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| The UK housing market: a bubble about to burst? |
something is fishy
by KIPPER
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#1001452
of 3278
 10 Dec 2002
12:45 PM |
Oh, i see, you are querying this :-
(all items RPI excluding mortgage interest payments)
I think you are confused between mortgage repayments, excluded, and house prices, included. I thought this forum was about house prices? |
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KIP read it again
by KIPPER
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#1001451
of 3278
10 Dec 2002
12:42 PM |
If you haven't mislayed your spectacles please re read,
Which items are included in the Retail Prices Index?
The RPI includes data on food and drink, tobacco, HOUSING, household goods and services, personal goods and services, transport fares, motoring costs, clothing and leisure goods and services. A list of price indicators used in the construction of each year's RPI is available from the website
It's in upper case to make it easier, if you don't believe me check the site |
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I missed a section
by KIPPER
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#1001450
of 3278
10 Dec 2002
12:40 PM |
Of course the reason inflation is so low, with housing included, is obvious.
In real terms prices are reducing in the high street, whether real or virtual. No one can ignore the downward pressure on supermarket goods, cars, increased market available on the internet and airline tickets to quote a few. Infact if it wasn't for housing we'd be near, if not in, a deflationary position.
This is a key difference to 1990, if you pull up the inflation figures for that year they are not 2.5%.
"1990 - Inflation 9% for the year - not looking so good. Peaked at 10.9% in September "
http://www.bized.ac.uk/dataserv/chron/kf1990.htm
Thats my point to the earlier posting, without the equity withdrawal spending, the inflation levels would be even lower. If they were lower then interest cuts are forced, to make people spend.
That is why the interest rates were so high, in 1990. That's the BOE's problem now, the pressure on interest rates is downward.But they are trying to hold. This is why a further boom, in UK housing, will be expected post EU membership. You guy's living with your parents better jump on the band wagon soon.
I think you need to review the term "money illusion". It's a valid economic theory, quick summary below,
"The term 'money illusion' refers to a tendency to think in terms of nominal rather than real monetary values."
One might suggest the people who "hope" for 50% falls are suffering "money illusion". |
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Kipper? What are you saying!!!
by Knowledge is Power
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#1001449
of 3278
10 Dec 2002
12:38 PM |
Kipper,
That's what I just said! To quote myself I said;
"think you’ll find that this is incorrect! The BoE uses the RPIX inflation measure that DOES NOT include House Prices. If it did, UK inflation would be much higher & an immediate INTEREST RATE RISE would be round the corner."
you just stated:
"RPIX (all items RPI excluding mortgage interest payments) is the main economic measure used by HM Treasury and the Bank of England."
What is your argument with me Kipper?
The BoE uses the RPIX over the RPI. Read the MPC's minutes, or better still their inflation report & you'll appreciate the subtle difference between RPI & RPIX!
I'm saying they should use RPI as the main economic measure and not RPIX!
If they did, Inflation would be much higher & so would interest rates. Further more using RPI although a more instant measure of monthly inflatory shifts (that has it's negatives) would help keep housing inflation in check.
I think the 21st century would benefit from a more dynamic measure of UK inflation and not the silly RPIX. How long has the BoE used it? Five years, well it's time for a re-think! |
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Rik - unused or unusuable
by Andy B
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#1001448
of 3278
10 Dec 2002
12:33 PM |
Rik
Your comment about housing & unused properties is nonesense.
It is like saying why buy a new computer when there are lots of old ones unused?
Clearly you have not seen the 'houses' that are empty, try visiting parts of Salford, where there are full streets that are empty.
I suggest that many of these 750,000 houses are just waiting to be offically struck off the dwelling list at the ODPM.
And to correct you further house price inflation has been lower in the higher housing price brackets - per the BOE inflation report. (NB I have not checked their figures on this though). So not sure about the 4 bed detached etc.
Regards,
Andy. |
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Knowledge is power - try again!
by KIPPER
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#1001447
of 3278
10 Dec 2002
12:21 PM |
Retail Price Index summary from:-
http://www.statistics.gov.uk/cci/nugget.asp?id=21
The RPI
FAQs on the UK's main measure of inflation
What is the Retail Prices Index?
The Retail Prices Index is the UK's principal measure of consumer price inflation. It is defined as an average measure of change in the prices of goods and services bought for the purpose of consumption by the vast majority of households in the UK. It is compiled and published monthly. Once published, it is never revised.
"What is it used for?
Measures of inflation are vital tools for economists, business and government. The Bank of England's Monetary Policy Committee sets UK interest rates on the basis of a target figure for inflation set by the Chancellor of the Exchequer. Wage agreements, pensions and changes in benefit levels are often linked directly to the RPI. Utility regulators impose restrictions on price movements based on the RPI. RPIX (all items RPI excluding mortgage interest payments) is the main economic measure used by HM Treasury and the Bank of England.
Which items are included in the Retail Prices Index?
The RPI includes data on food and drink, tobacco, housing, household goods and services, personal goods and services, transport fares, motoring costs, clothing and leisure goods and services. A list of price indicators used in the construction of each year's RPI is available from the website."
Now I believe it mentions housing in there! But, of course it has to, what is an inflation figure without housing? It's like car prices without the engine, or a deep seas sive without air. Now please restate your previous question to include an adjustment for the power of this knowledge. |
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Housing
by Jack Straw
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#1001446
of 3278
10 Dec 2002
12:13 PM |
Rik,
I think if you re read that article it states,
"disused housing in the north"
Of course, since you know your demographics, you'll obviously know that most major cities, in the north, are shrinking.
But I'm sure you read the article. What else does it say, since you have chosen to quote from it???? |
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Shortage of housing
by Rik
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#1001445
of 3278
10 Dec 2002
12:05 PM |
I always find it rather amsuing to read about "shortages of housing". What it should read is "shortage of affordable, luxury 4 bedroom detached homes in a really nice area close to good schools with a big garden and near to the countryside". The article provided by Kipper contains the following statement from a Lib Dem spokesperson...
"The staggering fact is that we still have 750,000 homes sitting empty across the country. It's terrible that we've failed to bring those homes back into use.'
If there really was a shortage of housing these properties would not be empty. Furthermore there are always rpoperties for sale and rent. If there were genuinely not enough housing these places would be snapped up as soon as they came onto the market! They are not, however. |
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Kipper? Are you confused?
by Knowledge is Power
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#1001444
of 3278
10 Dec 2002
10:34 AM |
Kipper,
You state:
“With regards to 5% of GDP down to house equity witdrawal. Well the argument is simple, this is maintaining inflation. Without the said spending inflation drops and so do interest rates. “
I think you’ll find that this is incorrect! The BoE uses the RPIX inflation measure that DOES NOT include House Prices. If it did, UK inflation would be much higher & an immediate INTEREST RATE RISE would be round the corner.
This is the biggest weakness of the policy of the BoE (set by Labour Gov). House prices are the biggest purchase/investment that people make. To not include it in the inflation measures is stupid.
Question: Why do you think firefighters/nurses want bigger pay rises?
Answer: to meet the rising cost of living.
Question: So what’s been rising the most in the last few years?
Answer: House prices.
So… If house prices were included in the inflation measures, Nurses et al (with above or equal inflation) pay rises would be MUCH better off & much happier!
This is a very interesting topic & I thank you for raising it. I feel that contrary to the IMF’s view of our monetary policy, it is a very silly mistake that has been made & will be one of the contributing factors to the housing markets downfall. |
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reply to kipper
by sparkey
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#1001443
of 3278
10 Dec 2002
06:05 AM |
The interest rate is 'decided' by the current and projected inflation in the UK. Yes, Europe + the US economic activity has a bearing, but not much.
A 20-30K payoff from the FS! Wow, I'll put my CV in now.
90%+ of the people who work in the FS industry are on relative modest wages. These are the telephonists, back office processing. There are very few highly paid individuals in the FS - and these are getting fewer as we speak. Oh, the higher paid individuals tend to be sacked rather than made redundant.
50% fall - easy knock 5 years price growth of the market! |
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post deleted.
by ftmonitor
FT Administrator  |
#1001442
of 3278
10 Dec 2002
01:25 AM |
| Please bring the focus back around to the topic issues and away from discussions of one another. |
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Elvis has left the building
by KIPPER
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#1001441
of 3278
09 Dec 2002
10:29 PM |
Did I say that? If so please highlight the section of text.
What are you saying, or should I ask what do,
"Wise men say."
answer if you are not,
"all shuck up." |
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Kippered
by The RealFakeElvis
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#1001440
of 3278
09 Dec 2002
10:16 PM |
So everyone can go on borrowing forever with no negative consequences?
Now that is a novel idea. |
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Point made
by KIPPER
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#1001439
of 3278
09 Dec 2002
10:02 PM |
| I think I illustrated that point in my previous message |
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Mr Kipper
by The RealFakeElvis
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#1001438
of 3278
09 Dec 2002
09:51 PM |
This debt spiral has to end sometime, doesn't it?
What then are the implications for jobs and house prices? |
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