Friday, October 3, 2008

What Now For UK House Prices??

House backs $700bn bail-out plan

The US House of Representatives has passed a $700bn (£380bn) government plan to rescue the US financial sector. The 263-171 vote was the second in a week, following its shock rejection of an earlier version on Monday.

Posted by renting2 @ 08:02 PM (2301 views)
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49 thoughts on “What Now For UK House Prices??

  • Well that’s Wall Street sorted out then. I’m ever so pleased for them. After all they have a standard of living to maintain………. and it is the peoples’ duty to support them even though the resulting starvation can be quite uncomfortable. God Bless !!!

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  • tyrellcorporation says:

    What Now For UK House Prices??

    Precipitous decline I reckon…

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  • prices will still drop, people cannot afford any more they only earn so much, plus i think banks will avoid risky debts for some time, so expect 3 1/5 or 4 times salary for some years now…

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  • meant 3 1/2

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  • Just looked outside and I can see the air filling with golden parachutes. I assume the 59% of those polled in America who didn’t want their Congressmen to pass this bill can see them too.

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  • Oh yes! UK House Prices………. This will ensure they drop to JU levels.

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  • mark wadsworth says:

    $700 billion?

    They’ve tacked on an additional 448 pages of pork barrel spending costing around $150 billion to buy off the 57 Representatives they needed to change from ‘No’ to ‘Yes’ over the past few days.

    In old money, that’s eight pages of legislation and $2.6 billion of pork per Representative.

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  • I think we all knew some sort of deal would be struck in the end, however if you read a bit further afield than the BBC and Mr Peston’s blog the serious commentators don’t think the proposed package is anywhere near enough – it will be like a re-run of Oliver ie please Sir can I have some more.

    As for UK house prices they will continue on a downward spiral – we’ve got several years ahead of posting up the price reversals and the graph’s showing house prices falling of a cliff

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  • planning4acrash says:

    I found out how really bad it had become. The House passed a 1Trillion war bill the last couple of weeks, not a whisper!

    This means hyperinflation for the dollar, and, given co-ordination seen with ECB, BOE and friends, expect more of the same here. Its going to be a rocky ride. It is likely that inflation takes some of the visible falls, as sterling devaluation has already, but money won’t flow into housing till its affordable, period. I think this will take away the cusion, so I am waiting for 50-60% falls, 70%+ in some places. I expect neighbourhoods in places with more £1 houses, like we see some places up north. Many council places won’t have a price, you won’t be able to get a mortgage for them at all. NO mortgages for ANY local authority high rise flats for another 4yrs, for example.

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  • Landedgentry says:

    Dow ended the week closing below mondays close when the plan was first rejected so shows you what the markets think about it.

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  • Those POOR Americans. I mean in both senses. God Bless them.

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  • Risk has been re-priced, those without a fat deposit still will not get a loan and many a BTL gunna be up the the gills in NE before and resets before FTB step back in the market.

    Normality will return, but it is still 18 months away, even with rate cuts that will not be passed on as the 3 banks left in the UK re-capitalise.

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  • planning4acrash says:

    Incredibly, this was overwhelmingly a Democrat supported bill: http://clerk.house.gov/evs/2008/roll681.xml

    Democrats will be forced away, not wanting to vote Republican. Will we see a third party resurgence?

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  • P4AC – I think you make very valid points on this one. I have always maintained that what I call the “affordability factor” would win the day and bring house prices back into line. If inflation does sweep the land there does not appear (at this stage) to be any sign of it being accompanied by wage inflation and unless I’m otherwise mistaken most UK citizens are going to be financially worse off.

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  • japanese uncle says:

    For quite a while, this website was too busy to be accessible earlier today. So I am posting my comment in reply to job and str2007 as follows, which in any event is relevant to this thread:
    —————————————————————————
    jonb:

    65% HPC is just on nominal terms, ie. it could well be 75% on real terms. In London, as illustrated by the Tuffnel Park flat cited by nooneo, HPC could well reach 90% and more. One bed ex-council stuff in one of the dodgiest areas in north London is priced 280K? 350K? Oh my…. The proper value should be less than 30K, or possibly 20K considering the physical deterioration/depreciation. Be in no doubt.
    ————————–
    str2007

    No I have not taken any potential massive bail-out into account, as I cannot precisely think through what sort of impact it would have. I personally feel that the House (US Congress) may well reject #2 again. Also I tend to believe that Webster Tarpley’s solution, to cancel out all existing derivatives contracts might work, without inflicting any damage to the real economy. In any event creating a huge deep pocket, by confiscating the assets swindled through the asset bubbles by property speculators and investment bankers and their shareholders during 1997-2007 should be given the gravest consideration and priority. Land value tax in the case of the UK may well be a perfect solution, provided such tax should never harm owner-occupying smaller family houses at all. I do hope the British public should be awakened in this times of crisis, despite their blurred power of thinking thanks to the fluorine dumped into the tap water.

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  • JU – your mega bearish predictions are gathering support from several quarters as the ongoing crisis unfolds (and IMO for what it’s worth is in it’s infancy despite the so-called “bail out”)

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  • Just had a look at the Dow. Not too impressed to say the least. Should be in for a very volatile week ahead — so nothing new there then. Can’t wait for next weekend’s surprise—–wonder what it will be?

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  • Thanks for coming back on that JU.
    Thought I’d have a quick look on here and see what you all thought about the bailout. Thus far.
    Of course on the 10 o’clock news they’re suggesting lending will start over and interest rates are set to be cut. Traditionally a trigger for borrowing against houses.
    I was under the impression that the BoE had pumped in about £200billion so far (which would be about 1/2 the amount of the USA bailout) an awful lot given we’re a 1/5 the size.

    Having listened on the news and had a quick read here I’m still not clear, if I’m honest, what the outcome is likely to be. Having said that I’m not sue anyone else is.

    Do we actually know how the $700billion figure came about and what and how it will actually fix anything ?

    I’m not even clear how exactly it will be fed into the economy.

    As far as I’m aware the last time money was fed in through the banks they kept it for themselves and played with the commodities market.

    With regard to our short term house prices I think it may give deluded sellers who might have been about to crack and reduce asking prices, another shot of hope to hold out for the Spring pick up. Hope not.

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  • The americans are broke, the cupboards are bare, they have turned out their pockets and only a dime drops to the floor..”.what shall we do” says bush ! I know we have loads a paper so we will print more money and then we can buy worthless debts and we will then get the tax payer to pay more tax,more tax and more tax…… This does not change anything….the thousands of millions of dollars, pounds, euros and other currencies have been stolen by the unscrupulous and banking principles will change for ever. If you want to buy and borrow, deposit and income required, loans will be based on affordability = house prices fall.

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  • 2 japanese uncle @ 12

    You, of all I have listened to on this blog have been

    Concise – Rarely a word wasted
    Accurate – I think your perceptions are no longer percieved as bearish, but right on the money (!)
    Completely out there – This country would never support you’re more liberal of views (let alone MW’s Land Value Tax – improbable to say the least – that would be revolutionary)
    And above all truth an honesty.

    I thought you were a bit “out there” when I first started using this site 4 years ago but you (and almost all the other regular posters) but it is quite simply the place to go for a proper opinion.

    I’d vote for you JU, in any election.

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  • The plan is doomed to fail because it actually doesn’t commit enough money to the problem. US house prices are still falling and there is already twice the $700billion in distressed MBS …despite those continued housing market falls.

    As a side bar… the USA today elected a new president… President Poulson. He has $700billion to spend and absolutely no legal oversight. Infact, the bill passed expressly forbids recourse to law in regards to the decisions of the treasury secretary.

    God Bless President Poulson.

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  • planning4acrash says:

    str 2007

    – The 700bn was a smoke and mirrors exercise. The devil is in the detail. Paulston was given power to spend 700bn at any time, over and over again, without congressional approval. It was an unlimited bailout that could cost hundreds of trillions.
    – The real bulk of the bill were, dictatorial powers, freedom from court review of spending, and, carbon tax. All unconstitutional, all totally criminal, all based on complete lies and oligarchy.

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  • planning4acrash says:

    What the freaking heck has carbon tax have to do with bailout?!

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  • planning4acrash says:

    Surely Carbon tax would destroy the economy! Rather like the 30,000+ put out of work when hemp industry was made illegal during the great depression. The psychopaths have their way with us, again, how predictable.

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  • I’ll trade a vote for a place in the Cabinet !

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  • P4AC

    They are just playing at being in charge.

    Remember, if no-one turns up for the war, no-one gets killed.

    $700b might be smoke and mirors, but when you do the sums, I’m sure that’s about the size of the dodgy mortgages in the US.

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  • BTW.

    Does anyone else’s partner call themselves a HPCrash.widow?

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  • P4AC
    So that combined with a drop in interest rates would lead to a weakening of the dollar again and significant inflation to help make all that horrible debt vanish ?
    Oh and a lift in the price of Gold.

    Good that’s that all sorted out then. Where’s my property times?

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  • This ‘deal’ will, in the end, ensure the bonuses and pensions for those ‘in the know’. I’m not talking about a conspiracy, just fancy high finance. ‘A fool and his money are soon parted’ springs to mind, and we have fools holding our (taxpayer) purse strings on both sides of the Atlantic.

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  • I haven’t seen HPCrash.widow posting on here ?
    She must be on Friends Re-United.

    Yes there is some complaining.

    I can’t help my thirst for knowing the future – saved us a few quid so far.

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  • gardeniadotnet says:

    Gone all day without posting summat…the tension’s killing me, so…

    Peston’s Blog, Friday 3rd October

    UPDATE 15:16 Although HBOS is perceived in the market to be particularly strapped for cash, and is therefore a significant beneficiary of the Bank’s new-found largesse, it isn’t the bank that was having difficulty renewing credit in the money markets this morning.

    That was another of our big banks – which only goes to show that the liquidity drought (which was acute again this morning) is vicious and pervasive.

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  • Do we know which bank ?

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  • gardeniadotnet says:

    >Do we know which bank ?

    I don’t, but you can betcha bottom dollar Robert does.

    Not Lloyds surely?

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  • Barclays?

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  • str 2007 and particularly gardeniadotnet

    “Yes there is some complaining”

    “Gone all day without posting summat…the tension’s killing me, so…”

    Who’s for starting a yahoo group “imaddictedtoHPCandit’sruiningmywife”

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  • renting 2
    That just about sums it up
    gardiniadotnet
    My guess was Barclays based on the fact they haven’t been mentioning them on the BBC News articles about Bank problems, leading me to conclude they have problems and the Beeb have been told to keep their name out of the news.

    Right I’m going to bed or they’ll be a divorse on the horizon, then I will need a House Price Crash. I’ll see what you’ve all decided in the morning.

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  • night night str 2007

    all say aaaaaaahhh!

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  • So, this bill was to protect the 401 (k), and all these other things, well, what happened? Okay, on Monday, the stock market went down immeddiately on the mere fact that Congress voted it down. Remember there was no alternative plan allowed. Just the Paulson Plan (Hanke-Panke). Then this persuaded voters to contact their respective congressmen, meanwhile the senate added sweeteners and sent it back with a majority. Congress, knew it was too late, no other choice, “a gun to their heads”, and voted with a majority. Today, we saw the DJIA at 10,780 at around 6.20pm (after it was clear the vote was won). Then these future pensioners thinking this bill would help with their 401 (k) etc. Would see what happens next. So what happened next? GW Bush signed the bill into law at 8pm (Very very quick) despite the fact the bills $700bn won’t come into force for a further 14 days, you might ask why the rush. So after the bill was signed we then saw the DJIA eventually closing (9pm) at 10,325 which from the peak is -450 points. As far as I’m concerned, the American public have now signed themselves up for the $55 trillion dollars or enslavement. A very sad day for democracy. The world is entering very very interesting times.

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  • D’oh, you see, just about to switch off and you say something else.

    Yes I’ll need that help group, very funny.

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  • Hello, my name is renting2 and I’m an HPCaholic.

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  • gardeniadotnet says:

    >imaddictedtoHPCandit’sruiningmywife

    The Fragrant One only has an issue with me being on HPC, so I Alt>Tab onto a suitably business-like website when the need arises.

    Sad, I know.

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  • P4ac – directive 51. The republican congressman knew that this was a duff policy. The democrat congressmen won’t get in again.. and nor will either McCain or Obama. USSA

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  • just love this blog. > ; }-

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  • charlie brooker says:

    More details of the bill emerge this morning.

    According to the BBC and Sky it will take several weeks even months before the first tranches of the rescue package are spent and the mechanisms for distributing the funds are not yet even in place.

    If true, then according to Professor Nouriel Roubini’s RGE Monitor such response times are insufficiently prompt to prevent global systemic meltdown.

    Last night’s exercise was window dressing, nothing more.

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  • The US haven’t sorted out the housing (personal) debt, just some of the Banking mess-up. Ahead is more banking mess.

    This means that mortgages & loans will still be hard to obtain, at best based on 80% LTV. With affordability low, prices will drift downwards. As with any asset class some parts of the market will be more affected than others.

    My only national prediction is that the UK government will start to tinker with House Prices…..”Well Minister, what would you llike the numbers to say”?

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  • Mandelson the spin doctor is back in town….

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  • Just had a thought re: Hank Paulsen. He’s out in January. He’s got his 700 billion, but can’t keep it, because he’ll be replaced on 20/01/09. So, what’s the gag here?

    I was once a primary executive in a company where the board of directors removed the managing director and replaced him due to his age. The old guy was canny and, on the way out the door, took on projects for the coming year we couldn’t possibly handle. But we were locked in. It sank the budget, the whole place went into turmoil. The workload was impossible and key people left. The entire company was mortgaged, every asset. On looking back I had to laugh. They thought the man they’d removed was an incompetent elder statesman, but he sure had the last word and left us with utter destruction. Is this the legacy of George Bush, Dick Cheny, the neo-cons, since they’re now officially out of time? Is it literally designed to throw the place into chaos? I wouldn’t put it past them. Look at the legacy so far: War, poverty, homelessness, inhuman lack of response to natural disasters, lack of freedom and due process, about as close to martial law as possible without announcing it. Then what?

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  • Titanic Captain @49 – You see what I see.

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