The London Mega Bubble Crash

[Caius]

Why is it Thatcher's fault?

[TheCountOfNowhere]

It must be possible to get the words "monster" and maybe even "loony" into the above sentence - probably a few others as well.

The London Monster Mega Loony Bubble Crash? It deserves it.

Ok keep it simple - The London Mega Bubble Crash it is.

I like your thinking....the monster raving london loony mega bubble crash.

The media have tried to join my band wagon with the Super-Bubble nonsense, but that's no way descriptive enough.

I think we're stuck with the london mega bubble term.

[billybong]

I like your thinking....the monster raving london loony mega bubble crash.

The media have tried to join my band wagon with the Super-Bubble nonsense, but that's no way descriptive enough.

I think we're stuck with the london mega bubble term.

Thank you , the word Super in the expression Super- Bubble is almost flattering but that's the UK media.

[TheCountOfNowhere]

Thank you , the word Super in the expression Super- Bubble is almost flattering but that's the UK media.

Doo Doo Doooooo - here comes super bubble....to save us.

[steve99]

Why is it Thatcher's fault?

The great initiator of free range banking in the UK mimiking regans USA. Also the destruction of the unions deleted pricing power for workers. This created the begining of the greater shift of income to capital rather than labour. ie we are going back to the 1800's Labour failed by carrying on with tory policies re banking and speculation over investment.

[(Blizzard)]

The great initiator of free range banking in the UK mimiking regans USA. Also the destruction of the unions deleted pricing power for workers. This created the begining of the greater shift of income to capital rather than labour. ie we are going back to the 1800's Labour failed by carrying on with tory policies re banking and speculation over investment.

Plus the expansion of right-to-buy, which has proved to be a total disaster.

[Venger]

MSE anecdotal that the market has ground to a halt.

Housing Market in South East

Thanks for that.

SoCal/Cal, which I think closely reflects very similar market forces in play in London/SE, also seems to be showing some signs of topping out, buyers falling away somewhat, a tick up in supply.... after house prices have reached every higher peaks during 2013.

Unless it's just a pause for more mega-HPI.... but surely a point must come where just about all buyers at these high prices have lured themselves in, and a drop-off in the flow of fresh buyers willing to pay anything like current prices.

http://www.doctorhousingbubble.com/california-home-real-estate-inventory-up-cash-sales-percent-of-market/

March 30, 2014

Inventory is finally starting to show up in the California housing market. The main motivator of this growing inventory is the delusional prices being asked by sellers are no longer generating massive amounts of sales from house lusting buyers. In other words, sky high prices have caused many homes to sit on the market longer thus allowing for more inventory to accumulate like a queue forming at a Disneyland ride. Can’t blame the sellers if suckers are lining up to hand over their cash for a mortgage albatross. The rapid increase in prices uncoupled from wages has left many California household unable to afford current prices.

There is little surprise that inventory is picking up this year and we are seeing more homes sit on the market for much longer durations. In certain markets, house yearning buyers are so motivated that they will still dive in regardless of the larger trends. Some areas will always carry a premium. Yet the overall trend is unmistakable.

For Los Angeles, inventory is up a solid 17.8 percent year-over-year. Riverside is up 22.8 percent. Sacramento is up a whopping 23.9 percent. San Diego is up 18.6 percent. Ventura is up 22.1 percent. In other words SoCal has a growing share of inventory. The Bay Area is bucking this trend with inventory actually down year-over-year.

A big reason for this is the fast rise in prices in 2013 coupled with low inventory:

..Based on the data above, California home prices went up roughly 30 percent from 2012 to the current price level. Yet look at sales volume above showing a very weak start to 2014. The trend is definitely softening. Cash sales remain a big part of the market but overall the nominal number of transactions is falling:

[renting til I die]

Doo Doo Doooooo - here comes super bubble....to save us.

Not so much to save us, more to save the UK economy (well GDP, whatever that is good for! ) and the Tories election prospects. Go Super Bubble, yhey!

[douglasc]

I'd still like an answer to my question, which banks are lending heavily on London property ? If I get an answer I will be removing my money from there forthwith, penalty or no penalty.

You might find that it's a Building Society.

[Frizzers]

Daddy Bear always said there would be a crack up boom.

What came after that in his list?

Does anyone know where that Daddy Bear list has gone?

I couldn't find it anywhere. Has it been deleted?

[a j]

London prices seem to br booming big time. Everywhere seems to norm out at around 4.5% gross rental return - and rents seem to be rising as well . Did we really think we would look to 2011 as golden age for buyers?

[mewParadigm]

London prices seem to br booming big time. Everywhere seems to norm out at around 4.5% gross rental return - and rents seem to be rising as well .

Contrary data quoted in today's article here: http://www.marketwatch.com/story/why-londons-real-estate-bubble-looks-ready-to-burst-2014-04-23

"In Fulham, where I am currently writing this, prices have risen 12% in the last year, but rents are down 6%. Just north of Hyde Park prices have risen 10%, but rents have fallen 8%. In tony Mayfair, once the home of the aristocracy and now better known for its diplomats, prices are up 5% — but rents are down 8%. And along the south bank of the Thames directly across from the City, in the area known as Riverside, prices have risen 13% in the past year, but rents have fallen 2%."

"According to Knight Frank, the gross rental yield on prime central London property has now collapsed to the lowest levels since they began keeping records in 1995. The gross yield, 4% as recently as March 2009, is now down to 2.8%. Ten years ago it was north of 5% and in the mid-1990s it was up toward 10%."

[a j]

Contrary data quoted in today's article here: http://www.marketwatch.com/story/why-londons-real-estate-bubble-looks-ready-to-burst-2014-04-23

"In Fulham, where I am currently writing this, prices have risen 12% in the last year, but rents are down 6%. Just north of Hyde Park prices have risen 10%, but rents have fallen 8%. In tony Mayfair, once the home of the aristocracy and now better known for its diplomats, prices are up 5% — but rents are down 8%. And along the south bank of the Thames directly across from the City, in the area known as Riverside, prices have risen 13% in the past year, but rents have fallen 2%."

"According to Knight Frank, the gross rental yield on prime central London property has now collapsed to the lowest levels since they began keeping records in 1995. The gross yield, 4% as recently as March 2009, is now down to 2.8%. Ten years ago it was north of 5% and in the mid-1990s it was up toward 10%."

The reference to falling rents seems to refer to prime areas of London. Is this the effect of housing benefit cuts? In the zone 4 type areas anywhere near a tube rental prices seem to be increasing a lot over the last year. The collapse in gross yield is a product of rising prices rather than falling rents - sadly on both counts.

[Democorruptcy]

Does anyone know where that Daddy Bear list has gone?

I couldn't find it anywhere. Has it been deleted?

It was just in his signature so obviously died with his membership.

Though I'm sure someone once did a thread about the contents of it. I looked for the thread before my previous post but didn't find it.

[tio]

Canary-On-Thames: Soaring Property Prices And Falling Rents Reflect Cheap Global Credit, Not Scarce Local Real Estate
by David Stockman
http://davidstockmanscontracorner.com/the-canary-on-thames-soaring-prices-and-falling-rents-reflect-cheap-global-credit-not-local-scare-property/

In short, London is not Menlo Park, the Rouge Works or even Silicon Valley. There are not so many Thomas Edison’s, Henry Ford’s or Bill Gates’ there. In truth, its an open air safety deposit box for the resource barons, the real estate moguls and the hydrocarbon rentiers—-along with their financiers and other professional vendors. All have prospered mightily from a global industrial boom that has been pushed along for nearly two decades now by an even mightier tidal wave of central bank enabled credit.

There is a growing probability, however, that the planetary credit bubble has reached its apogee. Central banks everywhere are now pushing on a string because financial asset valuations have reached ludicrous extremes; and when financial prices plateau, the re-hypothecation machine slows and eventually stops. That is, credit stops growing because zero interest rates notwithstanding, there is no new collateral to hock.

Since the global financial system is deep in uncharted waters there is no telling how the great credit bubble will unwind or how massive will be the asset deflation when the full extent of global over-building, over-investment and over-valuation becomes more transparent. But it is likely that Arends’ anomaly of rising London property prices and falling rents will resolve itself by means of cap rates which lurch sharply upwards—-and not owing to rising rents, either.

[winkie]

When either property exceeds a healthy equilibrium/balance in line with the local working populations income, access to credit and therefore propperty that becomes way and beyound financial reach....rents will fall, or when property falls below normality, rents fall.

Things will not improve until property becomes more aligned in cost to real people, that do real productive jobs, in the real economy....everything else is hype and manipulation, and rents will have to fall.

[Wurzel Of Highbridge]

Rents are falling, and particularly in London.

[Frizzers]

It was just in his signature so obviously died with his membership.

Though I'm sure someone once did a thread about the contents of it. I looked for the thread before my previous post but didn't find it.

That's a shame.

I was looking for that list he other day and couldn't find it. His leaving explains why.

Didn't he buy a place in 2010?

If so, he got that right

[Democorruptcy]

This list?

How will the Global Economy play out 2005 onwards?

1. Global Housing Market Bubble Bursts

2. Global Bank Lending Implodes

3. Global Economy Begins to Contract

4. Global Banks begin to Fail

5. Global Unemployment Soars

6. Global Banks are Nationalised

7. Global Interest Rates are Lowered Dramatically to 0%

8. Global Quantitative Easing will be carried out on a Massive Scale

9. Global Dash For Assets

10. Global (Inflationary) Default on Debt - (Bond Market Collapse)

11. Global Hyperinflation

12. Global New Currencies introduced

13. Global Political Unrest & Change

DB says he / she bought in 2009

That looks like it.

[TheCountOfNowhere]

That looks like it.

Scarcely accurate,

No mention of government sub-prime lending to the masses or government deposit schemes.

What his list keep the same from 2005 ?

Edited April 25, 2014 by TheCountOfNowhere

[TheCountOfNowhere]

http://en.wikipedia.org/wiki/United_Kingdom_national_debt

"Official figures state that as of July 2011 the British national debt amounted to £940 billion, or 68% of total GDP.^[5] The annual amount that the government must borrow to plug the gap in its finances used to be known as thePublic sector borrowing requirement, but is now called the Public Sector Net Cash Requirement (PSNCR).

As of Q1 2012 the national debt amounted to £1,278.2 billion, or 86.8% of total GDP.^[18] The PSNCR figure for 2010/11 was £143.2 billion, or 11.7% of GDP.^[5] Total British GDP in 2010/11 was estimated by the IMF at $2.25 trillion, or around £1.4 trillon.^[19]"

^{Those tories have certainly fixed things. Something is going to give soon.}

Edited April 25, 2014 by TheCountOfNowhere

[terryturbojr]

A nice anecdote to illustrate the London mega bubble. Friends bought in Walthamstow in aug 12 for 280. Put on market a week back and ea sorted open day. Not sure how many people went but 3 of them offered 475 on the day, so waiting to hear back who is willing to go higher.

Bubblicious. As much as I dislike the idea I think it's time to STR again, although not quite as easy with a wife and two kids as when I did it last time I was a single man (which really demonstrates how long this has dragged on for).

[tomandlu]

http://www.bbc.co.uk/news/blogs-trending-27132187

London and the United Arab Emirates (UAE) are closely connected. Thousands of tourists from the UAE visit the capital each year and the city's biggest football arena is Arsenal's Emirates Stadium. But a violent attack in the city has led thousands of Emiratis to tweet that #london_is_not_safe - threatening to unwind that relationship.

It would be amusing (and genuinely unexpected) if the black swan event that brought London crashing down was a hashtag...

[otters]

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10785563/Gherkin-tower-enters-receivership.html

I'm surprised this hasn't already been posted on here.

[tomandlu]

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10785563/Gherkin-tower-enters-receivership.html

I'm surprised this hasn't already been posted on here.

It's got its own thread.