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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (22750)	2/3/2005 8:57:58 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

DATAWATCH UK housing crash fears diminish Thursday, February 3, 2005 10:42:36 AM LONDON (AFX) - Concerns that the UK housing market is poised to experience an early 1990s-style crash diminished this morning after a closely-watched survey pointed to a solid increase in prices in January The Halifax, the UK's biggest mortgage provider and part of the HBOS PLC banking group, found house prices rose a seasonally adjusted 0.8 pct in January over December Despite the monthly improvement, prices were up 13.7 pct on a year-on-year basis, the lowest annual rate since December 2001 "They were somewhat stronger than the recent monetary data would suggest but market momentum continues to slow," said Adam Chester, analyst at HBOS The Bank of England's rate-setting Monetary Policy Committee has raised the cost of borrowing a quarter point on five occasions since November 2003, taking its key repo rate up to 4.75 pct, as it sought to stem inflationary pressures arising from above-trend growth and rampant consumer demand But evidence of a general economic slowdown, alongside subdued inflation data and concerns over the housing market outlook, have raised expectations that the next interest rate move may actually be down. "The (Halifax) report will be seized upon by those predicting a soft landing for the housing market and will certainly reinforce growing expectations that an early cut in interest rates is unlikely," said Ed Stansfield, property economist at Capital Economics The MPC has kept interest rates unchanged since last August and analysts said today's survey may ease any housing concerns on the nine-member panel especially as it comes in the wake of a similar survey from the Nationwide, the UK's largest building society. Last week, the Nationwide found house prices rising by 0.4 pct in January Like the Halifax, the annual rate fell slightly to 12.6 pct - its lowest rate in three years Capital Economics' Stansfield is a little bit more concerned than the Halifax and the Nationwide, which dismiss suggestions of any slide in prices "Despite the resilience of the Halifax and Nationwide house price indices, we still believe that the bigger picture of record valuations and deteriorating affordability points to substantial falls in average house prices over the next two to three years," said Stansfield forexstreet.com