House prices, economy, outlook 2008

[tomstickland]

The news has been a great source of entertainment recently, mainly watching the car-crash that is the housing market, economy and demise of Gordon Brown's government.

Recent highlights:
-John Prescott's memoirs, laying into Brown, Milliband and Balls.
-Cherie Blair's comments from her book
-Local election drubbing
-Livingstone voted out

House prices are falling, construction stopped, household budgets stretched by fuel, energy and food prices. Then mortgage rises for those who are trapped when cheap deals run out.

Meanwhile we continue to see a rise in taxation and ever more zealous application of the law. Think of parking cameras picking you up for dropping someone off in a bus stop, clamping, the car tax clampers who wanted the vehicle that had one wheel on the pavement.

Personally I think that as money becomes tighter those who work for a living will start to be become every more disheartened and possibly aggressive.

Now, not all of these things are actually directly attributable to the government. Quite a few are though.

It's going to be interesting.

[lethal]

In your highlights, you missed out (from today) inflation jumping from 0.25% to 0.3% which will need to be headed off by IR increases and Caroline Flint accidentally [deliberately?] wafting a document around stating that the government believe we will see 5-10% falls in house prices at the bare minumum this year alone http://news.bbc.co.uk/1/hi/uk_politics/7398244.stm

On the house prices point, I've got no particular issue with the prices falling* a good long way. I belive it's unethical for people to have speculated on shelter just as it is unethical to speculate on food supplies. (If you want to speculate, go buy some gold or shares)

As for IRs, people will harp on about how they should be cut when private lending is already decoupled from the BoE baserate anway. The reality is that any further cuts in IRs will put food and fuel prices on a rocket and fire it to the moon (We are net food and fuel importers now).

*unfortunately the economy is now based on nothing more than the notional price of bricks and mortar. The government let industry die but blew over a hundred billion on a bank. I don't think we can fix this now unfortunately - I think a lot of people are about to discover that you can't eat bricks and mortar.

[j17sparky]

Obviously i dont want to see this country go down the shatter but tbh i cant see anyway to get it back on track than for it to go right down so that it can climb back up again. Unfortunately i believe Labour will be out of office when the shat does hit the fan, and i believe they know this hence their policy of putting off the enevitable for someone else to pick up the peices. I can only hope peoples memory span is long enough to realise that it was Labour which put us in this situation not their sucessors, but knowing this country/society i think that is highly unlikely.

[j17sparky]

The notes also highlight the rise in repossessions - but stresses that the 2007 figure is "still only around a third of that in 1991".

Well yeah, its not even half way though this year yet and the worst is yet to come With teh current trends what about next years figures...?

[lethal]

Originally Posted by j17sparky

With teh current trends what about next years figures...?

Nu Labour are apparently not capable of thinking beyond a week next Tuesday.

[leesturbo]

you missed in you sig another 50billion for all banks in general
this year which are Private companies! yes billion its not a typo

[MikeWarner]

So much makes me want to leave this country.......

[neil105]

i can remember mortgage interest rates of 15% its not that bad yet

[tomstickland]

unfortunately the economy is now based on nothing more than the notional price of bricks and mortar.

Spot on.
For nigh on 10 years the main economic model was spending based on the false belief that house prices equated to wealth.
All that really happened is that ever more money was borrowed. With the lenders borrowing on the swap markets at rates of a few percent, it was easy money lending it out at 4-5%. So they all competed to see who could lend the most. As more money became available people were prepared to pay ever more for property.

I read a comment by someone the other day who really believed that there should be a lowering of lending rates so we could all get back on with borrowing.

From an input-output model, house price growth cannot go on forever.
I've been watching the price drops on rightmove. I suspect that some people are still believing that their house is immune from any falls and still marketing them at 2006 prices "good area, it's different this time" etc etc

[SRimon]

Its worrying times for sure...

But I'd be more worried for the whole economy if the house prices dropped a lot, the amount of people that would effect is huge. Would lead people into poverty etc, is that what the economy really needs?

I've got around 40% equity in my house now, however, I obviously wouldn't want to lose it all and be balancing on the 100% mortgage side of things.

We shall see, 10-15% would see the lower end, flats etc be available for around 70k, that in mortgage terms (at a reasonable interest rate) is affordable for most. I.e. a 5-600 all bills inclusive property.

The doom and gloomers annoy me, just because some of us work hard for our houses, bust a gut, why should we suffer for people wanting/praying for prices to come down. Then basically waiting for the easy ride.

TBH we'll never see 15% interest again IMO, the economic world has changed far too much. 7ish is the highest we'll see imo.

[KillBill]

Originally Posted by SRimon

The doom and gloomers annoy me, just because some of us work hard for our houses, bust a gut, why should we suffer for people wanting/praying for prices to come down. Then basically waiting for the easy ride.

Its not that they are willing others to fail / loose equity, its just that a drastic price drop is the only hope in hell a great many people will ever have of getting on the property 'ladder'. As for the easy ride thing, if you could pay £200k for something, or wait a year and get the same thing for £100k, which would you choose? Its just common sense.

[rudd86]

so if it continues is it likely to go something like this,

over taxation (i.e. fuel and cost of liveing) - economic downturn (i.e. fall in highstreet spending resulting in job losses) - full blown recession?

just trying to get my head around it, sorry if its wrong, thats why im asking.

[lethal]

Originally Posted by neil105

i can remember mortgage interest rates of 15% its not that bad yet

"It's different this time"</irony>

In 1990, people were paying a smaller percentage of their salaries to the banks. I'm informed that IRs reaching 7-8% could have the same effect now on overextended borrowers as 15% had on overextended borrowers back in the 90s.

[j17sparky]

Originally Posted by neil105

i can remember mortgage interest rates of 15% its not that bad yet

But back then the average person wasnt borrowing £200k. At 15% with a mortgage over 35 years the repayments on £200k are £2518.91pm (£2500pm interest only). iirc the average wage is £24k pa, which is £2000pm before tax.

If interest rates ever do hit 15% again it will make the 90s look like feck all.

[jamied]

Originally Posted by rudd86

so if it continues is it likely to go something like this,

over taxation (i.e. fuel and cost of liveing) - economic downturn (i.e. fall in highstreet spending resulting in job losses) - full blown recession?

I feel that we have never pulled out of the last recession fully.

You try to find the skilled people we had a few years (10-15 years ago) working in production factory's, i myself find it very hard to source engineers and fabricators like what my dad did 15 years ago.

Jobs have been made redundant very easily over the period of time.

All you have to remember is that you are disposable and nothing is 'British made' anymore so we have no real back bone to this country anymore.

Any company that has been doing well has been killed off with red tape, tax and high import charges due to we have to now ship our raw goods in.

Its all grim and shall get worse before anything will start to change.

[montytronix]

iam now unemployed as work is drying up in architects offices - alot have cheap poles working
i have 2 options

drop my rate by 25+% to get ****ty work in drips all over the area
or
do somink completely different-iam probably gonna do somink completely different!!

The indicators are worse than last 2no recessions -
-the pound had devalued and we cant utilise this as we make fkkk all to export-all smart spec money is going elswhere
rapid import costs
-Reckless Banks have been greedy and fkkd up..... but we are to pay for it circa £100+ billion not so long ago they
recorded record profits?
-Paying for a never ending blank cheque war....but no mates rates on iraq oil but US will iam sure....
-Cheap import labour has stopped wage increases [probably good to control inflation-keep us all poor from spending]
-Pensions fkkkd up by gordie - still no rescue-house prices rise as bought for future pensions [2 fkkk ups]
-All the cabinet are scotch and hate the british as long as they get devolution-to settle old scores-who gives afkk?
-We will all work for Tesco's poking the till roll dolly birds - happy days
-if you do get a temp sh1t job being laid off from your proper job- gordie has only wiped off the 10% PAYE rate
making it worse working a sh1t job for less !!!!

Reasons to be cheerful
Happy days are here again

[keithcdb]

Originally Posted by montytronix

-All the cabinet are scotch and hate the british as long as they get devolution-to settle old scores-who gives afkk?

I rarely drop in on these debates but WTF are you on?

[lethal]

Originally Posted by rudd86

so if it continues is it likely to go something like this,

over taxation (i.e. fuel and cost of liveing) - economic downturn (i.e. fall in highstreet spending resulting in job losses) - full blown recession?

just trying to get my head around it, sorry if its wrong, thats why im asking.

It's not really the tax that's the issue (although I'll agree it's not helping).

The price we have to pay for fuel and food has gone up considerably because we import huge amounts of it. Unfortunately, due to interest rate cuts and poor international confidence in the UK economy, the value of Sterling has dropped significantly. This means it costs us more to buy in our imports.

Coumpounding this, fuel and food are both seeing their prices rise from an international point of view.

The 'big-money' investors who were in property jumped out when they saw the s**t flying fanwards and got almost straight into oil after a brief foray into gold. Now they're speculating on oil and the price is going up, way up.

Then theres food, last years crops were terrible almost globally so there isn't much fuel around. To compound the matter, people have begun using food crops for fuel driving the price even higher.

[montytronix]

I dont know what economic devices the govt has left to get the economy back up and running?....its a sick

interest rate hikes were to control inflation-inflation is a killer-but with the pound devalued 'invisible' trade is wacked we dont make anything so our balance of payments is in the shathouse

if if we do make stuff with cheap eastern block ppl - it still cant compete with chinese slave labour / no pollution / H&S costs etc

lets all move to china work like dogs and die premature deaths thro pollution
or go on strike....! FFS

Economic a level students will be studying this last 10 years for years to come

[lethal]

Originally Posted by keithcdb

I rarely drop in on these debates but WTF are you on?

He means Scots and is talking of the conspiracy theory that because Gordon Brown, Doug Alexander, Yvette Cooper and Des Browne are Scottish, there is a plan to subjugate the English in favour of the Scottish.

Obviosly that's ridiculous, if it were the case, there would be signs such as the Scottish getting better healthcare provision and things like that......

....oh, wait.

[montytronix]

Originally Posted by keithcdb

I rarely drop in on these debates but WTF are you on?

lol
its really a shocker that a scottish PM employs the majority of his cabinet from his own country!! PhoneyBlaire is scottish

is this not an insult to us englishers as it is clear from this that we are not good enough for Mr Brown [in our own country] to run our own country? But the results unfolding are for all to see. Is this clearly discrimination? or jobs for the boys?

a real shocker check his cabinet-?
[you forgot darling to mention a few]

[keithcdb]

Oh come on now, we have been campaining for complete independancy for years but the english government will never let it happen due to scotland being a oil producing nation, how much would england miss that?

[montytronix]

tell you what boys lets all live in scotland and become MP's disguised as scots - if we all become unemployed down here eh?
and address the balance?
if not just for the benefits we all pay for our northern chums per capita

lol
GordyB really does treat us like idiots / fools / retards / tax milking cows eh?
enough said.......

[montytronix]

errr WTF paid for all the oil refinery infrastructure technology etc etc to get the bloody stuff in the first place?
Who paid for all your scottish infrasture for you to live?

it certainly wasnt rab C Nesbit !! lol
T0nyBlr is scottish

[keithcdb]

Agreed the current government are making a tit of things but dont start with some sort off scottish conspiracy theory