Thursday, Mar 05, 2015

Cook us up another scheme George:

Motley Fool: Have We Finally Reached Peak Housing Market?

When house prices slipped during the financial crisis, nobody was surprised. The property market had been scaling dizzying heights for a decade.
The only surprise was that they didn’t tumble further. The Bank of England’s decision to slash interest rates to 0.5% almost exactly six years ago gave the market a desperately needed shot in the arm.
Six years later, this property market stimulus continues to be injected at maximum dose. But like any drug, the effects are finally wearing off.
The sheer scale of stimulus pumping up house prices is so extreme we no longer notice it. In fact, we think it is normal.
Despite the hallucinogenic low rates, the weird thing is they are no longer doing their job. House prices have run out of juice anyway.

Posted by debtserf @ 09:53 AM (7402 views)
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12 Comments

1. hpwatcher said...

House prices are now so massively high, I expect the only way they can rise is another boost like the FLS i.e. 42 billions - although I think the government cuts / future disputes and strikes could well prevent something like that.

Oh, or a big currency devaluation, which is fairly likely, as the globalist elite continue to decimate the UK working man, saver and taxpayer.

Thursday, March 5, 2015 10:43AM Report Comment
 

2. sibley's b'stard child said...

So long as they can keep the plates spinning till after GE, the party will continue unabated. This is one frustratingly resilient bubble.

"Young people have seen what is coming. Bank of England figures show the proportion of 25-34-year-olds owning their home has plunged from 59% to 36% in the last decade."

That drives me to distraction, as if the fall in homeownership is in some way a conscious decision on behalf of an entire generation. The property VIs would just as likely say 'for young people, renting is a lifestyle choice!'. Both views are woefully myopic.

Thursday, March 5, 2015 12:07PM Report Comment
 

3. hpwatcher said...

This is one frustratingly resilient bubble.

Yup - and EVERYTHING is going into it - all other UK industries - aside from service - are effectively over; only this one is left.

Thursday, March 5, 2015 01:39PM Report Comment
 

4. jack c said...

hpw & sibs - very valid points (IMO). One area where the music has definitely stopped in my experience is re-mortgaging. The broker fee plus other associated costs are such that if the adviser carries out a genuine cost/benefit analysis it reveals that almost all borrowers (with the odd exception) are better off sticking with their existing lender who can perhaps facilitate an in-house product transfer rather than a full blown re-mortgage.

MMR has also banged another nail into the re-mortgage coffin

www.dailymail.co.uk/news/article-2960963/Families-stranded-rip-mortgage-rates-Banks-say-new-rules-stops-handing-cheaper-loans-remortgage-approvals-slump.html

It will be interesting to see whatactually happens when the artificial props fashioned over the last 7-8 years or so are unable to support the weight of a hugely overpriced UK property market ! I can't personally see a happy ending to this one.

Thursday, March 5, 2015 02:32PM Report Comment
 

5. reticent said...

@2

That annoys me no end, too. It smacks of the BTL claim that they are responding to rising demand in the rental market, when in fact they are the ones who create that demand by outbidding FTBs in the first place, forcing them to remain tenants.

Thursday, March 5, 2015 04:40PM Report Comment
 

6. tom101 said...

How difficult is it to apply additional taxes to second residential properties? or residential properties owned by companies....?

Thursday, March 5, 2015 05:43PM Report Comment
 

7. hpwatcher said...

That annoys me no end, too. It smacks of the BTL claim that they are responding to rising demand in the rental market, when in fact they are the ones who create that demand by outbidding FTBs in the first place, forcing them to remain tenants.

Housing should be rationed. No-one should own more than 3 properties - a top needs to be put to this little game.

Until FLS in 2013, house prices were dropping - no-one was talking about a housing crisis. The FLS rises - and subsequent drop in interest rates - are a DIRECT RESULT of the Conservative Party policies.

I sincerely hope the Conservative party are wiped out at the next election. I live in a ''safe'' Tory seat, and myself and my neighbors will be out as often as possible to get the incumbent Conservative MP thrown out.

Thursday, March 5, 2015 07:12PM Report Comment
 

8. libertas said...

Funny article that says, don't buy houses, buy our stock tips!! Biased? This is somebody seeking a share of the new pension money flooding from annuities into other investments after the election.

Meanwhile, mortgage rates quoted are hallucinogenic and everything is awesome when you are paying less than 2% rates for a home.

His claims that folk are renting "coz they see what is coming" and because they are "fancy free" with crap magnolia walls and not even the right to paint their wall or put in a new carpet. As if these folk are winning.

Friday, March 6, 2015 03:44AM Report Comment
 

9. libertas said...

hpwatcher, BOE lost the chance of a devaluation by waiting so long at 0.5%.

All they can hope for now is a cut to reduce the rise of Sterling against the Euro. How can he compete with constant Grexit threat and more than 100% monetisation in the Eurozone? Yes, UK needed tightening, but the market is doing it for us via the exchange rate.

By the way, UK house prices are still SOARING by the day, priced in Euros. This is how markets ease the extremes of the market-place.

Friday, March 6, 2015 03:47AM Report Comment
 

10. libertas said...

HPWatcher, if housing were rationed in that way, and you extend your logic, local government should be banned from owning more than three properties per Borough, and Housing Associations will be outlawed. Also, no Freeholder could ever own an entire sky-scraper of flats.

Oh, you don't like logic?

Friday, March 6, 2015 03:50AM Report Comment
 

11. This comment has been removed as it was found to be in breach of our Blog Policies.

 

12. Rupertw said...

No joined up thinking. Spend millions on housing subsidies to "prop up" the market, cut police budgets when the number of immigrants coming into UK and population as a whole is increasing across all social classes. What happens to house prices after GE?

Sunday, March 8, 2015 12:50AM Report Comment
 

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