Speculation and public money underpinning housing bubble

sensibly_insane

No wonder, media has started to beat the drum again and a new round of property frenzy has just started. This interesting graph does show which phase we are in another property bubble.

Like any other property bubble, this is going to be burst sooner rather than later. What will be different this time?

Last time, the banks were carrying the bad debt and the tax payers bailed these banks out though some did go bust sending the financial shockwaves around the globe, we are still enjoying the aftershocks. The bankers had to arrange for all the bail outs.

This time, the bankers won't have to beg for bail out as these banks are already owned by the tax payers who will bear the brunt of coming economic melt down directly with an additional blow of eroded savings due to historically low interest rates.

You want to help people buy homes, make the housing affordable by bringing the prices down and not by artificially enabling people to buy beyond their affordability.

Current government schemes are nothing short of ponzy scheme which will just spiral out of control very soon. Help to buy schemes are "help to sell" in fact, which help people artificially to stretch beyond their affordability pushing the prices higher and making the prices less affordable for the ones coming after them. It is just another way to make GDP more attractive by not creating more jobs and not generating wealth by tangible production. We all know how that has backfired in the past. How will it be different this time, I would be interested to know this.

chucknorris

sensibly_insane wrote: »

No wonder, media has started to beat the drum again and a new round of property frenzy has just started. This interesting graph does show which phase we are in another property bubble.

Like any other property bubble, this is going to be burst sooner rather than later. What will be different this time?

From what I can remember from where we are now, or perhaps not even there yet, it took 12 years, from 1995 to 2007. Which actually ties in with what Hamish is predicting on this thread (mid 2020's).

antrobus

sensibly_insane wrote: »

No wonder, media has started to beat the drum again and a new round of property frenzy has just started. This interesting graph ....

Oh look, a graph!

sensibly_insane wrote: »

....does show which phase we are in another property bubble.......

The stealth phase?

CLAPTON

sensibly_insane wrote: »

No wonder, media has started to beat the drum again and a new round of property frenzy has just started. This interesting graph does show which phase we are in another property bubble.

Like any other property bubble, this is going to be burst sooner rather than later. What will be different this time?

Last time, the banks were carrying the bad debt and the tax payers bailed these banks out though some did go bust sending the financial shockwaves around the globe, we are still enjoying the aftershocks. The bankers had to arrange for all the bail outs.

This time, the bankers won't have to beg for bail out as these banks are already owned by the tax payers who will bear the brunt of coming economic melt down directly with an additional blow of eroded savings due to historically low interest rates.

You want to help people buy homes, make the housing affordable by bringing the prices down and not by artificially enabling people to buy beyond their affordability.

Current government schemes are nothing short of ponzy scheme which will just spiral out of control very soon. Help to buy schemes are "help to sell" in fact, which help people artificially to stretch beyond their affordability pushing the prices higher and making the prices less affordable for the ones coming after them. It is just another way to make GDP more attractive by not creating more jobs and not generating wealth by tangible production. We all know how that has backfired in the past. How will it be different this time, I would be interested to know this.

miss use of the term ponzi


how do you suggest reducing the price of property?
building more, reducing infrastructure charges and stop imposing the cost of subsidising social housing on buyers of new build?

Masomnia

cepheus wrote: »

Keiser makes that point in his slot, the bubble is politically motivated. Glad we agree for once!

PS is anyone on this thread still renting and is not expected to be given a sizeable enough inheritance to be able to buy a property?

Hello :wave:

My great uncle has written us into his will as he has no other family, but he isn't exactly rich, and he spends on all money on fine wines.

I doubt there will be much left when he goes, which in a way I'm glad about, he worked hard for his money trying to teach the children of Sheffield French all his life and really he deserves to enjoy it. Or be comfortable in his old age in a decent home.

After my father's debts are paid off there'll be nowt left and while my mum owes nothing, she hasn't got much saved and isn't looking at much of a pension when she retires.

But then you don't want my life story

I agree that the government is doing its utmost to inflate the housing market, but really I'm not sure the economy will recover until people have faith that it is going ok. We're obsessed with house prices as a nation, and won't feel wealthy until we know that property is rising in value.

Masomnia

chewmylegoff wrote: »

The nonsense that is the keiser report strikes again. The summary's idiotic attempt to suggest that £12 billion has been diverted from housing benefit to underwrite mortgages demonstrates what palpable nonsense this is. Firstly, guaranteeing mortgages doesn't cost anything unless the debt goes bad and the bank calls in the guarantee, secondly I'm pretty sure housing benefit spending is increasing despite the govt's "reforms".

Given that the number of people in employment is the highest it has ever been, it's fairly clear that the statement that we don't work anymore and just sit around gambling on houses is basically the stupidest conclusion possible. Graham will come along now and say that they're all on zero hour contracts and not actually doing any work.

Mmm the housing benefit bill is ~£22bn, so reckons it has been more than halved. Right.

antrobus

HAMISH_MCTAVISH wrote: »

.....Max Keiser is catastrophically wrong on UK housing.

He's been a bit wrong on gold too. He was telling people to buy gold at $1700 an ounce last November. It now appears to be about $1375 an ounce. That's a 20% loss over 9 months.

Thrugelmir

cepheus wrote: »

Keiser makes that point in his slot, the bubble is politically motivated. Glad we agree for once!

So what's changed ?

Between 1997 and 2010 the electorate were conned into believing that boom and bust had been abolished.

As we know now. That was a lie.......

CLAPTON

Thrugelmir wrote: »

So what's changed ?

Between 1997 and 2010 the electorate were conned into believing that boom and bust had been abolished.

As we know now. That was a lie.......

no-one I knew believed such nonsense (and they are people who vote)
however, cheap goods form China and the east did mean that inflation was low.

sensibly_insane

CLAPTON wrote: »

miss use of the term ponzi


how do you suggest reducing the price of property?
building more, reducing infrastructure charges and stop imposing the cost of subsidising social housing on buyers of new build?

Definitely it is misuse of the term ponzi but ponzi is the closest term to describe what is being done.

If I have to suggest ways of the reducing the prices of the property, what is the use of these politicians and their highly paid advisors, why are they paid millions of tax payers money if they can't figure out the solutions they are paid for.

Building more is not a solution as all the newly developed property will vanish in the black hole of the foreign investors. I am specially referring to the institutional and individual overseas property investors who are devouring the newly built properties in London e.g. British land and British properties should be preferably for the ones who are living in U.K. and not for the super rich sitting in the BRIC economies. Can we ban the foreign investors investing in the British properties who would never live in these properties ?

Secondly, these newly built properties will be swept by the buy to let in country investments. Housing is one of the basic human needs and we are in nothing short of an emergency situation. We do ration in the emergency situations, Can we ban people owning more than one properties?

Last, get someone to sort this this financial mess who at least lives in this country, who is a citizen of this country and not someone who lives out of a glorified brief case. For some jobs, you won't let someone work if their grandparents were not British, how could you let a non-British person run the whole financial machine of this land, that's beyond me.

IMHO, the basic principle here is wrong. Basic needs like housing, medical, education, electricity, things without which we can't live a civic modern life, should not be vehicles of profiteering. No wonder, we have allowed this and now we see the prices of all of these souring higher and higher.