I agree house prices will fall futher and need to but my point is up to now the overall double digit fall is regional and quite frankly considering the conditions held up well.
Take out N Ireland (which is a very small number of homes nationally )and your in single digit fall.
If you compare this to the US...
Take out N Ireland (which is a very small number of homes nationally )and your in single digit fall.
If you compare this to the US...
DislikedThe currency in N.Ireland is sterling, as they remain part of the UK.
There often tends to be a time lag with falling house prices, in that the provincal parts of the country are first affected, with London and the south east following on at a later stage.
I am sure prices will come down a lot more, considering the lack of credit from the banking system (mortgages are down 60% on last year), weakening employment situation and higher inflation, all of which severely dents consumer confidence. On a fundamental basis, house prices are still extortionately expensive in relation to income and rents. Prices need to fall by about 25% to bring them back inline with their long-term average.
I agree that much of the above scenario has been priced into cable and UK stocks - with consumer discretionary, property and banking stocks decimated. How much is obviously impossible to quantify. But derivatives on home prices are forecasting over a 20% drop from preak to tough and most economists are predicting tightened credit conditions to continue well into 2009 and unemployment to rise to 1.8 million.
Therefore, the markets' outlook on UK plc is already grim, which should be mostly reflected in the current price of cable. However, I think cable can reach below 1.90 if economic data over the next few weeks/months highlights that the worse-case scenario is now becoming the likely scenario. This would imply that the BOE will have to cut rates more aggressively than previously thought, starting at the end of 2008.Ignored
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