Financial slowdown official

  Quickbeam 08:48 15 May 2008
Locked

click here I've said this for months, but others just say it's nothing, but the cycle of boom is moving around to bust again.

Inflation higher than the government likes us to believe, the price of everything going through the roof, house prices stagnating, wage rises set to the inflation rate the government wants us to believe... Hard times are looming.

  Grey Goo 10:44 15 May 2008

Must be bad, loads of migrant workers are returning home as well.

  Forum Editor 09:51 17 May 2008

is moving around to bust again."

No it's not, we're simply experiencing a slowing of growth. Even the most sceptical of financial analysts aren't predicting a recession, and currently the FTSE 100 is where it was last July.

Inflation is the problem facing consumers, coupled with the fall in the house market. The house market will recover, because currently the labour market is good - we now have more people in employment than at any time since records began. Of course there's a problem - economic growth has slowed, but saying that we're moving from boom to bust is a wild exaggeration.

  Quickbeam 11:47 17 May 2008

I see first hand that pockets are deepening.

  newman35 12:08 17 May 2008

I'm not convinced a recovery in the housing market is a certainty.
The 'boom' was fuelled basically by lenders giving ever more ridiculous sums to purchasers. In earlier times the standard building society rule was 2.75 times first borrowers annual income (plus 1 times spouse annual income). At present, assuming an 'average' salary around £25k this would mean a max mortgage of about £93k. The reasoning, by the lenders was that this was an affordable amount and still with spare for other living expenses (so less likely to default).
Compare this £93k with recent loans being given, and I see some way yet for prices to level out.
Even with good employment levels it's the salaries that are important in house affordability.

  rawprawn 12:14 17 May 2008

I see that Barclays Wealth are advocating buying equities. I have a feeling they are right, as in all markets including commodities and equities, rises and falls are always over egged.
The time to buy is when others are not, not when you are trying to follow a market.

  oresome 13:11 17 May 2008

I have a number of what were blue chip shares that have halved or more in the last few months, so I would advise caution to anyone contemplating buying into the market now.

Who is to say it won't get worse before it gets better?

  Forum Editor 14:31 17 May 2008

always use the state of the labour market as a guide to what happens in the housing sector.

Houses are like food - people will never stop wanting them, and they'll do whatever it takes to get on the ladder. In due course the house market will recover, of that you can be sure. Building land is finite, and the demand for houses is growing; that means one thing, and one thing only, as soon as the lenders rebuild their cash reserves they'll start lending more freely, and people will borrow - it will happen as sure as night follows day.

  jakimo 21:53 17 May 2008

The next 2 years are going to be very difficult with the cost of living going up & houses coming down, there is one consolation, the extra £120 tax allowance might just be enough to buy a house by the end of the year

  Forum Editor 22:42 17 May 2008

That's an interesting theory - put me down for a dozen.

  laurie53 08:15 18 May 2008

I'm never able to understand why the housing market is of such importance to people unless you are looking to move, and that surely can't apply to the vast majority?

If you are settled in a house why is it so important what happens to the housing market (as opposed to the interest rate, which obviously does have a bearing)?

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