There Is Clearly Something Afoot...a New Bubble Or A Crack Up Boom ?

[TheCountOfNowhere]

Have been sitting watching events outside of London over the last few months with total disbelief.

It's like the London mega bubble has spread, like a cancer to the rest of the country.

The big question is this bubble just going to keep going, will they be able to maintain prices at the current insane levels or is this the death throws of a pre-election bubble ?

The price rises 2000-2007 were insane, the asking prices rises from 2012-2015 make that look like chicken feed.

Who is buying ?

Who is lending into this ?

What the (((( is going on ?

[LiveinHope]

Have been sitting watching events outside of London over the last few months with total disbelief.

It's like the London mega bubble has spread, like a cancer to the rest of the country.

The big question is this bubble just going to keep going, will they be able to maintain prices at the current insane levels or is this the death throws of a pre-election bubble ?

The price rises 2000-2007 were insane, the asking prices rises from 2012-2015 make that look like chicken feed.

Who is buying ?

Who is lending into this ?

What the (((( is going on ?

No idea, but a young couple I know and whom I suggested should not just pay the asking price of £135k for a terraced 2 up and 2 down 3 years ago, but who did so because prices always go up, just sold yesterday for £175k. It has left me scratching my head today, for sure.

[council dweller]

The longer it goes on the worse it will get. Also the longer it goes then we`ll be certain to run into demographic problems ...we`ll never see an end.

(see Japan)

[TheCountOfNowhere]

No idea, but a young couple I know and whom I suggested should not just pay the asking price of £135k for a terraced 2 up and 2 down 3 years ago, but who did so because prices always go up, just sold yesterday for £175k. It has left me scratching my head today, for sure.

I've seen this dozens of time now !!!

It's got worse though, its caught hold, people think 2008 was a blip and that this will go on and on.

The cancer has spread. It's amazing to watch...but every so worry as to how it will end.

If inflation takes hold, it might be time to mortgage up.

I am sure they want inflation...massive inflation...can they manage it....time will tell

Edited March 19, 2016 by TheCountOfNowhere

[TheCountOfNowhere]

The longer it goes on the worse it will get. Also the longer it goes then we`ll be certain to run into demographic problems ...we`ll never see an end.

(see Japan)

Japanese house price have collapsed...over decades now. Their ecomony has struggled for years now

[dgul]

I am sure they want inflation...massive inflation...can they manage it....time will tell

As far as I can see the only way out is to crash the currency. I'm not sure about which different vested interests would be in support - old money vs banks, etc.

[jiltedjen]

stock markets started falling 7-8 month ago, so you would expect the housing bubble peak to be around now.

its crazy how long it has rumbled on, but bubbles always are crazy.

Going to be a rather large pop soon enough and i 100% think banks will require bail-ins, and currency destruction.

Large rally in stock markets at the moment, last big rally before its plunge time again.

What we can see with prices is crazy enough, the stories of fraud that will come out after the burst will be more than anyone expected even on this HPC website.

[bubbleturbo]

I think a lot of this has to do with the stamp duty penalty on more than 1 pwoperdee ownership, which comes into force 1st April 2016.

A friend of a friend put their flat on the market in Edinburgh last weekend. They thought they would be lucky to get 170. It sold for 185, now comes the piece de resistance. The buyer has said they will pay 190 if they are out and the sale completed by the end of this month.

Do the math, these people are really not that bright are they? I would say these jokers are overpaying by at least 15K to get in before the stamp duty changes and their shrewd business sense therefore saves them £5700.

I am sure even in their tiny brains, if they do understand they are justifying this nonsense by "it will appreciate by that in 3 months".

This does however prove to me that a lot of the current activity and mania are still the buy to leech crowd. It will be interesting once they are forced out, where prices will go as affordability constraints from the non - speculative players will drive the market where it needs to be.

I expect BOE to be given the powers and to start acting on BTL lending soon.

Edited March 19, 2016 by bubbleturbo

[Venger]

Have some hope this is the peak. House on a street I keep an eye on came to market recently and already gone Sold STC at something like £470K. I was astonished when it sold for £370K a couple of years ago. It's peak.

Inventory on market has been scraping lows. A lot of it is trading equity between different buyers anyway.

Banks can handle HPC. Many HPCers think banks so fragile, even when stress tests and Carney make it clear they're pretty solid for correction. BTLers are squealing having reinvested in unregulated BTL at the margin on the double-down.

--------

Real Estate Bubbles:

The manic phase of the boom lasts for several years. In the classic assets mania, markets outrun any rational valuation based on yield or cash return. Properties come to sell at absurd prices on the expectation they will appreciate to still more absurd prices. And they do. They defy gravity, moving from one lofty new high to another, month after month, year after year.... long enough to lure in otherwise prudent people to mortgaging their gains to reinvest in the inflated assets on margin.

Before the market can top, everyone who could conceivably be drawn in must have already become a buyer. And debt levels supporting the asset prices must be many times higher than any that could conceivably be serviced out of the cash flow yielded by the asset itself.

Then comes the bust. Just as everyone has come to count on the idea that the lofty asset valuations are permanent, there is a crash.

------

“Demand is intrinsically linked to affordability, and that’s linked to how much banks are prepared to lend and how much people are prepared to borrow.

Demand for housing is a very flexible thing. Saying something isn’t going to happen because it hasn’t happened yet doesn’t really make any sense. That’s like saying because I haven’t died yet I won’t, but I guess I probably will. And a housing crash is much the same. Something not happening simply makes it more likely that it will, rather than it won’t, if the conditions are in place, and the conditions are in place.

Markets are driven at the margin. They’re driven by people who have to buy or people who have to sell. So when you get to the point when there are people who must sell, and that will come, then prices fall across the board because not many people have to be forced to sell at a low price to push values down.”

[19 year mortgage 8itch]

Have some hope this is the peak. House on a street I keep an eye on came to market recently and already gone Sold STC at something like £470K. I was astonished when it sold for £370K a couple of years ago. It's peak.

Inventory on market has been scraping lows. A lot of it is trading equity between different buyers anyway.

Banks can handle HPC. Many HPCers think banks so fragile, even when stress tests and Carney make it clear they're pretty solid for correction. BTLers are squealing having reinvested in unregulated BTL at the margin on the double-down.

--------

Hi V, I offered £226,000 on this 2 years ago http://www.rightmove.co.uk/property-for-sale/property-40819095.html

2014 listing http://www.rightmove.co.uk/property-for-sale/property-29658078.html

Here we have £117,000 worth of work not done since last November http://www.rightmove.co.uk/property-for-sale/property-40722852.html

Edited March 19, 2016 by 24 year mortgage 8itch

[Venger]

Hi V, I offered £226,000 on this 2 years ago http://www.rightmove.co.uk/property-for-sale/property-40819095.html

Here we have £117,000 worth of work not done since last November http://www.rightmove.co.uk/property-for-sale/property-40722852.html

You were outbid by £10K-ish? And now it's being sold (flipped maybe?)

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=13962161&sale=51382346&country=england

(I'm looking at alarm box and satellite dish for the match)

How many years of seeing prices held up by those who then flip them on for even higher prices, and houses returning as BTLs (prices we refused to pay) have we seen in our area over the last 6 years. Way too many.

As for the second link... ah yes. http://www.rightmove.co.uk/property-for-sale/property-40722852.html

Sale Date: 04 Nov 2015. Sold Price: £283,000.

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=51135085&sale=2492314&country=england

Hope some flippers eventually get left holding these flips. An end to forever HPI, endless money, and into a HPC. However only ever known them to achieve their aims and sell at higher prices, and still likely that seller will achieve his price in this market. (Although at same time want those HPCers who've limited risks with purchases to be okay).

[zugzwang]

A crack up boom? Looks like the making of one from where I'm sitting. So many counter-trend reversals in 2016.

Oil was down to $26, no spare storage capacity anywhere, certain to go to the teens... WRONG... Up 50% in six weeks, even after Iran started adding to the overcapacity.

Natural gas trading @ $1.59 after a mild winter, certain to go below $1... WRONG ... Up 30% in a week.

S&P 500 @ 1810, bear market for sure to go to 1750... WRONG... Off to the races, up an astonishing 15% in a few weeks to 2050, and a potential new BULL MARKET.

Gold trading @ $1040, staring down the throat of 850... WRONG... power move recovery, up 25% to 1250 in just over a month.

Economic fundamentals don't appear to have changed, if anything they're worse than they were in late 2015! The only explanation I can muster for these once-in-a-generation reversals is the tsunami of yield-seeking QE cash sloshing around the world looking to escape the deathly clutches of NIRP.

This chart from JP Morgan neatly summarises the QE dynamics and relative commitments of the various central banks. The BoJ and Swiss National Bank are in a league of their own but the ECB has clearly overtaken the Fed in the last eighteen months.

[Barnsey]

I really hope this is peak Mr V, as someone looking very possibly to relocate and to buy in South Manchester/Cheshire in the next year or two, it's almost looking as insane up there too compared to here in London.

My HPC faith has truly been tested since the stock drama at the New Year when things were looking bleak and now everything getting back to normal according to MSM bar a slight risk of Brexit no one is taking too seriously.

Work friend just had offer accepted of 395k on a tiny 2 bed in Berkshire thanks to BOMAD of fiance, no way a FTB budget but sadly the reality down here, I haven't got a chance in hell despite props to buy anything near that. Did I mention it's a very very small property?

Too many props worldwide compared to 2008 to prolong this false optimism, yes everyone it's perfectly normal for the upper classes to shop at Lidl and let's all have lovely PCP cars we'll never own, sunny loans, Martin Lewis saves all etc but pleeeease let's eventually have some Japanese HPC to go with the endless printing and the true dire reality of this bleak land.

[wherebee]

Are we now at the stage that any government in power when the HPC starts will be forced - by the sheer scale of the impact on the population - to bring in debt forgiveness on a large scale?

If I was a cold hearted single ******* in the UK, I'd be looking for a partner that could go balls deep on a huge mortgage. Don't get married, just run the debt until either debt forgiveness or bankruptcy. Meanwhile the non indebted partner saves like crazy in their untouchable assets.

It's so crazy = only a crazy approach is rational.

[porca misèria]

Place I viewed back in the autumn was asking £240k, I offered £200k. Now still on market, reduced to £220k asking price.

Last sold in 2006 for £247k.

Bubble? What bubble? It's been over a decade of small rises and small falls since the Big HPI.

[Barnsey]

Place I viewed back in the autumn was asking £240k, I offered £200k. Now still on market, reduced to £220k asking price.

Last sold in 2006 for £247k.

Bubble? What bubble? It's been over a decade of small rises and small falls since the Big HPI.

May I ask the region this is in?

There are many areas that have seen relatively slow HPI but everywhere I've got my sights on which are areas of varied employment with good transport links in which both my g/f and I could earn a decent wage are bubbletastic, SE & SW England, Bristol, Norfolk, Leeds, Manchester, Cardiff, Edinburgh....

Durham seems steady, Swansea? Others to consider?

[renting til I die]

I really hope this is peak Mr V, as someone looking very possibly to relocate and to buy in South Manchester/Cheshire in the next year or two, it's almost looking as insane up there too compared to here in London.

My HPC faith has truly been tested since the stock drama at the New Year when things were looking bleak and now everything getting back to normal according to MSM bar a slight risk of Brexit no one is taking too seriously.

Work friend just had offer accepted of 395k on a tiny 2 bed in Berkshire thanks to BOMAD of fiance, no way a FTB budget but sadly the reality down here, I haven't got a chance in hell despite props to buy anything near that. Did I mention it's a very very small property?

Too many props worldwide compared to 2008 to prolong this false optimism, yes everyone it's perfectly normal for the upper classes to shop at Lidl and let's all have lovely PCP cars we'll never own, sunny loans, Martin Lewis saves all etc but pleeeease let's eventually have some Japanese HPC to go with the endless printing and the true dire reality of this bleak land.

Haha, yes, that is sooo true. Totally normal for people to try to save pennies on stuff they really need. Need every penny to keep that HPI going.

[Guest]

It's disgusting how long this has gone on and how big it has gotten.

Personally I am at breaking point. I need to find a way to have my own space. There's zero reward or even a hope of one to work towards to counterbalance the stress of my job.

I can't be in this situation a few years from now, a home just as out of reach as ever, my youth and my health and my peace of mind sacrificed chasing house prices I can never catch.

Our system is disgustingly unfair and the housing 'market' has utterly failed to produce an optimal outcome or to increase real wealth or living standards.

House prices have blighted my life. I just can't earn the hundreds of thousands you need to buy a bit of freedom.

[Venger]

Totally understand you irrationalactor. And renter-savers / hpcers really get it from all sides. First the VI/BTLers, then raging HPI year on year to new peaks (after crisis that brought down banks), QE galore and all the other stimulus..... and then all those telling you that your savings are going to be wiped out anyway. (Class response by you below )

It is a gamble to be a saver of currency in a banking system, that is reliant on the repayment of credit lent out into a housing market, that can only yield a return should those loans be repayable. I do not see logically how a crash in house prices, having such a detrimental effect on the banking system, will benefit those using those very same banks as their savings vehicle. I think it likely that bail ins would occur in a recurrent financial crisis, as it one of the few options still left on the table, and has proven to work in other examples in recent history.

Great, so not only have I been locked out of home ownership I now get blamed because my efforts to save enough money to escape the trap somehow 'fuel the bubble' because the banks are using my money as collateral against lending even more money to idiots to bid up prices with.

Just how exactly am I supposed to opt out? I have no control over the bank's lending decisions and I have no control over the amount of debt other people are willing to put themselves in.

If only I'd given my house deposit away, or never saved it in the first place! Houses might then be 0.0001% cheaper! That's surely got to be well within reach of the 100% mortgage I'd be needing!

I don't want to be an investor. I just want to be able to save up and buy a flat of my own, like my parents did their house.

Reminded me of something from Red Dwarf (book), when they realise they're inside a shared-experience game (Better Than Life - BTL) which has a mechanism to block out the memory that you ever entered it.

Lister shook his head. 'Maybe. We don't know. We don't know exactly at what point we started playing the Game. How much of this has been real? Did we get back to Earth? Did Nova 5 spaceship exist? Maybe I started playing BTL back on Mimas, and you two don't exist. Maybe our whole relationship and everything that's happened has been part of my fantasy.'

'No, no, I exist,' said Rimmer. 'Honestly.'

'Yeah, but you'd say that even if you didn't exist,' said Lister.

'Oh, I don't believe this!' said Rimmer. 'Not only am I dead, I don't exist either! Thanks a lot, God!'

Edited March 20, 2016 by Venger

[Venger]

I really hope this is peak Mr V, as someone looking very possibly to relocate and to buy in South Manchester/Cheshire in the next year or two, it's almost looking as insane up there too compared to here in London.

My HPC faith has truly been tested since the stock drama at the New Year when things were looking bleak and now everything getting back to normal according to MSM bar a slight risk of Brexit no one is taking too seriously.

Work friend just had offer accepted of 395k on a tiny 2 bed in Berkshire thanks to BOMAD of fiance, no way a FTB budget but sadly the reality down here, I haven't got a chance in hell despite props to buy anything near that. Did I mention it's a very very small property?

Too many props worldwide compared to 2008 to prolong this false optimism, yes everyone it's perfectly normal for the upper classes to shop at Lidl and let's all have lovely PCP cars we'll never own, sunny loans, Martin Lewis saves all etc but pleeeease let's eventually have some Japanese HPC to go with the endless printing and the true dire reality of this bleak land.

Just read your opening-post in your own thread in NW Regional.... and another post elsewhere on another thread. Most of us are feeling it. Year after year (and all those who tip up about innocence). Don't know what to post, other than I, along with many others, refuse to meet (debt ourselves) these asking prices for a house. Take some cheer from the fact many a BTLer has been jolted into the real world.

[...................] I just have a bad feeling the optimism on here for a housing price correction with everything going on in the World still won't reverse the 50% increases i've seen in areas around London I hoped to *just about* be able to afford back in 2012 whilst saving a deposit, now that I've finally got my 10% together I despair at what i'm seeing and continue to pay my £1k in rent per month with no way out

This is why I have a tiny glimmer of hope still left in my beaten up self, it's the very recent astronomical pace that just HAS to come back to earth.

When we first moved into our rental flat in leafy SW London, sandwiched between 2 epic housing estates, I thought to myself I wouldn't mind trying to buy it in a few years or one similar if prices stayed fairly level, realising it was the most I'd EVER want to "pay" for a 1 bed in London (zone 3).

Value in Autumn 2011 when we moved in £225,000

Value now estimated at £395,000

[steve99]

Its because wages are going up 10% per year and secure long term jobs and careers are plentiful and their is a massive shortage of workers at every level. The pound is also strong and likely to get stronger year on year due to our innovative, modern, progressive economy that draws us all together filling the rift between rich and poor which also adds to our buying confidence. The banks are in on this too for the very same reasons and will lend lots of money on the basis of all the things Ive mentioned above.

Its that simple.

[Pop321]

I really hope this is peak Mr V, as someone looking very possibly to relocate and to buy in South Manchester/Cheshire in the next year or two, it's almost looking as insane up there too compared to here in London.

My HPC faith has truly been tested since the stock drama at the New Year when things were looking bleak and now everything getting back to normal according to MSM bar a slight risk of Brexit no one is taking too seriously.

Work friend just had offer accepted of 395k on a tiny 2 bed in Berkshire thanks to BOMAD of fiance, no way a FTB budget but sadly the reality down here, I haven't got a chance in hell despite props to buy anything near that. Did I mention it's a very very small property?

Too many props worldwide compared to 2008 to prolong this false optimism, yes everyone it's perfectly normal for the upper classes to shop at Lidl and let's all have lovely PCP cars we'll never own, sunny loans, Martin Lewis saves all etc but pleeeease let's eventually have some Japanese HPC to go with the endless printing and the true dire reality of this bleak land.

Great post.

The stamp duty will definitely help and I hope will flatten the market initially and C24 will push it down.

The £1000 rent you pay covers a BTL'ers £350k debt - but if that £1000 pcm were their earned salary it would allow only say £40k mortgage lending. Once the BTL'ers go (and they will) this artificial situation will be removed and prices will drop.

BOMAD I hope will react to the press reports and not jump in to hold prices up. They don't expect to lose money....so when they think they might then maybe they will help little Edward rent for a while.

The examples on this thread of daft prices mirror what I have seen over the last 6 months and particularly pre April completions. Like the Edinburgh example given I see irrational prices to save 3% stamp duty....I know some people struggle with maths and are stuck in the headlights of HPI forever.

Venger is right about supply. In our town (in Yorkshire) there are 2 bungalows under £200k for sale. I would expect 20.

I have seen boom and bust several times. The property market has never felt more than the stock market than it does right now. Property is also driven on sentiment and once things flatten enough and people stop expecting further rises then people stop buying unless they need to move. And once price dip even just slightly many people stop altogether waiting for cheaper prices next year. You may not always see the price fall in the shop window....but when nothing is selling and someone needs to sell, that's the 30/40% falls behind the curtain.

I know it will come and I hope it comes at a time that suits your move.

[Barnsey]

That'll be why I'm having to work 13 alternating shifts around the clock every 14 days (yes 2 or 3 days off work each month) just to remotely keep up with price increases, and that's when the overtime is available, seems all my colleagues are doing much of the same whereas the old boys with their HPI dream home (+ 1 BTL in some cases) just do as little work as possible and go to Spain every long weekend.

It's OK, the government is on my side, I've got my HTB ISA going up by £200 each month so all is looking rosy!

[jiltedjen]

the big rally in stocks and commodities is following rather huge falls. won't take long for it to roll over again.

Looking back at 2000 and 2007 it was about this point into a stock market fall that things accelerate, maybe only a month or two away from that. Unless this rally steams full ahead and keeps making new all time highs it's doomed.

I have a permanent portfolio so I try and mechanically buy shares. But for the sake of waiting a month or two for the rally to clear I can wait.

the housing market will roll over soon enough and be in full crash mode early next year.

Be thankful your sensible enough to keep out of it, or that simply can't afford to take part.

QE is the lie people gobble up that 'it's different this time' it's never different. a bubble is a bubble.

[Barnsey]

Thanks for the reassurance, means a lot!

You talk perfect sense in an illogical situation, which is why this forum has truly kept me sane when everyone buying into the crazy market around me seems insane but of course they see it the other way. It's silly but life really feels like it's on hold/uncertain until we buy, been renting 14 years now.

Let's see if April onwards things stall, and here's hoping those doubling of house prices in China every 14 months driven by P2P loaned deposits has an epic domino effect and sooner than later.