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Why Is The Media & Politicians Trying To Play Down The Bubble?

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http://www.bbc.co.uk/news/business-24707577

House prices rising modestly, Land Registry figures show

House prices are only rising modestly in England and Wales, figures from the Land Registry suggest.

Its latest index shows that prices rose by 3.4% in the year to September, a little faster than general inflation.

It said the average property price is now £167,063, well below the peak reached in November 2007 when average prices hit £181,839.

The figures will provide ammunition for those who argue that Britain is a long way from a housing bubble.

Earlier in October, the Office for National Statistics (ONS) reported that house prices throughout the UK were at their highest since records began.

ONS data is based on housing transactions, but higher-value London properties are given a heavier weighting than in other surveys.

The latest figures from the Halifax, based on mortgage applications, suggest prices rose by 6.2% over the past year.

The Land Registry data includes houses bought for cash, as well as those purchased with mortgages.

It is also based on repeat sales, comparing successive prices for the same individual property.

As a result, it says that its sample size is "larger than all the other statistical measures available".

What exactly is going on?

Edited by cool_hand

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http://www.bbc.co.uk...siness-24707577

House prices rising modestly, Land Registry figures show

House prices are only rising modestly in England and Wales, figures from the Land Registry suggest.

Its latest index shows that prices rose by 3.4% in the year to September, a little faster than general inflation.

It said the average property price is now £167,063, well below the peak reached in November 2007 when average prices hit £181,839.

The figures will provide ammunition for those who argue that Britain is a long way from a housing bubble.

Earlier in October, the Office for National Statistics (ONS) reported that house prices throughout the UK were at their highest since records began.

ONS data is based on housing transactions, but higher-value London properties are given a heavier weighting than in other surveys.

The latest figures from the Halifax, based on mortgage applications, suggest prices rose by 6.2% over the past year.

The Land Registry data includes houses bought for cash, as well as those purchased with mortgages.

It is also based on repeat sales, comparing successive prices for the same individual property.

As a result, it says that its sample size is "larger than all the other statistical measures available".

What exactly is going on?

Modest increases when there should have been none at all. When there should have been sharp corrections. But it's wrong to suppose that politicians and central bankers know what they're doing, they're just reprising the policy they've used to address every financial crisis in the last thirty years: lower rates, flood markets with liquidity. It's always managed to re-start the global economy in the past so it must work again this time, right?

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the dont want interest rates to rise or maybe they dont want people to think they'will.

Not before the election anyway

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Not before the election anyway

Yes, the 2015 election is the primary consideration. Everything else can be sacrificed for it.

It's worse than normal this time because the economy is worse than usual, and with fixed term parliaments he can't just time the election for the upswing, he has to try and time the upswing for the election.

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I guess if people accept we are at bubble levels the implication is that we won't remain at bubble levels for long, and so mr & mrs ignorant aren't 'worth' as much as they think they are so won't spend or borrow to spend so much.

Mortgage debtors feel richer and therefore happier and trip along to the voting booth for more of the same. And the rest of the economy is propped up that little while longer when people aren't cutting back and spending within their actual means.

Its all about the election, they want more time ruining lives.

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There's a complaints form. They respond to things like this, a while back I got them to change that areas 'enjoyed' a price rise to 'experienced' it (but they ignore you on other things - point out with data how anti-european their coverage is and you're waiting years for a response). Go to http://www.bbc.co.uk/complaints/

I used to fume every week at the Times property section - they had a regular corner for the latest predictions on house prices - from 'gloom' to 'optimistic' - no prizes for guessing which was which. I would have emailed if I thought they'd take a scrap of notice but thought it was probably far too entrenched in their VI heads to be shifted.

Edit: only today the wretched Anne Ashworth is talking of an 'improvement'.

Edited by Mrs Bear

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I used to fume every week at the Times property section - they had a regular corner for the latest predictions on house prices - from 'gloom' to 'optimistic' - no prizes for guessing which was which. I would have emailed if I thought they'd take a scrap of notice but thought it was probably far too entrenched in their VI heads to be shifted.

Edit: only today the wretched Anne Ashworth is talking of an 'improvement'.

Much like the deepening of the coal mine shaft used to be an improvement for the coal mine owner.

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http://www.bbc.co.uk...siness-24707577

House prices rising modestly, Land Registry figures show

House prices are only rising modestly in England and Wales, figures from the Land Registry suggest.

Its latest index shows that prices rose by 3.4% in the year to September, a little faster than general inflation.

It said the average property price is now £167,063, well below the peak reached in November 2007 when average prices hit £181,839.

The figures will provide ammunition for those who argue that Britain is a long way from a housing bubble.

Earlier in October, the Office for National Statistics (ONS) reported that house prices throughout the UK were at their highest since records began.

ONS data is based on housing transactions, but higher-value London properties are given a heavier weighting than in other surveys.

The latest figures from the Halifax, based on mortgage applications, suggest prices rose by 6.2% over the past year.

The Land Registry data includes houses bought for cash, as well as those purchased with mortgages.

It is also based on repeat sales, comparing successive prices for the same individual property.

As a result, it says that its sample size is "larger than all the other statistical measures available".

What exactly is going on?

£167K as an average house price is being politicised as 'too low' and therefore rises from this level are a good thing.

Makes sense I guess as there must be plenty (albeit diminishing numbers of) people who are wanting their house price to go back up.

The left hand doesn't know what the right hand is saying in that nobody seems to be connecting that the 'too low' prices are 'too expensive' for the majority of population and economy.

If Nick Boles gets his way, the house-builders are allowed to obliterate the green belt and house prices magically drop, does this mean that the prices will be even further away from the government ideal target ?

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they are at it again:

http://www.bbc.co.uk/news/business-24747950

'Bubble' warning, after UK house prices rise again

A senior economist has warned about the dangers of a house price bubble, following figures that show prices are surging.

In its latest monthly survey, Nationwide said prices across the UK are now 5.8% higher than this time a year ago.

That figure is up from 5% only a month ago.

Howard Archer, the chief UK economist with IHS Global Insight, warned that policymakers need to be vigilant.

"The acceleration in house prices...will fuel concern that we could be on our way to a new housing bubble," he said.

He added that the UK is "currently some way off from an overall housing market bubble", but warned that the government will need to act "quickly and decisively" if the housing market does become overheated.

He is forecasting that house price inflation could reach 8% in 2014.

Earlier this month, Peter Spencer, the chief economic adviser to the EY Item Club, said that the chances of seeing another housing market bubble are "extremely slim."

Nationwide said that prices increased by 1% in October, taking the average price of a home in the UK to £173,678.

However, it pointed out that prices are still 7% below their peak in 2007.

It also said that mortgages remain unusually affordable.

"Typical mortgage servicing costs remain modest by historic standards, thanks to the ultra-low level of interest rates," said Robert Gardner, the Nationwide's chief economist.

Earlier this week the Land Registry reported that prices in England and Wales were rising at a more modest rate.

It said prices increased by just 3.4% in the year to September, only slightly higher than inflation.

Whereas the Nationwide figures are calculated on the number of mortgages it agrees to give its customers, the Land Registry figures are based on actual sales.

Cash buyers

It therefore includes cash buyers.

One estimate claims that homes are being bought with cash in over a third of cases.

According to Hamptons International, the property agents, 35% of sales in the first six months of 2013 were for cash.

Earlier in October, the Office for National Statistics said that prices across the UK as a whole had reached a record high.

It calculated that the average price of a UK property was now £247,000, the highest it has ever been.

Its figures are based on the number of mortgage completions.

I'm totally enraged by the BS they are spewing out. What has happened to peoples wages since 2007? They've generally gone down. Property prices in the area I was looking to buy in London have gone up at least 30% since 2009 – that has added over £100,000 to the price.

Unless you are fortunate enough to have some sort of large windfall you don't stand a hope in hell.

I read somewhere that Cameron has quoted prices are down on average around 30% since peak. Where are they getting their figures from?

This needs to be challenged - but then the media are all in it.

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the dont want interest rates to rise or maybe they dont want people to think they'will.

Certainly the banks don't want interest rates to increase, that might reveal they are wearing no clothes and are bankrupty.

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EY ITEM Club @EY_ITEMClub

Is UK facing a housing bubble? #EYITEM says not. Today’s stats reveal mortgage approvals remain 50% below pre-financial-crisis peaks

So price is irrelevant - it's all about mortgage approvals?

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There's a complaints form. They respond to things like this ... Go to http://www.bbc.co.uk/complaints/

Got a reply - not much use, but at least he read it.

Hello [bristolhunter]

Your complaint to the BBC news website has been passed to me, as I wrote the story concerned.

I take your point that an affordability multiple of 6.5 is pretty high, but I am not sure it is conclusive evidence that the housing market is currently in a bubble.

Most economists say we are not there yet. Many, such as Peter Spencer of the EY Item Club, think we are a very long way from it.

As you would expect from the BBC, we have to give a balanced view of different claims about the housing market.

But where there are warnings about a bubble, we do report them. As in this story, published today on the BBC website:

http://www.bbc.co.uk/news/business-24747950

I hope this helps.

Yours Brian

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If we aren't in a bubble why are there so many government schemes aimed at pairs of well educated high earners to allow them to get into enough debt to afford a modest home?

It is utterly bizarre. Introduce schemes so people can afford to 'buy' whilst at the same time saying that people can afford to buy.

Bubble = unaffordable prices.

Bubble != high transaction volumes. Low transaction volumes if anything because the prices are too high.

They are trying to redefine what bubble means. Let's hope the fundamentals of economics are listening.

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But the argument is that HTB has been introduced because buyers can't save the required deposit but can pay the monthly mortgage!

Do they really believe we are entering a new economic paradigm of never ending low interest rates, 30 year + mortgages and never ending HPI?

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But the argument is that HTB has been introduced because buyers can't save the required deposit but can pay the monthly mortgage!

Do they really believe we are entering a new economic paradigm of never ending low interest rates, 30 year + mortgages and never ending HPI?

No.

As many people have already stated, they believe that doing this will help them win the next election.

And it probably will help at the very least.

HTB is a no lose situation for the Tories. If they pump up the market a bit before the next election, that's great for them. There will only be a crash due to an external event (IRs are almost certainly not going to rise in the UK unless they are forced). This is outside of their control, and gives them the "it started somewhere else" get out of jail card.

It's a bit like selling stuff off. It's a no brainer. If you sell it off that means that you can save on cuts which improves your electoral chances. Don't sell it off and it just gets left in the pot for the next lot to squander supporting their efforts.

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But the argument is that HTB has been introduced because buyers can't save the required deposit but can pay the monthly mortgage!

I would call that not being able to afford it. They can only pay the mortgage if a large enough deposit is used to reduce the amount borrowed! The houses therefore are overvalued by the amount of the required deposit minus the amount they could actually save in order to use as a deposit.

Which assumes the cost of borrowing doesn't increase over the mortgage term. Which it probably will so it would be financially responsible to assume an average interest rate over the term of the mortgage of considerably more than offered at the start of the mortgage.

Combine a sensible mortgage value with a sensible mortgage borrowing cost and remove the need for more deposit than the 'buyers' can raise on their own and you have an affordable price. Its likely to be 30%+ lower than the current price. My guess is they are double what they ought to be. Which isn't actually that unreasonable a drop when you consider they tripled over 10 short years.

Do they really believe we are entering a new economic paradigm of never ending low interest rates, 30 year + mortgages and never ending HPI?

They hope it will stay that way up to the election. Beyond that they don't care.

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EY ITEM Club @EY_ITEMClub

Is UK facing a housing bubble? #EYITEM says not. Today’s stats reveal mortgage approvals remain 50% below pre-financial-crisis peaks

So price is irrelevant - it's all about mortgage approvals?

A financial crisis is not "normal", and any suggestion that 2007 was normal, is quite absurd! However, I sold a turd of a house that I didn't like, and didn't feel guilty! :blink:

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If the current 'see no evil, hear no evil' is primarily aimed at getting the tories to win the next election what happens after they win?

If the bubble bursts after they start their second term then surely people will think ' I'm not voting you lot in again!' thus damaging their longer term future.

If they did win would it be possible to manage and ease the bubble down? (or do they simply continue with it where eventually the working class are just renters - thinking about london especially)

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If the current 'see no evil, hear no evil' is primarily aimed at getting the tories to win the next election what happens after they win?

If the bubble bursts after they start their second term then surely people will think ' I'm not voting you lot in again!' thus damaging their longer term future.

If they did win would it be possible to manage and ease the bubble down? (or do they simply continue with it where eventually the working class are just renters - thinking about london especially)

They will worry about that when it happens.

First, win the election, cos if you don't win it you don't even need to worry about sorting out the mess. I don't think many politicians worry too much about the long term future. Cameron is finished if he doesn't win the next election, and so are all his cronies.

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I guess if people accept we are at bubble levels the implication is that we won't remain at bubble levels for long, and so mr & mrs ignorant aren't 'worth' as much as they think they are so won't spend or borrow to spend so much.

Mortgage debtors feel richer and therefore happier and trip along to the voting booth for more of the same. And the rest of the economy is propped up that little while longer when people aren't cutting back and spending within their actual means.

Its all about the election, they want more time ruining lives.

I think that's right. Even Mr & Mrs Ignorant probably have an inkling that bubbles always burst. They probably learned about the South Sea Bubble at school (as I did).

But if it's not a bubble prices then just might keep rising. That's mathematically impossible indefinitely in real terms but they don't know that.

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I used to fume every week at the Times property section - they had a regular corner for the latest predictions on house prices - from 'gloom' to 'optimistic' - no prizes for guessing which was which. I would have emailed if I thought they'd take a scrap of notice but thought it was probably far too entrenched in their VI heads to be shifted.

Edit: only today the wretched Anne Ashworth is talking of an 'improvement'.

Edit again: well I finally did email the wretched woman pointing out that 'improvement' is not synonymous with 'increase', etc. Not that it will do the slightest good, I know.

I do wish such journalists would be forced to declare VI at the end of every article,how many BTLs/2nd homes they own, and where, how heavily they are mortgaged, etc.

It would be interesting every time there is a 'puff' piece on property in X or Y, if they had to state at the end of it, that yes, they have been trying to flog a property in X for the past 8 months...

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Edit again: well I finally did email the wretched woman pointing out that 'improvement' is not synonymous with 'increase', etc. Not that it will do the slightest good, I know.

I do wish such journalists would be forced to declare VI at the end of every article,how many BTLs/2nd homes they own, and where, how heavily they are mortgaged, etc.

It would be interesting every time there is a 'puff' piece on property in X or Y, if they had to state at the end of it, that yes, they have been trying to flog a property in X for the past 8 months...

I am the turd of wisdom! :blink:

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