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Rics: Uk House Price Bubble Ripples Out Of London

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The Osborne/Carney Extinction Plan goes nationwide.

http://www.telegraph...ss-Britain.html

By Richard Dyson, and Matthew Holehouse

10:00PM BST 09 Apr 2014

The housing boom is spreading across the country, with rapidly rising prices and long queues of buyers no longer restricted to London, experts announce on Thursday.

Property sales in the first three months of 2014 reached a six-year high as the market recovered on a "truly national" scale, according to the Royal Institution of Chartered Surveyors (Rics).

Activity is at levels last seen in early 2008, before the banking crisis took hold, and is spreading to the Home Counties and beyond, figures suggest.

The trend is "striking in that it is clearly broadening out", said Simon Rubinsohn, a Rics economist. "There has been a sense that it was one story for London and a very different outlook everywhere else, with perhaps a few other city centres edging ahead. But that is not the case any longer," he added.

"Now that the housing market recovery is well and truly under way and mortgage finance is more readily available, buyers seem to be looking to test the market right across the country, not just in the usual hotspots of the South East."

Rics' 513 branches of estate agents and valuers in England and Wales reported average sales of 23 properties each in the first quarter of the year. This is up from a low of 12 in 2009. In mid-2007, the peak of the last housing boom, chartered surveyors were selling properties at a rate of about 40 per quarter.

Prices were also on the rise. Rics has pushed up its forecast for national house price growth this year from six per cent to eight per cent. Its surveyors were most optimistic about price rises in the East Midlands and the North West.

Mr Rubinsohn said he was "hopeful" that there would not be "runaway" growth on the scale experienced in London, where some boroughs have recorded annual increases of 30 per cent, according to Nationwide. The building society's latest data showed London prices rose 18 per cent in the 12 months to March, and 9 per cent nationally.

Figures from the Office for National Statistics show the average UK house price stands at £254,000, up from £194,000 five years ago. The average London house price is £458,000, up from £301,000 over the same period.

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Cheap credit!

I can believe the forecasts of 25% to 30% property inflation over the next 3/4 years driven by the low cost of credit. Mortgage repayments at 2 to 3% are ridiculously cheap and there is plenty of room on the repayment affordability.

NOW would be a fantastic time to raise MORGAGE interest rates by 1%, and stave off further runaway inflation.

The people buying now are mainly taking out 5yr fixed deals and believe that they can pay down a huge chunk before the end of the 5 year term when their interest rate resets to a higher rate. They believe the economic fundamentals are improving and that their chance of earning more to repay the debt it increasing.

We have seen this all before. Once the low price of credit has been priced in and the last few suckers overstretch and default - the whole lot comes tumbling down again. It's inevitable, but I would expect no change from the last bubble because importantly the system has not changed.

It's interesting that we have reached near 0% base rate and that next time the bubble bursts it will have to be dealt with in a different way.

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Another thing.

The 'shortage' of properties for sale is due to many of them being owned as long term investments and essentially removed from the market.

There is no shortage of rentals and rents have been falling for the last couple of years. IMO now would be a good time to Sell to Rent.

On the other hand new construction is going through a boom, so the shortage of supply 'for sale' will only last another 12 months at most.

Overall I am starting to think that perhaps there is no overall shortage of homes, but it's the distribution of them that is the issue. For example if a landlord owned all but 10 properties in a town and one came up for sale, there would be a bidding frenzy on those 10 properties [if the banks allowed]. Overall there could be an oversupply of homes in that town with many of the rentals empty. You would think that the price of the rentals would fall, but not in the case where the government pay a minimum [housing benefit] for each and every house.

In summary the system is rigged to the bone.

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The government we elected to sort out Labour's housing bubble is doing a great job, isn't it :rolleyes:.

Criticise the bubble in opposition, ignore it for most of their first term, pump it up some more in the hope of winning a second term on the back of it.

Career politicians have their own interests at heart.

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Another thing.

The 'shortage' of properties for sale is due to many of them being owned as long term investments and essentially removed from the market.

There is no shortage of rentals and rents have been falling for the last couple of years. IMO now would be a good time to Sell to Rent.

On the other hand new construction is going through a boom, so the shortage of supply 'for sale' will only last another 12 months at most.

Overall I am starting to think that perhaps there is no overall shortage of homes, but it's the distribution of them that is the issue. For example if a landlord owned all but 10 properties in a town and one came up for sale, there would be a bidding frenzy on those 10 properties [if the banks allowed]. Overall there could be an oversupply of homes in that town with many of the rentals empty. You would think that the price of the rentals would fall, but not in the case where the government pay a minimum [housing benefit] for each and every house.

In summary the system is rigged to the bone.

I think you may be onto something with the rent issue. A genuine property shortage would have set off rent inflation nationally not just in London.

But the fundamental problem is the Mugabenomics of Osborne and Carney borrowing 7+% of GDP every single year while keeping base rates at 0%. At least Brown could blame the bankers, they have no such excuse.

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I don't think the conservatives will pull it off like Labour did as this time they are they are going it alone.

Residential property prices in the EU and the US (outside major cities) are steady, not rising. In effect this bubble if firmly on the hands of those in Westminster, you can't blame it on an international property boom this time.

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The government we elected to sort out Labour's housing bubble is doing a great job, isn't it :rolleyes:.

In a kind of 'You call that a bubble? We can do better than THAT!' kind of way. They were probably upset that the 2001-7 bubble made the Lawson bubble look like a pimple.

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I think you may be onto something with the rent issue. A genuine property shortage would have set off rent inflation nationally not just in London.

There was some stat I saw recently that 30% of new builds being bought were standing empty (if I remember correctly).

Also seen photos of newish developments in West London with only a couple of lights on at night - indicating even though 'occupied' they may be infrequently used.

Locally here, due to 2nd homes, holiday homes etc. and retired boomers living in the 4/5 beds there is only a tiny fraction of bedrooms occupied at any one time.

The problem with this compounds as the people that do live there lose facilities (public transport, schools etc.) due to low population in areas that previous had population.

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So average sales volumes of 12 per quarter in the low and 40 in the 2007 high and now at 23. Presumably they want volume and prices to move in tandem. A long way off 2007.

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Seems to be a concerted effort to get things going again after a disappointing March with a 1.1% fall in prices and a detected slowing in enthusiasm from most commentators.

If they ramp enough no doubt March could prove a temporary blip.

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Seems to be a concerted effort to get things going again after a disappointing March with a 1.1% fall in prices and a detected slowing in enthusiasm from most commentators.

If they ramp enough no doubt March could prove a temporary blip.

Also bear in mind that this is April, HPI ramping frenzy time of the year. I'm not denying that there is a genuine boom going on, but it is also "that time of year".

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Seems to be a concerted effort to get things going again after a disappointing March with a 1.1% fall in prices and a detected slowing in enthusiasm from most commentators.

If they ramp enough no doubt March could prove a temporary blip.

The Feb figure was up 2.4% MoM. The 1.1% fall is just correcting that statistical blip, leaving prices rising at about 0.6 to 0.7% a month, in line with figures over the last 12 months.

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The Feb figure was up 2.4% MoM. The 1.1% fall is just correcting that statistical blip, leaving prices rising at about 0.6 to 0.7% a month, in line with figures over the last 12 months.

It did seem to coincide with a slowing in enthusiasm. I was taken aback by the strong start to the year and equally surprised when it lost momentum in march.

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Another thing.

The 'shortage' of properties for sale is due to many of them being owned as long term investments and essentially removed from the market.

There is no shortage of rentals and rents have been falling for the last couple of years. IMO now would be a good time to Sell to Rent.

On the other hand new construction is going through a boom, so the shortage of supply 'for sale' will only last another 12 months at most.

Overall I am starting to think that perhaps there is no overall shortage of homes, but it's the distribution of them that is the issue. For example if a landlord owned all but 10 properties in a town and one came up for sale, there would be a bidding frenzy on those 10 properties [if the banks allowed]. Overall there could be an oversupply of homes in that town with many of the rentals empty. You would think that the price of the rentals would fall, but not in the case where the government pay a minimum [housing benefit] for each and every house.

In summary the system is rigged to the bone.

Something I have always believed, and the PTB know it, hence no "Mass building programs" that some on here call for.

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I think you may be onto something with the rent issue. A genuine property shortage would have set off rent inflation nationally not just in London.

But the fundamental problem is the Mugabenomics of Osborne and Carney borrowing 7+% of GDP every single year while keeping base rates at 0%. At least Brown could blame the bankers, they have no such excuse.

And as most would not be able to stretch their finances any further there would have been hordes of homeless in the streets and banging on the doors of council offices up and down the land? Most of the "shortage" memes are myth IMO, myth to keep the ever so important (to the banks) prices up.

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I think you may be onto something with the rent issue. A genuine property shortage would have set off rent inflation nationally not just in London.

There's a great chart on one of ChairmanOfTheBored's threads/posts showing house prices vs rents. It tells you everything you need to know about this being an enormous bubble

Kudos to anyone who can find it on this site.

Here's another one though:

rents.png

http://blogs.independent.co.uk/2012/07/11/do-we-really-have-a-housing-shortage/

Similar to ones the world over for the usual suspects:

Australia:

housing-chart2.gif

http://www.marketoracle.co.uk/Article24444.html

Vancouver:

GrowthInVancouver.jpg

http://socalappraisal.com/socal-in-world-context/

Let's see how we compare to some other countries:

20110305_src138.gif

http://www.economist.com/node/18250439

USA has de-leveraged. Spain does look in worse shape than us.

I'm afraid some of the graphs are out of date, but I would guess things look even worse for the UK, Canada and Australia.

Edited by Eddie_George

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Phew just in time for an election, wages stagnating but at least your house is going up in value. Great news I always wanted to rich....

The economic plan was to get the property ponzi going again to get the economy going it appears they may have managed to get it to splutter back into life with a new frenzy. A great success.

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The government we elected to sort out Labour's housing bubble is doing a great job, isn't it :rolleyes:.

Criticise the bubble in opposition, ignore it for most of their first term, pump it up some more in the hope of winning a second term on the back of it.

Career politicians have their own interests at heart.

They didnt really, though did they? OK, maybe for a few months in early 09, when the bubble started to deflate.

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Phew just in time for an election, wages stagnating but at least your house is going up in value. Great news I always wanted to rich....

The economic plan was to get the property ponzi going again to get the economy going it appears they may have managed to get it to splutter back into life with a new frenzy. A great success.

Unfortunately people think HPI= healthy economy. Its something visible, something they think the media cant twist.

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There's a great chart on one of ChairmanOfTheBored's threads/posts showing house prices vs rents. It tells you everything you need to know about this being an enormous bubble

Kudos to anyone who can find it on this site.

Here's another one though:

http://blogs.indepen...using-shortage/

Similar to ones the world over for the usual suspects:

Australia:

http://www.marketora...ticle24444.html

Vancouver:

http://socalappraisa...-world-context/

Let's see how we compare to some other countries:

20110305_src138.gif

http://www.economist.com/node/18250439

USA has de-leveraged. Spain does look in worse shape than us.

I'm afraid some of the graphs are out of date, but I would guess things look even worse for the UK, Canada and Australia.

Much worse.

price+to+rent.jpg

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Let's see how we compare to some other countries:

20110305_src138.gif

http://www.economist.com/node/18250439

USA has de-leveraged. Spain does look in worse shape than us.

I'm afraid some of the graphs are out of date, but I would guess things look even worse for the UK, Canada and Australia.

Spain was probably dirt cheap in 2000 though (just look at the foreign population of spain in the other thread in 2000, it was a 5th of its current level, doubt much injection of foreign speculation back then), by 2000 the UK was already above its long run average...despite what that chart says. The overall move may be right ( spain about 40% above 2000, UK about 50%) but UK housing was no way 80% of LRA, more like 120%.

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Unfortunately people think HPI= healthy economy. Its something visible, something they think the media cant twist.

Well when you are sat in a house "worth" £200k plus clearly you are rich... Even better you get richer without doing anything, it's all win win. My first house made more money than I got paid in 6 years of work, you really can't be that type of return.

No wonder everyone got into the housing ponzi its easy money, trouble is the exponential problem of increasing prices, the car industry I think has already hit this issue that people can't afford to buy a new car so now everyone is "leasing" it seems this type of financing is slowing gaining traction in the housing sector. Pretty soon it will be I'm living in £600k house and I've got a 50% stake.

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They didnt really, though did they? OK, maybe for a few months in early 09, when the bubble started to deflate.

Cameron did, Osborne did and Cable was all over it. Not many speeches survived the "Night of the long Internet deletions", though.

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