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TheCountOfNowhere

The London Mega Bubble Crash

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I said last year london was in some kind of crazy bubble and it couldn't go on much longer.

I've even emailed the BoE on three of four occasions only to be fobbed off with some nonsense. They ignored my last email !!!!

It is obvious and plane to see what is occurring. I am expecting to be appointed to the executive committee of the BoE any day now. laugh.gif

We are now seeing what I can only describe is a mega-bubble-mania. I can scarcely believe what i've witnessed over the last 12 months.

The MSM is now onto the fact that this is a crazy bubble and is unsustainable.

The big question now is when will it crash and what will be the spark.

I doubt it will last this summer. What will spark end of the madness....now, that is a question.

When it does blow the S.E. and surrounding counties are impacted hard.

Caveat Emptor.

Edited by TheCountOfNowhere

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I said last year london was in some kind of crazy bubble and it couldn't go on much longer.

We are now seeing what I can only describe is a mega-bubble-mania.

The MSM is now onto the fact that this is a crazy bubble and is unsustainable.

The big question now is when will it crash and what will be the spark.

I doubt it will last this summer. What will spark end of the madness....now, that is a question.

A thermo nuclear explosion above Mayfair when the Yanks launch an attack on key Russians? :blink:

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The big question now is when will it crash and what will be the spark.

This bit is key. Without a catalyst, no matter how big a bubble they're won't be a crash.

Proof of this is the number of posts like this there have been on this forum every year for the last 6-7 years.

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I would like to see another 50% on top of London property to ensure that the most destruction is done when it all comes crumbling down.

Disclaimer: I have moved our savings out of GBP.

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This bit is key. Without a catalyst, no matter how big a bubble they're won't be a crash.

Proof of this is the number of posts like this there have been on this forum every year for the last 6-7 years.

The housing market has been crashing for 6 years now, this is just another bump in the road.

There are plenty triggers, the most likely for me is that they borrowers will reach the top prices possible on what they can borrow. The buyers will dry up immediately and the whole thing will collapse.

Another good question is which banks have exposure to this madness...WHO IS LENDING ?

To bankers might like to think they are too big to fail but the bankers are just the right size for a prison the cell.

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The big question now is when will it crash and what will be the spark.

"Events, dear boy, events..."

While the bubble continues, supply will be limited and demand will remain high. That said, I've no idea who is actually buying right now (a decent four/five bed terrace in an half-way acceptable area* - that'll be £1,000,000 approx.) - as per another thread, the 'foreign cash-buyers' meme seems likely to overstated.

* zone 3 ffs

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"Events, dear boy, events..."

While the bubble continues, supply will be limited and demand will remain high. That said, I've no idea who is actually buying right now (a decent four/five bed terrace in an half-way acceptable area* - that'll be £1,000,000 approx.) - as per another thread, the 'foreign cash-buyers' meme seems likely to overstated.

* zone 3 ffs

Those Chinese people busy be mega (bubble) rich!!!

Demand will remain high until.......it does't.

As someone says the higher this goes the better, the collapse will be so much more spectacular.

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The housing market has been crashing for 6 years now, this is just another bump in the road.

There are plenty triggers, the most likely for me is that they borrowers will reach the top prices possible on what they can borrow. The buyers will dry up immediately and the whole thing will collapse.

Another good question is which banks have exposure to this madness...WHO IS LENDING ?

To bankers might like to think they are too big to fail but the bankers are just the right size for a prison the cell.

In a world where the US has exported dollars to the world asset prices will rise as the people close to the money fountain invest the cash. Banks are some what protected given the government guarantee of 20% on housing - although few londoners are actually using HTB. If we think globally, there are few places to invest your cash with such a benign environment that the UK government provides. Easy access to funds; low taxes for the rich non-doms and above all total anonymity if you want it. We are a kleptocracy managed for the few not the many. In that context, the housing bubble has a long way to go. Probably (and as always a guess) but 2015/2016. In my experience its always longer than you can think possible. This will price all Londoners out of housing in Zone 1 and 2 except the 1% and their minions providing financial, legal and tax advice. Everyone else who actually "makes things" or contributes to a vibrant society is going to get kicked in the teeth. But everyone is so accepting in this country, as long as they can have a drink and watch Eastenders what is there to worry about? Most people don't read the real news i.e they read gossip and celebrity trash. I doubt they even know that a war is brewing in Europe.

Despite that doom and gloom the dial will reset and the world won't end. We will just setup a new system as we always do. The rich will still be rich and the poor will still be poor. Its the poor people who have the education to understand what is happening who are most stressed but in life its the things that you can't see coming that stress you the most.

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In a world where the US has exported dollars to the world asset prices will rise as the people close to the money fountain invest the cash. Banks are some what protected given the government guarantee of 20% on housing - although few londoners are actually using HTB. If we think globally, there are few places to invest your cash with such a benign environment that the UK government provides. Easy access to funds; low taxes for the rich non-doms and above all total anonymity if you want it. We are a kleptocracy managed for the few not the many. In that context, the housing bubble has a long way to go. Probably (and as always a guess) but 2015/2016. In my experience its always longer than you can think possible. This will price all Londoners out of housing in Zone 1 and 2 except the 1% and their minions providing financial, legal and tax advice. Everyone else who actually "makes things" or contributes to a vibrant society is going to get kicked in the teeth. But everyone is so accepting in this country, as long as they can have a drink and watch Eastenders what is there to worry about? Most people don't read the real news i.e they read gossip and celebrity trash. I doubt they even know that a war is brewing in Europe.

Despite that doom and gloom the dial will reset and the world won't end. We will just setup a new system as we always do. The rich will still be rich and the poor will still be poor. Its the poor people who have the education to understand what is happening who are most stressed but in life its the things that you can't see coming that stress you the most.

Yeah very good....the new rich were ****ed in 2007 and they'll ****ed in 2014. This country is run by the old money, they alreayd own the land.

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As previous posts - my view is that:

- London will mostly likely top-out near where it is now

- Regions will take 2 or 3 years to get to same local earnings multiples

- BOE will tighten lending a bit, but not raise IR, when they do it will be 0.1% per quarter from 2015

- More help to hardworking families will follow a Tory near majority

- A new type of mortgage will appear, 30 or 40 year fixed

- BTL will become less attractive, maybe taxed to provide further assistance to FTBs

- More properties 'priced to sell' will appear as boomers realise they're not going up a lot more and downside risk only increases

- China will embark on a massive stimulas effort and avert drama

- Even though global economy sluggish our exports will rise as currency devalues

- EU currency devalues more than GPB so holidays become cheap again

- Wages will start to rise quite rapidly as business investment gets unlocked and exports rise

- Food and oil creep up as investor look outside stockmarkets, property and bonds for returns

- We'll still be here sure it's going to collapse any day

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As previous posts - my view is that:

- London will mostly likely top-out near where it is now

- Regions will take 2 or 3 years to get to same local earnings multiples

- BOE will tighten lending a bit, but not raise IR, when they do it will be 0.1% per quarter from 2015

- More help to hardworking families will follow a Tory near majority

- A new type of mortgage will appear, 30 or 40 year fixed

- BTL will become less attractive, maybe taxed to provide further assistance to FTBs

- More properties 'priced to sell' will appear as boomers realise they're not going up a lot more and downside risk only increases

- China will embark on a massive stimulas effort and avert drama

- Even though global economy sluggish our exports will rise as currency devalues

- EU currency devalues more than GPB so holidays become cheap again

- Wages will start to rise quite rapidly as business investment gets unlocked and exports rise

- Food and oil creep up as investor look outside stockmarkets, property and bonds for returns

- We'll still be here sure it's going to collapse any day

They wish.

Nice try Gordon.

My scenario is much like the great railways bubble.

- Prices go mental

- People decide to sell/cash in

- Buyers disappear

- (Another) Bank run

- Banks shut doors

- Extended bank holiday

- Some banks don't re-open ( take you pick ).

- Witch hunt in government for those responsible

- A couple of high profile jailings to appease the masses

- Long period of depression.

I;m sure George Osborne would have like to have thought he had fixed the economy, but really, he's just made things much much worse. When the forthcoming collapse happens it's going to ruin some people.

History is peppered with these boom and busts, history is not peppered with "boom and stay highs"

Time will tell.

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I said last year london was in some kind of crazy bubble and it couldn't go on much longer.

I've even emailed the BoE on three of four occasions only to be fobbed off with some nonsense. They ignored my last email !!!!

It is obvious and plane to see what is occurring. I am expecting to be appointed to the executive committee of the BoE any day now. laugh.gif

We are now seeing what I can only describe is a mega-bubble-mania. I can scarcely believe what i've witnessed over the last 12 months.

The MSM is now onto the fact that this is a crazy bubble and is unsustainable.

The big question now is when will it crash and what will be the spark.

I doubt it will last this summer. What will spark end of the madness....now, that is a question.

When it does blow the S.E. and surrounding counties are impacted hard.

Caveat Emptor.

Since everyone and their dog knows that London is in a mega-bubble (including mainstream media) I doubt that we'll see any sort of bust along the lines predicted - every effort will be made by the authorities to protect it.

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Since everyone and their dog knows that London is in a mega-bubble (including mainstream media) I doubt that we'll see any sort of bust along the lines predicted - every effort will be made by the authorities to protect it.

How ?

Lower interest rates ? ( but rates are at 0.5 and ther government know savers are already against them ).

Money printing ? ( The yanks are tapering and getting ready to raise rates, they care not for their school yard bi-atch ( the UK ))

More schemes ? ( HTB wasn't popular amonst, well, anyone dont seem them getting away with a new scheme ).

Media Propaganda ? ( That must be wearing thin on people now, especially in the internet age ).

Force people to buy ?

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History is peppered with these boom and busts, history is not peppered with "boom and stay highs"

A boom is something far above a previous high though - we are not there in most London postcodes yet - and certainly not there in the regions.

We've got a government who is willing to socialise the cost of scaffolding the situation - and electorally advantaged for doing so.

We also have the unusual situation that a massive chunk of younger people do not have any mortgage debt - it's not like that has been exhausted yet - it's not even started. The VIs just haven't found the right mechanism to do it yet (40 year fixed).

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A boom is something far above a previous high though - we are not there in most London postcodes yet - and certainly not there in the regions.

Really ?

The asking prices in our area have sky-rocketed 20-30% in 12 months. Sale prices how gone up a bit but are tending back to2007 prices. Some asking prices are 20% higher than in 2007.

Wages have not risen. Cost of living has shot up which counteracts the cheaper mortgage debt.

We are back at 2007 and if memory serves me right, with wags levels/cost of living/cost of borrowing that was an unsustainable bubble level that collapsed the entire banking system.

The sales round our way look to have hit a brick wall.

There are stories of 100's of people going to open house days in london....I can only assume it's the same 100 idiots.

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This bit is key. Without a catalyst, no matter how big a bubble they're won't be a crash.

Proof of this is the number of posts like this there have been on this forum every year for the last 6-7 years.

Can you remember a bubble that didn't pop?

It'll go eventually. They always do.

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It's brewing up a bit like the Conservatives early 1970s Barber Boom "Dash For Growth" (aka Dash For Debt) which failed to win the 1974 General Election for the Conservatives (UK economic devastation central - along with the LibDem and Labour lots) and led into stuff like the 3 day week. Mind you lots of UK workers are already on the 2 day week plus benefits/tax credit so it'll be different this time.

A possible problem with Russia's energy exports - and although now it looks an outsider perhaps other energy suppliers including the Middle East entering the fray causing oil crisis problems because "the recovery is complete and growth is high". Leading to a continuation of the economic collapse.

Edited by billybong

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The asking prices in our area have sky-rocketed 20-30% in 12 months. Sale prices how gone up a bit but are tending back to2007 prices. Some asking prices are 20% higher than in 2007.

Back to 2007 prices is not a boom though - I can see the argument - but there is still upside here - and it's not all postcodes. Many outside London regions could double prices in this boom yet.

There are stories of 100's of people going to open house days in london....I can only assume it's the same 100 idiots.

Those 100 likely have zero debt (outside of CCs and student loans). With 350K FTB house prices in London that's potential of £35M of new debt (before interest) if the VIs can find a way of flipping all the paid-off properties to young people at these valuations - if, for instance, they bring in 100% LTV 30yr mortgages.

Edit: I'm not just being contrarian here - since being so wrong in 2009 I just don't think it's as binary as it may look right now (as much as I wish it was the last days before a crash ...)

Edited by slacker

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The big question now is when will it crash and what will be the spark.

I don't think there will be a specific trigger.... it's enough for the mainstream media to talk of bubbles. Once Joe Public starts to realise there's a bubble, it just needs a handful of people to lose their nerve in london and drop the price for a quick sale..... then it will be like dominoes as people race each other to the bottom. I think the first to try and sell will be foreign investors, people with ill advised BTL (2nd home owners, or people who inheritted the property). Once they start trying to offload.... sit back and watch the show :)

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Proof of this is the number of posts like this there have been on this forum every year for the last 6-7 years.

The difference now is that the BoE/government has run out of options..... they've printed, they've dropped IR to near zero, they've "given" people "free" loans (HTB x 2).....

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Back to 2007 prices is not a boom though - I can see the argument - but there is still upside here - and it's not all postcodes. Many outside London regions could double prices in this boom yet.

We're still in the 2007 Boom....we are living through the 2007 bust, this is part of it.

Some localised crazy speculative house buying is not a housing market recovery. There's a reason this isn't happening all round the country.....people are skint and have no appetitie for it. The london/s.e. is full of spivs who want money for nothing....money comes at a price...they will learn that the hard way.

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Edit: I'm not just being contrarian here - since being so wrong in 2009 I just don't think it's as binary as it may look right now (as much as I wish it was the last days before a crash ...)

I dont think any of us were wrong in 2009....most of us have said all along the bottom would be 2016 ish.

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