Thursday, August 31, 2006

House prices rise at fastest rate in a year

Nationwide: House Price Inflation Accelerated in August

U.K. house-price inflation accelerated to the fastest pace in a year in August, the Nationwide Building Society said. The average cost of a home rose 6.6 percent from a year earlier to £167,721 , the biggest increase since April 2005. Home values accelerated even after the Bank of England raised its benchmark interest rate for the first time in two years on Aug. 3. The central bank is counting on house prices to support a pickup in consumer spending this year.

Posted by little professor @ 11:42 PM (14 views)
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6 thoughts on “House prices rise at fastest rate in a year

  • how do nationwide work their index out?

    is there a chance that their ‘August’ figures relfect transactions started or completed before the rates hike?

    BFS

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  • waitingfor hpc says:

    no problem with more IR rises then?

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  • As already posted the cycle of borrowing generating growth continues. Although some economists suggest this is the new economy it only works when credit is freely avaialble. When this ends as central banks try to combat rising inflation the party willl come to an end.

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  • Usually a few weeks before the transaction is registered (completion of the deal) and exchange of contracts …contracts exchanged before Augusts interest rate rise will only be completed at the end of the month. In any case, it takes some time for interest rates to have any effect on an economy….and there is still alot of positive sentiment in the housing market which will need a few more rises or so to dent…..I still see a long slowdown or crash over several years then a drop off a precipice. Indeed I think it started in 2004, but you would need median (not average) house prices to find it. You can always sell a good house at a good price even in a crash, and average prices slowly creeping up reflect this, but getting median prices is the real measure. The (slow meltdown) of 2004-2015 may not yet become apparent for a year or two…..but by 2010 or 2012 the whole attitude will be changed by a continued difficult market. Remember…something that can’t go on for ever doesn’t. If it looks like a bubble, smells like a bubble and tastes like a bubble then the chances are that it is a bubble

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  • “something that can’t go on for ever doesn’t”

    Spoken like a true economist. I think the exact phrase was from Herb Stein, famously putting it as, “If something can’t go on forever, it won’t.”

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