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Apparently, Europe is on the brink of a meltdown and a double-dip recession is looking increasingly likely. And how will this affect house prices?
Good questions. I liked the interview with a government chappy the other day "a double dip recession is looking increasingly inevitable".... eh?
But on the positive side, I love a double dip!
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We've not come out of the first recession yet!!!*
(OK technically, on-paper we have but thats a load of rollocks).
The recession never went away.
No-one's defining it as a second recession, just a second dip within the recession 🙂 Hence the name "double dip recession".
Can we still ride our bikes.?
Probably. But don't expect to be able to afford to fix them, so go careful 🙂
Its going to get a lot lot worse before it gets any better. Whoever gets in after the next election is going to have to take an axe to public services that will make Thatcher look like some kindly benevolent aunt. Anyone who doesn't think that's the case is living in la-la-land
If I was working in the public sector I'd be preparing for unemployment. As I work in the private sector I don't have to prepare as I'm already there. Hurray for capitlism!!!
What tyres for the second dip? 🙂
high rollers 🙂
'buy now, pay later'
Welcome to later 😥
I never bought, thanks a bunch!
As a public sector employee I'm almost waiting for the inevitable "chat" to happen, despite the "reassurances" that healthcare won't be effected. Bollox, my employing Trust is going to be in massive debt shortly as the PFI funded new hospital will be opened - despite Labour many years ago pre a general election stating that PFI was a bad idea and that they'd be abolished - yeah, right!
A lot of things seem better than they really are at the moment because all the things that are used to calculate figures have been held artificially low for sometime.
When Interest rates rise, & the effect of low VAT, stamp duty, car scrapage schemes etc are factored in it looks very drastic indeed 😐
As binners said, after the election we can look forward to massive cuts in public spending, inevitable increase in taxation, inflation on the up, house prices stagnant, banks refusing still to lend to business or indeed provide any sort of support and increasing unemployment. It really is a very very bleak picture.
already starting to see more repossesions come on the market round our way (london)
once the interest rates rises in earnest then we will be seeing a lot more
should have an effect of lowering prices quite a bit
how much money could be saved if we pulled out of afgahnistan tomorrow?
would that be enough to avoid the worst public service cuts?
and europe could take a lot longer to come out of this than us, which sucks coz they are our biggest trading partner, so will keep us from comming out quickly
I don't see things getting better for Britain than where they are now for at least a decade. The cost of living will go up (with higher and more volatile energy prices as Asia booms) but wages won't. Spending will contract further. The picture for the whole of Europe looks very gloomy: currently in places like Italy and Germany, there are four people taxpayers for every state-supported citizen (pensioners etc). In a few years that will be three to one.
This is depressing, I may as well of got into massive debt for the last 10 years like all the other idiots out there.
Should I cash in my shares now?
Dunno about other sectors, but engineering looks a whole lot better than this time last year.
At least it is sunny outside (in Brighton)
Yeah, cheer up everyone, if we think we're in a recession then we'll stay in one.
i wouldnt worry too much about it all
a) there is nothing you can do
b) economists have an incredibly poor recent track record on predicting the financial future
c) there is always a lot of doom mongering spread around before a general election
d) the media loves a good scare story
e) you can always go and ride your bike, which makes everything seem a bit better ime
f) oh yeah and a house price crash would be great for me as i could get on the property ladder and the insane property prices in this country in general could be sorted out
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Yeah... your right. Rousing chorus everyone 😀
the public sector will not really start to feel the pinch that the private sector felt till the new financial year.
add to that a government who will put off the inevitable till after the election.....
and
and
AND
the chilterns are really soggy at the moment 🙁
If we'd not had the boom, and then the bust, would we have ended up roughly where we are anyway?
I'd love a good house price crash. They're too bloody expensive, and it doesn't do anyone but owners of multiple properties any good.
I'd love a good house price crash. They're too bloody expensive, and it doesn't do anyone but owners of multiple properties any good.
But a price crash hurts current owners, which isn't nice. (I'd like one too but I'd not like to see others in my family in massive negative equity even more).
Yeah a property crash and the associated interest rise is just what the country needs 🙄
Do you want people to lose their homes?
If you can't afford a house, look for a smaller place or get a better paying job.
Please no house price crash, I am close to completion on mine and it's been a real struggle to get back on the market.
Feeling it badly in my trade 'Electrical' linked to building and industry.
Figures were going up until Dec 2009, the weather might be an issue in my line of work, but I'm seriously bunny nosing.
get a better paying job.
Easier said than done 😡
If you can't afford a house, look for a smaller place or get a better paying job.
A shame the third option of "Borrow far far more than you can afford" is no longer available to those trying to get onto the housing ladder.
We could be in Haiti with a limb roughly hacked off and all our close friends and family dead.
No you're right, not being able to put a massive palace on credit is worse.
Its going to get a lot worse before it gets better.
One thing though, banks will still lend to trading businesses. Now that they've been bailed out they are going back to "traditional banking" which means LIBOR plus 3% and a nice hefty arrangement fee. Good for them.
I disagree, the model of capitalism is working -we 've had the dip and now we're stabilising and can come out of this with time-how much I don't know.
People are taking other jobs with less pay and hrs.
This has been happening for years.
how will this affect house prices
It might force them back to a realistic level.
it's been a real struggle to get back on the market.
Are you mental? By struggling to get "into the market" you help fuel said market and create the struggle for yourself. It's a recession. House prices are unsustainable. If you wait, they'll fall, you already know that.
No they can't. There's too many sold at the high price.
A crash would see too many people bankrupt and the lenders with properties worth less than they lent to the buyers.
these prices are here to stay mate.
, the model of capitalism is working
Over priced housing that many first time buyers can't afford.
The goverment printing money it doesn't have.
Business collapsing and jobs being lost.
Tens of billions to bail out the banks.
How would you describe capitalism not working?
..or..
You are Gordon Brown and I claim my £5
get a better paying job.
Genius. My problems are over. Thanks for that.
the model of capitalism is working
It is...people's welfare sadly is not one of the parameters in the model.
(although some people do need to redress what they view as 'necessities', but hey their high expectations are due to/a requirement of Capitalism in the first place! :))
A crash would see too many people bankrupt and the lenders with properties worth less than they lent to the buyers.
Property prices are set by the market, it's one of the few areas where that's the case. people are taking cuts in income and losing their jobs, whilst banks are tightening up on lending.
Fewer people buying with less money to spend doesn't fuel a property boom does it?
Also, if there are (and no-one's going to argue that there aren't) going to be massive public sector cuts, do you think that might affect the property market? The NHS alone is the fourth largest employer in the world, the cuts to it alone will have a serious and sustained effect on the housing market, at the very least to the extent that NHS employees wil be less keen to risk taking on a mortgage that they'll be unable to pay if they lose their jobs then their homes. Multiply that over the whole public sector and the picture looks less rosy than you seem to think. then factor in the private sector job losses and you think the econly can really sustain boom house prices do you?
then let's add to that little mix the people who are not spending money now because the see the need to be saving, just in case. Those savings are money not circulating round the economy creating jobs as it goes. reduced economic activity = high house prices?
Maybe we need to cull a few old people logan's run style.
Not only would it reduce the 'pensions burden' but people would inherit their assets so encouraging spending and the government gets more tax from it too, reducing the public borrowing?
Win/win...no? 🙁
On a serious note are there any stats for increasing death rates during economic down turns?
The goverment printing money it doesn't have
It prints it, so it does have it. That's why it's called printing and not borrowing 🙂 Oh and it's the Bank of England anyway not the Govt.
backhander - MemberYeah a property crash and the associated interest rise is just what the country needs
Do you want people to lose their homes?
If you can't afford a house, look for a smaller place or get a better paying job.
or how about you shouldnt have borrowed at such a ridculously large factor of your income,ie a house you couldnt really afford, in the 1st place
But a price crash hurts current owners, which isn't nice.
Only if you sell & then most would be buying again at a deflated price anyway
I guess I'm lucky in that I've paid my mortgage off & house prices are really irrelevant.
or how about you shouldnt have borrowed at such a ridculously large factor of your income,ie a house you couldnt really afford, in the 1st place
What if you didn't, and your income then falls? Not everyone who gets repoed is an idiot with a massive mortgage.
Depends on how you define "money" Pretty little bits of paper with numbers on them or the wealth to actually back them up. the bits of paper are IOUs ("The bank of England promises to pay the bearer on demand.." The governament/BofE is printing IOUs it doesbn't have the wealth to support.
And the Bank of England are effectively the fiscal arm of the government. The Bank couldn't have printed the extra notes without being told to do so.
Yeah a property crash and the associated interest rise
I'm not an economist, so humour me. Why would falling house prices inevitably result in an interest rate rise (given recent falls have resulted in decreases in interest rates!)?
As uplink says, if you think that falling house prices are a problem for all property owners then you've been taken in by the hype which was one of the factors for the whole mess we're in.
I love a good cheery thread 🙄
Thanks, i was feeling quite positive till i read this one 😉
aracer - when houses are reposessed the banks lose money. And if prices are crashing, the bank can only sell at a pretty small fraction of what they lent out. The BoE base rate might not rise but the banks' real rates will, since they need to recoup money.
Property prices are set by the market
Some might say set by greedy estate agents.
I've seen property taken off the market before Christmas only to come back on after Christmas upto 20% higher. And if you do some research on historical house prices on that particular road with comparable houses - it just isn't warranted.
Now somebody stupid and desperate enough may buy it - but that still doesn't justify the price. I'd like to think the market has learned from past mistakes but excessive borrowing for unrealistically priced property is all a recipe for disaster.
And with Greece, Spain, Portugal, Italy and Ireland all being in a deep economic mess who knows what is around the next corner?
BBSB - the little bits of paper are irrelevant, since no-one's literally printing them anyway.
[url= http://en.wikipedia.org/wiki/Quantitative_easing ]Quantitative easing[/url]
Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically 'out of nothing' by [b]increasing the credit in its own bank account[/b]
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and what if it isn't. we live in a benign environment with little risk from earthquake, fire, flood, famine.
as long as i'm healthy then its not really to much bother if I cant buy a few trinkets to make life a little more fun.
We could be in Haiti with a limb roughly hacked off and all our close friends and family dead.
This is going to sound mad, but to some degree their position is enviable. Once you're at the bottom (an unpleasant and sad ride) you can only go up, everyone else there is at the same level and everyone helps each other out to make the place habitable. It's a fairly positive place to be if you can see past the initial suffering. Sort of the opposite here.
Yeah a property crash and the associated interest rise
A property crash would actually put pressure on keeping interest rates low.
An interest rate rise happened when the inter-bank's cost of lending / borrowing goes up (LIBOR?). And as you know this happened with all the toxic debt floating about. And if countries in the Euro zone start going pear-shaped (as per Greece) - it's going cost more money to borrow.
If Osbourne gets his hands on the economy we will deffo have a further recession. Cutting expenditure as we are trying to get back to some level of growth would be a total disaster.
Some might say set by greedy estate agents.
It's not the estate agents buying houses - if they set the price too high they won't do any trade (as has been happening recently).
The BoE base rate might not rise but the banks' real rates will, since they need to recoup money.
Well yes, but even the banks' rates with risk factored in are at historically low levels - there's quite a lot of room for them to add in extra risk margin without the rates becoming such that anybody with any sense should have a problem (ie still lower than the rates people were paying last century).
Cutting expenditure as we are trying to get back to some level of growth would be a total disaster.
Says one lot of economists, whilst another lot says something totally different.
The trouble is, we're really deep in it this time, and if something isn't doen to start balancing the books, external factors rather than internal ones could start causing us problems due to decreasing confidence in us as a country.
We could be in Haiti with a limb roughly hacked off and all our close friends and family dead.This is going to sound mad, but to some degree their position is enviable. Once you're at the bottom (an unpleasant and sad ride) you can only go up, everyone else there is at the same level and everyone helps each other out to make the place habitable. It's a fairly positive place to be if you can see past the initial suffering. Sort of the opposite here.
Bloody hell, I hope nobody from Haiti reads that, they would feel seriously patronised
The first one aint over yet, there is a solution, keep printing money (quantitive easing) until everyone has enough and the national debt is paid off.
Cutting expenditure as we are trying to get back to some level of growth would be a total disaster.
Well the alternative is to either keep borrow more and more - or raise taxes both of which have their own problems. If I was in opposition I'd be hoping my party didn't win this time around...same as back in '92; whoever gets in next time is gonna be hated.
Some would say we need high inflation to inflate the debt down to a manageable level - that'll lead to nice high interest rates so you might want to fix now....
as long as i'm healthy then its not really to much bother if I cant buy a few trinkets to make life a little more fun.
There's trinkets, and there's paying your rent/mortgage and bills.
Some would say we need high inflation to inflate the debt down to a manageable level -
A lot of the debt has been generated by bailing out the banks, buying shares etc. As the economy improves, this debt will dissipate and the sale of shares might even make a profit. Osbourne on the otherhand seems to want to stifle recovery, and flog off the shares at a discount, we lose two ways there.
The level of UK debt is not actually that high anyway when compared to other countries.
Kimbers, my remaining mortgage is ~1.5X our combined salaries, so we most certainly have not borrowed irresponsibly.
Maybe if you had made some better decisions, tried a bit harder and weren't so difficult to get on with you'd be able to afford a studio flat in Peckham.
Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically 'out of nothing' by increasing the credit in its own bank account
Yes, inventing money with nothing to back it up.
Whether that's printing money or just saying it's there is the irrelevant part, the fact is that there is a claim to wealth that does not exist. And that's what got us into this hole in the first place.
Jeez, you really do need things explained, don't you?
Yes, inventing money with nothing to back it up.
But money never has anything to back it up... does it? It's just numbers on a computer!
Good old financial innovation
Maybe if you had made some better decisions, tried a bit harder and weren't so difficult to get on with you'd be able to afford a studio flat in Peckham.
I do enjoy the level of condescension on STW some days. Other days it drives me mad
[url= http://en.wikipedia.org/wiki/Gold_reserve ]ever heard of gold reserves?[/url]
The ones that labour sold for pittance?
According to that wikipedia page, we only have £10bn of gold. There must be a lot more sterling in the world than that.
So a lot of money out there has no gold to back it up, doesn't it? Is that wrong?
the model of capitalism is working
Unfortunately our brand of capitalism relies on infinite economic growth. Banks lend money then demand payment with interest. Interest payments can only come out of growth.
See the problem?
Our economic system relies on infinite growth. But we live on a planet with finite resources.
Which is a problem as we are currently running out of oil, fish, hard woods and fresh water, to name just a few things.
This guy has my favourite take on our current situation:
[url= http://www.richardheinberg.com/Home.html ]Richard Heinberg[/url]
But in terms of explaining why "modern life is rubbish", this guy is a more entertaining read:
[url= http://www.kunstler.com/index.php ]James Howard Kunstler[/url]
Kimbers, my remaining mortgage is ~1.5X our combined salaries, so we most certainly have not borrowed irresponsibly.
Maybe if you had made some better decisions, tried a bit harder and weren't so difficult to get on with you'd be able to afford a studio flat in Peckham.
im perfectly likable
if your salary is only 1.5x your remaining mortgage then you will be fine, whats the problem?
and fyi! my missus and i now have a very hefty deposit am well in a position to buy a studio flat in peckham ,we just didnt see that buying when prices were silly expensive was the right decision .......looks like we were right
as for the gold reserves labour sold off 400tonnes- we have 300 left-at a loss (compared to todays prices) of 2bn
it wasnt a smart thing to do but against a national debt of 850bn its the least of the governments failings
The level of UK debt is not actually that high anyway when compared to other countries.
"PIIGS" Debt as % of GDP (2010 forecast)
Portugal - 84.6%
Italy - 116.9%
Ireland - 82.9%
Greece - 125%
Spain - 66.3%
Compared to UK?
UK - 80.3% of GDP
The difference? Lower unemployment and not being in the Euro perhaps?
And Alistair Darling has announced a massive amount of spending, erm, I wonder where all this money is going to come from.....
http404 i thought we were at 60% of GDP
USA is at 71% japan at 200%!!
http://www.economicshelp.org/blog/uk-economy/uk-national-debt/
edit oh i see thats the forecast for 2010
So if we all work really, really hard for 10 months of the year, don't pay ourselves or each other but just our overseas creditors, we'll be sorted by xmas!
Come on, who's up for it? I will if errr....you will...honest
[url= http://www.theonion.com/content/news/u_s_economy_grinds_to_halt_as ]its all just a load of meaningless numbers[/url]