Saturday, July 18, 2009

An industry too important to fail……

'Upturn signs' in housing market

More VI's out in force today. The problem with housing in this country is that - like some banks - it has become far too important to the UK economy to fail. ''The housing market is showing the first signs of an upturn since 2006, the Home Builders Federation (HBF) has said. The body's survey of Britain's major home builders found 60% of those asked had seen an increase in sales compared to the same time last year.''

Posted by hpwatcher @ 06:53 AM (2520 views)
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22 thoughts on “An industry too important to fail……

  • This phrase bothers me;
    “Chancellor Alistair Darling is to meet with the banks next week to remind them of their legally-binding obligation to lend more money to homebuyers”

    Is the badger telling them to throw caution to the wind to get things shunted upwards again – just in the nick of time for an election?

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  • Is the badger telling them to throw caution to the wind to get things shunted upwards again – just in the nick of time for an election?

    Definitely.Sterling may get runined in the process, but as long as his devious boss remains in power….

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  • It would be better for the Chancellor to meet with banks and pension funds to sort out a way for them to invest in the private rental sector!

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  • Another key phrase – ‘people have got to move on with their lives’

    The builders, estate agents, solicitors etc., etc. have been surprisingly patient since the start of the credit crunch.

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  • It’s surprising the BBC even bothers getting figures to back up their bullish claims any more.

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  • The nation is over-borrowed on every front, so what does the Chancellor do..

    ..urge renewed lending..!

    ..this is short term politics at its very worst.

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  • Supposing the banks tell the Chancellor to shove it? After all ,they nearly went out of business backing the the National Homeowners Party (whichever branch) by directing cheap credit at would-be homeowners.
    The Chancellor will have to show that he has plans in reserve to stop another housing bubble: the line -in-the-sand
    Land Value Tax would work.Wait for land prices to bottom out and then tax any increase above that point.Land prices might not rise at all in that situation so any housing finance that the banks could provide would go along way.
    This form of LVT does n’t devalue people’s property .

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  • montesquieu says:

    Wishful thinking wrapped up in VI spin and masquerading as measurable fact.

    Two current stories in the news:

    Housebuilder says now is right time to buy a house, and Joe Mugpunter goes ahead and buys one. ”Meh,” he told the BBC.

    IMF says the economy is going to hell in a handbasket and BTW swine flu might set recovery back by two years.

    On the evidence, which is more likely?

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  • So the $64,000 question – bull trap or bottom?

    The only way I see housing re-inflation is if Crash & Co. flush money into the system via higher wages and liar loans. They will also need to create jobs for the unemployed too. It’s possible, but as hpwatcher points out, Sterling will suffer.

    Sadly the sheeple don’t look beyond holiday money when it comes to Sterling. so Gordon could well pull off a heist involving a propped up housing market and a devalued pound. Real sad…

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  • Is there a higher power that stops a Government bankrupting a nation ?

    Come on Queenie – kick them out.

    Most of us on here go against the crowd, however it may prove that fighting the market turns out to be futile when essentially the general public want higher house prices and higher wages and we have a government in place willing to provide that at any cost.

    As mentioned above general public aren’t too worried about a devalued pound as this can be argued away as being good for exporters.

    An external force that pushes up base interest rates to at least 3-4% and mortgage rates to 7-8% will be the only thing that will stop general public from borrowing more.

    Quite how the banks have a ‘legal’ obligation to lend money out and how that is monitored against the banks perceived bad risk I don’t know. However, if bank executives are incentivised on lending, that is what they will do.

    To be honest I’m not really seeing strong signs of recession out there yet. A surf through Autotrader suggests to me that luxury/sports & 4×4 prices are holding up well. These prices I think will collapse ahead of house prices IMO as leasing rates become too much for the supposedly over indebted households. No sign yet though 🙁

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  • montesquieu says:

    Higher wages? Where are higher wages going to come from?

    This isn’t the 1970s, there are no proper trades unions any more, most people (at least in the house-buying demographic) are on personally negotiated salaries. Inflation touched 5% last year, the wife got 5% being a public sector employee, I got 1% in the 2008 round and company-wide there’s nothing this year.

    The inflation trick won’t work. Runaway inflation with static salaries would be even less politicall acceptable than a house price crash.

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  • montesquieu

    I know a few big companies are struggling, British Airways springs to mind. But are most using this as an opportunity to have a staff clear out and salary overhead overhaul out of choice as opposed to necessity ?
    I don’t know the number of self employed versus employed people in this country, but other than huge spending cuts the income of the self employed can’t be controlled so easily.
    (EG if there’s only 3 days worth of plumbing or electrics to do then something else can be done for the other 2-3 days of the working week). If you’re fulltime employed and you don’t get a pay rise you’re probably to knackered in the evening to set about earning extra).

    Don’t worry I still have my money fully hedged against the housing market, but this Dead Cat Bounce is currently alot stronger than I was expecting.

    I guess we’ll be in a full on government spending programme now all the way to the election next year (unless as I suggested above there’s an outside influence that changes the current course).

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  • I guess we’ll be in a full on government spending programme now all the way to the election next year

    Spend now, forget about the future bust – the Labour way.

    The important thing to be doing now, is working out ways to preserve your wealth, because the impending sterling crash will wipe out most people’s savings – just like in Iceland.

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  • To be honest, the article seems pretty reasonable to me. HBF say that they are seeing the “first signs of an upturn since 2006.” Considering what has happened to the volume of sales in recent times, it would be surprising if there wasn’t some sort of uptick eventually – especially with the goverment trying to engineer a recovery for the election. It’s a bit like a doctor saying “Good news: your disease isn’t terminal. We just have to amputate a few bits.”

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  • @12. hpwatcher

    The impending Sterling crash on top of the devaluation of 20-30% we’ve already had… Scary…

    Wasn’t it around a 40% loss of value when they called Iceland’s currency devaluation a crash? We are already half way there now.

    Maybe it is the British stiff upper lip that is preventing anyone from acknowledging our currency elephant sitting in the living room!

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  • Europeanbear says:

    Quote “although new home sales had increased, they were at an extremely low level last year”. 60% may have reported increased sales but that means 40% have not. Last year’s were very low. No recovery really. Prolonged dead cat bounce is caused by artificially low interest rates and dellusion.
    New labour is engineering a mini economic bounce at huge expense to the public finances. They know the 2010 election is lost. But a mini economic bounce may just persuade enough people to vote new Labour to ensure the Tory majority is only say 20 rather than 200. This mean that the Tories will be struggling with tough decisions for 4-5 years and will not have the cushion to weather through bouts of unpopularity. Labour will be reelected 2014 or 2015…..the current policies are to ensure this.

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  • hpwatcher

    If Sterling savings are for a house and the house is priced in Sterling, does it actually matter ?

    Or is the implication you’re making that the collapse will import a load of inflation which will push up house prices ?

    If we’re honest did the recent 20-30% collapse in Sterling increase the price of imports by 20-30% – err no it didn’t really unless of course that increase will follow over the coming year or 2.

    In fact if a collapse in Sterling did push up inflation and as a consequence people had less available for their mortgages wouldn’t that infact reduce the price of houses as the disposable income available for mortgages would be reduced.

    Also would a sudden increase in inflation result in a hike in interest rates – doubling the effect.

    I can see currency ‘speculation’ gaining clever/lucky people a few quid.

    Always interested in a few SIMPLE tips on currency presevation though !

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  • The fall in sterling has pushed up prices, even for things produced in the uk. For example fruit and veg grown in the uk has gone up because farmers are selling more of it for export and this is pushing the £ price up.
    Also how much do you think a packet of crisps costs in a Young’s pub in London? Ans = £1.05. That is hyper-inflation in my view.

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  • tenyearstogetmymoneyback says:

    Following on from str 2007 s comments.

    Back in the 1980s boom a colleague came up with the theory that the reason house prices were going up
    was that everything else such as televisions was getting cheaper so people had more money to spend on houses.
    Another colleague said how in the late 1960s he had spent 10% of the cost of his house on an automatic washing
    machine (as that was the going rate back then) !

    I wonder what will happen to house prices if the prices of things like washing machines and cars do start going up
    (as happened when the pond fell out of the ERM and overnight the camera I was saving up for went up 20%).

    :- Duncan

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  • If Sterling savings are for a house and the house is priced in Sterling, does it actually matter ?

    Well, no – if we were to stay with pound, BUT we may just find ourselves in the euro and holding a load of worthless UK pounds.

    Or is the implication you’re making that the collapse will import a load of inflation which will push up house prices ?

    In the latter stages of a sterling collapse, we could see a asset grab, in which case house prices would rise. In the event of there being no collapse, we could see a large degree of inflation.

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  • Broon is desparate to engineer a recovery in order to get elected.

    Unfortunately, in doing so he runs the risk of ruining the economy for an entire generation.

    Go Gordon Go!

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  • Welcome to Japan !

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