House Prices May Fall

house prices

Clever fellow that Governor, being able to predict that prices might fall. I've just heard another prediction - prices might rise. Now, I wonder who's right?
 
Please be sensitive :)

Hey Pete,

Please be sensitive to other people feelings when posting. There's at least 147 people out there who don't like those throwaway comments

[broken link removed]

MAC :)
 
This topic about analysts might be pertinent in this context:
 
QUOTE: "Clever fellow that Governor, being able to predict that prices might fall. I've just heard another prediction - prices might rise. Now, I wonder who's right?"

Yes, I realise analysts predictions can vary wildly. Though when the governor of the Bank of England makes a prediction about house prices it does give the prediction a little more gravitas.
 
direction

He is in the best position to know whether interest rates are going to go north and how quickly they will go up, so he has to be taken seriously I think
 
No matter how much gravitas he has he still can't predict the future any better than you or I or Mystic Meg...
 
From my own limited knowledge of economics, I don't think the Bank of England has had a direct influence on interest rates in Ireland since, oooh, 1979 ?

I could be wrong, though.

:)
 
-"I don't think the Bank of England has had a direct influence on interest rates in Ireland"-

Please note from original message, the question was in relation to UK house prices, and if a fall there would have any knock-on effect on Irish house prices.
 
house prices

The gov'nor cannot see the future in a "Nostradamus" sense of the word.

Though as it is the gov'nor of the Bank of Englands job to make a prediction on u.k. house prices every month (he sets the interest rate), I would guess he is probably better placed to make more accurate u.k. house price predictions than either you, me or mystic meg.
 
house prices

Not necessarily. The Governor's job is to assess and set the price of MONEY (i.e. the Central Bank base interest rates) rather than the price of PROPERTY. Even if the former may affect the latter it's not his job to predict the future behaviour of the property market.
 
house prices

Mayby it is not his job to predict the housing market but it is his job to keep a lid on inflation and the biggest inflation is house prices. Fortunately, he has the power to increase interest rates for this purpose.
 
house prices

Are you sure about that? As far as I know Ireland's main measure of inflation (the Consumer Price Index) does NOT include mortgage costs and so is not affected by house price inflation. I'm not sure if the UK's main measure of inflation is similar. I am not saying that the Governor doesn't take an interest in the property market(s) but I AM saying that he can no more predict future performance of the market(s) than any of the rest of us.
 
Re: house prices

Governments (and more particularly their Central Banks) have, at least in modern times, always used interest rates as a tool to stimulate or inhibit economic activity. The idea of inhibiting economic growth may seem perverse, but it is a basic tenet of economics that rapid or uncontrolled growth in economic activity will cause prices to rise sharply - with seriously negative consequences in the long run. Although property prices may not be included in indices of consumer prices, they are a key component of inflation, and for that reason Central Bankers have always been careful to monitor and control property market price movements.
 
CPI

Unregistered user, it is true that the CPI does NOT include the price of houses, as they are an asset, not a good or service.

But the CPI does include mortgage costs as one item in the large basket of items whose prices are tracked.

They have an average mortgage size, and a typical rate, and this gives an average repayment.

So a rise in interest rates, aimed at cooling the general economy and inflation, would actually push up this small component of the CPI.

Do you get me?

I do like imparting economics, and I know you are an avid listener and learner, and this gives me pleasure.
 
Re: CPI

So as Protocol rightly says ...

as the price of houses goes to the moon

and if interest rates fell ...

we would be showing lower inflation.

Magic!

[Given the indifference in owning houses here .. and the relatively low portion of household income devoted to purchase ..this makes absolute sense p.s. this refers to residents of the moon]
 
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