Friday, October 3, 2014

Um, what was that about a recovery?

Services sector’s loss of steam signals end of UK growth spurt

"The expansion is based on a consumer and property fuelled boom. There is low productivity, low wage underemployment and a dodgy balance of trade. If the Tories get a majority next year, the wheels will truly come off the cart after a very short time. Not only will the growth curve be normalizing downwards anyway, but the kind of fiscal tightening needed to meet their deficit-cutting aspirations will require a massive drain of money from the economy. It's a race for them between the election date and the re-appearance of reality." (wildejamey)

Posted by hpwatcher @ 02:33 PM (3825 views)
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10 thoughts on “Um, what was that about a recovery?

  • Actually, the expansion has slowed, not ended. Any reading about 50 is expansion, it dropped from about 59.7 to 58.1. This is a non-story unless if a trend is established. Frankly, this appears to be a minor correction in expansion rates.

    The article states that the readings suggest quarterly GDP growth of 0.8% (3.2% annualised) rather than 0.9% (3.6% annualised), and frankly, it is far too close to make that distinction and their failure to go into decimal places makes the annualised figure wildly inaccurate on their forecast.

    What this suggests is that capital will continue to be sucked into the UK from Europe and house prices will likely be leveraged to GDP growth. Since 4.5x income can be borrowed, maybe 15% house price rise in the next year.

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  • What this suggests is that capital will continue to be sucked into the UK from Europe and house prices will likely be leveraged to GDP growth. Since 4.5x income can be borrowed, maybe 15% house price rise in the next year.

    Oh Libby, of course – UK house prices to go to the moon. Silly me.

    Actually, I remember you going on rather obsessively about how interest rates were going to rise quite significantly…..you were wrong then, and very probably wrong now.

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  • LOL

    “Since 4.5x income can be borrowed…” – By a maximum of 15% of new borrowers.

    BOE will be capping LTV’s in the next 12 months so more downward pressure.

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  • some banks are still lending 10x income

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  • I still think they will rise significantly, but not in the next few years. My re-assessment has come from recent moves towards negative rates and deflation in Europe plus, signs that oil is in a bear market.

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  • Libertas, is your entire prediction for ‘significant’ house price rises – in a couple of years time – entierly based on negative interest rates and mortgage rates droping to 1%?
    As interest rates tend towards zero and the proportion of interest as the monthly repayment also tends towards zero do you not think that lower mortgage rates impact on house prices also tends towards zero. If not then why?
    If your predictions are also basen upon rental yield which is nearing 1% to 2% net voids, insurance, letting agents commission – what do you think the lowest yields investors will take on? Negative.
    So, lets assume your prediction is correct and house prices double in the next few years, mortgage rates are zero and yields are negative – then what? Do prices collapse or stay permantly high?
    Would be interesting to hear your well thought through opionion on the above.

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  • New agreed home sales in South West London have significantly dropped in the last few weeks. I am seeing chains breaking with both people pulling out and people not obtaining mortgages. Around 5% of the puff has been taken out of house prices. The estate agents are putting this down to the fact it is Autumn and it is a great time to buy, and then there will be an upward cycle. Even though there be more acts of puffery to inflate the market, people with mortgages are now more constrained and only so many of them will be able to join the bubble. I am not sure what is happening with the 20 storey high shoe boxes built all along the river Thames. As one developer told me, they don’t bother with British people, much easier to sell to foreigners off plan. To a certain extent I think these need to be factored out of both house building figures ( the so called number of new house builds a year) and house prices as mostly what they are a big concrete Ponzi schemes, sold at inflated prices and sparcley occupied.

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  • New agreed home sales in South West London have significantly dropped in the last few weeks. I am seeing chains breaking with both people pulling out and people not obtaining mortgages. Around 5% of the puff has been taken out of house prices. The estate agents are putting this down to the fact it is Autumn and it is a great time to buy, and then there will be an upward cycle. Even though there be more acts of puffery to inflate the market, people with mortgages are now more constrained and only so many of them will be able to join the bubble. I am not sure what is happening with the 20 storey high shoe boxes built all along the river Thames. As one developer told me, they don’t bother with British people, much easier to sell to foreigners off plan. To a certain extent I think these need to be factored out of both house building figures ( the so called number of new house builds a year) and house prices as mostly what they are a big concrete Ponzi schemes, sold at inflated prices and sparcley occupied.

    Reply
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  • New agreed home sales in South West London have significantly dropped in the last few weeks. I am seeing chains breaking with both people pulling out and people not obtaining mortgages. Around 5% of the puff has been taken out of house prices. The estate agents are putting this down to the fact it is Autumn and it is a great time to buy, and then there will be an upward cycle. Even though there be more acts of puffery to inflate the market, people with mortgages are now more constrained and only so many of them will be able to join the bubble. I am not sure what is happening with the 20 storey high shoe boxes built all along the river Thames. As one developer told me, they don’t bother with British people, much easier to sell to foreigners off plan. To a certain extent I think these need to be factored out of both house building figures ( the so called number of new house builds a year) and house prices as mostly what they are a big concrete Ponzi schemes, sold at inflated prices and sparcley occupied.

    Reply
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  • Too much debt. Government trying to tell people that everything is great! I wish it was……..

    Steady loss of credibility and build up of anger all round. I wish UKIP (or some other party) could fix things but the strings of our politicians are pulled by the US Fed. Have a look at the Gold Price, sales of paper ETFs and big purchases of physical. Tweaky, tweaky?

    Affordability for houses is at an extreme level. House prices won’t rise next month or the month after, IMHO

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