Bank of England Sacrifices Scotland’s Economy to Protect the Overheated London Property Market – Oh Yes They Did and They Will Do It Again – Wake Up Scotland

 

 

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5 November 1999: Scotland ‘Sacrificed’ as Interest Rates Rise

The Bank of England was accused yesterday of sacrificing Scotland’s economy after slapping on another interest rate rise to stop the over heating in the London property market.

Scotland’s hard pressed business community said the result of the boom in house prices in the south east was to pile more misery onto Scots firms.

The Monetary Policy Committee announced another 0.25 per cent hike in base rates to 5.5 per cent which will further strengthen the pound making life even more difficult for Scottish exporters.

Yesterday Scots business groups queued up to blast the decision, saying the Bank of England was ‘ignoring the pain being suffered in Scotland’. … (Daily Mail)

 

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17 March 2017: The Bubble is about to burst once again

Inflation is now at its highest rate for nearly four years. The pace of increase is relentless. Households and businesses are being forced to cut back on expenditure and The Bank of England is under increasing pressure from the City of London to increase interest rates. Changes are primarily attributed to:

* Brexit. There is an increasing picture of “doom and gloom” within the UK (at all levels) in response to the March 29 triggering of Article 50. Many are of the view that this will bring with it a long period of difficult discussions with no guarantee of success.

* A weakening pound. An negative impact of the June referendum on membership of the EU. Reducing benefits of hedging increases in the price of food (bringing to an end nearly three years of supermarket price cuts)

* The heating up of the London housing market (foreign buyers)

* Escalating fuel oil costs. The commodity is priced in US Dollars and the fall in the value of Sterling against a major upturn in the cost of a barrel of crude doesn’t help matters.

* Imports – including food. Nearly three years of cost cutting in the supermarkets is at an end and increasing cost of production are being passed on to the consumer.

* Above inflation wage increases. Companies are under pressure to award annual wage increases well in excess of inflation and the bandwagon effect is bringing industrial action to the fore.

In recent months corridor conversations (in the Treasury) have focused on monetary policy and just how long the excess inflation over target will be accepted before the Bank takes remedial action.

There is anxiety that tackling inflation by increasing interest rates might only be achieved at the expense of shoppers and small businesses. But the UK consumer and small businesses are a major factor in driving the economy forward and it is crucial that the purchasing power of wages is not reduced to levels against which buyers would cease to spend.

 

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17 March 2017: Help to Buy Scheme and the Overheating Housing Market

The Tory government’s “Help to Buy” mortgage guarantee scheme,(ended on 31 Dec 2017) largely enjoyed success in London (where the bulk of property’s valued between 200K — £600K are located). The measure, designed to help first time buyers get into the housing market had the undesired effect of heating up the property market in London with house prices rising in double inflation figures.

The house price surge was not so evident in Scotland. Indeed in some deprived areas house prices actually fell. Cameron and Osborne’s con-job on the Scottish electorate had been successful. London had been protected at the expense of Scotland’s property sector.

The warping of the housing market came to the attention of the EU’s financial risk watchdog who warned recently that the UK had a property market that risked overheating in the low interest rate economy.

Correcting measures will need to be introduced requiring buyers to find much larger deposits against lowered borrowing limits. It is entirely possible housing values could be reduced into negative equity sparking the dreaded property “fire sales”.

The Bank of England also cautioned last month that any improvement in household finances seen since the 2008 crisis “may have come to an end”.

 

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17 January 2017: Property Market in Scotland Takes a Hit Whilst the overheated London market Prospers

The City of Aberdeen has seen the biggest drop in property values across the whole of the UK in 2016. Given that the overall UK property market has and is predicted to continue increasing in value, it is shocking that Aberdeen saw prices down by nearly 10%.

It is not only Aberdeen which has been affected in Scotland as the country accounts for seven of the 16 areas covered. Accompanying Aberdeen in its property price woes is Inverclyde who took second place in the list of areas with the largest drop in property values with a near 8% fall.

Biggest price falls in London It has been an up and down year for London with the changes to stamp duty tax for buy to let investors and the uncertainty caused by a Brexit vote. Although

the capital has remained strong in the face of adversity, homeowners in Hammersmith and Fulham won’t be feeling great about their investment in one of the most expensive markets in the world. It is the only borough to have seen prices decline, down -2.10% in the last year whilst the capital as a whole has seen values rise by over 7%.

http://www.luxuriousmagazine.com/2017/02/uk-property-price-drops-2016/ .

 

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