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What's the housing market like at the moment?

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Tony, I'm impressed with your optimism.

 

When (and how) do you think the financiers will sort out the market, and will they ever return to the lending practices that we need to support the prices at current levels?

 

The £50bn injection hasn't had any effect on LIBOR and there is talk that if prices keep falling, Northern Rock may not be able to pay back the loan to the Treasury. This will soon become political dynamite when the general public realise how much of our money the government is risking to try and keep hold of power.

 

Also, some people ARE in a rush and have to move for whatever reason. It is these forced sellers that will lead to the price indexes showing falls over the next 2 years.

There are two unrelated questions there. I wouldn't (and never have) advocated some of the lending practices that were undertaken before. However I have confidence that lending will be easier in the near future. If it doesn't house prices will be the very least of peoples worries.

 

I understand that LIBOR is softening a little.

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I have it good authority form a couple of people that in 3 - 4 months time , things will start to ease and start moving again . One of the people I have spoken to was up here from London on business . Her bank is looking to fund a large development . She had lots to say about the situation and told us after a meeting that there are various things in the pipeline to ease the situation. Hope she is right because we have a few properties stood at the moment.

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Phylis, your comments are always interesting. You have up to recently been quite bullish with your thoughts. You now seem to have now turned in to a bear and agree that prices are falling.

 

Where do you stand on the question of recession? Will we be in one by the end of the year?

 

Personally I feel we will be in one by December.

 

I dont think we will go into as recession.

 

It is quite worrying though the amount of developers who have recently started laying people off. It will all come out in the wash

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oh, you know, doing this and that.

 

i saw this article today and thought of you - any comments on it?

 

do you agree it looks a bit dismal for the new-build industry at the moment?

 

http://www.independent.co.uk/news/business/news/sharp-fall-in-new-home-sales-puts-thousands-of-jobs-at-risk-832208.html

 

I agree it is diar for the residential developers. The majority have started laying off staff and cutting back on their working hours. We have had a huge drop off of new residential work. We are fortunate though that this only makes up about 25% of our work output.

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I dont think we will go into as recession.

 

 

Im hoping we dont get a depression, and think that a recession would be a 'let off' after years of financial exuberance, and, as a nation, spending way beyond our means, whilst producing nothing of real worth.

 

Housing market aside, Im genuinley interested Phylis, as to why, and how, you think will avoid a recession. Bearing in mind theyve already used the 'cut interest rates to stimulate consumer spending' card in the wake of 9/11, and that in part has lead us to where we are now.

 

The real question imo is are we heading for a inflationary or deflationary recession?

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A recession is two consequtive months of negative growth.

 

Legal and General are giving a 90% probability of recession occuring...

 

http://www.forbes.com/afxnewslimited/feeds/afx/2008/05/21/afx5034381.html

 

I don't want to put words in Phylis' mouth, but she's been consistently over optimistic on any topic to do with housing or the economy, as if by wishing it were so it will be.

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Let's be honest Cyclone... we all need to wish that it won't happen. If we hit a recession house prices will be the least of your worries.

 

This isn't a situation to be scoring clever intellectual points on the internet.

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If wishes were pennies we'd probably all be rich. It doesn't alter reality though, we do appear to be headed for a recession, pretending it's not going to happen won't help, best accept it, hope that we're wrong, but prepare for it anyway.

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in answer to the original question about "what's the housing market like?" the answer is "generally depressed".

 

But, this is, after all, a generalism and generalisms don't apply to all situations.

 

So, if you had the good sense or good fortune to buy a house in a good area where demand is always high then you'll probably find that, with so few houses actually being put up for sale, you'll have no trouble selling.

 

That's the thing that some folks forget, ok, so, very few people are selling, which means that very few are buying, but that also means less competition for those who are selling.

 

If your house is the exact same as dozens of others in the same area you might find it tough. But if you have something to sell that is rather different, and it's in an area of high demand, you shouldn't have any problem.

 

I think we will avoid a recession but the housing market will stay flat for another 2-3 years until the new Conservative government have chance to take office and restore the nations faith in the housing market.

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The market is flooded with unsold property.

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Let's be honest Cyclone... we all need to wish that it won't happen. If we hit a recession house prices will be the least of your worries.

 

This isn't a situation to be scoring clever intellectual points on the internet.

 

Ah, the Armageddon response.

 

I was once involved in some scenario planning where one of the variables being examined was economic stability. It struck me that the range of possible economic outlooks being discussed was incredibly narrow: growth stalls a bit vs growth accelerates.

 

'What if we hit some serious turbulence, like a depression?' I asked. 'There's no point looking at that because no strategies would work, it's the Armageddon scenario.' came the reply.

 

But but but, we can't just ignore it and hope it goes away if there is a tangible possibility of it happening. We need to plan accordingly.

 

Ironically, if you are going to lose all your money, losing it on property is as good a way as any.

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Being in a depression isn't guaranteed to make you loose all your money.

So long as you're not unlucky enough to be out of work for an extended length of time all you have to do is move your money into safe investments, ie a savings account and wait it out.

Unless you're investing as part of running a business though it's likely that you could 'make' more money by investing in paying off your own mortgage if you have one, the amount you can save in interest by paying off early is huge.

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