Thursday, May 31, 2007

It is meltdown!

House price growth 'slowing', and more articles...

"The Nationwide data is consistent with our expectation that house prices will lose buoyancy gradually over the coming months as demand is increasingly pressurized by the rising affordability pressures stemming from higher interest rates, modest real disposable income growth and elevated house prices"

Posted by confused76 @ 10:25 PM (40 views)
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11 thoughts on “It is meltdown!

  • I’m not getting too excited. Back in 2005 there were much, much stronger signs of a market reversal, but look what happened. Only a serious economic set back to borrowers will result in a significant dip in prices. The government/MPC is going to do all it can to prevent such a situation. So look out for a tax amnesty for BLTers or the revival of Brown’s plan for tax free pensions investment in residential property. Apparently nu labour has a policy to promote home owership, this certainly is true but they dont seem to mind who owns them and how many you own.

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  • Gilbert,
    neue labour has already played many tricks, now they know they will lose scores of votes if they keep pushing the BTL bandwagon of money laundering and tax evasion (at least here in london). the MPC s got no choice but to sustain rates and (thus) the pound. the currency will go in reverse as soon as Blanchflower wakes up.
    the situation in 2005 was pretty dire, rentals were going down 10% here in LND, flats were on the market for 6-8 months.
    if housing was a market based on demand and supply fundamentals I would say you are right being cautious.
    I say the party is over since the tricks sustaining this bubble are over.

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  • Gilbert is wrong. The crash was postponed, not cancelled. Every bubble bursts, that is why they are called bubbles. The only way it can continue is if people are allowed to borrow EVEN MORE MONEY (8 x salary for example).

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  • Cstanhope707 says:

    0.25% Cut in IRs at the next meeting I bet!!!!!

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  • The only thing between the middle classes and economic melt down are houseprices, I believe the government will do everything in it’s power to stop a crash.

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  • Sage words from Mr Mickey.

    The absence of the “Feel Good Factor” was not understood and was one of the large reasons why the Tories lost power in 1997. A House Price Crash, whatever that is, will destroy New Liebour, especially Gordon Brown because he was Chancellor for most of the boom period – his policies set the economic conditions we are facing today.

    It is for this reason that I believe Gilbert is right. Political forces will skew the market for as long as it can be skewed.

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  • Unfortunately the longer the market is skewed, the more it (and the economy) will be screwed when it corrects itself.

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  • Guys,
    International markets will push sterling down the toilet if government lowers IRs or does not collect enough taxes.
    My forecast is… they exhausted their tricks in 2005, now they are painted in a corner.
    Remember Gordon is no more in control of things than international markets are. If George (Soros) wakes up we are in the [email protected] Delaying normal market courses will mean having house price correction later i.e. AT THE SAME TIME of next economic slow down. Now the buoyant economy can absorbe house price slow down and mitigate loss of feel good
    I think it is not wise to postpone (and my feeling is BoE and govt are on that wavelength)

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  • it would be funny if GB called a snap election in Sept only to lose it and leave Cameron holding the bomb with a 5 second fuse.

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