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Realistbear

Bank Rate Should Be Cut By 1.25%- Former M P C Member

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http://www.telegraph.co.uk/money/main.jhtm...2/cnecon102.xml

Interest rates should be cut to 4 pc, says Goodhart
Edmund Conway
Last Updated: 12:09am GMT 02/03/2008
Interest rates should be cut to as low as 4 per cent as Britain heads into a probable recession, one of the Bank of England's most prominent former policymakers has said.
Charles "Chuckers" Goodhart, a former Monetary Policy Committee member, warned that both the United States and Britain were facing a "shallow recession" in the coming months as the strains in the housing market and financial system take hold.

It is inevitable that we will follow the US in all things as we have shared in the same things. That which besets the US economy will be here soon enough. As for a "shallow" recession I have no idea why Chuch thinks a 10 year borrow and spend binge will pass over us so easily. There aint no free lunch Chuck!

IMO Merv will be cutting just like Ben and will be accused of too little too late when the going gets really rough later this year.

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If house prices start tumbling, won' the BoE start 'slashing agressively' ?

100% certain, guaranteed.

We have the highest house prices in the world in relation to wages and the fuel ran out a few months ago (cheap and easy credit). Gordon's HPI plane is sputtering and wheezing and the props are slamming shut ready for the big dive and crash into the ground below. The parachutes will be opening up soon as key members of his miracle team bail out.

Sterling is tied to HPI and high comparitive IR. Both are going down. Be warned.

Edited by Realistbear

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We have the highest house prices in the world in relation to wages and the fuel ran out a few months ago (cheap and easy credit).

You forgot Australia RB. Just been back home for a couple of weeks, and what is going on there is very much like the peak of the boom here only even more insane. Houses being snapped up in hours in Brisbane for prices that are just breathtaking multiples of average household salaries AND interest rates are higher in Australia. Friends just bought a 4 bed house on a 16 perch block for 1.5 million AUD in Brisbane, which would have been 200,000 AUD 10 years ago when it was on a 32 perch block (they are allowing people to split blocks and move the house to one half of the block, then sell the remainder!) The banks are lending money like it is going out of fashion and the TV is filled with adds for 10k loans approved with just a phone call etc. etc. Cost of basics such as food is just letting rip too. Last 4 years have seen massive increases.

There is going to be some almighty pain in Oz if/when the Chinese economy implodes and no one wants our rocks any more...

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Friends just bought a 4 bed house on a 16 perch block for 1.5 million AUD in Brisbane, which would have been 200,000 AUD 10 years ago when it was on a 32 perch block (they are allowing people to split blocks and move the house to one half of the block, then sell the remainder!) seen massive increases.

There is going to be some almighty pain in Oz if/when the Chinese economy implodes and no one wants our rocks any more...

D'oh out of interest where in Brisbane did your friends buy ?

Not sure that China will crash, fingers crossed that is doesn't.

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You forgot Australia RB. Just been back home for a couple of weeks, and what is going on there is very much like the peak of the boom here only even more insane. Houses being snapped up in hours in Brisbane for prices that are just breathtaking multiples of average household salaries AND interest rates are higher in Australia. Friends just bought a 4 bed house on a 16 perch block for 1.5 million AUD in Brisbane, which would have been 200,000 AUD 10 years ago when it was on a 32 perch block (they are allowing people to split blocks and move the house to one half of the block, then sell the remainder!) The banks are lending money like it is going out of fashion and the TV is filled with adds for 10k loans approved with just a phone call etc. etc. Cost of basics such as food is just letting rip too. Last 4 years have seen massive increases.

There is going to be some almighty pain in Oz if/when the Chinese economy implodes and no one wants our rocks any more...

Ain't that the truth. Perth is crackerjack at the moment. However, I can see the reason for it; everyone is digging holes and sending minerals north like crazy. But why Brissy would be booming is beyond me.

Edited by Paddles

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100% certain, guaranteed.

We have the highest house prices in the world in relation to wages and the fuel ran out a few months ago (cheap and easy credit). Gordon's HPI plane is sputtering and wheezing and the props are slamming shut ready for the big dive and crash into the ground below. The parachutes will be opening up soon as key members of his miracle team bail out.

Sterling is tied to HPI and high comparitive IR. Both are going down. Be warned.

Hate to disagree with you RB as you have been consistently right over the last two years but I believe that although the MPC may want to cut rates they will be prevented from doing so by inflation which is only going one way (even allowing for GB's fiddling ). I think that both the US and UK will be forecd to raise rates in the second half of the year putting the final nail in the coffin of the miracle HPI MEW economy. This is not 100% correct gauranteed just my opinion.

Mind you, as you yourself have pointed out falling IRs does not necessarily lead to lower mortgage IRs , infact it seems quite the opposite as the banks are putting rates up again this week ... GB you are fecked .........ha ha ha ha ha.

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Ain't that the truth. Perth is crackerjack at the moment. However, I can see the reason for it; everyone is digging holes and sending minerals north like crazy. But why Brissy would be booming is beyond me.

Wrong call thereon Perth its well and truly in the slump phase. As for Brizzy I had my say on that previously.

The demise of the Perth boom is confirmed, with growth of just 1.1% in 2007.

The full list of capital cities and growth in the House Price Index between December 2006 and December 2007 is:-

Brisbane 21.6%

Adelaide 20.2%

Melbourne 18.1%

Canberra 14.3%

Hobart 11.1%

Darwin 11.1%

Sydney 8%

Perth 1.1%

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Wrong call thereon Perth its well and truly in the slump phase. As for Brizzy I had my say on that previously.

The demise of the Perth boom is confirmed, with growth of just 1.1% in 2007.

Shooting from the hip again; not been back there for 18 months and was going on anecdotal evidence from a friend who was there at Xmas.

I'll be retiring in W.A. in about 10 year's time so the end of the boom is top news for me.

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I firmly believe we will get a panic 1% cut in the near future - but it wil be too late.

When that happens we will be in the 'pushing on a piece of string' territory. If it happens the stockmarket and bond market will take it as bearish sign and LIBOR will probably go up as banks become even more reluctant to lend.

In effect a panic lowering of rates by central banks might cause the availability of mortgage finance to go DOWN and mortgage rates to go UP as default risk will be perceived to be rising.

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Shooting from the hip again; not been back there for 18 months and was going on anecdotal evidence from a friend who was there at Xmas.

I'll be retiring in W.A. in about 10 year's time so the end of the boom is top news for me.

No worries shell be right..

The population growth in Perth is going to keep rising dont know what that means....maybe you should buy 3 years from now.

extract follows

So which locations show the best long-term capital growth? According to data from Residex, Perth is the standout performer on capital growth over the past ten years, both for houses and for apartments.

Perth's average annual growth in median house prices has been 14.5% over the past decade. Country Western Australia is next best with 12.1%, following closely by Hobart with 12%. Next is country Tasmania, with average annual price growth of 11.6% over ten years.Perth has recently had a remarkable price boom also, but again its performance has been solid longer-term. There were several years in the latter part of the nineties when Perth values grew at least 6% and then in 2002 they jumped 12%, followed by 13% in 2003, 21% in 2004, 16% in 2005 and 35% in 2006. The Perth party is over and many analysts are predicting values to fall a little in the next couple of years, but its performance since the mid-nineties has been exceptional.

With apartments, Perth again leads the nation (12.7% average), while Canberra, Adelaide, Hobart and Melbourne all delivered growth better than 10% a year. Sydney, again, was at the bottom of the pile, averaging just 7%. Right now I wouldn't buy in Perth, because all indications are that values are going backwards and will continue to for the next couple of years. Perth has shown it's a long-term performer and will deliver again in the future – it's just that right now is not the right time to buy there.

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housing market and financial system

i love that bit, because of low rates we are in this mess, if people are moaning about 5% rates we are truly screwed, as the natural rate is 6.75 %.

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D'oh out of interest where in Brisbane did your friends buy ?

Not sure that China will crash, fingers crossed that is doesn't.

Toowong. Close to city and university, hence the massive rises seen there. The house was a classic 2 bed from early in 20th century (the sort with the porch in front, and hallway from main doorway with bedroom either side before passing into main living area) on a 32 perch block. It was shifted to one side of the block and raised. Half the block has been cut off and kept by the seller. Extra bedroom and balcony attached out the back (is up high so has view across green, which is nice), garage, laundry and another bedroom added underneath.

Given the craziness in Brisbane at present, I expected the price to be high (900,000k was in my head when I asked them what they paid), but 1.5million! I'm clearly out of touch with economic "reality" :blink:

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Toowong. Close to city and university, hence the massive rises seen there. The house was a classic 2 bed from early in 20th century (the sort with the porch in front, and hallway from main doorway with bedroom either side before passing into main living area) on a 32 perch block. It was shifted to one side of the block and raised. Half the block has been cut off and kept by the seller. Extra bedroom and balcony attached out the back (is up high so has view across green, which is nice), garage, laundry and another bedroom added underneath.

Given the craziness in Brisbane at present, I expected the price to be high (900,000k was in my head when I asked them what they paid), but 1.5million! I'm clearly out of touch with economic "reality" :blink:

Yes Toowong I know it well and it has certainly been breaking some price records recently. I think it is pretty risky at that price. Investmenet wise the year is off to very slow start in Brissy everyone a bit twitchy with rising rates and the bear stock market. The listings in Brisy have spiked and some townhouses have dropped asking price. The entry level hosues under 400K still very strong though and I dont see to much downside in those prices.

Otherwise its the golden years for Brisbane high employment and high salaries and if you beleive in the supercycle with commodoites some say its best years lie ahead.

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Yes Toowong I know it well and it has certainly been breaking some price records recently. I think it is pretty risky at that price. Investmenet wise the year is off to very slow start in Brissy everyone a bit twitchy with rising rates and the bear stock market. The listings in Brisy have spiked and some townhouses have dropped asking price. The entry level hosues under 400K still very strong though and I dont see to much downside in those prices.

Otherwise its the golden years for Brisbane high employment and high salaries and if you beleive in the supercycle with commodoites some say its best years lie ahead.

What happens in Australia will largely be determined by what happens in Asia. I suspect that if the US and Europe really start to suffer, China will soon follow as I don't think that its population will be able to take up the slack in consumption. Could be wrong, but hope not as I want to return home and buy a house sometime in the not too distant future :lol: Whatever happens though, Oz should come out of it better than the UK.

I agree with the 1.5 million price tag being over steep even given the current situation.

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Brown has staked a lot of his reputation on the "low inflation" claim. We need a "truth about inflation"-themed Panorama or similar programme coming on around summer - that should throw a spanner in the works. But will the BBC dare do such a thing? I doubt it.

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What happens in Australia will largely be determined by what happens in Asia.

Oz will go the way of the Northern hemisphere this year or next - I don't think we need concern ourselves with too much analysis here. Housing is in a crazy bubble here (more crazy than the UK imo) and will correct. That is all you need to know.

Ozzies are bullish but they are a young country and have no experience of any similar to what is about to happen.

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i love that bit, because of low rates we are in this mess, if people are moaning about 5% rates we are truly screwed, as the natural rate is 6.75 %.

The neutral rate 4.75%.

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You forgot Australia RB. Just been back home for a couple of weeks, and what is going on there is very much like the peak of the boom here only even more insane. Houses being snapped up in hours in Brisbane for prices that are just breathtaking multiples of average household salaries AND interest rates are higher in Australia. Friends just bought a 4 bed house on a 16 perch block for 1.5 million AUD in Brisbane, which would have been 200,000 AUD 10 years ago when it was on a 32 perch block (they are allowing people to split blocks and move the house to one half of the block, then sell the remainder!) The banks are lending money like it is going out of fashion and the TV is filled with adds for 10k loans approved with just a phone call etc. etc. Cost of basics such as food is just letting rip too. Last 4 years have seen massive increases.

There is going to be some almighty pain in Oz if/when the Chinese economy implodes and no one wants our rocks any more...

I couldn't agree more I have some programmes on my PVR called 'wanted down under'. I was watching it last night, it was about Brits selling & moving up there but what I noticed is that they are talking about 35,000 to 45,000 AUD salary and house prices are 350,000 to 435,000 AUD that is for 3 to 4 bed house with a swimming pool & big garden. It just shows how stupid house prices are in this country.

Those people usually have some equity to take with them but if you were a local with no savings you would need a ten times salary multiple to buy a family home! I think their house prices are more insane than us.

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Oz will go the way of the Northern hemisphere this year or next - I don't think we need concern ourselves with too much analysis here. Housing is in a crazy bubble here (more crazy than the UK imo) and will correct. That is all you need to know.

Ozzies are bullish but they are a young country and have no experience of any similar to what is about to happen.

Agreed - and as with the UK, because of the other converging factors around the timing - credit crunch, inflation, recession etc the crash will happen far quicker thant it has in the US. "Kerrrr----plunge" springs to mind.

UK crash at full tilt by mid summer 2008, Aussie crash commences at this point and full tilt summer (their winter) 2009. By then the recession in the US and Europe will have smashed China, who, post Beijing will start to allow a letting out of steam in general. They will be fine to allow a few fallow years - the Communist Party is clearly worried about growth creating political instability and their slow-down will hit commodities and therfore Australia mighty hard for a while.

Gold Rush Australia 1870s - followed by the massive crash - it is all cyclical.

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Agreed - and as with the UK, because of the other converging factors around the timing - credit crunch, inflation, recession etc the crash will happen far quicker thant it has in the US. "Kerrrr----plunge" springs to mind.

UK crash at full tilt by mid summer 2008, Aussie crash commences at this point and full tilt summer (their winter) 2009. By then the recession in the US and Europe will have smashed China, who, post Beijing will start to allow a letting out of steam in general. They will be fine to allow a few fallow years - the Communist Party is clearly worried about growth creating political instability and their slow-down will hit commodities and therfore Australia mighty hard for a while.

Gold Rush Australia 1870s - followed by the massive crash - it is all cyclical.

KoalaBear_crop_50.jpg Edited by Bardon

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  • 293 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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