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Wurzel Of Highbridge

London Bubble Life-Cycle Distortion.

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With the government intervention that has gone on since 2008 they have distorted the market, thus the bubble lifecycle. they have not prevented the crash but distorted it and made it worse.

bgodmx.png

2015 - The non recovery

2015 - The peak London bubble

2015 - The year foreign investors pull out of London.

2015 - The year they realise that interest rates cannot go lower.

2015 - The year of the 50%+ London property crash.

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This is London we are talking about so its just a gradual upward progression to infinity defying all rational explanation, apart from BoE/Fed printing press.

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With the government intervention that has gone on since 2008 they have distorted the market, thus the bubble lifecycle. they have not prevented the crash but distorted it and made it worse.

bgodmx.png

2015 - The non recovery

2015 - The peak London bubble

2015 - The year foreign investors pull out of London.

2015 - The year they realise that interest rates cannot go lower.

2015 - The year of the 50%+ London property crash.

That's great!

But the plateau around 2016 is a bit sus for me. By drawing out the left hand side of the chart I suspect they've merely compressed the right hand side. As soon as London goes then we're on an express elevator to hell. Straight down, with a sovereign default some time around 2020.

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You are starting it from 2006 and as such your graph looks credible, but so does the original if you start it from 1997. I agree that the longer it takes, the lower prices will go.

The original graph is an indication of crowd behaviour, not an accurate prediction of time scale.

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This is London we are talking about so its just a gradual upward progression to infinity defying all rational explanation, apart from BoE/Fed printing press.

The London bubble could have gently deflated in 2008, the successive governments and BOE chose not to take the pain and encouraged the bubble by:

> Not introducing lending standards

> Lowering the base rate to 0%

> Introducing extra 'liquidity' into the market

> Help to Buy

> Forbearance

> Funding for lending

> Preferential treatment of BTL

Lets suppose

> Property prices cannot outstrip wage inflation indefinitely as the value of the property is based upon the rents that can be extracted.

> The government is not indefinitely able to actively inflate the bubble via incentives.

I guess what I am saying is that the bubble in London today is much more fragile than that of 2008 because interest rates are already 0%, the government debt is much much higher and they are less able to bailout the banks without and Irish situation or serious currency depreciation.

The longer time goes on the likelihood of 'something' happening increases and the more unstable the system becomes.

On a different note: Bond yields are rising, quick look over there there is a war you must look for stability in the US & UK.

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So how much of the current bubble in London house prices is "smart money", "institutional investor" money or "public" money. Little or large?

Apparently the London market is now mainly being supported by overseas money and government (taxpayers) money including Hoodwink to Buy security money. Traditionally when overseas money has started coming into UK property in significant amounts then that's been a signal for the top.

Maybe the original chart will have to be amended to include the overseas and government money categories.

Whenever the government comes so blatantly into a market to "save" it then it's likely somewhere around the dead cat bounce zone.

Overseas investors probably spread themselves around the peak and the dead cat bounce zone depending on what their own economies and other investment sectors are doing at the time - and it's no coincidence that they flee to "safety" at those times as the global economies seem to become more synchronized with lots of economies and investment sectors peaking one way or another almost simultaneously.

Edited by billybong

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Another point is has another phase been added between the Mania Phase and the Blow Off Phase as for sure the other phases leading up to a top have happened already.

Maybe a Mad Moronic Manipulation Phase should be added to the chart for current markets.

Edited by billybong

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All that is based on the premise that the graph correctly represents this economic period or situation. It has been reposted so many times it's taken as factual; we should consider if it really represents anything useful anymore.

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Another point is has another phase been added between the Mania Phase and the Blow Off Phase as for sure the other phases leading up to a top have happened already.

Maybe a Mad Moronic Manipulation Phase should be added to the chart for current markets.

Exactly my original point.

All phases change, the game moves on continuously - nobody predicted a Government Manipulation Phase because it had never happened before.

Any ideas if there will be other phases? An IMF stage perhaps?

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Exactly my original point.

All phases change, the game moves on continuously - nobody predicted a Government Manipulation Phase because it had never happened before.

Any ideas if there will be other phases? An IMF stage perhaps?

Not the IMF. It's as bankrupt as the UK. A hyperinflation (default) stage would be my guess.

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This is London we are talking about so its just a gradual upward progression to infinity defying all rational explanation, apart from BoE/Fed printing press.

Recently noticed that the sort of properties I was looking at with daughter about 3 years ago - period PB 1st floor 2 bed maisonettes in nicer roads of Tooting, with own little garden, are now generally priced at 25% more than they were then, I.e. from around £270-280K to £350K +. one we looked at, not in bad nick, sold for 250k and subsequently went back on the market after only about 18 months for £365K. *

Barmy.

and this is not a fashionable area, let alone foreign investor territory.

*sold for £350K.

Edited by Mrs Bear

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Recently noticed that the sort of properties I was looking at with daughter about 3 years ago - period PB 1st floor 2 bed maisonettes in nicer roads of Tooting, with own little garden, are now generally priced at 25% more than they were then, I.e. from around £270-280K to £350K +. one we looked at, not in bad nick, sold for 250k and subsequently went back on the market after only about 18 months for £365K. *

Barmy.

and this is not a fashionable area, let alone foreign investor territory.

*sold for £350K.

....but that won't help your daughter when she wants to move, higher prices only mean extra debt, taxes and costs......you also hope that there will still be the available money and still a demand to buy at very high prices when she does move.........whilst she is living in it the best thing she can do is to pay down the debt thus creating her own equity she will be grateful for one day.....hypothetical equity, today's snapshot is no guarantee of future prices or performance. ;)

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Exactly my original point.

All phases change, the game moves on continuously - nobody predicted a Government Manipulation Phase because it had never happened before.

Any ideas if there will be other phases? An IMF stage perhaps?

An MDF stage, mainly taking place underneath Waterloo Bridge and the back of the Savoy.

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Recently noticed that the sort of properties I was looking at with daughter about 3 years ago - period PB 1st floor 2 bed maisonettes in nicer roads of Tooting, with own little garden, are now generally priced at 25% more than they were then, I.e. from around £270-280K to £350K +. one we looked at, not in bad nick, sold for 250k and subsequently went back on the market after only about 18 months for £365K. *

Barmy.

and this is not a fashionable area, let alone foreign investor territory.

*sold for £350K.

Was this a former LCC home? Someone posted about one a while ago, and just wondered if it was you.

Posted this chart in the chart section but I'm going to repost it here. New build provided 61% of London's net housing supply in 2011-12.

Also I posted a few days ago, about the massive increase of residences which will be seen in Mayfair (new planning applications).

BSrDje3CMAE9Z3i.png

Edited by aSecureTenant

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....but that won't help your daughter when she wants to move, higher prices only mean extra debt, taxes and costs......you also hope that there will still be the available money and still a demand to buy at very high prices when she does move.........whilst she is living in it the best thing she can do is to pay down the debt thus creating her own equity she will be grateful for one day.....hypothetical equity, today's snapshot is no guarantee of future prices or performance. ;)

Yes, we do understand all that, thank you. I am not quite a novice in these matters. ;-)

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