Sunday, January 13, 2008

After 3 months, David had a sudden e#@[tion in January

January's shock house price stats

"Even in a weak market, house prices have not lost the capacity to surprise. Nobody expected the Halifax, Britain’s biggest mortgage lender, to announce a 1.3% rise in house prices for last month. I suspect that even within the bank, there was a certain amount of head-scratching. So, what has really been happening to house prices since the credit crisis broke in August? you would say that November marked the point of maximum gloom, when the full effects of the Northern Rock affair and the credit crunch were felt." HA HHAHAH ... "full" effect... AH HAHHA

Posted by confused76 @ 01:31 PM (918 views)
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4 thoughts on “After 3 months, David had a sudden e#@[tion in January

  • Havent i seen your face before my friend….
    “what went wrong in the British housing market is common knowledge.
    The then-chancellor of the Exchequer, Nigel Lawson, cut U.K. interest rates to the historically low level of 7.5 percent by the summer of 1988 shortly after lowering taxes. In addition, he gave four months’ notice in April 1988 that if a house was owned by two or more people, only one would be eligible for tax relief on mortgage interest payments.
    Low interest rates and taxes reduced the cost of mortgages and released money to buy houses respectively and property shot up in value. The abolition of tax relief for more than one owner put the froth on the market as young couples rushed to take advantage of the tax loophole while it remained.House prices in southeastern England rose by more than 25 per cent in both 1987 and 1988, according to the Halifax. They were among the strongest rises nationwide, largely because of the extensive use of mortgages in the southeast.
    the subsequent buildup of inflation, and the rise of interest rates as high as 15 percent to combat it, soon turned market boom into bust, and Britain is unlikely to see another such boom when house prices do rise again, experts say. Halifax’s research manager, Gary Marsh, noted that Britain’s entry into the exchange rate mechanism of the European Monetary System would “impose economic discipline” that would restrain another fiscally-induced boom.
    In Britain the first sign of economic expansion in recent times has been a rise in house prices.

    In the next couple of years, Mr. Marsh said, “There will be some constraints on supply which will push prices up a bit higher than average earnings, but without the cyclical boom-bust that we have seen.”

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  • voiceofreason says:

    I agree with his hypothesis that staggered HIP introduction has caused the swings. It should settle down now, Rightmove’s index should resume it’s trend and come in at around -0.5% on 21st January (week on Monday).
    Quote from David:
    “The other health warning is that recent movements in both the Halifax and Nationwide series might have been distorted by the staggered introduction of home information packs.”

    On the subject of inflation, flights for my family to Preveza in Greece cost £1050 in May 2006. The May 2008 price for the same route, same airline is £1840. (Both in half term, so double normal price anyway)

    That’s 30% increase year on year.
    And CPI is 2.1%. Hmmmmm.

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  • it_is_going_with_a_bang says:

    “On a raw basis, incidentally, the Halifax figures pointed to a doubling of annual house-price inflation between November and December, from 3% to more than 6%”
    Oh so now the annual inflation is based on the the best few figures that can be bunched up and any particular bit of time.

    Incidentally my ar5e. Incidentally he didnt even need to say it.

    Still trying desparately to talk ‘flat’.

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  • David Smith’s viewpoint can be summarized as “the figures may look bad, but if you strip out all the bad news and negative figures, it’s actually quite positive.”

    Without fail. Every time. He has a grotty East London flat he bought a couple of years ago. I remember when he proclaimed that MEW is the new wealth generating income source for the UK. He doesn’t even know basic economics from broken window fallacy.

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