UK economy / house prices etc

[menousername]

Interested on your thoughts on the UK economy

From where I am sitting I see job cuts, companies making rotations from full time staff with security and beneifts to using temp/contractors, wage stagnation vs increasing living costs, fuel costs, energy costs all up, likely tax increases after the next Parliament, etc etc

Today i read two separate articles about increasing house prices which are accelerating at the fastest pace in several years and that 10,000 new buyers have applied for or taken up (admittedly not sure which) the govt help to buy loans which plug the ltv gap for buyers who can't afford a deposit. Further...while it may not be quick, rates have to increase sometime in the near future

What are everyone's feelings about where we are economically? Does this all add up to you?

Edited by menousername on Wednesday 14th August 13:45

[NewbieP99]

if it looks like a bubble and acts like a bubble then its a BUBBLE!

[P-Jay]

I'm hoping it's a short term bubble that'll last until interest rates rise, but I've learnt to never underestimate the collective stupidity of Man.

But unemployment is down, GDP is up, the eurozone is out of recession and the banks are all advertising on TV offering mortgages again. I hear they're all recruiting too!

[The Stiglet]

menousername said:

Interested on your thoughts on the UK economy

From where I am sitting I see job cuts, companies making rotations from full time staff with security and beneifts to using temp/contractors, wage stagnation vs increasing living costs, fuel costs, energy costs all up, likely tax increases after the next Parliament, etc etc

Today i read two separate articles about increasing house prices which are accelerating at the fastest pace in several years and that 10,000 new buyers have applied for or taken up (admittedly not sure which) the govt help to buy loans which plug the ltv gap for buyers who can't afford a deposit. Further...while it may not be quick, rates have to increase sometime in the near future

What are everyone's feelings about where we are economically? Does this all add up to you?

Edited by menousername on Wednesday 14th August 13:45

Have a read - http://www.mindfulmoney.co.uk/wp/shaun-richards/bo...

[menousername]

The Stiglet said:

Have a read - http://www.mindfulmoney.co.uk/wp/shaun-richards/bo...

its things like this in the comments section by DLinneridge, that are jumping out at me in the current climate


At the same time pensions are likely to be squeezed, savings real returns are negative, again etc etc, so their personal income is a problem. At least the banks assets will have been inflating nicely, just what ‘we’ need for the share sell off. So maybe we will see a ramp up in the number of equity release schemes to help these poor, hard pressed ‘home-owners’ keep warm. Funded and run by the banks, of course. Could be very profitable. Especially if it coincides with serious funding constraints on the NHS ......

[jonny70]

The housing market warming up is a government attempt to kickstart the economy through rising house prices and more debt , that people cannot afford (they can at the moment cause interest rates are 0.5% but in 5 years time when they are 5%)

Its all government intervention through zirp 0.5% , deposit lending schemes , lending the banks mortgage money etc this intervention cannot go on forever and when the government pull it during the next economic boom , the st will hit the fan as it it is all underpinned by cheap money and lots of debt , the cost of debt will rise)Its really sad the government didnt learn the lessons from 2007.

[Sir Bagalot]

I read somewhere that in the past year house prices have increased 3.1%.

And the realworld inflation rate in the UK is what? 5-10%? So in fact in real terms they are still going down.

[0000]

I'm sure the last I heard most of the recent rises were down to (i) government schemes and (ii) London. I don't think the bulk of the UK market's going in either direction at any rate (inflation aside).

[Lawrence5]

Big one I read was houses in south east are unaffordable for 9 out of 10 people. Gulf in earnings is the real story....

[P-Jay]

Sir Bagalot said:

I read somewhere that in the past year house prices have increased 3.1%.

And the realworld inflation rate in the UK is what? 5-10%? So in fact in real terms they are still going down.

I don't think so, they're rising faster then people's incomes so in every way they're getting more expensive, whether the value is rising as quickly as a tin of beans or litre of diesel only really matters in regards to the general public amount of disposable income 1) have some sort of life style 2) drive the economy.

[Lawbags]

They say that it's a good thing about house prices rising etc, but for those of us who have been trying to get on the property ladder for the last few years, that makes it one step further away.

I have quite a far out theory (shoot me down if need be). It's all linked into immigration, benefits and hand outs.
Stop (or control) immigration and that would save a fortune and free up a mass of jobs, stop handouts to anyone who asks for it and anyone on benefits for more than 6 months who isn't clearly disabled (none of this 'I'm stressed' rubbish) gets the choice of army, navy or airforce. In which time they will get a trade, can leave and start working.

Boom, UK economy fixed (tounge in cheek)

[P-Jay]

Lawbags said:

They say that it's a good thing about house prices rising etc, but for those of us who have been trying to get on the property ladder for the last few years, that makes it one step further away.

I have quite a far out theory (shoot me down if need be). It's all linked into immigration, benefits and hand outs.
Stop (or control) immigration and that would save a fortune and free up a mass of jobs, stop handouts to anyone who asks for it and anyone on benefits for more than 6 months who isn't clearly disabled (none of this 'I'm stressed' rubbish) gets the choice of army, navy or airforce. In which time they will get a trade, can leave and start working.

Boom, UK economy fixed (tounge in cheek)

There's often some confusion here IMHO, rising house prices are seen as an indicator of a growing / confident economy so some people think it's a 'good thing' but unless you're a Bank, Estate Agent, Tax Collector or own more than one you sell-off for a profit it's pretty much a 'bad thing'.

As for your theory.... I'm not so sure.

[Lawbags]

P-Jay said:

There's often some confusion here IMHO, rising house prices are seen as an indicator of a growing / confident economy so some people think it's a 'good thing' but unless you're a Bank, Estate Agent, Tax Collector or own more than one you sell-off for a profit it's pretty much a 'bad thing'.

Aye.
Surely a growing economy is indicated by rising profits? Which should in tern be fed to us, in wages?
We can carry on wishing!

[Pulse]

A point I'm glad someone else has picked up on in The Telegraph: http://www.telegraph.co.uk/finance/economics/10244...

The new 'help to buy' scheme is NOT going to help things - only make things worse.

In 5 years' time, when people have to start repaying those debts, they will crumble once again.

[anonymous-user]

rising house prices are just as much as indicator of the availability of mortgages as they are of the economy doing well.

[Pulse]

RealSquirrels said:

rising house prices are just as much as indicator of the availability of mortgages as they are of the economy doing well.

Exactly; which means they will only go higher once the next phase of the scheme comes in next year.

[menousername]

what happens when interest rates rise?

I popped a test into a mortgage calculator, 250k house, 50k down.... leaves a 30yr mortgate with 800/900 monthly repayements at today's rates

I have not had a mortgage so I do not really understand what happens when rates rise.... I assume that you can only lock in low rates for a certain period of time so in the medium term, 5yrs or so, people we be seeing sharp rises in monthly repayments? Is that correct?

I dread to think what owing 900 a month could become?

[pingu393]

Does anyone think that rising house prices is a good thing?

[Pork]

RealSquirrels said:

rising house prices are just as much as indicator of the availability of mortgages as they are of the economy doing well.

Between 1995 and 2007 the UK population increased by 5%, the housing stock increased by 10% and house prices increased by 350%, meanwhile mortgage lending by banks increased by 630%.

Which of these figures is more likely to have led to a 350% rise in house prices: a 5% rise in population growth which is matched by an increase in supply of housing; or an unprecedented increase in mortgage lending from the banks?

Linky

[chris7676]

RealSquirrels said:

rising house prices are just as much as indicator of the availability of mortgages as they are of the economy doing well.

True, but you forgot the supply side which is a problem in the UK.

On the other hand, popularity of 'prime' London areas with international buyers doesn't make it easy.

Btw, it's all part of the international market, so let's not atrribute it too much to the HM government - the US and Irish markets are bouncing sharply, but they have had sharp corrections before unlike most of the UK.
Welcome to the long term British pickle.