Blog on current housing situation

HAMISH_MCTAVISH

brit1234 wrote: »

I learnt that irresponsible lending and too low interest rates fuel property bubbles and collapses before 2007. Now I see even lower rates and a return to irresponsible back again re-inflating the bubble again.

There was no bubble in the UK.

Just a genuine imbalance between supply and demand, which is demonstrably not a bubble.

Unlike the previous cycles everything done was done to stop this bubble correcting unlike before. I believe the 20 year cycle is irrelevant on this basis ?

And like everything else you've believed through this process, you'll be wrong on this too.

You never learn, do you Brit?

TruckerT

In no way was the 2007/8 collapse any kind of cyclical event. It was something completely new. The extent to which the banks were willing to push their luck continues to be revealed - they simply ignored all normal constraints on their activities. And, so far, there is little sign that they would not do the same again.

TruckerT

leveller2911

HAMISH_MCTAVISH wrote: »

And like everything else you've believed through this process, you'll be
wrong on this too.

]


Time will prove who is right Hamish. The thing that Brit didn't forsee and neither did you or I was the Government propping up HPI with HTB schemes and QE.

You didn't see that coming Hamish so TBH I won't hold my breathe on you being proved correct.

TruckerT

HAMISH_MCTAVISH wrote: »

It's wholly relevant.

And it's supported by the BOE paper which established it, authored by a member of the BOE's MPC and a world renowned economist to boot.

UK mortgage lending had the square root of naff all to do with UK bank failures.

Just 1/16th of UK bank mortgage losses were on overseas mortgages, not UK ones. In fact, had it not been for their overseas misadventures, the big UK banks would not have needed a bailout at all.

Hamish - you and Clapton are the only two people who make these claims. I think you got your ideas from a newspaper article by Stephanie Flanders which sank without trace.

The collapse was worldwide, and was without doubt caused by all sorts of dodgy mortgages and property valuations. All the western banking systems and all the western governments played their part.

TruckerT

marathonic

I love how the bears ramble on about low interest rates as if it's a bad thing. Interest rates have been low for quite some time now and will probably be low for a while yet.

So the bears wait for their crash in property prices, which may never materialise, when interest rates start rising. Meanwhile, those who bought enjoy a 6-7 year period where rates are at historical lows and they can, if they choose, pay down their capital at a very fast rate as a result.

For full disclosure, I'm from Northern Ireland, where we did have a crash. Therefore, people can now buy at 46% of peak values AND enjoy historical low rates - yet people here give the same argument of property prices falling further when rates rise.

HAMISH_MCTAVISH

TruckerT wrote: »

a newspaper article

Laying out the case in a BOE research paper.

The facts are indisputable.

UK mortgage lending did not cause the UK banking crisis, nor the failure/bailout of any of the large UK banks we all hear so much about.

TruckerT

HAMISH_MCTAVISH wrote: »

There was no bubble in the UK.

Just a genuine imbalance between supply and demand, which is demonstrably not a bubble

I seem to recall that in the run-up to the 2007/8 collapse there were huge numbers of housing developments under construction - the house builders couldn't believe their luck.

There was no shortage of supply, and after the crash, you could have bought two for the price of one.

But, until the crash, supply, demand and prices were in an unstoppable upward spiral. Which was fuelled by easy credit and stupid lending.

I don't understand the arithmetic of housing supply and demand. I live in a London commuter town, very close to the station. My rent has not increased in the four years that I have lived here, and the Estate Agents' windows are full of places to rent at only slightly more than I am currently paying.

Who would fill all the houses which they tell us we need?

TruckerT

TruckerT

HAMISH_MCTAVISH wrote: »

Laying out the case in a BOE research paper.

The facts are indisputable.

UK mortgage lending did not cause the UK banking crisis, nor the failure/bailout of any of the large UK banks we all hear so much about.

But it's irrelevant, innit.

The banks collapsed, and some are still paying the price.

TruckerT

HAMISH_MCTAVISH

TruckerT wrote: »

I don't understand the arithmetic of housing supply and demand.

We know.

And that's OK, as neither does Brit.

Which is why he thought prices would fall 50% by Xmas 2009.:rotfl:

HAMISH_MCTAVISH

TruckerT wrote: »

But it's irrelevant, innit.

The banks collapsed, and some are still paying the price.

It's wholly relevant.

As UK mortgage lending didn't cause the problem, then restricting UK mortgage lending is not the solution.