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OECD Warns UK Faces Housing Bubble
The U.K. faces a housing-market bubble unless the government boosts the supply of new homes, the OECD warned yesterday. U.K. home values have climbed 36.6% since 2004, the seventh-biggest rise among OECD nations and back near their 2007/8 bubble highs. The Bank of England said last week mortgage approvals had surpassed 60,000-a-month six months earlier than it had predicted. As Bloomberg's Niraj Shah notes, while the OECD raised its forecasts for U.K. economic growth, it said risks to the recovery include “vigorous” house-price increases that may curtail affordability. We are sure this will all end well - a speculative real estate bubble as the key driver of nominal economic growth? What could go wrong?... Is it any wonder that UK realtors see the crash coming and are asking the government to step back from this policy-induced euphoria?
Chart: Bloomberg
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OECD
LOL
UK house prices are overvalued, warns OECDhttp://www.ft.com/cms/s/0/8b59cd22-612a-11da-9b07-0000779e2340.html#axzz...
(from 2005)
The UK central bankers have done EVERYTHING POSSIBLE to blow more bubbles ... so, it shouldn't surprise us that, after 5 years of non-stop desperate bubble-blowing, THERE WILL BE BUBBLES.
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there goes 20 minutes i'll never get back.
I had OCED ONCE BUT then I saw this ad on TV
You know the end of the world is near when even the Realtors are warning that the central bankers are crazy.
Meh wake me up when house prices actually crash.
It's what Carney does best...
Yup he does. He blew fucking enourmous housing bubble in Canada. It has yet to pop. The Brits were so impressed, they brought him over to do the same for them.
What some call "bubbles" others call "job security" for our policy makers.
It's only when the bubbles burst that this crowd gets scrutinized - "seriously" I should say.
Who knew?
(other than Max Keiser and his viewers...)
At least their govt put real wealth into citizens pockets....fuck you Ben
Yep Mark Carney wants to blow a bigger bubble than the record one he left Canada with. He also wants to increase the 4 x GDP debt the UK banks have to 9 TIMES !!!!
Obviously if they ever raise interest rates the UK is bankrupt due to our £10 Trillion overall debt, although it would make housing affordable once again!!!
Everything is do good here we have the Red Cross delivering emergency food parcels for the first time since WW11, thank God Carney has given the banks money to speculate in the housing market !
Ya don't say.
2008 sub-prime did little to affect the UK market, nothing like what happened the other side of the pond. We see massive immigration figures for such a small island which are helping pony up the pile of cards. So the powers that be think we're strong enough to take on more housing debt while wages stagnate, money is watered down through QE and Carny for some odd reason only cares about unemployed targeting.
If you wanted a recipe for failure you'd choose the one they are touting.
The cure for high prices is........... Higher prices. Give it time. It will correct itself
Doesn't matter... Countries will do it Venezuela-Style!
Until the ordinary Joe is not heavily invested in the Stock market it will not tank.
At least a housing bubble has wider participation that a bond and stock bubble.
Nobody owns $5bn of housing, so it's a fairer bubble than the US one.
Still a bubble though.
UK realtors - we call them estate agents amongst other things - are ramping asking prices like crazy. They are out of control.
Go and ask the average Brit what they think of a UK realtor and usually the reply has the word 'scum' in it somewhere.
OECD - now here's an organization that should be loaded up on school buses and driven off a cliff.
The UK government does not care if there is a housing crash, provided it happens _after_ the next election, in 2015.
My house is drowning in a mandatory tax payer subsidized flood insurance bubble.
We get tornados to so I expect that will be mandatory next. Followed by mandatory drought insurance followed by who is going to offer me insurance against mandatory insurance?
Ave UK House Price £242,415
Ave UK Salary £26,200
Price to Earnings Ratio: over 9:1
Mortgage ratios available: 4x Salary plus 20% deposit required (approx £50k) to get a decent rate.
Conclusion: UK House Prices 50% overvalued
AT LEAST 50% overvalued.
Inflate your way to economic prospetiy....ya that works. Heck London saw a 10% month on month increase in listing prices in Sept. Insanity is the doing the same thing over and over thinking you will get a different result!
This is a supply and demand bubble unlike our US bubble which was buildem and they will buyem and flippem. The UK bubble is sustainable until a huge amount of inventory comes onto the market. The only people getting hurt are people who want to buy but can't because of the high down payment. This should keep the market stable until they lower borrowing requirements. If the borrowing requirements remain strong then again this UK bubble will last a lot longer.
Since this bubble is created by the government currently buying its re-election, what are the chances that Dave and Company re-consider their housing policy?
The UK housing bubble is indeed OFFICIAL government policy. They have chosen to juice home values as they believe that the UK economy can be based on housing. Cameron has even demanded that Britian's Green Belts and scenic areas be built on to allow more immigrants to enter and find homes.
It is THIS simple. The UK believes that population growth and new home building is their key to getting the economy back to a debt fueled growth cycle. I mean they are open about this. House price inflation is seen as a net positive for the economic system in the UK. Of course, as prices rise, homes get harder to afford. This little fact does not enter their minds. WHY? Because house price inflation is all about boosting the value of these assets that sit on the books of the failed banking system. Homes are held against the massive UK personal debts. To blow a huge bubble will put banks back into a net postive postion. As with everything int he 2013 financial world, it IS all about the banks.
This will end badly. I think Max Keiser is right when he claims this is a ponzi scheme that will enrich the few and totally destroy the many. That is the direction all all economic policy now a days. Trade deals destroy the average workers, central bank policies destroy workers and savers. Government policies, like hand outs to first time home buyers are meant to improve bank balance sheets. The Banks own government via bribing politicians. Manipulated stock markets and manipulated housing markets are the norm. There is no free market or free trade. It is all rigged, and the 99% are on the losing side of the trade. Trade off 99% of the population's economic health in order to juice the positions of the investor, speculator and banking classes. If the markets were open and free and non-manipulated, then I would have NO problem with investors, speculators or bankers. But that is NOT the case. It is rigged in their favor, any idiot can see that that is FACT. Cameron is a criminal manipulator of money supply and government policies, all aimed to aid the 1%. This should be illegal, but it is not. Revolution is going to be the result, maybe a few decades off, but when it comes, it will be an awful thing to witness. Revenge is a brutal thing to see. Just look at the Communist Revolution in Russia, or the French Revolution. Both were blood baths of epic proportion.
"Price to Earnings Ratio: over 9:1
Mortgage ratios available: 4x Salary plus 20% deposit required (approx £50k) to get a decent rate.
Conclusion: UK House Prices 50% overvalued"
I wonder why no bubbleblaablaatalk here in Finland, here no deposits were required at least last year, if house costs 200£, then you really got 200£ from bank, 100% loan ratio. Common people do great profits.
THERE IS NO BUBBLE ! ! !, now, please snort a line of cocaine like the mayor of Toronto and be Happy.
I'll see your coke snorting mayer and raise you a meth tooting banker. How far till we hit the bottom of this cesspit?
http://www.dailymail.co.uk/news/article-2509815/Len-Wardle-resigns-chair...
The land-owning Lords in the UK must be laughing their asses off at how the Commoners bicker, squabble and bid up prices of dwellings to astronomical levels, in many cases sharing land with others (multi-storey apartments), for what ends up being a postage-stamp sized area of land per owner.
"Land bankers" do the same thing as gem merchants: get cozy with the primary producers, hoard supply into storage and throttle the flow accessible to the public market, thereby driving up the price.
One component of the solution (there are others, but this is a major one) is to eliminate income tax (a penalty on work) and replace it with a land tax (a penalty on rent-seeking). This doesn't punish large land holders provided they are using the land productively in capital formation (farming, mining, tourism, forestry, etc), but it does punish land-bankers (who are sitting on land purely to restrict supply).