Saturday, December 17, 2011

Going down

'House prices will fall and mortgage rates will rise'

Howard Archer, an economist at IHS Global Insight, predicted falls of 5pc by mid-2012. But he added: "We believe there are serious downside risks to this forecast and that house prices could fall by more than 5pc given the deteriorating economic situation."

Posted by stuartking @ 11:21 AM (5054 views)
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4 thoughts on “Going down

  • Whatever the unveiling economics are over the next ten years, no-one will be getting wealthy on bricks and mortar. That little scheme has well and truly had it’s day – and created all sorts of social and moral issues with it. It’s over. Get used to it.


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  • 5%, not nearly enough! Bring on the sharp decline!

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  • The comments below the Telegraph story are interesting. Though there are only 19 at the time of posting, all are expecting and hoping for a substantial reduction in prices.

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  • But David Kauders, a gilt fund manager who has long seen the housing market as an unsustainable debt-fuelled bubble, cast doubt on these arguments. He said the market would see extra supply for many years as baby boomers died off, while more recent falls in the birth rate would limit the number of first-time buyers. “Even if banks were willingly lending, the lack of first-time buyers and surplus supply of inherited property would be damaging to house prices. Put these together and it should be clear that prices can only trend downwards slowly, for 15-25 years,” he said in his book, The Greatest Crash.

    I call bøllocks. The population of Liverpool may be falling (as per the other recent article on here); but the population of London and the South East continues to rise, through both internal migration from other parts of the UK and through external immigration from the EU and the rest of the world. There’s no driver for economic growth in Glasgow or Sheffield; whereas London attracts individuals and businesses from around the world.

    The argument about baby boomers dying off is ridiculous too. This generation will live longer than any before. Government spending on the NHS ensures they will live a long time.

    Then there’s the demand picture. Young people own a small home, just one, if they’re lucky. Old people own a large home, sometimes a second or third home too. More old people = more demand for second homes.

    There may be an HPC in the North; but I just can’t see it happening in the south east.

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