House prices in UK are propped up by overcrowding, overpopulation, students, immigrants, and the legal requirement that everyone be housed. These factors keep prices high even in cities with serious problems of unemployment and other social ills.

andyg: I know a bloke who goes around to sheep stations and charges farmers to clean the sheep shit from under their shearing sheds and then sells it as manure. He makes about 20,00 quid a year. It is his part-time job . He has a full-time job and no mortgage.

What are you doing in that poxy office earning peanuts, indoors under lights, going on little Med cruises and moaning about capitalism?

"I'm glad I emigrated to Australia, by far the best place to be in the developed world. "

You mean 'Switzerland'

We are an inept nation on housing. And NewLabour was a disgrace to the name Centre left.

No social housing means there are two choices. Rent on possibly just six-month secure tenancy; or get a mortgage on an enormous priced house, with bidders getting home loans until 2007 like drunks being handed the bowl of punch. And leave yourself not only a 25-year slave, but one who has little left over to spend in our consumer economy, ensuring further credit/debt cycle busts.

I remember lenders considering 45-year plus mortgages before the crunch, and G Brown answering a question at one of those leader debates on affordable housing: keep interest rates low. Pathetic!

Either interest rates need to rise to move the market: it will force sales, lower prices and buyers will arrive (simple basic economics); or banks need to repossess.

Repossessions have been kept low because of artificially low rates, and govt guaranteed banks failing to force sales (if they did, the lower priced house sales would damage their balance sheets). People took on too much debt, and like Greece need to default.

So we keep house prices high by pretending there is no problem, like euroland pretends there is no problem. Banks do not sort out their balance sheets and dole out enormous bonuses instead; sellers are insulated from the real world, buyers can't bid the asking prices, sales have crashed by 60%, and furniture suppliers go bust. All in order that we can pretend that the economy is not a stinking mess.

Were we/govt-supported banks to force repossessions on those who cannot pay their mortgage even at interest rates five percentage points below what they should be in a normal market, then those millions desperately looking for somewhere to house their family would find it.

But in order to save people from repossession, we enslave first time buyers, wreck furniture suppliers, insulate unrepentant irresponsible banks, and create a zombie economy.

Brilliant! 250 years of economic thinking, and what have we got? Swapped the pound sterling for leaves on trees as our currency.

@Matt

Foxy, head stuck in that fox hole?

The BOE decides interest rates independently. The coalition have slowed the growth of deficit so government bowwing is not driving the cost of debt up.

Given thats the coalitions plan, how can you say they have been incompetent?

The alternative of borrowing and extra £250Bn would have driven rates up. People voted against more borrowing.

There's no prospect of interest rates rising in 2012. We are trapped in an economy with insufficient demand and a government that is throwing away the only tool to deal with it: deficit spending.

Expect internal deflationary pressures to worsen as the cuts bite. The only policy response the Bank of England would have is to lower interest rates but these are already essentially zero, so it can't.

Real interest rates need to be negative for an extended period to get the people with cash to spend again. So external inflationary presures from commodity prices are welcome and the BoE is certainly not going to raise rates to combat that.

Rising interest rates to head off a boom... that would be a luxury compared to the depression in prospect.

I have heard that in Southern Ireland people have 400,00 euro mortgages on houses that they can't sell for 150,000. As a consequence all new building has virtually ceased with the multiple effects obviously huge.

I'm glad I emigrated to Australia, by far the best place to be in the developed world.

So we keep house prices high by pretending there is no problem, like euroland pretends there is no problem. Banks do not sort out their balance sheets and dole out enormous bonuses instead; sellers are insulated from the real world, buyers can't bid the asking prices, sales have crashed by 60%, and furniture suppliers go bust. All in order that we can pretend that the economy is not a stinking mess. http://www.weddings101.org/

When the States default (and they will), will the rest of the world be safe from that? No they won't.

Equities will be affected. Interest rates will go up. Many bond holders will sell to protect their shareholders. Obama has said enough with negotiations. Congress will actually solve this in 9 days? Not a chance.

Both party is counting on blaming the other for defaulting. Obama could at the last minute invoke the 14th Amendment and then raise the ceiling. However, putting this off until after the election won't solve anything. Obama and the other politicians all know that.

This means that the ONLY thing that matters is winning in 2012. If it means the economy to maintain our power, then so be it.

If you want to be in the Rat race then learn to become a Rat.
The fools play the casino's with not just their lives but their children's. They lose at the tables and then look for someone to blame. They were keen to show me their new car's and £100,000 houses but when I pointed out that these commodities belonged to a bank they called me a communist.
Such is life.

My understanding is that rates where due to be raised this year, but because of Gideon's incompetence the BOE have had hang fire.

I bet Mervyn King is guilt ridden over his endorsement of Osborne's Plan A.

Thank you Mr Divine. Like you, I realised years back that the UK is full of small minded twits who can only think about how to get more benefits themselves out of the system, while contributing as little as possible themselves; even moaning and groaning that 'rich' people don't pay enough; to them even honest small business people are 'rich', simply because they have worked hard and tried to make something of themselves. Britain is weighed down by this mentality, but luckily for myself and you, we realised it. There are millions that don't and will go to their graves with same agrieved, entitlement mentality. These people are the bedrock of the Labour-voting public, despite what the leadership of the pary and the New Statesman claim.

elrob: You could be right and in some parts (not mine ..I'm inland) of Australia then house prices are very high .. but again not as high as in Britain. I don't think it is a credit bubble because there have always been strict lending guidelines on credit here.

Australia is experiencing nearly 20 years of excellent growth partly due to rising commodity demand from Asia (not just China) and now prices. Will this demand end? It's like saying will people stop wanting more things? The population is huge in Asia and this will push demand and commodity prices up, therefore further boosting resource rich Australia. Remember the country has a massive agricultural industry.

The other thing about Australia is that the government keeps a very tight rein on debt. It was in surplus in 2008 and spent to avoid recession. Growth is about now about 4%

Next you've got an increasing population with many migrants being skilled and reasonably wealthy. So you've got this input. This means you've always got a need for more houses. The country is in a sweet spot and it's likely to continue. You should emigrate.

I wont sell because I own my big house on 5 acres outright, and I need a place to live with my kids. In fact I would like to see house prices fall here so as I don't have to spend so much of my savings setting up my kids.

andyg:My half a million quid house belongs to me not any bank. Like the Chinese say, if you think you are so clever why aren't you rich?

Going by most of your comments you're poor and stupid. Salt damage, salt pans!