I must admit to feeling rather guilty when I look at this chart. All I wanted was a sensible fall in house prices. I wanted property to be affordable; that was all.Prices have certainly come down, but as they fell, they seem to have brought the entire UK economy crashing to the ground. We are now looking at the worst recession since the 1930s.
If only someone had stopped the housing bubble in the first place.
21 comments:
Everything is going back to where it was in 1998.
So far the UK housing market is back to 2004...
1997 is Year-Zero politically (personally I think prices will settle at 2001 levels (absolute not inflation adjusted).
Stopping house price bubbles is easy:
1. Sensible banking supervision.
2. HM Land Registry only allowed to register mortgages of up to 70% of the property value as secured. The rest ranks as unsecured and is to be disclosed as such in the bank's books.
3. Liberalise planning laws.
4. Replace existing property and wealth related taxes with property or land value tax.
But politicians - Tories and Labour alike - like house price bubbles and the sheeple fall for it every time. LVT is a young person's tax, and the majority of people are old. Liberalising planning laws keeps prices down so benefits FTBs - guess who's against it?
Maybe young people should agree to refuse to buy houses until they bring in LVT and liberalise planning laws?
Re what AC1 says, I'd tip 2002 prices, but I'm prepared to be wrong.
AC: "I am feeling guilty".
"It will all come down. Not one stone shall stand upon another."
Ahem.
Why back to 2001? Assuming we revert to sensible lending (i.e. 3x average income) why wouldn't they drop back to 1995 levels when my average house was about £65K?
Why is the forecast of price fall still such guesswork ?
Because no-one is getting a grip of this problem.
Average house prices should be determined by average earnings x sensible lending multiples.
Before the boom mortgage lending was limited to 3.5 x main salary, so:
3.5 x £23k
Sadly the credit bubble was not only in property, but throughout the whole economy. Once you pull one card out the whole edifice collapses.Unlike the dotcom boom/bust, which was limited to the world of high finance, this one permiated an entire society. There was never any way that once house prices started to fall, the rest of the economy wouldn't follow.
Alice, I have been reading all this UK bubble stuff from OZ and concluded that it is all simply a Pommie Plot to boost U.K. national pride by having a good Olympics like China. Your not fooling me with all this economic crisis guff and all your charts Alice.
Everybody knows that the Poms only invent the sports and can’t win at them .
Now they have invented a new sport that even they can have a chance at winning. A report on Sydney Indemedia says:
“Announcing A New motor sport for the unemployed . Watching unsold cars go nowhere fast.”
Car enthusiasts can view an introduction to this exiting growing sport with a great future at the Guardian UK .The first photo of this sport in action, being at the Nissan test track at Sunderland UK. “Growing stocks of unsold cars around the world’
http://www.guardian.co.uk/business/gallery/2009/jan/16/unsold-cars?picture=341883529
A commentator who is on to the dastardly plot writes :
LONDON: Britain on Tuesday joined governments around the world in announcing an aid package for its ailing auto industry. The £2.3 billion plan came after three months of pleas from trade unions and executives at Jaguar Land Rover and Vauxhall.
Britain offered auto manufacturers and suppliers access to £1.3 billion, or $1.8 billion, in loan guarantees from the European Investment Bank, topped up with another £1 billion from the Treasury, the business secretary, Peter Mandelson, told Parliament on Tuesday. He also said that the government would increase its funding for retraining workers who had lost their jobs.
This is shameful waste of public monies By an anti-oz Perfidious Albion.
No sooner do the British invent a new world sport and crass commercialism enters to destroy its amateur status. No doubt, next the Poms will be campaigning to get the new sport Olympic status.
Clearly the Poms willingness to throw untold amounts of money at this sport and the UK bank sponsors is connected with the British conspiracy to seize Australia’s just share of Olympic gold Medals by subsidising their athletes with even more money than Oz does even at great risk to their economy.
What sort of sportsmanship is that?
They should have stuck to mini minors.
Rudd must do better at subsidising this sport for Oz than the Poms and the Yanks do. Our National pride in sport and gold medal tally is at risk.(and the flag making industry)
This is what labour does and no one ever remembers until its to late,Like a junkie who claims to be off his drug.
if only we could deport brown and bust to australia to continue talking his rubbish and lies there.
Also, do all austrlians so overtly racist; I'm assuming pomme is not complimentry?
Ben
AC: "I am feeling guilty".
HPI is a symptom of economic malaise - not the cause. Your viewing such distorted economic activity with a jaundiced eye shouldn't be cause for any guilty feelings as you're not contributing to the mess.
You're simply trying to call out the Emperor on being naked.
The guilt belongs to the current government and its agencies that allowed an asset price bubble fuelled by speculative cash flows from the far and middle east to destabilise the economy.
Your no more guilty Alice than short traders - ie not at all.
When I look at this chart, I do not feel guilty. It is clear, however, that we have gone "tits up."
A David
I am afraid to say that without the housing bubble there would have been NO BOOM.
We have no manufacturing/exports as such and the "wealth" created in the boom years was created from within by hyped up proprty prices.
The blame lies squarely at Gordon Brown's feet and no one else is to blame.
The banks were supposed to be regulated by the FSA - set up by Brown.
Brown just went along with the tide of wealth creation and took credit for the boom.
It seems now that he wants us to believe that the downturn is the fault of everyone else but I reckon this time people are wising up to this cretin for what he really is - USELESS !
I love it all.
On my street, a house will set you back a £1 million: in 1999, it was £450,000. In my home country, a million pounds would buy you a massive mansion in an exclusive neighbourhood: no chavs, no hoodie gangs, manicured lawns, great facilities, very safe. My street is all the bad things plus regular vandilising of cars, dog turds everywhere, rubbish on the streets, poor lighting, and considered a high crime area on the Home Offices website. That says it all about the UK's artificial bubble.
It wasn't a housing bubble, it was a cultural bubble. We want to have things, but we don't want to earn them.
Lovely post, hope you don't mind me quoting it on the italian forum on housing bubble
Regards
hi i'm laplace77 friend from the forum he linked - i am so impressed, prices in rome are following the very same trajectory!!! on the other hand, italian gouvernment and somehow people is trying to deny that economic crises will touch italy or so... it is true on one hand that our housing bubble has not affected very much banks, due to low use of financial "modern" instruments; though, we lost about 500.000 workplaces in last 3 months and nobody seems to care!!!
sorry workplaces = jobs !
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