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London Living Through Biggest House Price Bubble Ever

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http://www.standard.co.uk/news/london/london-living-through-biggest-house-price-bubble-ever-9221297.html?icn=ticker-1

The average London house price surged to a record £414,356 last month as a new report said the capital's boom is now the biggest property bubble in history.

Experts said the London market is now “detached from reality”, as prices rocketed by 13.8 per cent in the year to February — the fastest rate since 2007 — according to latest Land Registry figures. An explosion in the number of first-time buyers scrambling on to the ladder and easier access to mortgages have contributed to heating up the market.

Another factor is the tidal wave of foreign cash drawn by London’s status as the world’s premier “safe haven” investment. The latest increase means that the typical London home has gone up in value by just over £50,000 in a year, far outstripping the capital’s average salary of £36,781 in 2013.

But it immediately revived fears that the “dysfunctional” London property market is now out of control, with frenzied buyers creating a new bubble that will end in a disastrous crash when interest rates start to go up.

It also follows comments from the Prince of Wales this week warning that an entire generation of young Londoners is in danger of being priced off the property ladder.

Campbell Robb, chief executive of housing charity Shelter, said: “Another rise in house prices is another rise in people priced out, with thousands forced to watch their dream of their own home slip even further out of reach.

“The Government’s own figures predict house prices will continue to climb and it should start meeting people halfway by urgently addressing our shortage of affordable homes.”

The Land Registry figures were published as a survey ranked this London boom as the biggest speculative housing bubble in economic history.

Research commissioned by the Discovery Channel estimated property in the capital has increased in value by £1.2 trillion in the five years since prices started to recover in spring 2009 — dwarfing the Klondike gold rush and the Victorian railway mania.

Martin Stewart, director of independent mortgage broker, London Money, said: “House prices in the city have detached from reality. Many young people have no chance at all of ever getting on to the ladder in London and are being priced out even before they arrive for the dreaded open day.”

The biggest rises were in Hackney, on 21.5 per cent, followed by Waltham Forest 20.1 per cent, Islington 17.7 per cent and Wandsworth 17.6 per cent. The number of London properties sold for more than £1 million rocketed 40 per cent to 612 in December, the latest month for which figures are available.

The Land Registry also revealed how England is starkly divided between North and South, with prices rising 6.2 per cent in the South-East but dipping by 1.3 per cent in the North-East. Nationally, prices rose 5.3 per cent.

The Bank of England has warned about the number of borrowers being offered dangerously high mortgages.

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...as a new report said the capital's boom is now the biggest property bubble in history.

..Nationally, prices rose 5.3 per cent.

..The Bank of England has warned about the number of borrowers being offered dangerously high mortgages.

They don't have to take those mortgages, paying x2-x10+ what other people are willing to pay.

Hope we don't have another lobbying job of excuses if prices begin to soften. "They just wanted a home." "They believed what their parents told them." "The media made HPI look so nice and easy and constant."

There's a cost to such sympathetic position on non-owners, each time it's followed by massive bail-outs for home-owners.

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http://www.standard....ml?icn=ticker-1

The average London house price surged to a record £414,356 last month as a new report said the capital's boom is now the biggest property bubble in history.

Experts said the London market is now "detached from reality", as prices rocketed by 13.8 per cent in the year to February — the fastest rate since 2007 — according to latest Land Registry figures. An explosion in the number of first-time buyers scrambling on to the ladder and easier access to mortgages have contributed to heating up the market.

Another factor is the tidal wave of foreign cash drawn by London's status as the world's premier "safe haven" investment. The latest increase means that the typical London home has gone up in value by just over £50,000 in a year, far outstripping the capital's average salary of £36,781 in 2013.

But it immediately revived fears that the "dysfunctional" London property market is now out of control, with frenzied buyers creating a new bubble that will end in a disastrous crash when interest rates start to go up.

It also follows comments from the Prince of Wales this week warning that an entire generation of young Londoners is in danger of being priced off the property ladder.

Campbell Robb, chief executive of housing charity Shelter, said: "Another rise in house prices is another rise in people priced out, with thousands forced to watch their dream of their own home slip even further out of reach.

"The Government's own figures predict house prices will continue to climb and it should start meeting people halfway by urgently addressing our shortage of affordable homes."

The Land Registry figures were published as a survey ranked this London boom as the biggest speculative housing bubble in economic history.

Research commissioned by the Discovery Channel estimated property in the capital has increased in value by £1.2 trillion in the five years since prices started to recover in spring 2009 — dwarfing the Klondike gold rush and the Victorian railway mania.

Martin Stewart, director of independent mortgage broker, London Money, said: "House prices in the city have detached from reality. Many young people have no chance at all of ever getting on to the ladder in London and are being priced out even before they arrive for the dreaded open day."

The biggest rises were in Hackney, on 21.5 per cent, followed by Waltham Forest 20.1 per cent, Islington 17.7 per cent and Wandsworth 17.6 per cent. The number of London properties sold for more than £1 million rocketed 40 per cent to 612 in December, the latest month for which figures are available.

The Land Registry also revealed how England is starkly divided between North and South, with prices rising 6.2 per cent in the South-East but dipping by 1.3 per cent in the North-East. Nationally, prices rose 5.3 per cent.

The Bank of England has warned about the number of borrowers being offered dangerously high mortgages.

The end will be a thing of beauty, oh Yes. Keep your popcorn dry Chaps and Chapesses.

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Interesting article. Usually when they write about a housing bubble, there is usually a wink to 'fill your boots' and 'don't miss out.' Does seem to be a sense of alarm.

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The Bank of England has warned about the number of borrowers being offered dangerously high mortgages.

Don't they have these mysterious 'powers' to prevent this kind of thing? I wonder what they are? Maybe Carney has the power to transform into a compliant government stooge- or has he used that power already? :D

Reminds me of the old joke concerning the predicament of the unarmed policeman in pursuit of a felon 'Stop!- Stop I say or....or I'll shout Stop again!'

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I wonder what the tipping point will be, when will sentiment change it still has a while to run, maybe another 12 months.

When people start reading "bubble" on the front page of the paper, they will begin to get nervous.

However there are plenty of property industry stooges to tell them otherwise. Henry Prior often pops up in the media, introduced as a "property expert" rather than an industry spokesman. The media often neglects to mention BTL as a cause of HP inflation. Foreign buyers are often mentioned buti think they are less of a problem than buy to let.

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When people start reading "bubble" on the front page of the paper, they will begin to get nervous.

However there are plenty of property industry stooges to tell them otherwise. Henry Prior often pops up in the media, introduced as a "property expert" rather than an industry spokesman. The media often neglects to mention BTL as a cause of HP inflation. Foreign buyers are often mentioned buti think they are less of a problem than buy to let.

Really ? How likely is it that an average current housebuyer will understand what a bubble is ?

A 26-28 yr old person at work (educated, technical role in a research institute) has just bought their first house -"It's so exciting - it was a bit more than I wanted to pay - the only problem will be next month when I have to pay the solicitors fees"

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I wonder what the tipping point will be, when will sentiment change it still has a while to run, maybe another 12 months.

London will go when China goes. Most of the top-end 'bubble money' has come from China.

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Really ? How likely is it that an average current housebuyer will understand what a bubble is ?

A 26-28 yr old person at work (educated, technical role in a research institute) has just bought their first house -"It's so exciting - it was a bit more than I wanted to pay - the only problem will be next month when I have to pay the solicitors fees"

Something will need fixing the next month.

Then the car will break.

etc etc etc.

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Don't they have these mysterious 'powers' to prevent this kind of thing? I wonder what they are? Maybe Carney has the power to transform into a compliant government stooge- or has he used that power already? :D

Reminds me of the old joke concerning the predicament of the unarmed policeman in pursuit of a felon 'Stop!- Stop I say or....or I'll shout Stop again!'

The government (Conservative and LibDem coalition) went on and on and on and on and on and on .................about the BoE's new powers to stop a house price bubble when they introduced Help to Buy. They couldn't stop talking about how powerful the BoE's powers were during the autumn conference season. No details were published about what the powers might be - of course.

Then as soon as the (continuation of the) London house price bubble became so obviously out of control that it just couldn't be ignored then lo and behold the BoE suddenly announced that it couldn't do anything about it. They had no powers - they were utterly powerless.

The government didn't contradict it :o

Just saying.

Edited by billybong

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Chinese and Russian cash borrowed from the West, ploughed without regard into foreign powers' banking system...meanwhile, sanctions on a major power and we think they fear us?

We tried that on the Germans in WW2...flooding them with money...now its our turn.

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Where are the London sellers going? One thing is buying an over priced house thinking it will go higher, the pain and inferior quality of life may just about be worth it.......quite another when what is bought starts falling and lifestyle is below what said income expects and can acheive for the same elsewhere. ;)

Edited by winkie

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Watching Sky news this morning I had this moment of clarity when a Conservative MP explained that help to buy was not a problem because if it got out of hand and threatened to create a bubble......

What did he say next? did he say that the Chancellor of the Exchequer would immediately act in the national interest and terminate the scheme?

No- he did not say that.

What he said was this- if help to buy became a threat to the nations economic well being Mark Carney at the BoE would step in and put a stop to it.

So basically his pitch was this- should boy George get out of hand an adult would intervene to stop him.

And this was presented without a trace of irony or even of understanding just how damning this view of the Chancellor was- in effect he was admitting that George Osborne could not be trusted to act in the national interest because he was either too immature, or too concerned with short term political advantage or was just too bloody stupid to do so.

And these people aspire to govern a country?

Edited by wonderpup

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Watching Sky news this morning I had this moment of clarity when a Conservative MP explained that help to buy was not a problem because if it got out of hand and threatened to create a bubble......

What did he say next? did he say that the Chancellor of the Exchequer would immediately act in the national interest and terminate the scheme?

No- he did not say that.

What he said was this- if help to buy became a threat to the nations economic well being Mark Carney at the BoE would step in and put a stop to it.

So basically his pitch was this- should boy George get out of hand an adult would intervene to stop him.

And this was presented without a trace of irony or even of understanding just how damning this view of the Chancellor was- in effect he was admitting that George Osborne could not be trusted to act in the national interest because he was either too immature, or too concerned with short term political advantage or was just too bloody stupid to do so.

And these people aspire to govern a country?

That's today.

- but last month

http:/

/www.dailymail.co.uk/news/article-2560957/I-control-UKs-soaring-house-prices-says-Carney-Bank-chief-admits-powerless-average-asking-price-jumps-250-000.html

17 February 2014

I can't control UK's soaring house prices says Carney:

Bank chief admits he is powerless as average asking price jumps above £250,000

Which is true?

Edited by billybong

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Both and neither? They are politicians aren't they? :rolleyes:

Exactly - but the contradictions shouldn't be unremarked on. Likely the interviewer didn't take the Conservative MP up on what he'd said? - maybe the MP would have had an explanation for the contradiction. That would have been interesting and viewers might even have learnt something.

The governor isn't supposed to be predominantly a politician (emphasis on predominantly) but indeed he appears to be more and more acting in that manner. Maybe he'll explain the contradiction in his next and umpteenth Forward Guidance.

As the two statements contradict each other one is the truth and the other isn't. Either the BoE has the power or it doesn't - even if politicians made both statements.

Edited by billybong

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Which is true?

I suppose in theory a rate hike would pull the plug on HPI- but then so would an invasion from Mars- of the two the latter seems more likely to happen.

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I suppose in theory a rate hike would pull the plug on HPI- but then so would an invasion from Mars- of the two the latter seems more likely to happen.

The powers were supposed to be special - that's what they were called although they didn't go into detail. More special than a rate hike. So indeed it looks far more likely to be the latter.

Edited by billybong

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The powers were supposed to be special - that's what they were called although they didn't go into detail. More special than a rate hike. So indeed it looks far more likely to be the latter.

What should happen: The new rules for mortgage lending start in April 2014. Banks will take a lot more data and stress test before lending money to prospective house buyers. This should slow the house market down (if only because it takes longer to process all this new paperwork!). The BoE are waiting for two/three more months of data to confirm this. If the market doesn't slow down on the next quarterly datapoint they will instigate higher interest rates on lending to banks and force higher charges on capital to banks - negating some of the benefits of help to buy and making it less economically attractive to service borderline customers. The economy will slow a bit and credit will only be extended to the ultra-safe bets once again awaiting the next "guaranteed" trade provided by the government.

What will probably happen - Banks and estate agents will attempt to move demand forward (as applications before the deadline did not need the additional checks). Estate agents will create thousands of dummy entries asking for loans from banks and then retrospectively fill them with clients as they emerge. This is what all brokers did when they knew a good bank interest rate deal was ending. This will mean a spike in lending for the next quarter at least if not longer (remember the lending market is slooow it takes a few months to close most deals). When the rules do come in, they will also find a way around these rules by ensuring estate agents complete the forms favourably on behalf of their clients ("all in the great service"). George will hail his scheme as a success whilst politically giving the can to Mark Carney to stop any "bubble" (who could predict it?) if required. Mark knows he can't change policy as it may stop the Tories winning the election so he has to go along with it praying he can do something by May 2015. As always, that will be too late to actually do anything but hasten the crash which will probably start to occur by Oct 2015 (not a prediction just a guess)

Edited by katchytitle

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I noticed this article in the Evening Standard today suggesting that just under half the jobs in Iain Duncan Smith's constituency - covering Chingford and north Walthamstow - paid less than the living wage. This area has seen a 20% increase in house prices in the last year - the second highest growth after Hackney - and is forecast to see prices doubling and trebling again by the experts by 2017

http://www.standard.co.uk/news/politics/half-of-jobs-in-idss-seat-fall-short-of-living-wage-9225853.html

Whoever is buying - its presumably not the locals!

"The London constituency of Work and Pensions Secretary Iain Duncan Smith has more jobs which pay less than the living wage than almost any other area in Britain.

But research to be published tomorrow suggests almost half the jobs in his own constituency, Chingford and Woodford Green, fall short of the living wage. The data shows that one in five jobs across Britain paid less than this wage, reflecting warnings that rising employment masks a boom in low-paid work. The study, by the TUC, also suggests women are far more likely to earn less than the benchmark wage, set at £8.80 an hour in London.

Its analysis of figures from the House of Commons Library shows that in Chingford and Woodford Green, 43 per cent of jobs paid less than the living wage."

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I noticed this article in the Evening Standard today suggesting that just under half the jobs in Iain Duncan Smith's constituency - covering Chingford and north Walthamstow - paid less than the living wage. This area has seen a 20% increase in house prices in the last year - the second highest growth after Hackney - and is forecast to see prices doubling and trebling again by the experts by 2017

http://www.standard....ge-9225853.html

Whoever is buying - its presumably not the locals!

"The London constituency of Work and Pensions Secretary Iain Duncan Smith has more jobs which pay less than the living wage than almost any other area in Britain.

But research to be published tomorrow suggests almost half the jobs in his own constituency, Chingford and Woodford Green, fall short of the living wage. The data shows that one in five jobs across Britain paid less than this wage, reflecting warnings that rising employment masks a boom in low-paid work. The study, by the TUC, also suggests women are far more likely to earn less than the benchmark wage, set at £8.80 an hour in London.

Its analysis of figures from the House of Commons Library shows that in Chingford and Woodford Green, 43 per cent of jobs paid less than the living wage."

Let's hope they're sensible enough to vote for someone else en masse at the GE.

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Don't hold your breath.

Depressingly you are probably right, although on the plus side it'd be nice to have another ConDem coalition in place to reap the whirlwind of their idiotic policies!

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