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UK Home Prices Hit All-Time-Highs As BOE Sees "No Bubble"
U.K. house prices rose to a record last month as easier access to credit drove first-time buyers back to the market. As Bloomberg reports, the second phase of the government’s Help to Buy program was introduced this week, providing government-guaranteed mortgages to buyers with smaller deposits. The acceleration has fueled further concerns that the initiative may stoke a bubble. But have no fear...
- *BOE'S CUNLIFFE SAYS U.K. HOUSING NEEDS TO BE WATCHED CAREFULLY
- *CUNLIFFE SAYS DOESN'T AGREE U.K. IS ENTERING A HOUSING BUBBLE
What could go wrong? - "Demand has increased significantly in a short space of time, and raced ahead of the supply of homes." Now where have we heard that before?
U.K. house prices rose to a record last month as easier access to credit drove first-time buyers back to the market, Acadametrics said.
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The second phase of the government’s Help to Buy program was introduced this week, providing government-guaranteed mortgages to buyers with smaller deposits. The acceleration has fueled further concerns that the initiative may stoke a bubble. Mortgage approvals rose to the highest in more than five years in August, the Bank of England said last week.
...
House sales rose 12 percent this year compared to 2012, with the increase in transactions predominantly in the first-time buyer sector of the market, Acadametrics said.
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LSL said concerns about a housing bubble developing are overblown. While prices are rising, it is only a “fledgling recovery,” Newnes said. “It is not a boom or a bubble. It is a market correction, albeit a fairly quick one.”
The whole country will benefit from Help to Buy because it supports buyers in the southeast, where prices are higher, and in the north, where wage growth is slower, Newnes said.
See - it's for your own good...
And the Bank of England's Cunliffe would just like to let everyone know...
“It’s too early to say whether we’re entering into a bubble,” Jon Cunliffe, deputy-governor designate at the Bank of England, told U.K. lawmakers today in London.
"I agree that prices have risen fast this year. It’s coming from a relatively low level, housing activity is still not back to levels before the crisis”
“The picture emerging is that prices are starting to rise, but we’re still coming back from a relatively low base, and of course its a patchy picture because there’s quite a dispersion across the country”
“It doesn’t look as if there is a bubble”
So just like Bullard has noted before, he sees no bubble because everyone knows when a bubble is happening ("they're obvious")... so please go re-leverage and BTFATH in UK homes...
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There has never been a better time to sell your London flat and get the fuck out of England.
How can we short their housing market? Any clever ways to make some money?
May I suggest that we worry about return of capital rather than return on capital?
<Run Forest run.>
Oh, you're just being negative. Housing prices only go up, nobody would ever default on their mortgage....
Hold on, I just threw up in the back of my mouth a little. Have I been here before? This seems familiar.
I read this recession has resulted in the most Robust Salaries and Biggest Bonuses the City of London bankers and brokers have ever seen.
That's just a fur ball caught in your throat. Don't worry my friend, super duper low interest rates and easy peasy credit will wash it all back down.......for now.
<Got to make it to the Xmas banker bonus season bro.>
"Any clever ways to make some money?"
You short the market by selling. There are clever ways of making money, but fiat currency is relative and meaningless. It doesn't define who we are. We survive, we create, and we define. If you want real purpose and meaning, support those who stand for individual liberty.
Didn't Bernanke also recently say that there was no housing bubble? With the bubble in DC housing, you can almost figure out what these quacks are talking about.
As did recently the Australian central bank clowns.
But have they ever admitted to a current bubble? "Yeah we have created a massive bubble that when popped will wipe out half the nation's 'wealth'"? Of course not. The bankers and politicians ALWAYS have incentive to kick the can to the successor, and so they do.
The low interest rates and the press hype are pushing the Sydney market to new dangerous highs. Friends bought a house less than 6 months ago for 920k and just resold for $1090k. Sheer lunacy in an environment where wage increases and job creation are not exactly booming. And by the way the house needed renovation.
My 4 year old just said, but isn't there QE in the UK dad? I said, there is son, even a fucking idiot knows that QE is driving up bubbles in the US and the UK.
Jesus dad, those economists and politicians are fucking stupid!
Indeed my son, indeed they are!
your four-year-old has a charming way with words.
"There has never been a better time to sell your London flat and get the fuck out of England."
this is happening, since long. and many of them come to the... eurozone. three quarters of a million, last count, mainly pensioners
funnily, they are a substantial presence on the web. very conservative, often moaning about everything, but mainly terrified by the devaluation of their assets, particularly those in GBP, since they spend in EUR but often are invested elsewhere
they often hate the EUR because it's "too hard", and they would prefer softer currencies where they live
this guy, The Slog Blog ( http://hat4uk.wordpress.com ) is a very good example. very interesting conspiracy theories. he lives in the French countryside, of course. hates the EU, as good Brits have to
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the FT's Martin Wolf explains that the scheme has two parts. the first is government to finance a share in equity, i.e. advance up to 20% of the price, which is going to cost £3.5bn. the second is in guarantees similar to Fannie Mae and Freddy Mac. a lot of newspapers don't make this difference, or gloss over the huge burden of the second part on UK's balance sheet
Lord Turner, chairman of the Financial Services Authority, noted recently that the lending of UK banks supports mainly the purchasing of existing properties, and in 2009 an amazing 64% of lending was for residential mortgages (with 13% for commercial)
on the other side PM Cameron claims that he has to do it because the banks ain't lending, or, better, demand downpayments
I find frustrating that so many commenters come with "it's the BoE!" tirades. this is clear government policy in action, by a party that calls itself conservative, hates the EUR, promises a referendum by 2017 to exit the EU and clearly prefers this policy of "advanced gentrification" of the whole South-East quadrant of England to anything else
I wonder when they are going to have the shorter immigration lines for "the rich" in Heathrow
The UK's propert market is decidedly frothy. It never really took it's full medicine in 2008/9 and has climbed some 20 % since then. The governments ' help to buy ' scheme allows buyers of homes up to 600k (GBP) to buy with only a 5 % deposit - great if rates are low , disastrous when they rise. Like so many other country's and governments around the world, the Conservatives have not learned any lessons from the past. But the banks dont really care, they will be bailed out yet again by the taxpayers, when the defaults start happening.
"U.K. house prices rose to a record last month as easier access to credit drove first-time buyers back to the market, Acadametrics said."
No bubble. Just a cattle stampede.
London real estate is being used as currency,
London’s Great Exodushttp://www.nytimes.com/2013/10/13/opinion/sunday/londons-great-exodus.ht...
"Help to Buy program"
Seriously? You couldn't come up with a more snooty-sounding name for it? I suggest a re-branding:
'Help you enter the gates of hell' debt slavery enrichment program. No money down, no interest for 6 months, free Spiderman towel and all the negative equity you can eat for the rest of your life.
The next collapse is going to be Gigantic!
But we'll then hear all the London Bankers tesitfy before Parliament, "Nobody saw this coming."
not possible with max keiser waving it in their faces ...
Here's another suggestion: Community Reinvestment Act
Didn't George W Bush roll out a "Help to Buy Program"?
Funny, but didn't Carney create a massive housing bubble in Canada before fucking off to England?
<looking all around> Nope. No bubble here. I do, however, spot a bieber and a buble. But no bubble, sorry.
I did say we were fucked the moment Cameron hired a GS alumni to head the BOE. Lo and behold, just as predicted they are selling every fucking national asset not nailed down to the lowest bidder - Royal Mail, bits of the NHS, ....& er (We don't have a lot left of anything else).
I'd bet GS have multinationals lining up to buy the National Trust, and the most lucrative portions of the NHS supply chain as I type. Since I'm well out of the housing market, I'm going to enjoy watching the bubble pop this time but it may be awhile - Osborne (our chancellor) recently relaxed visa restrictions for Chinese visitors, no doubt to entice them to buy a house or two (dozen) to keep the bubble going. The moment I decided that the powerful are slightly retarded infantile criminals, their behaviour has been much more easier to predict.
When politicians sell themselves how can you not expect them to sell the country.
It is deliberate government policy to inflate house prices because a general election is due around mid-2015 and the Conservatives (roughly Republicans)
don't have a snowball's chance in hell of winning it outright without quite a large-scale house price boom. They don't need a boom in the north of
England, Wales or Scotland because no one votes for them there; they just need significant price rises in the southern half of England. London
alone won't come close to cutting it because at least half of London't population no longer votes for them either and as London becomes
increasingly diverse their share of the votes there will drop as well.
I recently heard on the radio "The economy is recovering because house prices are rising," and I literally laughed out loud. Frankly, it doesn't
matter whether the Conservatives or Labour (roughly Democrats) are in power in this respect. If Labour were in power they would be pursuing
exactly the same policy.
I recently checked house prices in my London neighbourhood. They've risen approximately 20% in the last 18-24 months (I'm not exagggerating),
which means they are now roughly 15% higher than their peak in late 2007.
Dead right, couldn't agree more. Politics, man. Labour would be doing the same. Of course it will all end in tears, but long after the next election. Taxpayers will pick up the tab in the end, as they always do.
Comments from BOE officials shock me, though. They should know better. Have we really learned nothing?
Key difference betwee US and Britain is that the US had a real housing crash. House prices there are low by historical measures, in terms of prices relative to average earnings (the key metric). In the UK, they didn't fall much after the crisis and have remained at historically nose-bleed levels relative to earnings. And this is the base from which we're going to have a "recovery"? It can only end in disaster.
A Canadian is running the BOE. He didn't think there was much of a housing buble in Canada when he left either. We are so screwed when interest rates rise. Housing will implde in Canada and the UK.
I came here to comment on the thread because I miss-spell words quite a bit and thus I was drawn to the word "CUNLIFFE"
just ratch interest down to -.025 that should eliminate any bubbles.
Here in NZ, our reserve bank is doing the opposite to the UK.
LVR is now at 20?
http://www.rbnz.govt.nz/news/2013/5406716.html
last responsible central bank on the planet..
It's only a bubble if it pops. Did it pop? See, it's not a bubble, everything is fine. Now move along you amateur economists and listen what the banksters and politicians are saying!
Awesome! The UK will need a war somewhere, no North Sea oil, no exports, cept for booze. Country is boned. Gilts are only bid because no buys Europe except the ECB
The BoE is a Keynesian lunatic asylum and the LSE is an abomination.
http://www.independent.co.uk/student/news/sanctimonious-little-prigs-ric... LSE is a joke.
Riots baby...
The UK is a manufacturing powerhouse, it's main product is MEGA-DEBT!
It's hard to see a happy ending for the UK. The bankers have looted and sold all the silverware, now they are chaining the people who can't even get a proper deposit together to the debt slave wheel.
The entire UK system is truly having a blowoff debt top
"Gilts are only bid because no buys Europe except the ECB" - that's wrong on two very important levels:
1. the UK is not part of the eurozone, which is the ECB's domain. the BoE does not belong to the EuroSystem of national banks aka the ECB
2. the Bank of England holds substantial quantities of USTs. they can sell USTs to support Gilts, if needed
btw, thanks for the link to this article about the LSE
Let's say this bubble pops. What then? We can't make interest rates less than zero (I guess we could. The government can just confiscate bank deposits). Print more money? Central Banks have used all the weapons they have available. They are out of options.
They are not out of options till the currency becomes worthless.
The currency itself is their weapon...
A young work colleague just bought a flat in Oxford UK, I tried to explain to him that he was now a debt slave, he just glassed over. Sigh.
Most of the action is in London, foreigners coming in getting rid of their fiat and buying up property at rediculas prices. The rest of the boom outside London is due to the government buyer’s scheme, it will all end in tears. Wages are still falling, inflation is rampant, and the young are taking on a debt yoke without realising the it will get heavier as time goes on.
The stock markets at record highs, the high end real estate price at record highs, the use of the foodstamps at record levels (when working). The amazing new century, brought to you by the bankers. Rejoice, Rejoice!
The Bank of England is a master of deception, as its record shows. It applauded and funded the Nazis, and so did the British monarchy, for example. The Bank of England is rotten to the core, and foisting its central bank model on the world, with all the ruin that comes with that incompetence and venality.
"The Bank of England is ... foisting its central bank model on the world" - two little things:
1. the BoE is nevertheless a national bank, since after WWII. it has been nationalized, i.e. it belongs to the UK gov. this is not true of the FED, for example
2. yes, up to a certain point. then other european nations have a slightly different model. most of them are part of the ECB, which in it's aggregate does pursue slightly different policies from the BoE and the FED
with the hope that this slight difference might help
We shall expand credit in the hills and the streets. We shall inflate housing prices in the villages and towns. We shall never surrender to responsible monetary policy. Never! Oh, and there will always be an England.
(Actual results may vary)
Manic - in a word -brilliant.
When 'stuff' is for free, or near free, the demand soars to infinite.
Hey, but the great man Shiller said on Newsnight, this time it's different; people are wiser, they learnt their lessons last time, this time won't be so bad etc........
Blind faith you might call it. A government investing in the housing market, to get itself reelected, whilst quietly selling of its assets to the Chinese.
A recovery based around creating more and more estate agents and call centre workers, and nothing of any worthwhile, longterm value whatsoever.
A nation fixated by house prices and red Ed Milibands under the bed.
A generation prepared to sacrifice its privacy, in the face of scaremongering. Narcotized dysfunction par excellence.
There's no bubbles anywhere... that's why in Hong Kong, 22 men live in a 42 square metre apartment, and pay $195 per month for his bunk.
http://www.theage.com.au/world/inside-hong-kongs-incredibly-cramped-cubi...
Here's a quote:
I generally think things are moving too quickly when someone says "soaring" regarding prices.
Then, there's this:
It seems as though this sort of thing is all good, as long as the government can license it and make a few dollars more:
Oh the hugh-manatee! Think of the children!
Oh sure, just like 2007, everything is fine.
No bubble here, move along, invest in a diversified portfolio of stocks, buy a house, and for God's sake monitor you credit score because everyone knows the more debt you go into the more responsible you are!
Eliminate the SE of England and this story is total bullshit. Meanwhile in other regions, house prices are still down 25% from the peak and not selling. So where's the bubble? London and the SE - as always.
BOE is so completely wedged in a neo-keynesian dead end. There is no other move from here, it's check mate..it's like it's an inflexion point for hyperinflation. They can't raise rates to slow it down because everything will go bust, they can only watch as prices spiral out of control.. capital controls?
I always struggle with "why people want housing prices to increase". You have to live somewhere. Why would any one want it to be expensive?
It is very simple. Housing is the biggest investment that most people ever make in their entire lives. As housing prices increase, their equity increases and they feel richer and more secure towards their retirement. They don't think about selling it and having to pay more for another house. They only think about how cheap they bought it and laugh at the prices everyone else has to pay.......until the market crashes. Then it becomes, WTF?
The UK, that docile herd, usurped only by their special amerikan friends.
British house prices never crashed when US, Irish and Spanish house prices crashed so the Bank of England is simply creating a bigger bubble on top of any already enormous bubble.
It is completely nuts.
You are hearing of people now turning down 100,000 dollar jobs in London because they can't afford to live there.
Its not just a bubble it's a giant inter-generatonal ponzi scheme. If I could leave I would but wife and kids want to stay. If you want to short it - there are the UK house builders such as Barratt and Persimmon. I think the model we are heading for is Bosnia.
Ah, the City of London. Home of the Whale and infinite rehypothecation. Have to think the next big crash will originate in the City.
And the politicians won't make it. They are trying to kick the can past the next General Election in May 2015, but the next crash is likely to hit them before that. GW Bush tried the same thing. He kept the bubble going any way he could to get to 2009, so his Party wouldn't get wiped out. He fell short by a whole year.