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Daily Telegraph: Prices Ahead Of Market Valuations

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From the Daily Telegraph, Rise in surveyors derailing house purchases

Home buyers are increasingly facing a mortgage shortfall as rapidly rising house prices steam ahead of market valuations.

I like the way that the article proposes to essentially define "prices" as what people are willing to pay if the banks will provide a mortgage to enable them to pay, whereas "market valuations" becomes a surveyor's valuation. Little doubt in my mind that a market valuation would be the prices at which the property sold. IMO this is classic illustration of the fact that house prices bubbles are determined by what the banks are willing to lend, given that taken as a whole the willingness of UK proles to borrow in order to jump into an existing bubble is essentially insatiable. It is increasingly apparent that, at any price point, at any time, if people are allowed to borrow enough, then buyers can be found.

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IMO this is classic illustration of the fact that house prices bubbles are determined by what the banks are willing to lend

In some direct sense yet, but what banks are willing to lend is itself determined by numerous other factors.

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In some direct sense yet, but what banks are willing to lend is itself determined by numerous other factors.

Maybe, but evidence from their past behaviour strongly indicates that the only factor that matters is whether or not house prices are expected to rise.

Perhaps you could come up with an alternative explanatory framework capable of explaining why in the last gasp of the previous bubble 90%-95% LTV interest only mortgages were a workable model for the banks but not why it was a bad idea 10 years before and 10 years after...

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The couple’s lender, Chelsea Building Society, sent a surveyor to value the property before signing off the mortgage. He valued it at £25,000 below the agreed sale price.

I like this, so the banks aren't willing to fund the gazumping of people wanting to buy property at any price. If you want to overpay then you had better stump up your own money.

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I like this, so the banks aren't willing to fund the gazumping of people wanting to buy property at any price. If you want to overpay then you had better stump up your own money.

Were there stories like this 2003 to 2007? It kind of predates my interest in all things UK Housing Ponzi.

Is the matter of surveyor's valuations failing to keep up with the prices buyers agree with sellers typical of a rapid price inflation phase? The way that the surveyor's representative in the article tells it in the story, it ought to be.

However, if this mismatch between what buyers want to pay and what surveyors will value at is 'new' then it might be indicative the fact that neither the banks nor the surveyors have much faith in this present burst of London & SE centred HPI being sustained, even over the relatively short-term.

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  • 407 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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