Monday, Sep 04, 2006

Nationwide talk it up again

Home.co.uk News: House price growth is fastest since early 2005

Fionnuala Earley said: "While we expect base rates to reach 5% by the end of the year - above the peak of the last rising cycle - we do not expect the market to slow as sharply as before."

"There are three main reasons for this. First, current macroeconomic conditions suggest fewer increases in base rates; secondly, fixed mortgage rates have moved more gradually, and thirdly, demand, particularly from the investment sector, is likely to remain fairly supportive."
Wrong, wrong and wrong again?

Posted by tinecu @ 05:04 PM (462 views)
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9 Comments

1. the bald man said...

Another VI article. What is the relevance that there will be fewer base rate increases ( rates are higher than before). Why are inflationary pressures less? Why is property such a good investment at this current time when yields are so low?

Monday, September 4, 2006 08:03PM Report Comment
 

2. Ticktock said...

Here is what Fionnuala Earley said after the last rate cut -

While there is uncertainty about the economy at present we still expect the next move in interest rates will be down and that this is likely early in 2006. But while the market responded quite swiftly to the rate cut in August, we do not expect a cut to cause annual house price inflation to accelerate back up to levels seen in early 2005.

http://en.thinkexist.com/quotes/fionnuala_earley/

Wrong.

IR'S will go much higher than 5% and everybody knows it. (except 'expert' VI Fionnula of course!)

Monday, September 4, 2006 08:18PM Report Comment
 

3. Ticktock said...

Here is what Fionnuala Earley said after the last rate cut -

While there is uncertainty about the economy at present we still expect the next move in interest rates will be down and that this is likely early in 2006. But while the market responded quite swiftly to the rate cut in August, we do not expect a cut to cause annual house price inflation to accelerate back up to levels seen in early 2005.

http://en.thinkexist.com/quotes/fionnuala_earley/

Wrong.

IR'S will go much higher than 5% and everybody knows it. (except 'expert' VI Fionnula of course!)

Monday, September 4, 2006 08:18PM Report Comment
 

4. P. Doff said...

I hate to be bullish, but in this part of North Wales, the market seems undented. The last interest rate increase has made no difference whatsoever and we have seen the busiest month on surveys (including sales) for 12 months or more. Buyers are still snapping up in the BTL frenzy, (many from wealthier parts of the UK) presumably to cash in on anticipated property price increases here. Houses that have been on the market for months are suddenly selling, often close to the asking price (a relative was recently gazumped on a property that had been on the market for 10 months). This 'dead cat bounce', that some seem to believe it is, will soon reach the stratosphere.

Yes, I know that yields don't stack up and, logic dictates that prices cannot continue to rise, but all this is still being ignored by amateur would-be landlords and speculators. Quite frankly, I don't think that a further 1/4% rise will make much difference to market confidence. This is sad because the higher the market goes, the less chance there is of a soft landing. Some readers may think this would be good news, but when it hits the fan we are all likely to get covered in the brown stuff, one way or another.

Monday, September 4, 2006 08:53PM Report Comment
 

5. the bald man said...

P. doff. I do not think the hard landing is that far away. Just look at the US amrket. I, like you are concerned about teh effect on the global economy and banking system.

Monday, September 4, 2006 10:24PM Report Comment
 

6. Whiteknight said...

Any individual making predictions or forward looking statements concerning the housing market should be subject to no less stringent requirements on disclosure to those who give advice on other financial instruments and asset classes.

I am also growing increasingly impatient for the time when the following statements will need to appear at the bottom of national newspaper articles:

"Long 1 family home. Long 1 buy-to-let in trust. Long one single bed flat above a chip shop in Clapham with fingers and legs crossed. etc."

Obviously these people are merely communicating what they truly and honestly believe to be the case and as such they will also be happy for others to view their position and then judge their comments as they choose.

Tuesday, September 5, 2006 12:41AM Report Comment
 

7. P. O. O. R said...

P.Doff said that property is still selling in North Wales - I live in the South East, and there is certainly a slow down in the market here with noticably more 'For Sale'signs than 'Sold' Prices in the South East are now at a rediculous level and even those on good salaries cannot afford to buy - I am renting which at this time is a better option, costs less, and I am making money from my equity. If I wanted to invest in BTL then I would have to look further away, and North Wales / North England would be where I would have to go to be able to afford the prices.

Hopefully interest rates will go up again this week, and again next month and the month after. It is going to take 3 or 4 hikes to make things difficult.

It will also be interesting to see the statistics for the South East over the next few months - If prices start to fall, then the wave effect will possibly start to travel out across the country?

Tuesday, September 5, 2006 09:17AM Report Comment
 

8. European-bear said...

All building societies and banks are obliged to warn that if repayments are not made the house could be repossesed. They should also be obliged (like most other investments) "the value of the house you are buying can fall as well as rise. If the value falls, you may loose some or all of the deposit you have used to help purchase the house. If the value of the house falls below the value of the outstanding mortgage, we may not allow you to sell your house, but we will repossess if you do not pay the mortgage....etc etc....

Tuesday, September 5, 2006 11:33AM Report Comment
 

9. talking rot said...

Like P.Doff, I hate tobe bullish too. However, back in 2005 Ms Fionnuala Earley stated a crash was unlikely and that prices would stagnate a while before rising slowly again. Unless I've missed something, her prediction has turned out to be accurate. Prices stagnated in 2005 and are now rising slowly again. I recall many learned commentators stating in 2004 that the year 2005 would "be interesting"; in 2005 there were many comments that 2006 would "be interesting."

Mervyn King hasn't made monetary policy boring - he has made house price inflation boring. I get very bored with reports of further rises. The the ingredients for a crash are in place but why, oh why, hasn't it happened?

Tuesday, September 5, 2006 02:00PM Report Comment
 

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