UK recovery cuts home repossessions, but some see trouble brewing

UK housing market is not sustainable. My wife and I bough our house 2 years ago in the South West for 243k - it has now been value at 295k. A 50k hike in 2 years - we are not complaining but it is crazy.

UK economy wants you now to spend 100K. what are you waiting for ?!!? If not, price will come back and you will lose job and end up on street.

thats madness..where abouts in the south west, if i may ask?

BoE are aware that raising interest rates will mean there is less disposable income as UK homeowners have to cope with increased mortgage payments, especially as the majority of mortgages are variable rates and not fixed, hence it will affect the overall economy. Therefore, until there is a "sustainable" recovery, I don't see the BoE increasing interest rates, but markets are always ahead of themselves. Although the economy has seen some good numbers recently, the average UK citizen is still feeling the pinch with no wage increases seen for the majority in the last 3 to 5 years yet inflation is still affecting prices, even though it has come down this month to be closer to the BoE target of 2%. Therefore, I don't see this recovery as sustainable yet until we see consistent numbers for at least 1 year. Even when unemployment hits 7%, unless inflation takes off, the BoE will hold off raising interest rates unless we get consistent GDP growth. I do agree that house prices, due to a supply shortage, are at historical highs in relation to average price vs. average income. The housing market bubble never really burst in the UK, like it did in US, Spain, Ireland... Unless wages rise, which they are not, current house prices are not sustainable and trouble is indeed brewing...

1000% agree bro!!

The other issue is that for many homeowners who have a mortgage, 30-40% of their disposable income goes on mortgage payments. Therefore, any rise in interest rates will definitely increase home repossessions and it will knock GDP down and banks will have to write off more debt. Due to the historical highs in relation to average price vs. average income, far too many people in the UK have outstretched their finances. This is not a good sign... However, until we see signs of this happening, GBP will continue to strengthen as it has done this year so far, unless the economic numbers start changing to become more negative. The numbers have in general been very good, especially in the last 3 months and the markets like it as evident with the strengthening £ vs all currencies. They are currently stalling apart from GBPJPY either for a reverse or for the next leg up...

Bath