When will London burst ?

lisyloo

No bubble lasts forever, it's a matter of fact.

I actually agree with you - and I think pretty much everyone on here would.
It's simply impossible.

However the question is when do you think this will happen.
Are you saying it's imminent?

ONS are showing wage risies not reductions.

Those who have been hit the hardest are the ones who already were on the edge and didn't have a mortgage because they lived in rented accommodation.

Where are those people now?
Did they go downmarket? stay with relatives? sleep on the streets? or go into emergency accomodation? or what?
I don't think the figures support large numbers defaulting or being evicted.
Of course there are always death, divorces, insolvencies all the time even when there is a boom.
Are you saying this is happening in big numbers?
Do you have a link or any supporting evidence?

cells

ciaccino wrote: »

Those who have been hit the hardest are the ones who already were on the edge and didn't have a mortgage because they lived in rented accommodation.

It doesn't take mass unemployment to pop a housing bubble. All it takes is that the middle class have their wages reduced (or their tax credits removed) and are unable to service their mortgages.

No bubble lasts forever, it's a matter of fact. It will happen overnight and it will be painful, especially to the deluded who have jumped on the property !!!!!! bandwagon too late.

Confirmation bias

For prices to fall you just need more people who have to sell than people who have to buy. That happened in 2008-2010 when people who wanted/needed to sell outnumbered those who wanted/needed to buy as the latter group was cut by mortgage rationing

In normal times buyers exceed sellers as we have a rapidly growing population and a very slowly growing additional new homes. The balance is so strong in favor or buyers exceeding sellers that we have seen in some places +20% HPI in a year

of course there are regional and local variations. Eg the town of Telford builds a lot of new homes each year so proces have not gone up at all in ten years. Sellers actually outnumbered buyers so in real terms prices have fallen by some 25% over the decade (0% nominal)

lisyloo

I say that the bubble will pop.

Well if we're quoting our wrong, then stop using metaphors.
What do you mean by this?
House prices will stop rising? The rate of change will reduce or what.

But if you are the average middle class property owner and servicing an expensive mortgage, you'll have no other choice than default, because nobody will have the cash to buy your house.

Why?
If you're the average person, still with your job and possibly getting nomial rises then why can't you just carry on paying the mortgage.
What has happened to stop you being able to do that?

I

t's not really difficult to understand

I'm findind it quite difficult.
You use metaphors, don't explain and won't answer questions.

antrobus

ciaccino wrote: »

....It's not really difficult to understand. Even Mark Carney stated in 2014 that "rates must rise to avoid housing bubble".
http://www.telegraph.co.uk/finance/economics/10985991/Mark-Carney-rates-must-rise-to-avoid-housing-bubble.html

Logically, I would point out that if you believe that Mark Carney was correct when he said in 2014 that "rates must rise to avoid housing bubble", then you would have to concede that there was no housing bubble in 2014, and there remains no housing bubble since rates have not risen.

TheBlueHorse

but the BoE is independent. Carney (and the other rate setters) can do what they like.

The real question here is - is there a bubble at all at the moment. Probably not.

I agree with Lissyloo - if prices fall massively when this imaginary bubble bursts - why can't the average person keep paying their mortgage?

MARTYM8`

cells wrote: »

Confirmation bias

For prices to fall you just need more people who have to sell than people who have to buy. That happened in 2008-2010 when people who wanted/needed to sell outnumbered those who wanted/needed to buy as the latter group was cut by mortgage rationing

The crux is your latter point - the availability of credit is what drives house prices outside central London and not the availability of buyers or sellers or houses.

When banks stopped lending - prices went down. When they started lending again - backed by huge government support - they are going up.

No cheap and easy credit - no can afford the prices.

Sabrina2000

chiefie wrote: »

For you economics experts out there . How can house prices continue to rise whilst the service economy depends upon continued low wage employment ? And whilst key public sector workers aren't paid enough to buy or rent somewhere ? how does this work and where is it all going ?

London will fall sometime in the future, how far and when are the only questions, but if anybody tries to argue it will only ever go up with no dips they are deluded.

lisyloo

How can house prices continue to rise whilst the service economy depends upon continued low wage employment ?

House prices can continue to rise whilst there are enough buyers and investors to support.
Certainly in London there are enough BTL investors, bank of mum & Dad, highly paid, foreign investors, foreign money seeking a safe home for price to rise.

Key public sectors can stay in existing accomodation, share or move further out. This can work if people are willing to do it or have no alternative.
Some employers will bus people in or provide accomodation.

I think the housing market has some legs but I don't believe it will go on forever.

ChopperST

ciaccino are you Crashy in disguise?

How would a change in house prices affect someone's ability to service a mortgage?

lisyloo

How would a change in house prices affect someone's ability to service a mortgage?

It doesn't of course.
A divorce, death (what's the other D?), relation, redundancy, sickness do of course affect their ability and this happens in small numbers all the time.