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Wurzel Of Highbridge

London's Housing Bubble 1996 - 2014

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Prices explode 500%+ A "Tulip mania" BOE & Osborne enabled prices to extend using tax payer backed help-to-buy scheme.

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Planet Ponzi ‏@PlanetPonzi Mar 25

.@SyesWideShut Macro #Economic disconnect between UK Property Prices, Income & Inflation. Watch today's @KeiserReport pic.twitter.com/SbinPcSfXk

https://twitter.com/PlanetPonzi

Edited by Wurzel Of Highbridge

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Prices explode 500%+ A "Tulip mania" BOE & Osborne enabled prices to extend using tax payer backed help-to-buy scheme.

I think that's a slightly misleading graph (lies, damned lies, etc.) - it hides the slump and therefore makes the 'return to norm' phase in the '90s look like part of the bubble. You need to extend further back.

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From the Telegraph

Prime London property an 'extreme outcome' of QE

10.45 An interesting note from Michael Hartnett at Bank of America Merrill Lynch, who has singled out prime London property as an "extreme outcome" of the "maximum liquidity - minimal growth" backdrop created by the reaction of central banks to the financial crisis (ultra low interest rates and QE) and as such could provide an "early warning system" for when the tide will turn as monetary policy tightens up again:

Quote In our view, London property is an extreme outcome of the Minimal Growth backdrop in the past seven years. The deflation of wages has, via central bank liquidity, been a primary driver of asset price inflation. Main Street has been in the doldrums while Wall Street has recovered strongly, and in the case of London real estate has also boomed thanks to capital flight from commodity producers and other emerging markets. We continue to rate the risk that excess liquidity ends in excess valuations and "speculative fervor" as high.

And if excess liquidity is ultimately to lead to more generalized inflation and a sell-off in bond markets, we think the UK is likely to prove a very useful early warning system.

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Its about to collapse, any fool can see that.

Get your pop corn and tin hat, sit back and watch it blow.

Nah, 'they' won't allow that. They couldn't afford it in 2009 so they certainly can't afford for it to happen now that the bubble is bigger.

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Its about to collapse, any fool can see that.

Get your pop corn and tin hat, sit back and watch it blow.

:o Don't say that! I just exchanged contracts today!

Oh well, got my ten year fix, GF just got a new mega bucks job, so we should be able to ride out the storm.

I guess I'm better off to now be in a house rather than a 2 bed flat when it all comes tumbling down.

But you're right - some people are going to get badly burnt.

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Nah, 'they' won't allow that. They couldn't afford it in 2009 so they certainly can't afford for it to happen now that the bubble is bigger.

At the end of 2008 the national debt was still less than 50% of GDP. Now it's nearly twice that. They can't afford to run it up to 150%. Game over.

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:o Don't say that! I just exchanged contracts today!

Oh well, got my ten year fix, GF just got a new mega bucks job, so we should be able to ride out the storm.

I guess I'm better off to now be in a house rather than a 2 bed flat when it all comes tumbling down.

But you're right - some people are going to get badly burnt.

Anyone who cannot stand to take a 30% hit on their supposed property value should really think about selling up sooner rather than later!

The trouble is when the tide turns everyone will be trying to sale their property. I don't think for one minute it will happen before the election but afterwards is fair game - especially if th government fail to do any type of dampening before then.

Edit:- Also as the bubble grows more money will be sucked out of the economy and the country will tip back into recession as mortgage holders pour more of their spending into making the monthly mortgage payment.

Edited by Shamus

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Anyone who cannot stand to take a 30% hit on their supposed property value should really think about selling up sooner rather than later!

The trouble is when the tide turns everyone will be trying to sale their property. I don't think for one minute it will happen before the election but afterwards is fair game - especially if th government fail to do any type of dampening before then.

Edit:- Also as the bubble grows more money will be sucked out of the economy and the country will tip back into recession as mortgage holders pour more of their spending into making the monthly mortgage payment.

Yeah..just like how Gordon brown stopped the last collapse until he won the election....

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Anyone who cannot stand to take a 30% hit on their supposed property value should really think about selling up sooner rather than later!

The trouble is when the tide turns everyone will be trying to sale their property. I don't think for one minute it will happen before the election but afterwards is fair game - especially if th government fail to do any type of dampening before then.

Indeed lots of bearish news today, but now I'll be in a house which I can see myself staying in for 10+ years. The thought of being trapped in a 2 bed flat in a falling market was actually quite frightening and one of the key reasons why I was so desperate to get out. Hopefully my long fix and 50% deposit should see me through the worst of it when it inevitably comes once Milliband and Balls are in Number 10 & 11.

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Does anyone know how much the average London wage has risen between 2000 and 2014?

The Halifax stats don't even show Greater London regaining the 2007 peak, obviously a bit sceptical about that in view of the commentary on here.......I don't know because I don't live there. Certainly the East Midlands is well short of the peak attained 7 years ago from my observations, well actually 9 years ago for Nottingamshire and Derbyshire (2005)

They show Q4 2000 for Greater London at 385.4 and Q4 2013 at 778.8, roughly a doubling. They show Q3 2007 at 810.6.

Always seem strange when we talk about bubbles on here when we are nine years from the peak in the North and still way short of the nominal peak attained nearly a decade ago, you have got a 30% fall for inflation even before you decide how much short of the 2005 price you are.. God knows what was happening in 2005 if this is a bubble.

http://www.lloydsbankinggroup.com/Media/economic-insight/halifax-house-price-index/

Not saying this wont develop into a bubble, and it has already in central London.

Edited by crashmonitor

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Does anyone know how much the average London wage has risen between 2000 and 2014?

Does anyone know how much the average London wage has risen fallen between 2000 and 2014?

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:o Don't say that! I just exchanged contracts today!

Oh well, got my ten year fix, GF just got a new mega bucks job, so we should be able to ride out the storm.

I guess I'm better off to now be in a house rather than a 2 bed flat when it all comes tumbling down.

But you're right - some people are going to get badly burnt.

Hurrah . 10 yr fix goooood

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:o Don't say that! I just exchanged contracts today!

Oh well, got my ten year fix, GF just got a new mega bucks job, so we should be able to ride out the storm.

I guess I'm better off to now be in a house rather than a 2 bed flat when it all comes tumbling down.

But you're right - some people are going to get badly burnt.

Why better off to now own a house + extra debt?

Real Estate Bubbles:

The manic phase of the boom lasts for several years. In the classic assets mania, markets outrun any rational valuation based on yield or cash return. Properties come to sell at absurd prices on the expectation they will appreciate to still more absurd prices. And they do. They defy gravity, moving from one lofty new high to another, month after month, year after year.... long enough to lure in otherwise prudent people to mortgaging their gains to reinvest in the inflated assets on margin.

Before the market can top, everyone who could conceivably be drawn in must have already become a buyer. And debt levels supporting the asset prices must be many times higher than any that could conceivably be serviced out of the cash flow yielded by the asset itself.

Then comes the bust. Just as everyone has come to count on the idea that the lofty asset valuations are permanent, there is a crash.

We already had that to 2007, but intervention came in (on back of so many sympathetic excuses for the over-borrowed), for super-monster bubble 2.0... yields today? Have to see if they run out of willing buyers/HTB2ers, and if underlying economy doesn't buckle with so many buyers going all in on housing/debt.

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The Halifax stats don't even show Greater London regaining the 2007 peak, obviously a bit sceptical about that in view of the commentary on here.......I don't know because I don't live there. Certainly the East Midlands is well short of the peak attained 7 years ago from my observations, well actually 9 years ago for Nottingamshire and Derbyshire (2005)

They show Q4 2000 for Greater London at 385.4 and Q4 2013 at 778.8, roughly a doubling. They show Q3 2007 at 810.6.

Always seem strange when we talk about bubbles on here when we are nine years from the peak in the North and still way short of the nominal peak attained nearly a decade ago, you have got a 30% fall for inflation even before you decide how much short of the 2005 price you are.. God knows what was happening in 2005 if this is a bubble.

http://www.lloydsban...se-price-index/

Not saying this wont develop into a bubble, and it has already in central London.

This isn`t a bubble like the Mega One Off Bubble That will Never Be Repeated, that was a true bubble, the Ponzi was working overtime then to get in new blood, sell on the loans, and allow people to cash in, move somewhere else with some profit etc. It was like a climber on Everest making a superhuman effort to make the summit, but leaving nothing for the descent. They used to queue nearly round the block to view flats here in Edinburgh, and sellers could demand sealed bids, that was the true bubble. Now the sales volumes are way down, many people can`t sell, not all London is bubble territory, certainly as you say parts of the Midlands, North England and Scotland (Let alone NI :P) have forgotten what "property bubble" means. This is the end game, the last few passes of the parcel before we get to who takes the hit. The prime London bubble is, as said in one of the links, a product of QE and a Canary in the Coalmine for when it all turns bad. The descent is going to be brutal.

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