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> Chart C: Change in the Receits to GDP ratio since 1986-87...

Can some one please explain the highlights of this data?
Seems that VAT has been making most of the running, whilst the rest have declined.

 

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The tech bubble is ripe for bursting.  I'm not doubting that the big technology companies have valuable businesses and a vital place in the market, but the valuations are just crazy.  Amazing what repressed interest rates and a 'full yer boots' access to credit from the central banks can do ....  (and not just to tech).

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Not a bad chart, shows a correlation between house prices and lending multiples. Missing proportion of single to joint income and length of mortgage term. Note the overall average has risen from 3.2x to about 3.5x since 2014 when the FPC advertised the lending taps were more open, under the guise of "limiting" lending. With prices set at margins 15% at 4.5x or more means a 3x might need to go to 3.5x to compete.

 

LTI and House Prices2017.jpg

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1st post and I'm moving main residence.

Decided to look into housing on my blog.

Essentially I think interest rates need to rise (very) slowly over the next few years, that should produce below wage inflation increase in house prices whilst the nominal values still rise (So the average man or woman just buying one house for their home isn't crucified when they come to remortgage). I think long term sane wage ratios can return - and that will be better for everyone.

http://ponyonthetories.blogspot.co.uk/

 

Full disclosure - I'm a homeowner but view a house as a place to live primarily rather than any sort of investment. And in the painful process of moving.

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On 11/21/2017 at 4:54 PM, Pulpstar said:

1st post and I'm moving main residence.

Decided to look into housing on my blog.

Essentially I think interest rates need to rise (very) slowly over the next few years, that should produce below wage inflation increase in house prices whilst the nominal values still rise (So the average man or woman just buying one house for their home isn't crucified when they come to remortgage). I think long term sane wage ratios can return - and that will be better for everyone.

http://ponyonthetories.blogspot.co.uk/

 

Full disclosure - I'm a homeowner but view a house as a place to live primarily rather than any sort of investment. And in the painful process of moving.

Annual wage inflation is 2% at the moment. Nominal increases in house prices that are less than wage inflation could be 1%. Current median household income in London is about £39,000. Current average house price in London is about £500,000. That makes a multiple of 12.8. I'm 38 years old at the moment. At the above rates of wage and house price growth, the average house price in London would get back to a still high but not outrageously high house price to household income ratio of 4 by the time I'm 157 years old. You see my problem? Thing is, it's not just my problem. At these numbers, a massive crash was baked in a long time ago. It doesn't matter what triggers it, whether it's Brexit, the flap of a butterfly's wings, or someone farting in front of a fabled foreign buyer in Harrods.  

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This chart shows indexed values of output in construction of private dwellings (taken from ONS) and house prices (taken from Land Registry). These are shown for both London and Britain as a whole. All indices are set at 100 in 1980 and all values are deflated by CPI to show the true underlying value that masks general inflation in the economy. The line for the value of construction activity in London speaks for itself. Look at the scale and compare it to the index of London house prices, which themselves have risen astronomically in real terms. Does this look like an equilibrium to anyone?

Picture1.thumb.png.fb8ccc757e6bb48e75e452c2f1776f32.png

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On 28/11/2017 at 1:41 PM, TheGreatestFool said:

Annual wage inflation is 2% at the moment. Nominal increases in house prices that are less than wage inflation could be 1%. Current median household income in London is about £39,000. Current average house price in London is about £500,000. That makes a multiple of 12.8. I'm 38 years old at the moment. At the above rates of wage and house price growth, the average house price in London would get back to a still high but not outrageously high house price to household income ratio of 4 by the time I'm 157 years old. You see my problem? Thing is, it's not just my problem. At these numbers, a massive crash was baked in a long time ago. It doesn't matter what triggers it, whether it's Brexit, the flap of a butterfly's wings, or someone farting in front of a fabled foreign buyer in Harrods.  

My chart was for the whole of the UK - I'm in agreement with you about London, but can't really understand why anyone chooses to live there unless they're completely minted.

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TheGreatestFool

6 minutes ago, Pulpstar said:

My chart was for the whole of the UK - I'm in agreement with you about London, but can't really understand why anyone chooses to live there unless they're completely minted.

Do you know where I can get London specific data btw, would be interested to look at it - the only thing that will be constant to the UK are the interest rates. Me and my other half burst out laughing about a year ago when we passed by estate agents windows on the way to see 2 Cellos perform down in the smoke.

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On 12/1/2017 at 2:16 PM, Pulpstar said:

My chart was for the whole of the UK - I'm in agreement with you about London, but can't really understand why anyone chooses to live there unless they're completely minted.

What kind of data? The source depends on what you are looking for. For house prices, the Land Registry can break it down as much as you want.

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I've recently discovered plumplot.co.uk which offers quite powerful graphic-driven charts and historic data down to local postcode level, with the option to adjust time period. I haven't come across anything else quite like it, and it seems to show just how quiet things are getting right now in the overheated areas like the Home Counties:

http://www.plumplot.co.uk/house-prices.html

So, for example:

http://www.plumplot.co.uk/Oxford-property-sales.html

http://www.plumplot.co.uk/Oxford-house-prices.html

P

Plumplot screenshot.jpg

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800x-1.pngT

Just small declines so far, probably because of uncertainty over Brexit, EU nationals going back home, investors wanting an EU pad so looking on the mainland instead, and interest rates going up - possibly the start of more rises in the cycle. So far, so boring. But things could change quickly, next year. There's the bubble in government bonds - some $10.1 trillion in global government bonds with yields below zero - which have kept rates below a 'healthy' level which should deflate as QE is reversed, leading to higher interest rates. Then there's the bubble in US tech, with stretched valuations for a shopping website and a couple of advertising websites. Also there are the bubbles in bitcoin and property. 

 

So? There have been these bubbles for years, why will they reverse? The might not, but QE is DEFINITELY reversing, which is the difference between next year and the last ten. Also the UK is DEFINITELY leaving the EU, which is the difference between 2019 and the last 45 years. If the 30-year bull market in bonds also reverses we'll have a nice trifecta in place, which would mean anyone buying a house in the next few years is buying at the worst time in decades. If you're a homeowner you should be saving every penny for tough times ahead, if you rent then sit back, relax, have a beer, as the biggest issue you'll likely face is your LL going bankrupt.

 

So although the present shows prices stagnating or with small falls, once the above are all in place we could witness havoc in the markets. The descent is always more sudden than the increase; a balloon that has been punctured does not deflate in an orderly way.

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