ONS: + 1.1% MoM +9.6% YoY

ruggedtoast

Generali wrote: »

What he said.

Prices are taking off and all the signs are there for a good old fashioned UK property bubble. The BoE must be seen to do something even if that something is utterly ineffectual.

Yeah but, not er, raising interests rates, right?

/nervous

PixelPound

HAMISH_MCTAVISH wrote: »

No materially significant recent trend up or down in volume of lending to FTB or Movers, and LTV/LTI appear to be well constrained by MMR.

With volume of lending remaining far below historical averages, and both LTV and LTI constrained, there's little cause for further macroprudential measures.

All that's happening is the limited supply of property is consolidating in the hands of a smaller, but more importantly wealthier, percentage of the population exactly as many on here predicted it would after the onset of mortgage rationing.

Or to put it simply.... When you only build a third of the houses you need, only the top earning third of households need to be able to afford them.... The rest can be excluded by price as the market rations goods in short supply exactly as it's supposed to.

There seems to be slight upward trend on FTB but existing owner movers is flat, so could that simply be existing owners aren't effected by house prices, since purchases are relative to sale prices and just the next increment up (if your house is worth £50K more than X months ago when selling, the house you buy will probably be £50K more than it was X months ago).. Given the housing stock being built at a steady rate, and well below demand, then is slight uptrend in FTB because of confidence in long term affordability?

CLAPTON

HAMISH_MCTAVISH wrote: »

Nah...Immigration is the answer to a different problem altogether.;)

The answer to a housing shortage is incredibly simple.

Build more houses.

However as that requires reducing planning restrictions and a massive increase in mortgage lending to consumers and bank financing to developers I won't hold my breath...

The answer to a housing shortage is indeed to build more houses and increase supply.

Immigration increases demand without increasing supply.

In London, about 40% of the population is foreign born: it is not unreasonable to deduce that prices would be lower and housing standards higher if that number were considerably less.
In addition, the number of foreign born people in London is increasing and so is the shortage of housing.

Now I know you believe that in 25 years time, we will be short of workers and that you believe in the productivity 'lump of labour' theory, but even if you are right we can comfortably wait for 20 years to see.

Generali

HAMISH_MCTAVISH wrote: »

An increase in prices caused by a genuine imbalance of supply and demand is by definition not a bubble.

Not that it really matters to the price of anything but this is what I think makes a bubble.

I believe that a fundamental lack of supply is a necessary precondition of a bubble. One of the ways that dot com companies keep their valuations at such crazy levels and constantly rising is because they release very small tranches of stock to the market and agree with the buyers that further tranches will be sold at a higher price. I mean seriously, do you really think that an illegal minicab service is worth north of forty billion dollars?

People will scrabble for UK property precisely because there is a lack of supply. It's not the imbalance between supply and demand that makes it a bubble it's the reaction to that imbalance.

purch

CLAPTON wrote: »

Immigration increases demand without increasing supply.

.

Apart from the one's who bring their own tents, and then live near Marble Arch (great postcode :eek:)

mwpt

HAMISH_MCTAVISH wrote: »

An increase in prices caused by a genuine imbalance of supply and demand is by definition not a bubble.

...

- Cutting back lending has caused supply to fall and the shortage to worsen

- Rents have soared as a result, attracting older investors, who outbid the mortgage-challenged young
...

The only way out is to significantly increase lending, letting builders sell as much as they can build, and letting the young have the finance to compete with the old....

Hi Hamish. Have rents soared as much as is being made out? It is difficult to find consistent/accurate figures for this. As far as I can tell, rents in SW London have gone up, but gone up broadly in line with other inflation. If under-supply was causing the house prices rise, I would expect to see a similar velocity in rent rises, but they have completely diverged. Cheap credit would seem to be the reason for that, rather than supply.

And, lending hasn't exactly been restricted for BTL, right? In fact, it has eased if anything since 2007. So why aren't builders building plenty and just offloading to BTLers?

purch

Generali wrote: »

It's not the imbalance between supply and demand that makes it a bubble it's the reaction to that imbalance.

Economics is a Social Scie...................oops sorry, done that page of the script before

caronoel

HAMISH_MCTAVISH wrote: »

http://www.ons.gov.uk/ons/dcp171778_403650.pdf

Also of interest....

But I thought house prices were due to fall before the election?

Thats what the wise owls on housepricecrash told me.

Why oh why are they always so wrong?

Generali

ruggedtoast wrote: »

Yeah but, not er, raising interests rates, right?

/nervous

Highly unlikely with CPI at -0.1%. When the Fed raises the BoE might follow.

michaels

HAMISH_MCTAVISH wrote: »

Before either one of you go too far down that path, the latest CML lending data is interesting.....;)





http://www.cml.org.uk/cml/media/press/4205

No materially significant recent trend up or down in volume of lending to FTB or Movers, and LTV/LTI appear to be well constrained by MMR.

Average Home Mover has an LTV of 72.9% and borrows 3.07 times income.

Average FTB has an LTV of 80.7% and borrows 3.36 times income.

With volume of lending remaining far below historical averages, and both LTV and LTI constrained, there's little cause for further macroprudential measures.

All that's happening is the limited supply of property is consolidating in the hands of a smaller, but more importantly wealthier, percentage of the population exactly as many on here predicted it would after the onset of mortgage rationing.

Or to put it simply.... When you only build a third of the houses you need, only the top earning third of households need to be able to afford them.... The rest can be excluded by price as the market rations goods in short supply exactly as it's supposed to.

The CML figures semed to be transactions down 16% latest Q vs same Q a year ago.

caronoel wrote: »

But I thought house prices were due to fall before the election?

Thats what the wise owls on housepricecrash told me.

Why oh why are they always so wrong?

They did fall for London properties over 1m for about 12 months up to the election...are there other properties in the country too?