Financial Times "Looks like a bubble ready to burst"

lukeh23

Interesting analysis on house price data.

Consensus seems be something will give after the next election

https://www.youtube.com/watch?v=8tz89YzbUPk

AndyGuil

Longview Economics not FT...

I'm not sure price to average earnings is the correct measure to look at. Price to average earnings for buyers is more appropriate and is currently around 3.4.

They also say it is a brewing bubble and will be pinched in 2 years as rate rises come in over mext 12-18 months. They don't say prices will go down just that the rate they have risen won't continue. Pretty obvious, when the market comes back to life suddenly it seems like a great acceleration. After this the rate of increase reduces to a more reasonable level.

lukeh23

"Longview Economics not FT..." I don't believe the FT has any old chump on to give opinion.

Truth of the matter, nobody knows how this will play out. We can all speculate, but time will tell.

However, its naive to have no concerns on the current situation.

Me if I had to bet, I see prices stabilizing in 2015, rates climbing to 3% and perhaps greater, and a lot of people being stretched. I also believe we can't rule out a correction, and correction is needed, either that or a huge house building program, which I don't much faith of transpiring.

AndyGuil

FT can have who they like. Longview have been going on about house prices for at least 10 years. 10 years is a lot of money wasted and lost on that advice.

chewmylegoff

lukeh23 wrote: »

Interesting analysis on house price data.

Consensus seems be something will give after the next election

https://www.youtube.com/watch?v=8tz89YzbUPk

Does one opinion constitute a consensus these days?

PasturesNew

House prices aren't linked to earnings because so many people are buying multiple homes, homes for cash ..... BOMAD/grandparents, cash gifts .... an increasing amount of "not income related" sources of funds.

padington

Anyone that needs to see what London is capable of just needs to look at 2007 / 2008. The cash points almost stopped working and credit got pulled back right left and centre and London property ... went down a little bit, relatively briefly.

We've seen what happens when the Sh*t hits the fan! Not much.

Labour will rein London in a bit to give to the regions so they can provide London with more brighter minds further down the road. I accept we may have had the best bit of the property sugar rush from the expectation of 5 plus good years to come but I really wouldn't count your chickens that 2018 is going to be any worse than 2008.

I expect by then london will have built that garden bridge and the skyline changed considerably for the better, the film and creative arts industries will be rocking, the uk tech companies making very big waves, city strong, unemployment right down, uk soft power increasing fast and they'll be some talk of London being the best city in the
world ...

... That's my prediction anyway, absence of black swans permitting and if so, not the best background to expect London properties to be tanking.

TickersPlaysPop

China could crash and send the world economy into another tough period.... in line with the triple dip prediction ......

The debit disease moved to China in 2008... Mark Carney and his deputy that recently left the BOE both said China is on their list of risks to the UK recovery.

There is a lot of foreign money in the central London property market and a lot of them might want their money back when things get tough again. Chinese 'money' has been buying up things in UK even things such as water companies! The world will finally face up to the fact that the growth in China is not real and it is just one big debt bubble.

I don't think enough time is spent discussing the China situation, partly because of the lack of proper information and understanding..... My feeling is that is the most likely thing to cause a sudden shock wave and huge change in stock markets/property markets/ banking....

Credit will dry up again, banks will fail, property will drop or stall....

AndyGuil

I would have thought economic issues elsewhere would result in more money going to safe havens?

padington

Financial times also says it looks like another bubble that just kept on bubbling ...

http://www.ft.com/cms/s/0/a4948d26-0064-11e4-a3f2-00144feab7de.html#axzz36M1DP6ae

lukeh23

chewmylegoff wrote: »

Does one opinion constitute a consensus these days?

No, consensus between the reporter and interviewee

As for the rest, its always so hilarious reading forum pundits who always know better then recognized experts,