Saturday, Aug 05, 2006

Now Even the Daily Mail has caught on ...

Daily Mail: Thisismoney: Rate rise threat to house market

The rotten rag, the Daily Mail, has finally caught on that a small increase in Interest Rates will have a larger impact then before. "Possession orders jumped 56% to 21,997 during the first quarter of this year." However, the quote I like best is "Homeowners have been forced to take on nearly 1 trillion of mortgage debt due to rising house prices, according to the Bank of England." Sorry - who forced these people to take on massive debts?

Posted by talking rot @ 09:53 AM (537 views)
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7 Comments

1. Cstanhope said...

Many many congrats to HPC yet more insight. The fact that the buyer was asking for more discount on top of the 3% below is also interesting. Couple of questions for anyone out there what does VI stand for sorry I'm new to the UK property market and what is going to be the impact of the new opportunities to purchase much cheaper properties in Poland, is this a new sort of Offshore outsourcing for the Property Market.

Saturday, August 5, 2006 10:19AM Report Comment
 

2. uncle chris said...

Cstan,

VI = vested interest, i.e. someone who will gain financially from the housing market remaining strong, and will do everything they can to maintain the illusion.

Saturday, August 5, 2006 11:09AM Report Comment
 

3. sirgoogle said...

Unlike the last HPC (which took about 2 years to fall after the inital triggers), I believe that this one will be very fast once it starts - and actually behave as a crash.

The reason for the difference is availability of information. Just like the last Stock Market Crash, the availability of information on sites like Rightmove etc and reports by ODPM, Land Registry (reported by UpMyStreet), will show people clearly when house prices start to fall. Once this sinks in there will be few (except for those who have to move - or insane bulls) who will buy until they are convinced that the market is bottoming. In addition vendors will see much more quickly the prices that others are actually selling for and (if they are really serious about sellng) will lower their prices accordingly - probably much more quickly than in the past as they have sources other than the estate agents to listen to/watch.

Saturday, August 5, 2006 02:45PM Report Comment
 

4. harold said...

While I agree with sirgoogle that the internet may make a difference, as things stand I don't see a crash happening just yet, not of the proportions required to return property to its long-term average. For a crash to happen more rises in IR are required and, sadly but more importantly, people will have to loose their jobs. It's an interesting fact that since 1995, i.e., since the last crash in the early 90's, the state provision for mortgage payment for people who loose their jobs has been drastically cut. Most of us on this site have little sympathy for people who borrow/spend too much and get into trouble. However, I will have sympathy for people who will loose their homes following the loss of their job. Unfortunately the chances of house prices simply returning to sensible levels without inflicting major social deprivation due to unemployment are remote. And don't forget, while lower house prices may benefit the thrifty, renters and FTBs, social deprivation with its attendant crime problems benefits no one.

No more boom and bust anyone? How many times have I heard that mantra chanted

Saturday, August 5, 2006 03:19PM Report Comment
 

5. sirgoogle said...

Harold. I did not say the HPC would start yet.

I do suspect that this is the beginning of the end of the boom however. Triggering the end of the last boom was the mad rush between April and Aug(?) 1988 to buy houses before MIRAS was cut. Following that there was a glut of property - and a recession with substantial IR rises. The HPC came some time later (1991).

I believe (please note that this is my gut feeling - not fact) that the recent upsurge in the market (caused by the lowering of IR in Aug last year (triggering more more into BTL) and the London City Bonuses) has had a similar effect to the MIRAS rush in 1988. The rise in IR this week may be similar to the MIRAS deadline.

The next things that the HPC require are more IR rises and the beginnings of a recession. Only with these will the "glut" of houses occur.

Now we wait and see.

It is a shame that so many people will get hurt in this

Saturday, August 5, 2006 03:48PM Report Comment
 

6. The Bald Man said...

I think the economy is much worse than the spin tells us. The economic miracle has been built on a mountain of debt. Now interest rates are rising and credit starts to tighten, house prices will come under pressure. My local estate agent told me there are a lot of properties coming onto the market from buy to losers trying to get out.

Sunday, August 6, 2006 11:26AM Report Comment
 

7. inbreda said...

Insolvencies were heading for early 90s levels BEFORE the rate rise. the popn are laden with so much debt they are falling over anyway without the need for rate rises to trip them up.

There is already evidence of the banks titghtening the lending criteria, and this will have the same effect as rising interest rates.

SA are now added to the list of economies thatare raising rates, so we may well have the double whammy of further rate raises too.

Either way, the next 6 months are going to be interesting.

Sunday, August 6, 2006 02:35PM Report Comment
 

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