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Ash4781

Gazing Into The Property Crystal Ball Means Looking As Far Away As China

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http://money.guardian.co.uk/news_/story/0,,2089653,00.html

Interesting read.

How inverted can the yield curve get ?

Excellent article:

"Members of the MPC were faced with a tough choice. They could cut bank rate because the higher exchange rate and cheaper imports meant there was a risk of undershooting the government's 2% inflation target. That, however, risked adding to the cheap money sloshing about the economy, which, given the history of the UK, threatened a housing bubble and higher inflation further down the road.

If, on the other hand, they decided the best thing to do was to hold bank rate steady or even raise it to cope with a higher growth rate in the money supply, the risk was that more hot money would have been attracted by high interest rates, leading to a fresh appreciation in the exchange rate and an even more unbalanced economy."

Rock/hard place.

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This caught my eye:

That means that the supply of available houses in the capital has expanded by 14.5% over the past two months. That compares with a 1.3% increase over the same period last year. "The increase comes at a time when there are signs of wavering demand," said Mr Donnell, "and it raises the question as to just how saleable these properties will prove to be."

Mmmm, nice - 11 times as many. Think that will increase prices? :lol::lol:

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Good article.

In practice, the existence of one global capital market and a common commitment to price stability has led to yields on government bonds converging, so that long-term interest rates in Britain, the US and Germany are now identical.

That only proves that all these fiat currencies (children of the USD anyway) will go the same way in the end. Got some gold?

Would I be comfortable with interest rates a percentage point higher than they are today? Will I still have a job in a year's time? If the answer to either question is no, proceed with extreme caution.

Let's make that 8% (hist. average) and over 10%, rather than one percentage point more.

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In a fairly balanced article, I particularly liked the final para.

For the prospective home-buyer the message is clear. Property is expensive and the cost of servicing a mortgage is rising. Ask yourself two questions. Would I be comfortable with interest rates a percentage point higher than they are today? Will I still have a job in a year's time? If the answer to either question is no, proceed with extreme caution.

Good ol' Larry.

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