Bank Of Ireland Revises House Price Forecast Down

[Realistbear]

http://www.bizplus.ie/news/2507

Bank Of Ireland Revises House Price Forecast

31/07/07: Bank of Ireland has revised downwards its forecast for house prices in Ireland

Bank economist Dan McLaughlin said: "Our 3% projection for 2007 now looks unlikely given the recent market trend, showing a fall of over 2% in the three months to May, the first since mid-2001. Consequently we now project flat house prices in 2007, with a very modest 2% gain in 2008, on the assumption that the rate cycle is seen to peak this year. We now expect 75,000 house completions in 2007."

McLaughlin said the house market is unlikely to pick up momentum again

Reeality daws, albeit ever so slowly. What the optimists fail to realise is that miracle ecnomies rely on forward momentum. Everthing that a miracle in house prices stands on is dependent on inflationary factors all working togethjer to keep prices rising much higher than the rate of inflation. E.g. VI commissions, BTL, overgeared loans etc. A stagnant or gently rising market cannot generate the cash flow to feed the machine and without cheap and easy credit it seizes up and crashes. This is why a Lereahean scenario is not possible. Booms always end in a bust. Always.

[marzipan]

with a very modest 2% gain in 2008, on the assumption that the rate cycle is seen to peak this year

translated as

"house prices will fall next year if interest rates are not lowered later this year"

I don't know where they get the idea that interest rates are going down this year, from what I heard the talk is of at least two more rate rises in the UK, surely europe can't be lowering rates at the same time.