Petem95

Housing market 'is heading for a fall' | This is Money

Cant deny this guy knows his stuff! The house price crash is already underway but it looks like it could be one of the worst ever!

The housing bust doesnt worry me, but the econmy crashing down and unemployment does!...

IMO things will never go back to how they are now (ie crazy asset prices fueled by cheap debt)

But hey there's no more boom 'n bust eh Gordon

Terminator X

iTrader: (7)

Total rubbish! I'll eat my hat if these scare tactics have any effect on what the BoE do

TX.

rik1471

If I had a quid for every time I came on this site and read a thread about another recession or house price crash, I'd be rolling in it. This site is full of middle-aged worry warts.

VoteConservative!

Thats because Gordon brown and his labour girl blouses have been propping up the economy with sticks!

Luminous

iTrader: (3)

hmmm, as long as people have the will and means to buy somewhere at a certain price then they will continue to do so.

There is still strong demand for housing as people still have their good jobs. Rates are still low enough, only issue is if lenders are going to give them high mortgages. If they think they can make money doing so, then they will, simple as that.

I think a house price jitter is in order, with the market recovering to today's levels by this time next year, or sooner.

Now there is a statement that can be brought up to shame me in the future

paulr

Why will inflation go up?

CharlesW

1. Increase in the price of natural resources
2. Increase in prices from China. Inflation in China is now a concern.

That's just for starters

3. Wage inflation is looking a possibility now.

alcazar

iTrader: (2)

IMHO, this is a Yank trying to talk our economy into failing. Theirs has/had been on the rocks for a few years and NOW their house prices have crashed. There's no reason we have to follow.

Alcazar

MrRee007

Greenspan is trying to sell a book ...... so, he needs something to help sales.

I am one of those who has said House Prices are about to crash for years and I admit that I got it wrong.

They have been propped up by Buy-To-Lets .... and it makes amazing sense, let someone rent your house, pay the mortgage and you own it when you want to sell.

Problem happens when confidence drifts away, and I think it is now.

House prices slip, renters start to buy, buy-to-let houses have no tennants and therefore come to the market driving down prices again, prices fall once more.

ChrisB

BBC article from two weeks ago:

PeteBrant

Instant debunking by Tx in a house price crash thread, just for a change, like.

Somehow I think if Greenspan were saying that there was nothing to worry about, you would be agreeing with him saying that he is one of the greatest economic thinkers of the 20th century (which he is by the way), but since he is saying the opposite, he is wrong??

rossyboy

iTrader: (8)

Whats this about then?

BBC NEWS | Business | UK inflation rate eases to 1.8%

UK inflation rate eases to 1.8%

Cheaper energy bills helped to cut inflation
UK inflation fell slightly in August, helped by cheaper energy bills and lower clothing costs.
The Consumer Prices Index (CPI) fell to 1.8% in August - its lowest level in more than a year - from 1.9% in July.

The rate is below the government's 2% target, and the fall is likely to add to expectations that UK interest rates have peaked.

However, the RPI inflation measure - which includes mortgage interest repayments - rose to 4.1% from 3.8%.

The increase in the RPI reflects higher mortgage interest payments which have followed five rate rises by the Bank of England since August 2006.

Rate help

Analysts said the latest inflation figures would be encouraging for the Bank of England, and increased the likelihood that there would be no more interest rate rises in the current cycle.

The Bank of England will closely monitor how the credit crunch and Northern Rock crisis is impacting on the real economy

Howard Archer, Global Insight

The current turmoil in the financial markets has also made the Bank reluctant to raise interest rates in the next few months, experts believe.

"I don't think we are going to get a rate cut this year, but this does give the Bank some leeway," said Ross Walker, an economist at RBS. "If they need to cut rates, this helps."

Experts said the Bank was unlikely to cut rates in the short-term given that high oil prices and possible future rises in food prices could still revive inflationary pressures.

"We expect the Bank of England to remain firmly in 'wait and see' mode for the time being, although we do anticipate that the next move in interest rates will be downwards," said Howard Archer at Global Insight.

"The Bank of England will closely monitor how the credit crunch and Northern Rock crisis is impacting on the real economy and affecting the outlook for growth and inflation."

The fall in CPI inflation was helped by some mortgage lenders cutting the levels of their mortgage exit fees.

Cheaper gas and electricity bills also helped to keep inflation under control as a number of price cuts from major energy suppliers came into effect.

rossyboy

iTrader: (8)

and this

BBC NEWS | Business | UK jobless total declines again

UK jobless total declines again

Wage growth can be a main driver of inflation and interest rates
The number of people out of work in the UK fell in the three months to June, according to official figures.
The Office for National Statistics said unemployment fell by 45,000 over the quarter to 1.65 million, continuing a downward trend.

But fears that a strong labour market will lead to wage demands and push up inflation were allayed by weak average earnings growth.

The numbers reinforced the view that interest rates could remain at 5.75%.

Average earnings in the UK, including bonuses, increased by 3.3% over the three-month period, the slowest rate in four years.

News of the muted pay pressure follows Tuesday's unexpected fall in consumer price inflation to below the government's key 2% level.

This is an encouraging sign that the Bank of England's rate-setting body will not rush into pushing interest rates up to 6%, analysts say.

Jobless rate decline

At the same time, data showing a continuing decline in the jobless rate and the number of people claiming unemployment benefits will be read as an indication that economic growth in the UK is still on track.

The redundancy rate for the three months to June 2007 was 4.8 per 1,000 employees, the lowest figure since comparable records began in 1995.

"Unemployment is continuing to fall gently, but average earnings numbers are very benign at the moment," said David Page at Investec.

"Wage inflation is just not adding to medium-term inflation risks at present. In fact, we wonder if there's a potential problem of soft wage growth undermining household spending."

Flatcapdriver

Rossyboy - you have to remember that inflation rates are averaged out over a twelve month period and as the article states it has been reduced, partly, by mortgage lenders reducing their exit rates and relatively low energy costs.

Presently, with oil, gas and lpg prices at or near record highs with corresponding electricity prices to follow the impact on the inflation rate is only going to get worse. By how much, who knows?

MrRee007

Good grief - it does seem like New Labour ARE to be trusted with the Economy after all

CharlesW

After what's happened over the last few days, that must be ironic

jasey

MrRee007

Seems to be all calm now ........ well managed I would have said?

Chris L

Well Greenspan should know - it's his policies that largely caused the problems that the US now have and one of Greenspan's biggest disciples is - you've guessed it - Gordon Brown

As the events at Northern Rock have shown - confidence is really rather shaky at the moment and it will have a knock on effect to the rest of the market.

It would simply not be possible for the government to absolutely guarantee the deposits of all institutions in the UK for one thing! So if confidence goes in other institutions, then savers would be on their own. The Northern Rock situation shows the results of the poor fiscal policies that have plagued the banking industry for years - if any of the board of directors of NR survives, it would be a miracle (and totally undeserved).

Whoever buys NR will have to find about £17 billion to plug the gaps which means they will need to attract in savers by pushing up savings rates and therefore making mortgage rates more expensive. You also have to consider that for many years we, as a country ran a trade surplus, but now it is in deficit - roughly 3% of GDP, which is a huge amount of money. If credit is more expensive to plug that gap also - you can see how this will have a negative impact on the economy.

There are a lot of warning signs out there. It doesn't matter how many people want to buy houses (for instance) - if the bank's won't lend the money, there will be no sale...

PeteBrant

Precisely, which is why people should not try and agree with him when it suits them, and not otherwise, because he is in as good a position as anyone to comment on the UK economy.

paulr

What would happen then is rents would fall. The thing is there is more than one economy out there. I have freinds who are 40, two good jobs, no kids two houses easily afforded. All they would do is lower the rent one the rented one. Then i know other people who are early 20's poor jobs struggling to get the first house. They are living at home and basically waiting for a relative to leave them some money. Totally different worlds.

CharlesW

All that has been done for the moment is to guarantee the deposits in NR. This may or may not reassure those who have deposited money with NR.

NR are still dependent on Interbank loans for any advances they wish to make. So for the time being they are unable to write any new business, which probably explains why after rising to 314.5p this morning, the shares have dropped back to 300p. They are not going to recover until NR have a new line of credit.

Chris L

Yep - I reckon someone will pick them up for around 180 / 200 pence a share - bargin!