Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

UK House Prices Slump 1.1% - Interest Rate Cut?

Housing-Market / UK Housing Dec 06, 2007 - 03:01 AM GMT

By: Nadeem_Walayat

Housing-Market Best Financial Markets Analysis ArticleThe UK Housing Market fell sharply in November, registering a 1.1% price drop according to Britain's biggest mortgage lender, the Halifax. The British Pound fell sharply on the news and stocks soared in anticipation of deep cuts in UK interest rates as the Housing Market has its first consecutive decline for 3 months in a row since 1995. The credit freeze is now in its 5th month with the interbank rate soaring to 6.65% increasing the chance of an interest rate cut at today's Bank of England MPC Meeting.


The Market Oracle forecast as of 22nd August 07, is for UK interest rates to fall to 5% by September 2008, with the first cut scheduled to occur in January 2008. Given the sharp drop in the housing market and signs of a fast weakening economy, there is now an increased chance that the first interest rate cut will take place at today's Bank of England MPC Meeting i.e. a month earlier than originally forecast. However, UK inflation is expected to continue rising during the next few months, with the Market Oracle forecast for UK inflation to peak during January 2008 and then decline sharply to below 3% by November 2008 (RPI), which will ensure the Bank of England keeps cutting interest rates during 2008. .

UK Inflation Trend Forecasts

The UK housing markets fast deterioration is expected to result in annualised UK House price inflation going negative for the first time since the early 1990's by April 2008, this is expected to be followed by a sharp fall in house prices as the buy to let sector rush for the exit to take advantage of the Uk capital gains tax change effective from 1st April 2008.

Further signs of the housing slump accelerating were illustrated by a sharp deterioration in the ability of houses to sell at auction with the number of sales falling from 97% in January 2007 to 71% by November 2007, despite cuts in the auction reserves as observed at a typical auction house.

Housing Market transactions are expected to take a further hit during December 2007, as the government's decision to expand the requirement for ALL UK Home Sellers to provide a Home Information Pack as of 14th December 07, will likely result in a big freeze on transactions hitting the UK housing market over the next few month. as fewer properties are put onto the market and thereby less transactions take place. Whilst this could be construed as being short-term supportive of house prices, it will hit the housing sector hard, which includes mortgage lenders and estate agents that could see as much as a 25% drop in business over a short space of time, and therefore the expectations are for further shocks in the housing and financial sector, this time focused on estate agencies.

Uk House Price Forecast 2007 to 2009

The UK property market remains at historically high unaffordability levels as illustrated by the Market Oracle UK House Price Affordability Index. Therefore the trend is for a sustained drop in UK house prices over several more years as house prices falls have barely begun.

UK House Price Affordability Index

The Markets reaction to the increased probability of an interest rate cut today was for the British Pound to fall sharply to £/$2.02 down 9cents or 4.4% from its £/$2.11 peak just 3 weeks ago. The Stock market soared with the FTSE rising by more than 170 points to 6493, led by Shell and BP as crude oil rose. As the property market continues to weaken, investors will increasingly see the stock market as a better investment option during 2008 which is expected to result with stock market gains during 2008.

However UK growth is forecast to fall sharply during 2008 towards 1.5% and therefore stronger gains are expected in foreign markets or in sectors with a strong exposure to fast growing foreign markets, rather than in domestic orientated sectors.

Global Stock Markets P/E Ratio Analysis

Current Market Oracle Housing Market / Interest Rate and Inflation Forecasts:

UK Housing Market Forecast for 2008-09 - As of 22nd August 2007
UK House Prices to fall by 15% over two years, falling prices to be accompanied by cuts in UK interest rates. (22nd Aug 07),

 

UK Interest Rate Forecast for 2008 - As of 22nd August 2007
UK Interest Rates to Fall to 5% by September 2008, First Cut in UK Interest Rates to Occur in January 2008 (22nd Aug 07)
 
UK Interest Rate Forecast for 2007 - As of 26th December 2006
UK Interest Rates to Peak at 5.75% between Aug and Oct 07(26th Dec 06)

 

UK Inflation Forecast for 2008 - As of 26th Nov 2007
Despite the current upward trend continuing into the immediate future, UK Inflation as measured by the RPI is expected to fall sharply to or below 3% by November 2008 (current 4.2%). The CPI is expected to fall to 1.8% by November 2008 (current 2.1%). (26th Nov 07)

 

By Nadeem Walayat
Copyright (c) 2005-07
Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Phillip
06 Dec 07, 04:01
Buy to let crash

Millions of fixed rates will expire over the coming year at very high interbank rates.

The buy to let is now a loss maker, I think your right about a buy to led crash in April. Why invest in buy to let when you can earn 6% plus risk free in a savings account ?


Deepak
06 Dec 07, 10:03
savings interest rates

savings rates might look good, but look how badly the pound is doing - wiping out gains. Most savings rates from institutions are simply catching up with the best that have been available for a while - most give rip off rates.

I wonder if you're not better keeping big mortgages as the BoE are obviously going to bail out homeowners and putting the cash into the mid-far east or the places that Nadeem keeps hinting at (turkey, russia, india, south korea) - that's where many moved their money during the summer crunch (note the bombay index).

Nadeem - any chance of some currency commentary ? Staying in the pound looks a poor bet right now.

ps - did you notice Canada reducing its interest rate even though its partially an oil currency ?


Elaine Power
24 Dec 07, 05:32
BUY TO LET investing

I am a buy to let investor ive been buying property since have a large range of propertys

We have been hear before its all happened before look at 1989 to 1996 period neg equity dom and gloom

I hope it all happens agian we need a price crash i havent bought property for 3 years there is no point yeilds are rubbish

Price booms do not help the proffesional property investormy advice is to put your money in the bank and hang back untill you can make a yeild of 8%

its simple

Im buying into the stock market i know its risky but over a 5 year period you will make money far more than in BUY TO LET

but if the crash happens i will be the first to buy again


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules