Rabu, 30 Mei 2012

EU: High UK house prices are risk to the economy

EU: High UK house prices are risk to the economy

By This Is Money

PUBLISHED: 09:07 EST, 30 May 2012 | UPDATED: 12:19 EST, 30 May 2012

The UK's high house prices are creating dangerous levels of household debt that present a risk to the economy, European Union officials have warned.

In a report on the performance of all EU member states under increased monitoring powers in the wake of the economic crisis, the European Commission highlights 'high levels of household debt' and the 'insufficient and rigid' housing supply in the UK as risks to the economy.

The report says: 'The high levels of household debt accumulated over the past decade are linked closely to high house prices and represent an important imbalance in the UK economy.'

Risks: The rush to buy increasingly expensive houses is loading UK households with dangerous levels of debt, the EC said.

Risks: The rush to buy increasingly expensive houses is loading UK households with dangerous levels of debt, the EC said.

It said household debt has been rising steadily for the past ten years, and highly indebted households are 'vulnerable to rises in interest rates or in unemployment, with potentially destabilising effects on the economy at large'.

The report warns: 'Household indebtedness may be further exacerbated if house prices increase again, especially in relation to disposable income.

'While there are currently few indications that housing demand or interest rates would surge in the near future, the insufficient and rigid supply of housing in the UK exposes the country to higher and volatile house prices.'

Britain's consumer debt - at nearly £1.5trillion - is the worst in Europe. Most of the money is owed on property. But the cost of servicing debts has fallen dramatically in recent years thanks to the Bank of England slashing the base rate to 0.5 per cent in early 2009, and with its programme of quantitative easing helping to keep consumer rates pinned down.

Money markets currently predict no rise in the base rate until 2016, although trading has been volatile: a month ago the prediction was for an increase in 2014. [more on interest rates predictions]

The report says the 'noticeable under performance' of the UK regarding external competitiveness and export developments deserves attention - 'although its potential macroeconomic risks appear less pressing than those arising from internal developments'.

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More QE and more years of near zero interest rates coming our way then. All to prop up the banks who would all go belly-up if interest rates increase. Though they are doing quite a good job of increasing mortgage rates on their own! Heaven help us when the inevitable rise in real interest rates happens - as it inevitably will once the markets turn their attention to the UK's over-indebtedness, having by then destroyed Greece, Spain, Italy..... I fear for my children's future even though they were taught not to get into debt, they will suffer for the sake of those who have, as we are doing at present. We aint seen nothing yet.

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When the HP boom was mid flow you would often hear people gloating 'Oh I live in a 400K house blah, blah, blah - What they should have been saying was I own a slice of the 1.5 Trillion debt mountain - Doesn't have the same ring does it! The EU officials are quite correct- We have over leveraged way beyond our European counterparts for decades to 'live the dream' but with HP's back to 2004 prices who has had the better quality of life over these 8 years - Definitely the Europeans who still maintain family values raise an eyebrow at those who choose to work on a Sunday! The Euro is failing due to a few bad apples but the majority of Europe still have much for us Britons to be envious of!

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" The report says: 'The high levels of household debt accumulated over the past decade are linked closely to high house prices and represent an important imbalance in the UK economy.' " ... ... Yes, yes, we know. We've told 'them' for years, but they took (and take) no notice. £70,000 properties rose to '£240,000' properties. Where does the extra mortgage income come from? It must come from somewhere - raised prices? What does that do to our international competitiveness, when products and services are expensive, due to 'high' wages so staff can pay their mortgages? Remember, it affects everyone. Of course, councils use the high prices to increase council taxes; they pay high benefits for high rents. So, who enjoys and gains from this situation? There should be an efficient public enquiry, followed by appropriate action, which will improve the lives of families and individuals in the UK. Build 2-bed minimum, flats and houses throught the UK, not just in the south. Time is short.

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With prices starting to drop in London as well as right across the country the UK will hopefully have the much needed house price crash.

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Keep your nose out of our affairs, EU. When we want your opinion, we'll ask for it.

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If so many people from abroad were stopped from buying houses like they are in other countries the house prices would stabilise in the UK.

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We should warn the Officials and Bureaucrats of EU they are spending too much of our money and its time their salaries were cut and they learned to manage with far less money from all EU countries Why spend £100,000 to move Eu Parliament several times a year this is wasteful and unproductive All Bureaucrats should be elected by the people

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Tell them to take their advice back to Big Brother Central and stick it where the sun don't shine. EU Officials preside over a continent and peoples they have destroyed!!

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