House Prices Up 2% in Jan, End Of Recession?

[Danny_Boy 10]

The interest rate will stay low unless inflation goes up I can not see inflation doing anything unless people start spending again thus to make the interest rates rise people must start spending again. It is all an economical vicous cricle pretty simple really the interest rates wil stay low as long as people stop splashing the cash but as soon as people splash the cash then interest rates will rise but so will consumer confidence and with it the economy!

[dazzler4 10]

everyone is skint! instead of the government ploughing billions into bank etc, they should give it to us, we will spend and pay off debts, economy boosted, everyone happy!

[Tricky 10]

The interest rate will stay low unless inflation goes up I can not see inflation doing anything unless people start spending again thus to make the interest rates rise people must start spending again. It is all an economical vicous cricle pretty simple really the interest rates wil stay low as long as people stop splashing the cash but as soon as people splash the cash then interest rates will rise but so will consumer confidence and with it the economy!

 

There are other reasons why interest rates might rise that have nothing to do with inflation. In which case we get high interest rates leading to deflation and you really don't want to be over-extended on your mortgage if that happens.

[Dimitri 11 10]

There are other reasons why interest rates might rise that have nothing to do with inflation. In which case we get high interest rates leading to deflation and you really don't want to be over-extended on your mortgage if that happens.

 

Won't rates also rise if the govt. struggles to sell it's bonds at auction?

 

Wage inflation is probably not going to happen in the current economic environment so when IR's do rise this will not be good for the housing market.

[Tricky 10]

Won't rates also rise if the govt. struggles to sell it's bonds at auction?

 

Wage inflation is probably not going to happen in the current economic environment so when IR's do rise this will not be good for the housing market.

 

Yes and yes. I believe they're trying to sell a billion pounds a day.

[Tricky 10]

Here's a view I'd go along with.

 

http://uk.biz.yahoo.com/05062009/389/false-dawn-house-prices.html

[Dimitri 11 10]

Yes and yes. I believe they're trying to sell a billion pounds a day.

 

I've read in the last few days that Latvia's recent bond auction has failed and they might have to devalue their currency. We sound like an economic success story compared to the Latvians and flats in the centre of Riga have lost 50% of their value.......in a year! Ouch.

 

I've also read that the Chinese buy a lot (most?) of our bonds but are going cold on them because of QE. They think the govt. want to inflate our debt away and this is putting them off, or at least worrying them, because they are going to be buying bonds that soon have less value. Basically if this happens (Chinese stop buying govt. bonds) interest rates will have to rise and this may happen very soon, maybe before christmas. Bye bye housing market recovery and hello housing market capitulation when it does.

[Dimitri 11 10]

Here's a view I'd go along with.

 

http://uk.biz.yahoo.com/05062009/389/false-dawn-house-prices.html

 

This period will be an annoyance rather than a worry that I have missed the boat. Continued house prce falls would be the preferred route but it never happens and isn't going to happen this time, I just hope the market bounce doesn't last too long.

 

A quote taken from the article.....

 

'The harsh reality is that the number of property transactions, mortgage approvals and home loans remain below half of what is needed for stable and rising house prices'

 

....... where are the other half going to come from with unemployment ballooning and with IR's probably going to rise in the near future (making mortgages less affordable)?

Edited June 6, 2009 by Dimitri 11

[Danny_Boy 10]

This period will be an annoyance rather than a worry that I have missed the boat. Continued house prce falls would be the preferred route but it never happens and isn't going to happen this time, I just hope the market bounce doesn't last too long.

 

A quote taken from the article.....

 

'The harsh reality is that the number of property transactions, mortgage approvals and home loans remain below half of what is needed for stable and rising house prices'

 

....... where are the other half going to come from with unemployment ballooning and with IR's probably going to rise in the near future (making mortgages less affordable)?

 

I am still unsure on where the economy will go from here it all depends on so many variables I still imagine (and hope I mudt admit) that we will start seeing sustained growth in 2010 but I still feel people buying now will look back and see it as a good decision in a couple of years time. Probably the time for people to start fixing them mortgages now though as we could be in for a squirmy few months.

[Tricky 10]

I've read in the last few days that Latvia's recent bond auction has failed and they might have to devalue their currency. We sound like an economic success story compared to the Latvians and flats in the centre of Riga have lost 50% of their value.......in a year! Ouch.

 

I've also read that the Chinese buy a lot (most?) of our bonds but are going cold on them because of QE. They think the govt. want to inflate our debt away and this is putting them off, or at least worrying them, because they are going to be buying bonds that soon have less value. Basically if this happens (Chinese stop buying govt. bonds) interest rates will have to rise and this may happen very soon, maybe before christmas. Bye bye housing market recovery and hello housing market capitulation when it does.

 

The weird thing is I know exactly what's going on with the US Treasury market because it is plastered all over t'internet but nothing about the Gilt market which isn't.

 

But... If things are going V. bad expect to see comments like "Gilt curve steepening". What this means is that overseas investors are moving out of long term debt and into short term, i.e. the price of short relative to long grows as demand moves to the short term end of the curve. That way investors such as China can just stop repurchasing Gilts or US Treasuries without generating the massive sell signals that would decimate the value of their remaining holdings.

[jack244 10]

Lets hope prices do rise. I have been most unfortunate in my timings (which I had no choice) but to buy when there was a property boom, and paid loads for a property, and then sell when they are really low. Oh well

[Cyclone 10]

Lets not, most people benefit from the lowering prices, only a few get burnt. Go the other way and everyone gets burnt.