Monday, September 16, 2013

Sniff Sniff, whats that smell?

Property website triples house price growth forecast for 2013 to 6%

House prices will grow by six per cent this year, according to a prominent property website - a tripling its original forecast for 2013. The house price estimate is in line with others already released this month: Halifax said average house prices had risen by 5.4 per cent year on year at the start of September. Mr Clegg told the BBC 'We’re just giving creditworthy customers the ability to borrow money to get their feet on the first rung of the property ladder.' Asking prices in London are up 8.2 per cent on a year ago, Rightmove said today, while in the West Midlands they have increased by 6.8 per cent, in the South East by 5.6 per cent and in Wales by 3.8 per cent annually.

Posted by khards @ 01:42 PM (2415 views)
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8 thoughts on “Sniff Sniff, whats that smell?

  • mark wadsworth says:

    By this time next year we’ll all be…

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  • It’s quite around here at the moment, I think everyone has rushed out at the weekend to buy a pwoperdee.

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  • Well, I smell burning 🙂

    I’m watching bond yields go up, but can’t see it happening for much longer – maybe the house buyers have the roll of the dice working for them, this time? Bond yields can’t go up much more.

    I sense the bond markets are really important to the politicians. One can expect the politicians to step into the role of central banker to delay “Bond Apocalypse” anytime soon. (I’ve borrowed the term from Max K).

    I expect lots more QE from the Fed and their pal, Carney in the months ahead. Maybe a further “slap-down” on gold this month. Goldman and their pals were trying to talk the market down to under $1,000 an ounce over the w/end.

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  • “Goldman and their pals were trying to talk the market down to under $1,000 an ounce over the w/end.”

    Lets hope so as PM’s appear to be the last ‘cheap’ assets left even at current prices. Actually some antiques aren’t looking bad if you have land for storage.

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  • Mark,

    I think there’s strong possibility that this baby is going up – and it’s going to last for a few years. The game has been reset and credit is already loosening. Population is growing and the crazy game of meeting the demand, but not sufficiently to make cartel prices vulnerable to any kind of rational correction, will continue.

    This time I see serious bubbles in the areas that people aspire too – low crime, good schools and relatively decent amenities. Less so in areas that aren’t perceived to fit that bill. Mind you if the banks go all in (and likely they will) in the end the whole thing will lurch upwards.

    Regards,

    Bellwether

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  • BW, yes, I am perfectly aware of all that.

    It’s the UK government versus the free markets, just as it has been for the last thirty years.

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  • @bellwether

    For there to be sustained price growth you would need sustained affordability improvement or lower lending standards – which one or both are you predicting?

    During the last boom lending standards were reduced to 125% mortgages 10x wage multiples and rates lowered from 7.5% in 1998 to 3.75% in 2003 before a brief blip up. these were the year the real inflation took place across the UK.

    The combined potential does not look so good this time, BOE to lower rates by 0.5% and new lending rules next year. Also I do not see people queued up to buy mortgage backed securities this time around.

    If anything, I would say that now is the last chance to get out of the market. London is clearly in a bubble.

    I really do not see where increased affordability is coming from with real wage decreases and interest rates at 0%, tighter lending standards. Clearly if you were standing in 2008 with rates at 7.5% and house to wage ratio at 3xwages you could fathom that rates may fall and wage to price ratios relaxed a little. At that time you also had rising real wages so you would predict forward that wages would be rising in the future.

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  • Khards,

    Lower lending standards, which to a large extent are already in place via ZIRP and Help to Buy etc.

    In anticipating a house price crash in 2006/7 many (self included) underestimated the utter determination with which government (and let’s face it the population at large whose mind set is not altered one bit) would keep this thing (aka “key engine of the economy) going.

    I think much of what you see is accurate – e.g, a growing gap between rich and poor and an over dependence on credit as a driver, but ironically this will only tend to increase house prices in “good areas”

    I kind of hope you’re right that this is a final hurrah but I don’t fancy betting against the government put.

    The help to buy thing is crazy, but will tend to insulate people from interest rates rises – we are taking about 20% of the price free for 5 years! Once the scheme can be shown to be “working” it can always be expanded upon!

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