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How Many Months Will The Reinflated Bubble Last ?


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When I see a growing list of reductions of more than £5k on Rightmove/Propertybee then I'll know that the crash as started.

This is a sign for me:

http://www.rightmove.co.uk/property-for-sale/property-42797774.html?premiumA=true

"REDUCED FROM £799,950 TO OIEO £725,000 - Offers are being invited by informal tender by no later than 12noon Friday 30 May 2014. Open House Friday 23 May 12noon to 1.00pm & Saturday 24 May 9.00am to 10.00am. Please contact our office for more "

That's a keen buyer if you ask me....keen to shift their house at well over market value before the end of the week.

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Do you have some information to back up that claim ?

I've never voted BNP and they've captured my vote, which sort of disproves your malicious post.

my only evidence is anecdotal

i work in a traditionally working class industry in east london

most of what psephologists would call white working class voters are hostile toward eu membership because of immigration and ukip is their party of choice

the same person who tried to employ my services in the distribution of bnp publicity several years ago is now a ukip activist

a more testable measure is looking at ukip support in the polls before and after immigration became their main selling point

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Housing is overvalued across the entire country relative to what can be responsibly borrowed based on a sensible realistic interest rate average over the entire mortgage term.

It has been for 10 years.

Is that a 'bubble', it rather depends on the definition. Its certainly a problem, its certainly unsustainable. I call it a bubble, you can choose not to, calling it a pink elephant doesn't make it any less harmful nor will it prevent the correction.

We give the impression on here that property is at new highs. The figure for Q1 2014 East Midlands was 561.0 (Halifax), the figure for Q3 2004 was 560.0. I agree it is a bubble, but one that has deflated hugely from 2004. It would be indeed surprising if it suddenly pops when prices are off the 2007 peak and still back at 2004 levels outside London and the South East and with the current level of interest rates and a growing economy.

There is a boom in London, but most of the rest of the country is still untouched with prices sub 2007, even if sub 2007 is still too high.

Edited by crashmonitor
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We give the impression on here that property is at new highs. The figure for Q1 2014 East Midlands was 561.0 (Halifax), the figure for Q3 2004 was 560.0. I agree it is a bubble, but one that has deflated hugely from 2004. It would be indeed surprising if it suddenly pops when prices are off the 2007 peak and still back at 2004 levels with the current level of interest rates and a growing economy.

There is a boom in London, but most of the rest of the country is still untouched with prices sub 2007, even if sub 2007 is still too high.

Perhaps in some of the wastelands prices have dropped hard, where no one really wants to live. You deny bubble almost every day it seems to me.

What was that calculation you were justifying prices with recently... something about 30% increase in wages since x-date?

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Perhaps in some of the wastelands prices have dropped hard, where no one really wants to live. You deny bubble almost every day it seems to me.

What was that calculation you were justifying prices with recently... something about 30% increase in wages since x-date?

Seeking justification for property I don't own, two thirds of my money is in cash.

Meanwhile you are always linking property in the wastelands of Cheshire which is currently offered at thousands of pounds less than it was sold for several years ago.

Edited by crashmonitor
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The bubble will last for as long as those in power have the will and ability to stoke it.

Given how precarious it is, I'd guess that shortly after the next election will be the point at which it all collapses since at that point the will is going to be wavering given that the consequences will be looming (n the case the Tories win).

A Labour win would likely cause an insta-crash in the entire economy as no-one has any confidence in them at all - not that they would act any differently than the Tories have been doing.

But of course, a black swan could pop it at any time.

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Seeking justification for property I don't own, two thirds of my money is in cash.

Meanwhile you are always linking property in the wastelands of Cheshire which is currently offered at thousands of pounds less than it was sold for several years ago.

Yes; thanks for cheering me up. I do that to offer others hope. There is definately weakness at the higher end (outside London/SE anyway).

It's just there is a corresponding depressing effect. For £100K or £1m knocked off a £2m-£4m house at the higher end, starter-type to mid-end homes have shot up in asking price, and sold prices reflect it too. I'm going to get depressed and claim bubble when starter home that sold for £170K in 2009 is back on market at £240K, and loads of people offering on it. Maybe it will equalise at some point.

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We give the impression on here that property is at new highs. The figure for Q1 2014 East Midlands was 561.0 (Halifax), the figure for Q3 2004 was 560.0. I agree it is a bubble, but one that has deflated hugely from 2004. It would be indeed surprising if it suddenly pops when prices are off the 2007 peak and still back at 2004 levels outside London and the South East and with the current level of interest rates and a growing economy.

There is a boom in London, but most of the rest of the country is still untouched with prices sub 2007, even if sub 2007 is still too high.

As I have said many times, the biggest shock the sheeple got after 2008 was that they couldn`t just pop their very average little house/flat on the market and have people clamouring to "buy" it. Massive intervention has allowed the tumbleweed to blow around but there has been no real price discovery across the market. Mortgage restrictions will help, rates up would be better for a proper crash.

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A few questions for the 'after election' voters:

Quite a few here saying the high levels of inflation driven by loose credit will last to after the election. I can understand if it was 2007/8 and you could get jumbo lire mortgages, but you simply cannot and banks are now stress testing to 7% for the last 3 weeks.

1, Are you guys saying that 'if' prices start deflating that the government will step in? Even after the bad publicity the 'bubble' is getting?

2, Do you think the credit has loosened recently and it will be easier for people to gain large mortgages and bid up prices further?

3, Just where is your inflation expectation over the next 12 months coming from?

One more point. As discussed here many times now is that falling house prices would win win votes so perhaps 'quietly' the government are trying to win votes from prices going up, then down?

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A few questions for the 'after election' voters:

Quite a few here saying the high levels of inflation driven by loose credit will last to after the election. I can understand if it was 2007/8 and you could get jumbo lire mortgages, but you simply cannot and banks are now stress testing to 7% for the last 3 weeks.

1, Are you guys saying that 'if' prices start deflating that the government will step in? Even after the bad publicity the 'bubble' is getting?

2, Do you think the credit has loosened recently and it will be easier for people to gain large mortgages and bid up prices further?

3, Just where is your inflation expectation over the next 12 months coming from?

One more point. As discussed here many times now is that falling house prices would win win votes so perhaps 'quietly' the government are trying to win votes from prices going up, then down?

people unable to get loans will have a negative (or for us positive) impact on prices, there is no doubt about that

however, i think you are overplaying the significance of access to loans. i don't know the figures but i think around a third of buyers are cash

also, the BoMaDs can just dish out a bigger wadge of cash to their middle class children

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How many months will the re-inflated bubble last ?

I vote for 1-3, CRASH is all over the news now. No one will be buying a house in the next few weeks, by the end of the summer all the indexes will be down and crash speed accelerating.

Osborne's bubble has ballooned too early and he might just have done all the HPC-ers a favour, we could well see the biggest correction in history.

If we do get a crash in 1-3 months - Milliband and Balls will be get elected the following year with evil plans to stop the correction and hopefully reinflate the market

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I believe the tipping point is here.

I've been reading HPC for several years with much interest but not posted until now.

I do own a house, bought in Oct 2007 with a 5-6 multiple IO offset mortgage in the south east.

Seven years of 60-90 hours a week has brought the mortgage down massively.

Now, with several kids aged 5 or less, it's time to think about where to go now.

I'm seeing people in our area who have houses on the market for 10 months at an asking price with no offers, saying they will "take it off the market and readvertise at £150k more as then it will sell". How can they think this will work???

I do think that, rather than being referred to as "sheeple", perhaps "boiled frogs" would be an appropriate moniker.

I'm sure it's been used elsewhere on the forum, but it seems to be appropriate. :)

The country as a whole has been in luke warm water that's been getting hotter for years now, to the point where it'll suddenly turn critical.

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

The boiling frog story is a widespread anecdote describing a frog slowly being boiled alive. The premise is that if a frog is placed in boiling water, it will jump out, but if it is placed in cold water that is slowly heated, it will not perceive the danger and will be cooked to death. The story is often used as a metaphor for the inability or unwillingness of people to react to significant changes that occur gradually

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If we do get a crash in 1-3 months - Milliband and Balls will be get elected the following year with evil plans to stop the correction and hopefully reinflate the market

I suspect that if they do get elected they'll be trying reinflate an economy that's in recession not just the housing market. Unfortunately for them Osborne can still ruin the party by running up his borrowing between now and the GE.

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I suspect that if they do get elected they'll be trying reinflate an economy that's in recession not just the housing market. Unfortunately for them Osborne can still ruin the party by running up his borrowing between now and the GE.

I suspect he HAS.

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I expect mortgage approvals for purchase year on year negative around July or August (they are falling month on month but holding up year on year ). Whether supply follows it down stabilizing prices I am not sure. The worst possible scenario (good for us) would be if supply increases while demand falls. That would be a bit irrational response.

For London it will be interesting to see if structured investment vehicles have been buying up. Still it is all cash as Carney says so if it all implodes well nothing lost?

Interesting times :).

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The worst possible scenario (good for us) would be if supply increases while demand falls. That would be a bit irrational response.

For a long time I have observed that stock increases when prices fall due to investors 'being smart' and getting out before further falls. When prices are rising stock becomes tight (the last 18 months) as investors holding onto their asset increasing in value.

It all accentuates the boom/bust cycle.

I don't know if anyone here follows cycle theory and the impact the internet and 24/7 news has on the feedback and duration of these cycles?

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As I have said many times, the biggest shock the sheeple got after 2008 was that they couldn`t just pop their very average little house/flat on the market and have people clamouring to "buy" it. Massive intervention has allowed the tumbleweed to blow around but there has been no real price discovery across the market. Mortgage restrictions will help, rates up would be better for a proper crash.

Agree with both points, no price discovery and a broken market that has persisted to this day, and highlighted by a mere million transactions a year.

The Market fell about 25% and would have fallen 50% left to market forces. Outside London that 25% has slowly reflated but is still about 10-15% off the 2007 peak.

I can only comment on the Nottingham market, but all the indicies would agree with that analysis. A broken market still off the 2007 highs and nice property struggling to sell.

Venger highlighted the fact that crap does sell, I would agree with that. The BTL market is about the only game in town, basically property that no one in their right mind would actually buy to live in. By contrast nice family homes in the 250-500k bracket just sit on the market.

A crash proper would mean we could just get back to normal with 2 million transactions a year, but no chance of that with the MPC protecting bank's loan books.

Edited by crashmonitor
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A few questions for the 'after election' voters:

Quite a few here saying the high levels of inflation driven by loose credit will last to after the election. I can understand if it was 2007/8 and you could get jumbo lire mortgages, but you simply cannot and banks are now stress testing to 7% for the last 3 weeks.

1, Are you guys saying that 'if' prices start deflating that the government will step in? Even after the bad publicity the 'bubble' is getting?

2, Do you think the credit has loosened recently and it will be easier for people to gain large mortgages and bid up prices further?

3, Just where is your inflation expectation over the next 12 months coming from?

One more point. As discussed here many times now is that falling house prices would win win votes so perhaps 'quietly' the government are trying to win votes from prices going up, then down?

I feel like price falls could gain real momentum in the spring before the election (this may just be me wishing schadenfreude towards the coalition) but there wasn't an option for this and these things generally run longer than expected so opted for 'after election'.

My thought process was that while the media has changed tack (to some extent) there is still just enough bullish sentiment remaining that, barring a black swan, the market seems likely to slow or see only moderate or localised falls for a while as delusional sellers hold out for "what it's worth" and greater fools "buy the dip". When the market doesn't "recover" in the way they expect it to is when I expect people to really start panicking and precipitate a full-on HPC (I guess this would have been just as well represented by a vote for "dead in the water"). Optimistically I can see the first half of this playing out over the summer, normal seasonal slow down being up-played to allow people to maintain the delusion that everything will be okay over the winter, and the crash proper getting underway after the lack of a normal spring bounce causes really fear to set in.

I hope those who think it will be earlier are proven right though!

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Agree with both points, no price discovery and a broken market that has persisted to this day, and highlighted by a mere million transactions a year.

The Market fell about 25% and would have fallen 50% left to market forces. Outside London that 25% has slowly reflated but is still about 10-15% off the 2007 peak.

I can only comment on the Nottingham market, but all the indicies would agree with that analysis. A broken market still off the 2007 highs and nice property struggling to sell.

Venger highlighted the fact that crap does sell, I would agree with that. The BTL market is about the only game in town, basically property that no one in their right mind would actually buy to live in. By contrast nice family homes in the 250-500k bracket just sit on the market.

A crash proper would mean we could just get back to normal with 2 million transactions a year, but no chance of that with the MPC protecting bank's loan books.

I know Nottingham used to have loads of students, don`t know what it is like now though, maybe still loads but living more in Uni accommodation for the full lengh of their course maybe? Where I am at the moment, close to the centre of Edinburgh, BTL seems to be struggling, this present landlord just seemed glad to get someone in the door, and the block here feels about half empty at the moment.

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Sorry if this is a bit off topic but I`ve spent a couple of hours posting leaflets for the libdems over the weekend.

It enables me to pock around on "my manor." I`m no longer a libdem though!

As I walked around I met just two people...they said they`ll vote for UKIP. I said "me too."

Well, I guess it`s decided then.....

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This MMR seems to be getting a lot of misplaced faith.

There is a very simple way that banks will make mortgages "affordable" - they will just extend the term. The MMR will actually give them an excuse to sell the longer term and so make people pay a much larger amount of mortgage interest. "We will have to extend the term or you cannot have the mortgage".

£180k house 5% deposit

£162k at 5% over 25 years = £947

£162k at 7% over 25 years = £1144

£162k at 7% over 30 years = £1077 (Interest = £226k)

£162k at 7% over 35 years = £1034 (Interest = £272k)

£162k at 7% over 40 years = £1006 (Interest = £321k)

http://www.drcalculator.com/mortgage/uk/

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