Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Ridiculous RICS Calls on Bank of England to Cap UK House Prices at 5%

Housing-Market / UK Housing Sep 14, 2013 - 11:11 AM GMT

By: Nadeem_Walayat

Housing-Market

The Royal Institution of Chartered Surveyors (RICS) has called on the Bank of England to cap house prices at 5% to prevent another house prices bubble, this is set against recent Halifax data that puts house prices rising at a rate of 4.6% per annum.

The problem with the RICS call for a 5% cap is that it implies that the Bank of England is ever competent in capping anything let alone house prices inflation, when the evidence suggests otherwise as the Bank of England has FAILED in its primary remit to target or cap CPI inflation at 2% for the past 5 years, and this during a period of economic depression i.e. the most favourable economic conditions for an inflation CAP , instead Inflation has averaged more than 60% above the Bank of England's 2% target rate at a rate of approx 3.3% per annum. Though real inflation tends to average between 1 to 1.5% above the highly suspect official rate therefore currently at between 3.7% and 4.2%, to which asset prices tend to be leveraged.


The following graph of official CPI inflation rate illustrates an exponential inflation mega-trend in motion that asset prices tend to be leveraged to and oscillate around and hence one of the primary mechanisms of how the elite accumulates wealth, whilst the effect on the wage slaves is to continuously lose purchasing power of net earnings (after taxes) thus forcing workers to take on debt and thus become reliant on political bribes (benefits and entitlements culture) as perpetual debt slaves who will spend virtually their whole adult lives servicing their debts, for instance over 90% of today's graduates will leave university with about £60,000 of debt that they will then be focused on servicing for the next 25 years of their lives.

In terms of Inflation expectations going forward, my long standing view is (16 May 2013 - Mervyn King Mission Accomplished, Bankster's Saved, Debt Monetized Via QE Stealth Inflation Theft )

An average rate of 4.5%, with a trend oscillating between a rate of 7% to 2.5%, which is the probable UK inflation trajectory over the next 5 years, with real inflation averaging at 6% per annum.

Therefore the RICS call for the Bank of England to CAP house prices at 5% is just as ridiculous for if during the house prices crash they had called on the Bank of England to put a floor under house prices of not falling more than 5% (actual crash was 25% in nominal terms, much more in real terms).

The bottom line is that the only way to cap house prices is for the government to stop printing money and debt, for as long as governments continue to bribe voters with printed money then there WILL BE Inflation to which asset prices are leveraged because assets such as houses CANNOT be printed. Currently the government prints an additional £120 billion of new debt per year to bribe the electorate that feeds inflation.

UK House Prices Forecast

My latest in-depth analysis of Mid August in the UK housing bull market series (UK House Prices Bull Market Soaring Momentum, 10% Inflation by October?) warned to expect an imminent boom in house prices, where my expectations were for house prices momentum to rise from 4.6% (July data) to at least 10% for October data, and reach 12%+ by January 2014 data as excerpted below:

In terms of the bull markets current momentum, the UK housing market is accelerating towards an annual inflation rate of at least 10% per annum. Given the markets current trend trajectory, UK house prices could be rising by 10% per annum as early as on release of the Halifax data (NSA) for October 2013 (in November), and continue accelerating to a rate of more than 12% per annum for January 2014 data (released Feb 2014).

And as illustrated by the below graph, I expect an imminent 10%+ per annum house prices boom that I expect to be sustained into at least Mid 2014.

Uk house prices forecast

Also see my recent UK Housing Market Final Warning video -

A Quick Recap of the Trend Towards a House Prices Boom

The actual signal for change from an embryonic bull market into a bull market proper came in September 2012 following the governments announcements proposing to double permitted developments for home owners, which had the near immediate effect of changing housing market sentiment long before the first building works could be commenced, as it would trigger demand for property with a view to extending as well as owners seeking to contract builders as I pointed out at the time right at the bottom of the UK housing market for 2012.

06 Sep 2012 - Super Mario Draghi Triggers Stocks Stealth Bull Market Rallies to New Bull Market Highs

This years convergence towards housing market bottoms such as the UK and US presenting one of those once in a couple of decades opportunities to climb aboard what still are embryonic bull markets, just as I strongly suggested the birth of a new multi-year stocks stealth bull market in March 2009

08 Sep 2012 - UK Home Extension Planning Rules Relaxed to Boost Economy, Trigger Housing Bull Market

I am continuing to see positive signs towards a multi-year bull market, so I am giving you another head start on an emerging probable multi-year bull market in UK housing.

The announcement was followed by further government measures that would boost sentiment long before the policies would be implemented in any significant number such as George Osbourne's March budget announcement to effectively create a UK subprime mortgage market by paying 20% of the deposit on first new builds and from 1st of January 2014 all properties upto a value of £600k.

20 Mar 2013 - George Osborne Boosts UK Subprime Housing Market Ahead of Election Boom

Creating a UK Subprime Housing Bubble

The chancellors announcement of £130 billion mortgage guarantees effectively amounts to seeking to ultimately create a UK version of U.S. Fannie Mae and Freddie Mac that will eventually blow up in spectacular style as more and more house buying voters expect to be bribed at each election and therefore the £130 billion will mushroom to one day stand at well over £1 trillion of liabilities, off course the bust will come AFTER the next housing boom, so this and the next government need not worry themselves for the consequences of creating a UK subprime housing bubble as the consequences of which tax payers will be liable for in a decade or so's time which means another financial crisis as this repeats the SAME mistakes of mortgage backed securities i.e. the lenders are not liable for the risks so can take on more risky loans for commission as the liabilities will be with tax payers.

This scheme will be extended from the 1st of Jan 2014 to allow prospective home buyers to buy ANY property (not just new builds) with the government financing 20% of a deposit upto £600k, or £120k of tax payer money going towards EACH prospective buyers home purchase, which EFFECTS market sentiment in the PRESENT.

For possible bull market investing opportunities see - 03 Jun 2013 - UK Housing Bull Market Opportunities In Britain's Multiculturalism Immigration Crisis.

Ensure you remain subscribed to my ALWAYS FREE Newsletter for in-depth analysis and detailed forecasts on the unfolding housing bull market.

Source and Comments: http://www.marketoracle.co.uk/Article42268.html

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2013 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 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.


Post Comment

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