Graham Beale, [Nationwide's] chief executive, also warned of a renewed fall inThe government is hoping that the low interest rates will generate a new property bubble to take the country out of recession - at least until the next election. That is not going to happen because:
house prices next year as more people lost their jobs and unemployment rose. -
Via FT.com
1- Britons cannot even save £200 for a new TV under the "buy now, pay later" culture, let alone saving 30k for a house deposit.
2-Nobody has 30k anyway: Britain has one of the world's highest debt-to-GDP ratios. The average Brit owes £9,191 according to Credit Action, a charity, and that excludes mortgages.
3- House prices skyrocketed until 2007 because cheap credit created bubble-jobs and illusion of wealth, not for sound fundamentals (work hard and save, wow, revolutionary).
4- Homeowners are losing their jobs, with unemployment set to reach 10pc next year. The government is trying to bail-out everybody but sooner or later it will become obvious that there is not enough money to save that many debtors. Homeowners will be forced to put their properties into the market as the only way to pay their debts. That will keep prices down.
5- Inflation is the government's favourite choice to pay for the debts by reducing the real value of money. Do not let it: get some good-old Inflation-Beating savings from NS&I and Swiss Francs. .And some Swiss chocolate.
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1 comment:
Someone senior in the business told me that the building industry is really going to tank next year ( taking its employees and those of its suppliers with it ).
Sites may look busy now but all the infrastructure projects currently underway were financed some years ago, very little is being approved at the moment so the downturn is yet to come.
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