Tuesday, July 28, 2009

London house prices up 2 percent in a month

The Land Registry reckons that London house prices are up 2 percent in June.

Oh how I hope that this isn't true, yet I have suspected for a couple of weeks that the property market in London was turning.

I fear we are heading back to bubbleville. Everything is coming into line for a ferocious surge in house price inflation; goverment guarantees, ridiculously low interest rates, and banks under pressure to lend. Once expectations of higher house prices takes hold, the UK will dive back into the abyss of a new bubble.

Why do we do this to ourselves? Do we ever learn?


  1. I've lived in greater London and I really don't understand why people continue to put up with the high prices down there. London wages don't really compensate for the much greater cost of living.

    It's much nicer up here in the north, and house prices are falling!

  2. Come on Alice, have the courage of your convictions. You didn't think a 15 year bubble would pop over night, did you?

    Stay true to the path. Another bubble is not possible. A bit of a mini bull market? Maybe. A year of ricing prices? Maybe. But unaffordable houses are unafordable houses. And without real economic growth that isn't debt fueled real house price growth is not sustainable, as people won't be able to borrow at anything but rediculously low rates. And yes, the government can keep rates low as long as the world agrees to keep financing the necesary deficits, but we aren't America, and there are numerous signs our credit card is already maxed out, so higher rates WILL be imposed on us via the bond market. And then, value will once again matter as the world will demand someone, either the home buyers or the government pick up the tab. And if neither of them can, what they can afford is what they will get. And then you can buy a house.

  3. Even though this follows the expected pattern exactly, it's still a bit disconcerting!

    Still, I'm expecting banking crisis round 2 to kick off anytime from now!

  4. The figures are artificial. A government induced blip and nothing more. As it has been reported today the commercial property sector collapse is set to cause the banks up to 300bn in losses. Wait for the write-downs and the banks will have less money for private investors.

  5. Why do we do this to ourselves? Do we ever learn?

    WE don't do this to ourselves but sit on the sidelines, scratching our heads and waiting....

    We learnt long ago that prices were unsustainable; this can't continue, what are FTBs earning? And a return to 10xSalary lending???

  6. What everybody else above me says.

  7. "果凍矽膠" is a wanger

  8. Couldn't this just be a result of more sales in the higher end as a result of dropping prices?

    Calculated risk has been harping on the fact that rising median home prices DO NOT mean prices are really rising as the number so influenced by the mix of homes being sold.

    If more high end homes are sold as a result of dropping high end prices, it will raise the median price even though the actual prices of homes are dropping.

    Could this be happening in London?

  9. Yes, it's all kicking off again!

    Uuuuh, no - it's not. I deal every day with the collapse of ridiculous debt.

    There is a giant hole where they hide everything. It's called the £.

    Come back in August, come back in May, and see if you can spin the stats in the same 'ickle girl voice.

    Show some balls, woman!

  10. I own a house, and I rent it out. I've a tracker mortgage, and the amount i'm paying to the bank has fallen hugely.

    I've got money coming out of my ears. I don't know what to to do with it all.

  11. Dr Dan HoldsworthJuly 29, 2009 at 2:39 AM

    All that's happening is that the Government has taken over from the general public as the major new borrower, and is busily using financial trickery to try to re-inflate the housing market (which is proof if proof were needed that Labour ministers know pretty much zilch about anything much).

    This mega-pumping of new money is certain to have an effect, and the effect is what you see; a minor blip in the market that occurs in the most messed-about-with, most distorted and most unrealistic section of the market, i.e. London.

    This is just a blip. The next big upset will come when the rating of UK Government Bonds drops, and the insane borrowing party comes to an end. At that point a lot of the money in the economy will vanish, as the financial firehose aimed at the recipients of benefits gets turned off.

    My guess is that the adjustment period that will follow this will be painful and will force a lot of people to ditch illusory wealth and live with what they have, which will mean a lot of property suddenly comes onto the market at knock-down prices.

  12. When transaction volumes start to come close to previous levels, the market is picking up. Meantime its a thin, illiquid market.

  13. Prices in Brighton are up 10% since April. Maybe its a mini blip cos the government is pumping so much money into the economy and will calm down when the cold winter days arrive.But, I've a strong deja vu feeling.

  14. I have been in the Great Depression II camp for a couple of years now, and yet have only just begun to appreciate that this crisis must unfold in slow motion. On reflection, GD1 did the same with the 1929 crash being followed by an optimistic 1930 before finally crashing again into 1933.

    GDII will be similar.

    Massive deficit spending and inventory restocking have caused the "green shoots" insanity in the second quarter of this year. Seasonal housing and employment factors also persuaded those with little knowledge but with excessive optimism to believe the worst is behind us, when in fact our keynesian masters are furiously digging the hole that all the new bulls will fall into come the autumn.

  15. Once again the house price crash fantasists are shown up to be what they really are :-)

  16. LOL to Mr. anonymous above. How do people like this get the balls to call the bottom, when they never saw the top coming? These people said prices would not fall at all, now they are saying prices have fallen enough.

    Are they buying, of course not. They bought at the peak, and are praying for a new bubble so they wont feel quite so stupid. Well guess what? You are stupid. Look at America. Two years earlier with their peak, and now down 30%. And most of the people in that market thought both prices would never go down, and then prices were "cheap" after a 10% drop.

  17. Squirt, I was also going to take anonymous to task, but on reflection I decided there was little point because other than calling me a fantasist he didn't provide any points to debate.

    Anonymous, if you could list a few reasons why the housing contraction is at an end I would be grateful. I'm still heavily invested on the bear side, and pointing out to me why this is an error would be a valuable contribution to my analysis, and to my future wealth prospects.

  18. Anonymous @9.03

    So much money you don't know what to do with it? Then give it to charity. There are plenty of people in the world who need it.


  19. John East, yes he is an idiot. There is only one possible reason he could have said, which is the gov't are reinflating the bubble. If they have, BRING IT ON! I would love a big dose of inflation. It would shoot my gold stocks to the moon, and when rates rise, i will get my savings income back. I will then spend said savings a year or two later on a house, after said higher interest rates rip the heart and soul out of the housing market. I'd like to see Mr. Anonymous pay 100% of his mortgage payments on a house he clung on to which has fallen 40% from the peak when he bought it. I know he is one of these fools because he wouldn't be scouring blogs and reading articles on rising prices if he didn't NEED them to go up BAD! He's probably an estate agent. Or worse, a banker. Enjoying yourself in these markets, Mr. Anonymous? I am! :-)

  20. Look-- people are buying hard assets. Not that surprising....

  21. The debt is much greater than in 1929. This is going to make The Great Depression look like a bit of a downturn.
    No market goes straight down or straight up.It's only natural that we are going to get countertrend upticks now and again.

    The Japanese model had many months of upticks during the 20 years of deflation, but none lasted longer than six months.
    Japan was the Canary in the mine, house prices are down 80% from their peak, we're sure to follow and exceed those numbers both loss and duration. The fact that most people don't agree with this just compounds the probability of it being correct.
    It's a slow burner. Rent books anyone.

  22. What I would like to know is why any of this has anything to do with balls