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UK May Home Prices Surge By Most Since 2002

Tyler Durden's picture




 

Two weeks ago we asked, rhetorically, "Whose Housing Bubble Is Bigger?" and showed the April home price increases in the UK and China:

 

Today, we have our answer. As the WSJ reports, "U.K. house prices rose at the fastest monthly pace in almost 12 years and to the highest level since before the global credit crisis in May, a survey showed Thursday, as demand for homes continues to outpace supply despite tougher new mortgage rules."

From the WSJ:

Mortgage lender Halifax said the average value of homes purchased by its own mortgage customers hit £184,464 ($308,922) in May, the highest price since April 2008. That marks a 3.9% increase from April—the largest monthly gain since October 2002—and an annual gain of 8.7%.

 

"Housing demand is still strong and continues to be supported by a strengthening economic recovery," said Stephen Noakes, mortgage director at Halifax. "Consumer confidence is being boosted by a rapidly improving labor market and low interest rates, although growth in average earnings still remains weak."

Actually housing demand is mostly supported by offshore - Chinese, Russian and Middle-east - hot money. That and the BOE's loose monetary policy of course, policy which won't be changing any time soon, especially following today's Bank of England announcement keeping rates unchanged.

However, if this bubble continues soaring as it has, the BOE will have no choice but to step in, now that its overheating housing market is outperforming even that of China.

Reports that house prices are continuing to surge will likely be a key discussion among Bank of England officials at a financial policy meeting later this month.

 

In April, the Mortgage Market Review rules came into effect with lenders having to adhere to new stricter lending rules.

 

There have been some signs that the new rules may have slowed mortgage lending a little as figures from the BOE Monday showed mortgage approvals slipped for a third straight month in April. However, the appetite for property in the U.K. remains undiminished and those who are able, are continuing to pay the price required to buy a home in the U.K.

For now, however, the handful of billionaires who own the bulk of luxury UK housing continue to be the biggest benefactors.

And in other news, French economists continue to profit from book sales wondering why the rich keep getting richer...

 

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Thu, 06/05/2014 - 11:13 | 4826847 Buckaroo Banzai
Buckaroo Banzai's picture

Imagine how tough those mortgage rules are gonna be when Sharia law takes effect!

Thu, 06/05/2014 - 11:16 | 4826857 whatsinaname
whatsinaname's picture

Are the Brits still running their QE programs or are they done with it ? I am lost. And whats holding their bond market up if there is no QE program running?

Thu, 06/05/2014 - 11:19 | 4826869 maneco
maneco's picture

Maybe the Belgians are also buying gilts?

Thu, 06/05/2014 - 11:42 | 4826946 Pinto Currency
Pinto Currency's picture

 

House prices are almost at escape velocity.

Thu, 06/05/2014 - 11:44 | 4826951 gh0atrider
gh0atrider's picture

Everyone is desperate to live at the epicenter of the Ponzi Planet.

Thu, 06/05/2014 - 13:41 | 4827378 absente reo
absente reo's picture

Yes, the BoE is still running the £375bn QE programme.

Thu, 06/05/2014 - 11:17 | 4826860 Fuh Querada
Fuh Querada's picture

It gets even worse when you look at the shit quality you get for these prices.

Thu, 06/05/2014 - 12:32 | 4827140 max2205
max2205's picture

Thanks for the chart....why did I think uk prices are at all times highs

 

Get to work Carney

Thu, 06/05/2014 - 13:38 | 4827371 Davos
Davos's picture

Fukin amen to that

Smallest houses in europe

Designed by talentless fools who think everybody wants a 'georgian' house, even if was only built last week, with none of the features the real deal benefits from

Uk housing market is the best joke going but the only game in town, has been for a long time

Thu, 06/05/2014 - 11:18 | 4826865 youngman
youngman's picture

Just hot money flowing in.....the average Joe cant afford it...but a Russian can..or even a Frenchie....just people going to where their money is safe..of so they think..

Thu, 06/05/2014 - 11:24 | 4826887 Rainman
Rainman's picture

Here's a London studio flat that rented for $ 1234/mo in just 16 hours after being listed. So tiny the bed almost touches the sink.

http://nypost.com/2014/06/05/tiny-1230-london-apartment-sparks-outrage/

Thu, 06/05/2014 - 13:40 | 4827375 Davos
Davos's picture

The tokyo residents would be green with envy at that palacial abode

Thu, 06/05/2014 - 11:27 | 4826894 firstdivision
firstdivision's picture

The VIX is inverse surging.

Thu, 06/05/2014 - 11:29 | 4826904 Al Capowned
Al Capowned's picture

I live in Bristol in the UK and in the last 5 years renting a one bed flat apartment has gone from around $800 $900 a month to around $1400-$1500.

We are getting killed over here, everything is skyrocketing in price, food, utilities, house prices, rent, tuition, energy, water you name it. 

I cant believe the economy is still turning, its must be running on serious amounts of consumer debt and HELOC at this point, as i cant see how many people have that much disposable income left after getting paid

 

Thu, 06/05/2014 - 12:46 | 4827193 Jack Burton
Jack Burton's picture

Al Capowned, I visit the UK often and read the papers daily on the internet. I see what you describe, but somehow people seem to live and prosper in many cases. No, I have NO idea how they do it. Especially in London and SE England. All I can figure out is that so many Brits work for government and get cost of living adjustments, that they are the ones who prosper. London is flooded with foreign money seeking safe haven, and that money is spreading out to other UK cities. You native Brits will end up kicked out of your own country by a government that seek foreign money and people at all costs. The government want floods of rich and poor foreigners.

As for the finances of govenment. They seek new taxes all the time and also print money via QE and go deeper and deeper in debt.

I seriously believe that no person can look at the entire UK economy and understand HOW it does not implode, just based on the inflation you decribe.

Thu, 06/05/2014 - 17:11 | 4828078 khards
khards's picture

@Al - I work in Bristol, but commute from Somerset which is 30-40 mins commute (£50pw) and less than 1/2 the price of living in Bristol.

Why do you live in Bristol? Did you graduate and just stay there?

Thu, 06/05/2014 - 11:30 | 4826906 Freedumb
Freedumb's picture

Surely this also has nothing to do with the government taking 20% equity in all new homes worth under 600k GBP as of April 2013 under the "Help to Buy" scheme, because prices NEVER go up when governments goose housing markets/student loans/monetary supply!

Thu, 06/05/2014 - 11:33 | 4826917 maneco
maneco's picture

You are right! Here in London you cannot find a decent home below £600'000 anymore. I guess you could call it the George Osborne Put.

Thu, 06/05/2014 - 11:36 | 4826924 CheapBastard
CheapBastard's picture
Real estate a 'crappy investment': 'Shark Tank' pro

 

Real estate will be a "crappy investment" over the next five to 10 years thanks to rising interest rates and stagnating home prices, investor Kevin O'Leary told CNBC's " Closing Bell ."

"I am convinced that at some point later this year we'll see the first 25 basis point rise. It'll rip through the infrastructure of utilities, and REITS and real estate," said O'Leary, one of the stars of the reality show " Shark Tank ."

"Don't buy any real estate. Don't do it," O'Leary said.

 

https://homes.yahoo.com/news/housing-crappy-investment-shark-tanks-21230...

 

Thu, 06/05/2014 - 11:55 | 4826991 RealityCheque
RealityCheque's picture

Dear UK: YOU. ARE. SO. FUCKED.

Thu, 06/05/2014 - 12:00 | 4827012 Nue
Nue's picture

One hot Southern Summer of years gone by a group boys decided to all pee in a water balloon in order to try and throw at a passing car. Standing in a circle in a small clearing in the woods beside the road each one took a turn in filling it up. Passing the ever expanding balloon one to another it got larger growing warmer as each made his contribution. .... Until by chance or miscalculation it burst one poor unfortunate who then had to run home to his mother crying soaked in urine. The moral of the story is the "golden rule" of Modern Kenysian fiance, it's ok to fill the balloon as long as your not the last one holding it when it pops.

>_>

Thu, 06/05/2014 - 12:04 | 4827031 dcau1
dcau1's picture

Must get on the debt ladder, sorry housing ladder kids or you'll miss out! You can't lose!

Thu, 06/05/2014 - 12:07 | 4827044 Al Capowned
Al Capowned's picture

How to blow the biggest housing bubble the UK has ever seen.

 

1. Permanent low interest rates

2. Return of Sub prime loans

3. Gov help to buy scheme ( guaranteeing mortages up to £600,000) 

4. Bring forward the help to buy scheme and extend it it 4 more years to 2020

5. Allow huge amounts of foreign investment in UK property.

6. Pretend there isnt a bubble

 

Shazamm, 

Thu, 06/05/2014 - 17:13 | 4828085 khards
khards's picture

And the biggie: Restrictive planning laws effectively outlawing any new deveoplents.

Thu, 06/05/2014 - 12:13 | 4827069 skbull44
skbull44's picture

Mark Carney; just doing to the UK what he did to Canada...

http://olduvai.ca

Thu, 06/05/2014 - 13:21 | 4827308 syntaxterror
syntaxterror's picture

"Deflation"

Thu, 06/05/2014 - 14:21 | 4827513 All is chosen
All is chosen's picture

There is hope! There is a place in the septic isle for everyone:

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifie...

NB: This is the retail end, auction prices are closer to zero. If everyone here added a million to their asking prices the foreigners would flood in. It's a just a case of bollox... sorry, I meant marketing.

NB2: Please ignore any rumours that this fine British* town is twinned with Baghdad.

*Not guaranteed to remain so.

 

Thu, 06/05/2014 - 15:14 | 4827671 giggler321
giggler321's picture

Right move can't b wrong? It's true my cardboard box is worth 8%+ more this year.

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