Fear not Alice, this is just a blip. As unemployment hits critical levels we will see wage deflation. This will hit house prices hard.
An average wage of ~30k is not affordable for even blue chip companies. A lot of work is going abroad (e.g China, India) because professional people are 50%+ cheaper to employ.
Yes to the above - the massive - the word hardly does - present reflation can only be done once, and the upticks in interest rates that have been going on for some time show it is an unusual moment - artificially low mortgage deals which will not be availbale in six months time.
Then, through the election, the necessary painful measures will be applied (lowering of public spending, raising of taxes and hard money policy).
The the index will show a little down, a little up, bumping along the bottom until c. 2015-2018, as it did c. '93-'98.
Alice, I'm gonna stop reading your blog if you don't stop fretting every day about rising prices. Nothing goes down in a straight line. Read the comments section from your post a few days ago "London house prices up 2 percent in a month". You'll learn something. At least try and stay impartial, if not true to your original analysis. Don't swing the way of the believer. IT'S ALL CLAPTRAP.
“The improvement in housing market conditions, however, does not mean that the positive price trends of recent months can be extrapolated into the future in a straight line. If prices continue to increase at the rate of the last three months, they would soon rise to levels that would be noticeably out of line with earnings, rents and other fundamental determinants of housing valuations. One should also not underestimate the impact over time of high unemployment, which has implications both for buyer confidence and the financial pressure on existing owners to sell. It is unlikely, therefore, that price increases can be sustained for long at the very strong rate observed over the last few months."
Nationwide July press release 30th July 2009.
Alice, now is not the time to start panicking. It is also worth noting that it is only the Nationwide index which is showing this mderate upward trend. The Halifax house price index for June showed a fall of -0.5% while the Land Registry showed a rise of just 0.1%.
It's all a load of bollox - there s no way with rising unemployment, interest rate and tax hikes on the agenda, that house prices will rise. There is no correlation between wages (which are going down if anything) and house prices.. they need to drop another 40% from where we are now (at least) to re-balance this ratio. Any partial re-inflation of the housing bubble is a temporary blip which will pale into insignificance compared to the drop we will experience. This won't happen while this pillock is still PM (who engineered the last bubble) - house prices will gradually slide into rhe abyss over the next 3 years in my estimation.
only a few muppets left now, soon no muppets at all. then kepow ! government funding slows... unemployment rises... CRASH ( a proper one).
It is strange that people on the one hand who seem really clued up and indeed, go so far as to blog economics, get very panicky about the obvious unavoidable end of the game.
7 comments:
Fear not Alice, this is just a blip. As unemployment hits critical levels we will see wage deflation. This will hit house prices hard.
An average wage of ~30k is not affordable for even blue chip companies. A lot of work is going abroad (e.g China, India) because professional people are 50%+ cheaper to employ.
They'll keep pumping it until the election - or a (somewhat overdue) black swan comes flapping along.
This is a global asset bust after all.
Yes to the above - the massive - the word hardly does - present reflation can only be done once, and the upticks in interest rates that have been going on for some time show it is an unusual moment - artificially low mortgage deals which will not be availbale in six months time.
Then, through the election, the necessary painful measures will be applied (lowering of public spending, raising of taxes and hard money policy).
The the index will show a little down, a little up, bumping along the bottom until c. 2015-2018, as it did c. '93-'98.
B. in C.
Alice, I'm gonna stop reading your blog if you don't stop fretting every day about rising prices. Nothing goes down in a straight line. Read the comments section from your post a few days ago "London house prices up 2 percent in a month". You'll learn something. At least try and stay impartial, if not true to your original analysis. Don't swing the way of the believer. IT'S ALL CLAPTRAP.
“The improvement in housing market conditions, however, does not mean that the positive price trends of recent months can be extrapolated into the future in a straight line. If prices continue to increase at the rate of the last
three months, they would soon rise to levels that would be noticeably out of line with earnings, rents and other fundamental determinants of housing valuations. One should also not underestimate the impact over time of high unemployment, which has implications both for buyer confidence and the financial pressure on existing owners to
sell. It is unlikely, therefore, that price increases can be sustained for long at the very strong rate observed over the last few months."
Nationwide July press release 30th July 2009.
Alice, now is not the time to start panicking. It is also worth noting that it is only the Nationwide index which is showing this mderate upward trend. The Halifax house price index for June showed a fall of -0.5% while the Land Registry showed a rise of just 0.1%.
Young Mark
It's all a load of bollox - there s no way with rising unemployment, interest rate and tax hikes on the agenda, that house prices will rise.
There is no correlation between wages (which are going down if anything) and house prices.. they need to drop another 40% from where we are now (at least) to re-balance this ratio.
Any partial re-inflation of the housing bubble is a temporary blip which will pale into insignificance compared to the drop we will experience.
This won't happen while this pillock is still PM (who engineered the last bubble) - house prices will gradually slide into rhe abyss over the next 3 years in my estimation.
stand by for the real crash....
only a few muppets left now, soon no muppets at all. then kepow ! government funding slows... unemployment rises... CRASH ( a proper one).
It is strange that people on the one hand who seem really clued up and indeed, go so far as to blog economics, get very panicky about the obvious unavoidable end of the game.
Post a Comment