,

up from two thirds three months ago.

[SHERWICK]

80% is right:

http://today.reuters.co.uk/news/articleinv...OUSING-POLL.xml

'Overvalued' housing market to cool next year

Thu Aug 24, 2006 12:25 PM BST139

By Ross Finley

LONDON (Reuters) - A revival in the housing market is set to cool off later this year and into next, with rising interest rates and overvalued property preventing further big price rises, a Reuters poll showed on Thursday.

A poll this week of 29 economists and property analysts showed median forecasts for just six percent house price inflation by year-end compared with nearly 9 percent by some measures at present.

They predicted that would slow to 3.5 percent in 2007.

Nearly 80 percent of the analysts who answered the question -- 17 of 22 -- said the market was overvalued,

up from two thirds three months ago.

Ah, the case of the missing '1'. However did that slip by I wonder...

[Come On Down]

Excellant news, I do wonder though who these so called economists and property analysts are.

I guess we're all property analysts to some degree!

I wonder if its the same experts who are continuously surprised by markey survey reports!

All that said, we've definitely got a correction on the way (not 3.5% gain). Further interest rate hikes will give the last buyers a wake up call and, slump. Bring it on.

Edited August 29, 2006 by Come On Down

[Lionel Richtea]

http://www.housefund.co.uk/2006/08/house-p...at-in-2007.html

House prices likely to retreat in 2007

A Reuters poll has suggested that property will cool off later this year and into next, thanks to with rising interest rates and overvalued property.

Shame that the housing market is neither a democracy nor animate as the author of this piece seems to think.

"Oi - property! Our poll suggests that you should cool down later this year. Get on with it."

[Golden Shower]

Hmmmm, HSBC have called it before. Maybe they have it right this time?

[Lionel Richtea]

Hmmmm, HSBC have called it before. Maybe they have it right this time?

Just like my broken watch - correct twice a day.

[Realistbear]

Hmmmm, HSBC have called it before. Maybe they have it right this time?

John Butler, economist at HSBC said: "Interest rates have risen, are likely to rise a bit further, and most of that, if not all of that has been passed on by banks at a time when unemployment is rising and real income growth is being squeezed."

"That is a bad mix for the housing market and .... there is a bigger chance now that we get a correction in 2007 than there was the last time interest rates were rising."

At least John has the data to back up his forecast this time around--unemployment growth, IR rises and a BIG squeeze on incomes from catastrophic rises in gas, electricity and council taxes etc. Add a sharp recession to the mix (led by OZ and US collapses) and we should see some real action soon. All bad things come to an end, eventually.

[Lionel Richtea]

Add a sharp recession to the mix (led by OZ and US collapses) and we should see some real action soon. All bad things come to an end, eventually.

Are you suggesting that Australia is in recession or heading for a recession? How does that square Dr Bubb's resource boom circle?

[Realistbear]

Are you suggesting that Australia is in recession or heading for a recession? How does that square Dr Bubb's resource boom circle?

Headed in that direction. Like the US--the house market is only a few months into the crash and the fallout will probably take a few more months to take the country into a full blown recession with job losses, SM correction, and lower GDP.

http://www.smh.com.au/news/Business/Small-...6617282525.html

Small business expectations 'plummet'

August 29, 2006 - 1:24AM

Small businesses are growing more concerned about the future of the Australian economy by the day as rising fuel prices, softer business demand and higher interest rates drag down sentiment, a survey shows.

[Lionel Richtea]

Headed in that direction. Like the US--the house market is only a few months into the crash and the fallout will probably take a few more months to take the country into a full blown recession with job losses, SM correction, and lower GDP.

http://www.smh.com.au/news/Business/Small-...6617282525.html

Small business expectations 'plummet'

August 29, 2006 - 1:24AM

Small businesses are growing more concerned about the future of the Australian economy by the day as rising fuel prices, softer business demand and higher interest rates drag down sentiment, a survey shows.

Not sure I agree with that analysis: one dead swallow doesn't make a winter. Macfarlane knows his eggs and wouldn't have sanctioned those interest rate hikes if he thought that were the case. However, it's good to see that some realty has begun to bite in the west of Sydney: the prices in Liverpool etc were ridiculous.

[Unexpected]

Just like my broken watch - correct twice a day.

If theyre correct twice a day for the next few years then thats good enough for me.

[ParticleMan]

[ ... ] A poll this week of 29 economists and property analysts [ ... ] Nearly 80 percent of the analysts who answered the question -- 17 of 22 -- [ ... ]

Now, I'm an iggorant sod and I don't got no formal stats background, but surely a survey size of 29 with 7 no response has a margin of error you could stampede a whole herd of elephants through - and outcomes from a pool this small probably shouldn't be expressed in 100th parts regardless?

[Willy Weasel]

Now, I'm an iggorant sod and I don't got no formal stats background, but surely a survey size of 29 with 7 no response has a margin of error you could stampede a whole herd of elephants through - and outcomes from a pool this small probably shouldn't be expressed in 100th parts regardless?

Lies, damned lies and statistics

[oracle]

Are you suggesting that Australia is in recession or heading for a recession? How does that square Dr Bubb's resource boom circle?

same as it does with ours.We have plenty of resource companies listed on the FTSE so while they prosper the consumer end gets pummeled.

net result....no (technical) recession.FTSE keeps plodding on over the long term.sterling crisis in a year or two makes for better earnings from FTSE so overseas investors pile in to the index.

[Lionel Richtea]

same as it does with ours.We have plenty of resource companies listed on the FTSE so while they prosper the consumer end gets pummeled.

net result....no (technical) recession.FTSE keeps plodding on over the long term.sterling crisis in a year or two makes for better earnings from FTSE so overseas investors pile in to the index.

Hmm... the location of listing isn't so much the issue it's where the money flows that's the thing. I seem to recall Australi entering into a 20 year gas supply agreement with China for AUD30 billion a year or so ago. All that money flows straight into the country, even if Methanex or whoever is listed elsewhere.

[Realistbear]

A broken watch is right twice a day whereas an innacurate watch is never right anytime of the day.

[neitherbullnorbear]

Lies, damned lies and statistics

Actully I think the Reuters poll is a very useful tool. This is not 30 or so complete herberts. This is the leading housing economists in the county, with a selection of different views and, importantly, economic models. To dismiss them offhand is a sign of complete ignorance, IMO, unless you are familiar with each one's particular model, which is somewhat unlikely.

The proportion expecting a crash in the near term (which usually means next year I think?) has been around the 11% to 14% mark in recent years? Does anyone know what it is now? The 80% saying property is overvalued would, I suspect (although have no evidence to hand) be higher than it was, say, a year ago or so.

[Londoner]

The poll of 29 economists and property analysts reports that house price growth will slow to 3.5 percent in 2007. That's down from forecasts of 6% - 9% for 2006.

They are predicting GROWTH of 3.5 percent so I wouldn't get too excited just yet!