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crashmonitor

Bubble What Bubble?

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We all know about prime London, a tripling of prices since 2004. But it really conceals the desperate situation elsewhere. Sure prices are still overpriced, but the damage was done 1999-2003 whence most provincial property prices doubled, since then, NOTHING.

It occured to me that house prices had tripled every decade since I was born (1964) with the exception of the last decade when it failed massively and flat-lined.

We can talk despair and bubbles, but the reality of the situation is this........

Typical three/four bed detached family property in the provinces........

1964.......£3,000

1974.......£9,000

1984.....£27,000

1994.....£81,000

2004...£243,000

2014...£243,000

How we can talk of bubbles on this data, God knows. A bubble is something that inflates not stays the same for ten years.

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But those numbers youve used are made up, prices have risen in most places since 2004.

Youre right about when most the damage was done though.

Wage inflation has been insignificant in the 20 years from 1994, compared with that from 1964 to 1984 and onwards to 1991 when wage inflation slowed.

Friend of mine who is a welder showed me a payslip from 20 years ago when he worked on a price and its the same as what he gets now, he lives in a 4 bed house that would cost 300K ... hed never be able to afford it now.

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The rise in asking prices often gives the perception that sold prices have risen too, which in much of the country they haven't for the best part of the decade.

Had the recent Haliwide reports not ticked up, by their measure national house prices would have been the same as they were ten years ago. We were only six months off that happening.

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The rise in asking prices often gives the perception that sold prices have risen too, which in much of the country they haven't for the best part of the decade.

Had the recent Haliwide reports not ticked up, by their measure national house prices would have been the same as they were ten years ago. We were only six months off that happening.

Ive just done a sold price search on Rightmove for Detached houses in Basingstoke, Chester, Ringwood and Leeds and all areas have seen notable rises.

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Guess this is the 'can't happen' soft-landing. :rolleyes:

Doesn't feel soft to me, I know two people who have been out of work now for 15 months, 1 other person that had to move to France to get a job, everyone's I know has had no pay rises/pay cuts in the last 4 years, I know 2 or 3 people that are financially on the brink of the abyss and it wont take much for them to fall into it.

Aint nothing soft about post-labour boom britain.

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2004 = left-hand side of the peak

2014 = right-hand side of the peak

If the bubble is symmetrical prices will be more or less the same.

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Ive just done a sold price search on Rightmove for Detached houses in Basingstoke, Chester, Ringwood and Leeds and all areas have seen notable rises.

Very selective of areas. But taking East Midlands on the bullish Halifax index as opposed to the stagnant land registry (which shows the housing market at an inflation adjusted nadir or very close)...................

Q3 2004.............568.2

Q3 2013.............554,2

Some bubble.

Try Hull, Stoke, Coventry, Leicester, Derby, Lincoln, Nottingham, Newcastle, rural North, Middlesborough.

It just seems strange that at a time when we have had a mid decade to mid decade flat-liner (except in the South East) after four decades of a tripling in prices each decade, we can talk about bubbles and even imply that homeowners have been in the box seat.

I'm in both camps, my properties (with an STR spell in between) have earned me precisely zero since 2004 as the indicies would suggest ( and the untility of having somewhere to live mortgage free has not really reduced my drawings over renting (the nature of home owning is basically you have a money pit liability, conveniently forgotten on the costings)); my investments have done rather better.

Incidentally i am not so bearish for the medium term, the fact that prices are where they were ten years ago in most of the country leads me to believe that we will get some growth over the next two or three years. But that's not talking as a VI since most of my money is out of property.

Edited by crashmonitor

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Very selective of areas. But taking East Midlands on the bullish Halifax index as opposed to the stagnant land registry (which shows the housing market at an inflation adjusted nadir or very close)...................

Q3 2004.............568.2

Q3 2013.............554,2

Some bubble.

Try Hull, Stoke, Coventry, Leicester, Derby, Lincoln, Nottingham, Newcastle, rural North, Middlesborough.

It just seems strange that at a time when we have had a mid decade to mid decade flat-liner (except in the South East) after four decades of a tripling in prices each decade, we can talk about bubbles and even imply that homeowners have been in the box seat.

I'm in both camps, my properties (with an STR spell in between) have earned me precisely zero since 2004 as the indicies would suggest ( and the untility of having somewhere to live mortgage free has not really reduced my drawings over renting (the nature of home owning is basically you have a money pit liability, conveniently forgotten on the costings)); my investments have done rather better.

Incidentally i am not so bearish for the medium term, the fact that prices are where they were ten years ago in most of the country leads me to believe that we will get some growth over the next two or three years. But that's not talking as a VI since most of my money is out of property.

The fact interest rates are at zero percent and we have QE and Help to Buy tells me the government know property prices are well above what they should be.

But you are probably correct in that house prices will continue to rise as the government and banks are doing all they can to make this so. In Dorset/Hampshire where i am looking its around 200K for a 2 bed terrace in an average housing estate surely this overpricing has to end eventually..

Think its best to compare 1998 prices to 2013 and to compare wage ratios needed to buy.

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Think its best to compare 1998 prices to 2013 and to compare wage ratios needed to buy.

Absolutely, on those metrics the prices are too high. The correction was never allowed to run its course, and we still have artificial props which I believe will continue the rises which started last year.

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Absolutely, on those metrics the prices are too high. The correction was never allowed to run its course, and we still have artificial props which I believe will continue the rises which started last year.

This is the problem, only Osborne, Carney and the select few know what props are still going to be in place so in truth there is no accurate way of predicting as you would be able to in a free market ... Apart from using the 2015 election to presume they'll do whatever is necessary to keep the plates spinning until then.

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This is the problem, only Osborne, Carney and the select few know what props are still going to be in place so in truth there is no accurate way of predicting as you would be able to in a free market ... Apart from using the 2015 election to presume they'll do whatever is necessary to keep the plates spinning until then.

As you point out, thie housing market is not a free market. if it's not a free market, it's a rigged market. it looks to me to be rigged in favour of the banks and the government taxation policy.

Putting aside the arguments about owning/renting....why would anyone buy into a rigged market ?

Would you put £50K on a horse if you knew the bookies were deciding which horse won ? The bookies mates would all be piling in though...

Edited by TheCountOfNowhere

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Very selective of areas. But taking East Midlands on the bullish Halifax index as opposed to the stagnant land registry (which shows the housing market at an inflation adjusted nadir or very close)...................

Q3 2004.............568.2

Q3 2013.............554,2

Some bubble.

Try Hull, Stoke, Coventry, Leicester, Derby, Lincoln, Nottingham, Newcastle, rural North, Middlesborough.

It just seems strange that at a time when we have had a mid decade to mid decade flat-liner (except in the South East) after four decades of a tripling in prices each decade, we can talk about bubbles and even imply that homeowners have been in the box seat.

I'm in both camps, my properties (with an STR spell in between) have earned me precisely zero since 2004 as the indicies would suggest ( and the untility of having somewhere to live mortgage free has not really reduced my drawings over renting (the nature of home owning is basically you have a money pit liability, conveniently forgotten on the costings)); my investments have done rather better.

Incidentally i am not so bearish for the medium term, the fact that prices are where they were ten years ago in most of the country leads me to believe that we will get some growth over the next two or three years. But that's not talking as a VI since most of my money is out of property.

Sales volumes have collapsed since 2004, and by your numbers we need to be looking at the 1994 price as affordable to the average punter? Things will just stagnate until people can no longer hold out for the bubble prices (or rates rise) HTB etc is a desperate attempt to get any slight movement in sales going. FTB areas in Edinburgh have already capitulated on asking prices and there is a lot more to come.

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