Jump to content
House Price Crash Forum
Bruce Banner

What Is The Primary Cause Of The Current House Price Bubble?

Recommended Posts

All three really But the ability of people to continue biding beyond any thing reasonable is the main one.

Share this post


Link to post
Share on other sites

Loose lending created high prices which created emergency interest rates.

The lack of building is because prices are too high for people to buy (without all this market interference BS)

Share this post


Link to post
Share on other sites
Guest

Loose lending:

  • IO mortgages and Self Cert mortgages should be banned
  • banks should only be able to lend 3.5 times salary
  • mortgages must be paid off before state retirement age

Share this post


Link to post
Share on other sites

Loose lending allowed people to make bids that bore no relation to their income or wealth. Everything else is a function of propping up the bust banks (low interest rates), & the pursuit of yield (land bank hoarding, BTL).

Banking incompetence & greed is the root cause.

Share this post


Link to post
Share on other sites

I voted for low interest rates. I see that most people have voted for loose lending and although I still think lending is too loose, even after MMR, I don't see any lier loans and IO mortgages currently on the market. Loose lending was the main cause of bubble part 1 2000-2007. The main cause now is low rates and everyone trying to chase yield. If rates were higher and it was worth keeping your money in a bank account, how many people would be considering BTL? Low rates are what are causing a complete mis-allocation of wealth and investment.

Share this post


Link to post
Share on other sites

You don't need anything other than sentiment....prices will go in the direction that the public think they will go. If prices look upward then sellers will go on strike or the reverse a buyers strike when it is perceived they are going down. You don't need fundamentals to set a market on the level of transactions we are currently seeing.......we are bumping along on a million transactions a year in a dysfunctional market and not the two millions transactions that would signal a normal functional market.

Seems that sentiment is on the turn.....but the powers that be will step in if they think they have crushed hopes too much...they don't want a crash do they.

Share this post


Link to post
Share on other sites

There should be no banning of any lending or capping etc. What there should be is a FREE MARKET. Then when it goes t1ts up NO BAILOUTS!

Share this post


Link to post
Share on other sites

There should be no banning of any lending or capping etc. What there should be is a FREE MARKET. Then when it goes t1ts up NO BAILOUTS!

Absolutely, the only things that should be banned are bailouts and artificial stimulus.

Share this post


Link to post
Share on other sites

Sentiment mostly but also;

1) Easy access to credit

2) BTL

3) Tax system that favours home ownership/asset ownership

4) Low interest rates

5) Not enough house building

6) Speculation

7) Chickens

Share this post


Link to post
Share on other sites

I voted for low interest rates. I see that most people have voted for loose lending and although I still think lending is too loose, even after MMR, I don't see any lier loans and IO mortgages currently on the market. Loose lending was the main cause of bubble part 1 2000-2007. The main cause now is low rates and everyone trying to chase yield. If rates were higher and it was worth keeping your money in a bank account, how many people would be considering BTL? Low rates are what are causing a complete mis-allocation of wealth and investment.

This is exactly my view.

Low interest rates allow people to believe they can afford to buy at a higher multiple than in the past. (Plus it's still cheaper than renting in some areas?)

But if no-one would lend them the money, they wouldn't be able to go ahead? (Unless we are still talking about liar loans?)

So IMO it's both "low interst rates" and "loose lending" ... and much less due to "lack of building". (There are plenty of places under-occupied, under-used and left empty.)

Share this post


Link to post
Share on other sites

Got to be low interest rates for me too, at least as the current primary driver, via speculation because "it's not earning anything in the bank"

Share this post


Link to post
Share on other sites

Amazing. Were there not low rates in 2010, 2011 and 2012? Were not the housing market and prices dying?

What was the trigger to revitalise the market?

How can you have such short memories?

Interest rates it certainly is not!

Share this post


Link to post
Share on other sites

Amazing. Were there not low rates in 2010, 2011 and 2012? Were not the housing market and prices dying?

What was the trigger to revitalise the market?

How can you have such short memories?

Interest rates it certainly is not!

According to my data, the market bottomed in March 2009. Guess when interest rates were lowered to 0.5%

Share this post


Link to post
Share on other sites

Proximate cause? FLS and HtB.

Secondary cause? The £120bn annual budget deficit.

Ultimate cause? Fidel and Hugo's socialism for the rich.

george-osborne-and-danny-alexander.jpg

Share this post


Link to post
Share on other sites

With respect, the majority is wrong. It's not enough houses.

Low interest rates and dodgy lending are contributing factors, certainly; but if they were the primary factors, then rents would be low. High house prices AND high rents mean there aren't enough houses.

(Or do people not think rents are that high? Maybe it's a localised thing...)

Share this post


Link to post
Share on other sites

* Excess global savings

* Excess return on capital

* Wealth inequality

* Income inequality

* Slowing rate of growth

All secular/demographic/political issues running into in the UK in particular

* Disfunctional land supply market, especially where demand is highest

I'd disagree then with the 'bubble' nomenclature in general. There are elevated prices due to the above.

'Bubbles' are generally shortlived (3 yrs or so) and irrational driven by sentiment.

This is generational & probably 'rational' (fundamentally) unless one believes the list of factors are sentiment driven and short-term, which appears to be a very hard sell in the UK.

Share this post


Link to post
Share on other sites

With respect, the majority is wrong. It's not enough houses.

Low interest rates and dodgy lending are contributing factors, certainly; but if they were the primary factors, then rents would be low. High house prices AND high rents mean there aren't enough houses.

(Or do people not think rents are that high? Maybe it's a localised thing...)

If it were due to there not being enough houses, then surely it would not be a bubble, would it?

Share this post


Link to post
Share on other sites

So many things...

  • Lowest bank rate ever, hence low returns on other investments and cheap borrowing
  • Help-to-buy (£10bn injected into the housing market)
  • BTL
  • Immigration
  • Russian/Chinese/Arab investors hiding looted cash from their own governments
  • Not enough building
  • Property porn
  • The Norman conquest (via a chain of logic too long to give here...)

Share this post


Link to post
Share on other sites

Irresponsible borrowing

No.It can't be. It is instead endless hordes of "cash rich foreigners and cash rich pensioners who are discerning professional investors looking for the safe heaven for their funds"...

That is what they say in the media. Thay also say that they tightened the loan criteria,...hence blame the bubble on above culprits.Of course, also nothing to do with shadow banking, fake shell companies and other parasites on the state teat.

Share this post


Link to post
Share on other sites

I voted for low interest rates. I see that most people have voted for loose lending and although I still think lending is too loose, even after MMR, I don't see any lier loans and IO mortgages currently on the market. Loose lending was the main cause of bubble part 1 2000-2007. The main cause now is low rates and everyone trying to chase yield. If rates were higher and it was worth keeping your money in a bank account, how many people would be considering BTL? Low rates are what are causing a complete mis-allocation of wealth and investment.

It's the same bubble.

Share this post


Link to post
Share on other sites

Loose lending created high prices which created emergency interest rates.

The lack of building is because prices are too high for people to buy (without all this market interference BS)

"Loose lending".......

i.e.

PREDATORY LIAR LOANS

THE KEY FRAUD BEHIND THE PYRAMID/PONZI SCAM "HOUSING MARKET" OVER THE LAST 15-20 YEARS.......

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.