Friday, January 22, 2010

Commentary from a property bear

Merryn Somerset Webb: House prices should rise...but they won’t

Merryn discusses interest rates, affordability, unemployment and the effect of the election on MPC policy. Closing paragraph: "Bubbles need momentum. The housing market lost its momentum in 2008. It clawed a little of it back in 2009. But it is hard to see where it is going to get any more from in 2010."

Posted by quiet guy @ 09:42 PM (1117 views)
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One thought on “Commentary from a property bear

  • A long while ago we had a debate on this site as to whether zero interest rates would make a difference. Granted at that time the Banks / BS closely followed base, so the assumption was the if the base went to zero the Banks / BS rates would follow. That in of itself was a bit silly really, but still.

    At the time the monthly Haliwide numbers were negative. And basically someone said … i think that the HPs would go down even if (mortgage ) rates were zero. I said that the person who said that was getting a bit carried away and that of course that would support prices.

    MSW says that the move up in prices on the back of (amongst other things) “zero” IRs is surprisingly small. I concur.

    The idea really was to support the monetary system and to buy time for confidence to come back, hence the rise in share prices from the March lows and the correlation to HPs.

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