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InlikeFlynn

Bubble Or Not?

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Via Twitter Hugh Pym Chief economics correspondent, BBC News tweets: "Bank of Eng FPC: mortgages at loan to income ratios above four times accounted for highest share of new mortgages Q3 since records began 05"

Edit to add original source:

"There was continued evidence of increasing momentum in the UK housing market, although a number of indicators remained below their long-run average levels. Mortgage approvals had risen by 40% in the year to January, though they remained 20% below their long-run average. Prices had risen by around 10% at a national level over the year to February 2014, according to the average of the main lenders' indices, and 5.5% over the year to December 2013 using ONS data, with increases seen in all UK regions over the second half of 2013. In a continuation of a longer-term trend, mortgages at loan to income ratios above four times accounted for a higher share of new mortgages in Q3 than at any time since the data series began in 2005. New mortgage lending at high loan to value ratios remained low by historical standards, though the number of mortgage products offering higher loan to value ratios had doubled over the previous six months. "

source: http://www.bankofengland.co.uk/publications/Pages/news/2014/025.aspx

Edited by InlikeFlynn

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It's not a bubble.

IT'S A MEGA BUBBLE.

with

LIAR LOANS

Sorry been wanting to do since I've been on the forum/

H/T to Eric

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It's a Double Bubble.

Everybody who bought before 2008 is trying to deleverage as fast as possible. Everybody who bought after 2008 is stuck on one of Osborne's subsidised fixes.

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Your're all wrong - House prices only ever go up!! FFS when will you people ever learn. :lol:

More correctly it's "asset price inflation" caused by deliberate government policy to please it's voters. subsidies, tax incentives, restrictive planning policy, lax immigration policy - all deliberate.

The aim of the whole charade is that all of the boomer generation can live for free on the backs of the young. It's the sit on your ass and get rich mirage of the Daily Express.

It's all very clear and simple, but will they get away with it?

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Of course it's a bubble!

It was referred to as "Labour's house price bubble" by Cameron, Cable, et al, before they decided to re-write history, deny the bubble ever existed and pump it up to create a feel good factor in the run-up to the election.

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When they say is it as new bubble or will we have a new bubble.

The answer is a resounding NO

it's the same one for the last 10 years!

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Has any other bubble lasted 10 years?

The whole idea of the term bubble is something that blows up 'quickly' and has very 'thin' fundamentals, then pop's. Look at silver in 2001, clear it doubled and then doubles again whilst the fundamentals remained 'thin', i then popped.

I could buy the theory that housing is illiquid thus the bubble is slower, but 10 years? IMO it's deliberate manipulation to support the Boomers and bankers.

We all know it's unsustainable without a major price correction or wage rises, however they might just me able to keep it propped up for another 10 years. Now 'they' have cut interest rates from 4% to 0.5% over those 10 years to enable people to keep paying the inflated prices, so it does look like the ammo has run out once the last cut has been fully priced in.

There are several rules that can be changed like. Mortgage interest relief in PPR's, help-to-let etc. that can be brought in to prop up prices after the cycle turns, but observing the public opionion on house-price-fixing policies I doubt that more of the same will be brought in.

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Not disagreeing.

As you say, due to relative slowness it moves, real estate can easily be in a 10 yr bubble, after rising the prior 40.

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The whole idea of the term bubble is something that blows up 'quickly' and has very 'thin' fundamentals, then pop's. Look at silver in 2001, clear it doubled and then doubles again whilst the fundamentals remained 'thin', i then popped.

I could buy the theory that housing is illiquid thus the bubble is slower, but 10 years? IMO it's deliberate manipulation to support the Boomers and bankers.

It seems a good question - can we call this a bubble any more? It's... something, and it smells 'orrible, but, with the intervention we've seen and the time-scales involved, is the term 'bubble' the best one?

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It seems a good question - can we call this a bubble any more? It's... something, and it smells 'orrible, but, with the intervention we've seen and the time-scales involved, is the term 'bubble' the best one?

It's clear that the full resources of the state have been put behind keeping it inflating - so it's still a bubble but one that is now only likely to pop when the system supporting it crashes.

As long as the state functions, seems pretty clear that whatever needs to be done to keep house prices unaffordable will be done.

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It's clear that the full resources of the state have been put behind keeping it inflating - so it's still a bubble but one that is now only likely to pop when the system supporting it crashes.

As long as the state functions, seems pretty clear that whatever needs to be done to keep house prices unaffordable will be done.

It's extraordinary. I stupidly assumed the tories would pop it as soon as they got through the door. Would we have been better if the original bubble had blown up under the conservatives* with labour coming in in 2010? The labour power-base might have been more willing to swallow it (and blame the tories).

* and if anyone wants to suggest that there would have been no bubble under the tories, I've got a bridge for sale.

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It's extraordinary. I stupidly assumed the tories would pop it as soon as they got through the door. Would we have been better if the original bubble had blown up under the conservatives* with labour coming in in 2010? The labour power-base might have been more willing to swallow it (and blame the tories).

* and if anyone wants to suggest that there would have been no bubble under the tories, I've got a bridge for sale.

I suppose >50% of them would be property owners and landlords, why would they pop it? Politicians do nothing for the public, they are all in it together.= 0 just look at the expenses scandal for proof.

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Younger politicians..media types...bankers etc...have all missed out...as time goes on less and less people will be willing to stake their reputation on this mega bubble.

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When they say is it as new bubble or will we have a new bubble.

The answer is a resounding NO

it's the same one for the last 10 years!

Yes, and the previous five. I just love the way they have data going all the way back to 2005. Comprehensive.

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When they say is it as new bubble or will we have a new bubble.

The answer is a resounding NO

it's the same one for the last 10 years!

It's deflated a long way, in most of the north it is way short of the nominal peak attained around 9 years ago in 2005. If we are on an 18 year cycle it no longer fits the model of a new bubble.......bears must hope that this fits the model of the 75 year housing super cycle and is indeed the same bubble about to explode properly this time.

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When they say is it as new bubble or will we have a new bubble.

The answer is a resounding NO

it's the same one for the last 10 years!

Only 10 years so back to just 2004? It started when the BoE were made independent in 1998. A lot of the damage was done well before 2004. In Feb 2003 the Halifax was up 24.9% annually and with inflation over target, the ever vigilant BoE decided to cut interest rates to a 48 year low:

The Bank of England has surprised City analysts by cutting interest rates by one quarter of a percentage point.

After 14 months on hold, rates have been cut to 3.75%, taking borrowing costs to their lowest level since 1955.

It is a sign of how worried they are about the economy

The move surprised City analysts, who had thought that the Bank would maintain rates at 4% to keep a lid on the housing market and general inflation.

House prices last month were 24.9% higher than in January 2002, Halifax, the UK's biggest mortgage lender, said on Wednesday.

...

"This is one of the biggest gambles any central banks has done - cutting rates when house price inflation is close to 30% and inflation is already above target," said John Butler, UK economist at HSBC. "It is true to say [the Bank is] playing with fire."

Ross Walker, UK economist at Royal Bank of Scotland, said: "I can see nothing in the data that suggests the UK consumer needs further interest rate easing.

http://news.bbc.co.uk/1/hi/business/2732645.stm

The BoE like to draw attention to how well they think they have handled the financial crisis, not that they helped cause it.

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Only 10 years so back to just 2004? It started when the BoE were made independent in 1998. A lot of the damage was done well before 2004. In Feb 2003 the Halifax was up 24.9% annually and with inflation over target, the ever vigilant BoE decided to cut interest rates to a 48 year low:

The BoE like to draw attention to how well they think they have handled the financial crisis, not that they helped cause it.

The same conditions prevail now as in the madness that was 1999-2004, a collapse in inflation due to a turning of the commodities' super cycle. Like then the B of E appear to be more concerned with maintaining some inflation even if this means double digit asset inflation. You would have thought they would have learnt the lessons of what happened back then.

Edited by crashmonitor

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It's extraordinary. I stupidly assumed the tories would pop it as soon as they got through the door. Would we have been better if the original bubble had blown up under the conservatives* with labour coming in in 2010? The labour power-base might have been more willing to swallow it (and blame the tories).

* and if anyone wants to suggest that there would have been no bubble under the tories, I've got a bridge for sale.

No-one in mainstream politics has any interest in popping the housing bubble or allowing it to deflate, quite the opposite.

Plenty of VIs in high places for high property prices and the totally thick general public think that ridiculously expensive house prices are the best thing EVAR (even though, strangely, they're not fans of ever rising food, petrol or electricity/gas prices :lol: ).

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The same conditions prevail now as in the madness that was 1999-2004, a collapse in inflation due to a turning of the commodities' super cycle. Like then the B of E appear to be more concerned with maintaining some inflation even if this means double digit asset inflation. You would have thought they would have learnt the lessons of what happened back then.

The answer to all this mess and rubbish, is to me astonishingly easy. Include house price inflation in the interest rate target. It is after all were all new money is created.

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Only 10 years so back to just 2004? It started when the BoE were made independent in 1998. A lot of the damage was done well before 2004. In Feb 2003 the Halifax was up 24.9% annually and with inflation over target, the ever vigilant BoE decided to cut interest rates to a 48 year low:

http://news.bbc.co.uk/1/hi/business/2732645.stm

The BoE like to draw attention to how well they think they have handled the financial crisis, not that they helped cause it.

Wow, that was a blast from the past and a real remainder of how little has changed. Reading the comments everyone was thinking much the same as today and this was before a crash!

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