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No Housing Bubble, But Bank Of England Says It Is Watching Closely

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http://uk.reuters.com/article/2013/09/25/uk-britain-boe-fpc-idUKBRE98O08T20130925

The Bank said on Wednesday there was no immediate danger of a property bubble in Britain but that it was keeping a watchful eye out.

It also said it wanted more study on how vulnerable hedge funds that rely on borrowing would be to future interest rate rises.

The central bank's Financial Policy Committee (FPC) said Britain's housing recovery "appeared to have gained momentum and to be broadening" but was under control, based on gauges such as level of activity, debt costs and prices compared with incomes.

"In view of that, the Committee judged that it should closely monitor developments in the housing market and banks' underwriting standards," it said in a statement after its Sept 18 meeting. "The Committee would be vigilant to potential emerging vulnerabilities."

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'The average house in the capital is now earning as much as its occupants.' 'With the average London house costing £438,000, the capital gain was worth £38,729. By comparison, the average London household had a post-tax income of £38,688 in 2011, the last year for which the ONS has statistics.' (From the FT) http://ftalphaville....london-edition/

So clearly no bubble.

Can Osborne and Carnage get over the line? A sterling crisis before the next GE is looking more likely by the day.

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'The average house in the capital is now earning as much as its occupants.' 'With the average London house costing £438,000, the capital gain was worth £38,729. By comparison, the average London household had a post-tax income of £38,688 in 2011, the last year for which the ONS has statistics.' (From the FT) http://ftalphaville.ft.com/2013/09/24/1644322/houses-beating-households-london-edition/

So clearly no bubble.

I saw that in City AM this morning and also thought of it when I saw this post.

The problem is that the government are chasing high prices at all costs. In an ideal world, London prices would be 4 times London income, so how it it be anything but a bubble when they have gone up 25% of that in a year when they are massively overvalued to start with anyway?

It is even worse in the States. I read an article recently describing how houses in a certain area a valued 20% higher than last year and that it was hoped that sort of growth figure would be sustainable.

Why don't people realise that it has to stop somewhere? As has often been said on here, if the price of bread or petrol went up by 20% each year it would be seen as a disaster, but when housing goes up by the same amount it is suddenly very positive.

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I saw that in City AM this morning and also thought of it when I saw this post.

The problem is that the government are chasing high prices at all costs. In an ideal world, London prices would be 4 times London income, so how it it be anything but a bubble when they have gone up 25% of that in a year when they are massively overvalued to start with anyway?

It is even worse in the States. I read an article recently describing how houses in a certain area a valued 20% higher than last year and that it was hoped that sort of growth figure would be sustainable.

Why don't people realise that it has to stop somewhere? As has often been said on here, if the price of bread or petrol went up by 20% each year it would be seen as a disaster, but when housing goes up by the same amount it is suddenly very positive.

because, housing doesnt cost...loans to buy do, and that is where they concentrate the "cost" element...shame that the last incarnation of HTB will be 1% down,99% free loan from the Government. it is the logical end to this nonsense,

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http://www.bbc.co.uk/news/business-24239742

The Bank of England is watching the UK's housing market "closely" for signs of any overheating, policymakers say.

The Bank's Financial Policy Committee (FPC) said the recovery in the housing sector seemed to have "gained momentum" with average prices up 5% in August from a year earlier.

It added that it was "vigilant to potential emerging vulnerabilities".

However, the FPC said housing activity and loan-to-value ratios on mortgage lending were below historic averages.

It also noted that debt servicing costs were low, and that the ratio of house prices to earnings was at the same rate as a decade ago.

The Bank of England's Financial Policy Committee is having to steer a fine line between dampening down excitable talk of another house price boom and reassuring people that it will intervene if there are genuine signs of the market overheating.

It highlights data on both sides of the argument - yes, house prices are up 5% year-on-year, though yes, the ratio of house prices to earnings is back at the same level as a decade ago.

But reading into the statement suggests that the FPC is very aware of the perceived dangers of another bubble - it says it will "closely monitor developments in the housing market and banks' underwriting standards".

The statement also spells out powers the Bank does have to get lenders to tighten up. The message is no boom right now, but we are ready to move early if we need to.

The FPC said: "In view of that, the committee judged that it should closely monitor developments in the housing market and banks' underwriting standards.

"The committee noted that if risks to the stability of the financial system were to emerge from the housing market, both it and the microprudential regulators had a range of tools available to address those risks."

The statement echoes recent comments by Bank of England governor Mark Carney that the Bank of England has the necessary tools to tackle a housing bubble.

There have been renewed fears of a property bubble in recent months fuelled by sharp price rises in London, where values jumped 10% in the year to July, according to the ONS.

However, it is argued that price rises in London are distorting figures for the whole country, with the market remaining weak in many parts of the UK.

Chris Williamson, chief economist at the researchers Markit said: "The committee... seems relaxed about the growing fears voiced by many commentators of a potentially disruptive housing market bubble.

"If risks of a bubble did appear, the FPC spelled out a reassurance that it, and the regulators, had a range of tools to restore stability. These included guidance on underwriting standards, capital requirements and recommendations to the regulators on tightening of affordability tests."

that is utter bull s**t

Edited by cool_hand

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http://www.bbc.co.uk/news/business-24239742

The Bank of England is watching the UK's housing market "closely" for signs of any overheating, policymakers say.

The Bank's Financial Policy Committee (FPC) said the recovery in the housing sector seemed to have "gained momentum" with average prices up 5% in August from a year earlier.

It added that it was "vigilant to potential emerging vulnerabilities".

However, the FPC said housing activity and loan-to-value ratios on mortgage lending were below historic averages.

It also noted that debt servicing costs were low, and that the ratio of house prices to earnings was at the same rate as a decade ago.

The Bank of England's Financial Policy Committee is having to steer a fine line between dampening down excitable talk of another house price boom and reassuring people that it will intervene if there are genuine signs of the market overheating.

It highlights data on both sides of the argument - yes, house prices are up 5% year-on-year, though yes, the ratio of house prices to earnings is back at the same level as a decade ago.

But reading into the statement suggests that the FPC is very aware of the perceived dangers of another bubble - it says it will "closely monitor developments in the housing market and banks' underwriting standards".

The statement also spells out powers the Bank does have to get lenders to tighten up. The message is no boom right now, but we are ready to move early if we need to.

The FPC said: "In view of that, the committee judged that it should closely monitor developments in the housing market and banks' underwriting standards.

"The committee noted that if risks to the stability of the financial system were to emerge from the housing market, both it and the microprudential regulators had a range of tools available to address those risks."

The statement echoes recent comments by Bank of England governor Mark Carney that the Bank of England has the necessary tools to tackle a housing bubble.

There have been renewed fears of a property bubble in recent months fuelled by sharp price rises in London, where values jumped 10% in the year to July, according to the ONS.

However, it is argued that price rises in London are distorting figures for the whole country, with the market remaining weak in many parts of the UK.

Chris Williamson, chief economist at the researchers Markit said: "The committee... seems relaxed about the growing fears voiced by many commentators of a potentially disruptive housing market bubble.

"If risks of a bubble did appear, the FPC spelled out a reassurance that it, and the regulators, had a range of tools to restore stability. These included guidance on underwriting standards, capital requirements and recommendations to the regulators on tightening of affordability tests."

that is utter bull s**t

Perhaps you can send them a link to the facts. I expect they will ignore it though and send you a link to www.rightmove.co.uk.

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because, housing doesnt cost...loans to buy do, and that is where they concentrate the "cost" element...shame that the last incarnation of HTB will be 1% down,99% free loan from the Government. it is the logical end to this nonsense,

Not quite.

1705484662_1368886901.jpg

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because, housing doesnt cost...loans to buy do, and that is where they concentrate the "cost" element...shame that the last incarnation of HTB will be 1% down,99% free loan from the Government. it is the logical end to this nonsense,

Still at least the wealth creation banksters will still be getting their non-capped bonuses.

We really wouldn't be able to do without these skilled wealth creators.

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A decade ago average prices were 5.5 x average salary, same as today, but the long term average is 4 x average salary so still over priced by 37% even if you accept the supplied figures (which I do not accept are correct). IMHO based on asking prices compared with properties I know from 1985 (so 30 years ago) prices are 300% up on prices then ie in 1985 you could buy a property for 3 x salary and now the asking price is 10 x salary.

The BoE will watch prices closely just like Carney did in Canada ... watched the prices but did nothing.

A proper correction should undershoot the long-term average, flushing out marginal buyers in the process and establishing the next cycle low. Asking prices of 3x may well become commonplace again.

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http://www.bbc.co.uk/news/business-24239742

The Bank of England's Financial Policy Committee is having to steer a fine line between dampening down excitable talk of another house price boom and reassuring people that it will intervene if there are genuine signs of the market overheating.

It highlights data on both sides of the argument - yes, house prices are up 5% year-on-year, though yes, the ratio of house prices to earnings is back at the same level as a decade ago.

Where did the BoE / Beeb get the 5% figure from? Land Registry August figures aren't due out until 27th Sept.

July-July YoY price rise was 0.8% according to the Land Registry's latest figures.

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I saw that in City AM this morning and also thought of it when I saw this post.

The problem is that the government are chasing high prices at all costs. In an ideal world, London prices would be 4 times London income, so how it it be anything but a bubble when they have gone up 25% of that in a year when they are massively overvalued to start with anyway?

It is even worse in the States. I read an article recently describing how houses in a certain area a valued 20% higher than last year and that it was hoped that sort of growth figure would be sustainable.

Why don't people realise that it has to stop somewhere? As has often been said on here, if the price of bread or petrol went up by 20% each year it would be seen as a disaster, but when housing goes up by the same amount it is suddenly very positive.

I have been saying the same thing to so many people, and 11 out of 10 watch me as if I am totally insane/stupid.

If the world is freezing,and the Government says it is global warming, then everyone will start to feel warm.

Crazy,but true.Talk about repeating anything (no matter how stupid or untrue it is) enough many times,then it becomes the self-supporting/evident truth for sheeple..

because, housing doesnt cost...loans to buy do, and that is where they concentrate the "cost" element...shame that the last incarnation of HTB will be 1% down,99% free loan from the Government. it is the logical end to this nonsense,

I foresaw this in the pipeline a few years ago.Even more so,they will eventually start giving you money in order for you to take the mortgage.(Of course with 0% down for deposit).That is the only way the pyramid will be sustained.

A decade ago average prices were 5.5 x average salary, same as today, but the long term average is 4 x average salary so still over priced by 37% even if you accept the supplied figures (which I do not accept are correct). IMHO based on asking prices compared with properties I know from 1985 (so 30 years ago) prices are 300% up on prices then ie in 1985 you could buy a property for 3 x salary and now the asking price is 10 x salary.

The BoE will watch prices closely just like Carney did in Canada ... watched the prices but did nothing.

+1

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HPI is a boon for politicians. Its 'free money' without it actually coming out of taxes. All you need is a BoE printing machine, a pet Governor who is "vigilant" and ensure the planning system creates 'false scarcity." Kerching for the home owners.

Let them carry on. When it all collapses on them., the looting, lynch mobs and public hangings of politicians will be a great popcorn moment.

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