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bring_it_on

Future Bubbles

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Having been discussed on this site many times. HPI is not used as a measure to gauge inflation using the current CPI system. This is one of the main reasons IMHO, along with the cheap money that the Uk has been awash with the last few years, that salary multiples needed to purchase UK housing has been able to increase to level that it has. If HPI was included then the reported level of inflation would have increased and therefore IR's would have needed to increase, to reduce inflation closer to the 2% target set for the BOE by the government.

There are external influences on the BOE such as they wouldn't have been able to raise them too much as HPI increased because the US treasury dropped IR's to such lows after the dot com crash and 9/11. Surely though if the cost of housing had been included this would have made them stop and think before dropping UK IR's to 3.5% and thus not allowing the bubble to expand to quite the extent that it did.

There has been talk recently by the government that they are considering that HPI should be included. Which i'm sure a few people on this site will see as a way for the government to spin the inflation figures once again and use them as a deflationary measure now we are seeing signs of a correction.

Does anyone else feel that inclusion of HPI would help to prevent further property bubbles or are these figures included in other countries inflation figures which have also seen huge increases in the cost of housing?

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I was going to continue my post and talk about stronger legislation for investment property as in most of continental Europe. If you control the level of rental income for investors that would help to stop people paying over the odds for a property and pass on their higher costs to the tennant. I guess that goes against most on New Labour's free market reforms which THEY feel has made our economy so dynamic the last eight years. We need to change things in some way to prevent this kind of thing from happening again.

What I will never understand is if this this was orchestrated, which i'm positive it was by all the different reforms made by this government towards property investment. Then why would Gordon Brown have come out with, "I will not let house prices rise out of control and risk the futue stability of this country!" He must surely have known this comment would come back to haunt him. Unless it wasn't in his long term plan at the time and he just got addicted to all the extra revenue that started flowing into the Treasury once the boom started?

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I was going to continue my post and talk about stronger legislation for investment property as in most of continental Europe. If you control the level of rental income for investors that would help to stop people paying over the odds for a property and pass on their higher costs to the tennant. I guess that goes against most on New Labour's free market reforms which THEY feel has made our economy so dynamic the last eight years. We need to change things in some way to prevent this kind of thing from happening again.

What I will never understand is if this this was orchestrated, which i'm positive it was by all the different reforms made by this government towards property investment. Then why would Gordon Brown have come out with, "I will not let house prices rise out of control and risk the futue stability of this country!" He must surely have known this comment would come back to haunt him. Unless it wasn't in his long term plan at the time and he just got addicted to all the extra revenue that started flowing into the Treasury once the boom started?

I would hope that future generations would be a little more wary of the dangers of HPI. Obviously this requires this one to be worse than the last (as obviously the lessons of that have yet to be learnt).

And this one will be much worse than the last IMVHO. Very few people seem to appreciate just how deeply the economy has become wedded to the unrealistic over-valuations of housing

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Why would you want to? The trick is spotting them before they take off, and then judging when to get off. If you can do that you'll probably be a very wealthy person.

that's true to an extent, but the bigger these bubbles get (as they seem to be doing) then the more they suck into them... so when they pop the fallout is much broader, even if you weren't invested directly yourself.

Recessions aren't nice, even if you get to keep your job. I was raised in the North in the 80s, my Dad kept his job but enough people around didn't - and that damaged everyone's quality of life

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I agree if you can follow the tides of property bubble's you will most likely end up wealthy over the course of your life. It is, after all, what creates the property ladder most of us aspire to be on. The bubble we have witnessed has been all consuming, and as it deflates it will no doubt hit hard right across the board. I do feel we would still have had high HPI during the world's recent economic boom. Just also think that if HPI had been included in the recognised inflation figures it would have helped curb how large this has become by forcing IR's upwards as prices swelled out of control. I'm hoping that this time we will learn our lesson to not let this situation occur in the future and control just how far our future property market can upswing.

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I agree if you can follow the tides of property bubble's you will most likely end up wealthy over the course of your life. It is, after all, what creates the property ladder most of us aspire to be on. The bubble we have witnessed has been all consuming, and as it deflates it will no doubt hit hard right across the board. I do feel we would still have had high HPI during the world's recent economic boom. Just also think that if HPI had been included in the recognised inflation figures it would have helped curb how large this has become by forcing IR's upwards as prices swelled out of control. I'm hoping that this time we will learn our lesson to not let this situation occur in the future and control just how far our future property market can upswing.

it would also have helped with the much vaunted property "ladder" as this only really works if inflation is eroding the cost of the initial debt.

banks don't like inflation too much though. I wonder if their growing influence is connected to the prioritisation of inflation control in the past few years. I guess the next few months will reveal which side the BoE fall on...

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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