Boom Bust - UK housing bubble set to burst

[redroofestates]

Excellent long term analysis.

[TheGodParticle]

I feel sorry for the first time buyers. where i live a two bedroom flat is around 165 grand, what young couple want to have that hanging over their heads for 25 years. is there any money left to have a good time ? very sad indeed

[ayozemmr]

what a waste, boom and bust, why we need retional growth???...pss, welcome to idiotland

[racingrubberbiker]

And the powers that be still have not learned this lesson. Why is it then that we now have now unheard-of low bank rate, and quantative easing to "re-start" the credit system, when the credit system is bust. Politicians, regulators and some economists belive we can carry on as before. They are WRONG. Our future is in the hands of Chinese, and middle-eastern holders of our debt, built up over many years of never-had-it so-good comsumption and greed

[ourearthhome]

Nial Ferguson a Scottish historian teaching at Harvard recently likened the real estate, i.e. land speculation, bust to the conventional explosive that drives the fissionable material of a nuclear bomb together to create a much more massive explosion. The nuclear fissionable material was all the mortgage based derivatives and the collapse of these wonderfully toxic items set off all the other speculatively explosive financial devices. Land busts take whatever is attached to them every time. Tsk

[dietangel]

well done for predicting this housing crash

[tech4156]

are you on the run?? why the darkened room.

[MisterBlakes]

I often feel guilty because of my earnings and wealth and then I listen to rubbish like this and realise that the reason why I have done well is that most of the public are absolutely stupid. Stop moaning about life and get on with it.

[ayozemmr]

welcome to reality, all goes up....

[anarchodolly]

it's about time land ownership became a major political issue in britain. i recently came across figures stating that 80% of britain's population is urban, yet urban areas account for just 9% of the land. no wonder britain seems overcrowded. yet a tiny minority of the population - largely the royal family and the aristocracy - own huge tracts of land. land ownership is incredibly concentrated in this country.

[NearAbbeyRoad]

@anarchodolly

Only 7.5% of the UK land is settled. Land ownership is not a problem if Land Value Tax (LVT) is implemented for "all" land. Then a planning system, not the Stalinist version we have now, that allows us to build of this land.

NO. We do not need to redistribute land or public ownership. It s public owned as the Crown it all. You only have the "title"

LVT naturally redistributes land. If you can't pay the LVT you sell up to someone who can or makes productive use of the land

[GaryVolts]

Great talk. Couldn't agree more except with the recommended action. Instead of taxing gains on land, free the interest rates from government control. The economy would grow at its natural rate, rather than the artificial, unstable one that the policians think it should be.

And since I'm on a UK article, just wanted to say Keynes was a horse's patoot, and the Austrians have it right about the credit cycle. The centrals planners are wrong, and they can all go to h, e, double hockey sticks.

[NearAbbeyRoad]

@GaryVolts said, " Instead of taxing gains on land, free the interest rates from government control.".

Very wrong. The permanent long term solution is Land Value Tax (LVT). Do a search on Fred Harrison on YouTube. He has some great Vids and puts it across very simply. The penny will then drop.

[sugarraygras]

"Men it has been said,thrive in herds,it will be seen that they go mad in herds,while they only recover their senses slowly and one by one." Charles Mackay 1841

[T850CSM101a1676]

I think fiat based fractional reserve money may have more to do with it.

Money should really only be worth as much as what you hope to exchange it for, and I'm not sure who's bright idea it was to go into the debt market anyway. But as long as the monetary system works that way, this problem will be unavoidable.

[Joyriser]

Absolutely! I could not have put it better myself!I hope that this time people are beginning to wake up to what is really happening!

[waderm810]

your right my friend, a colleague that i have worked with for two years killed himself last week because of the dubious mortgages that he was forced to sell on over priced houses. his wife and two kids will im sure love the fact that the house will be now repossed because hes not around to pay the mortgage. Your video has been informative. cheers. an estate agent, now jobless by the way. blairs dream/ i think not.

[manjit1966]

this is defantly true.

[VVendettaz]

Its obvious. Its coming and I for one say good. I could never afford a house at current prices. I simply cant understand where people with the same job as I have can afford houses at 280,000. I earn 19,000. I was offered a Mortgage last year totalling 110,000. I was just about to do it when I got wind of the US bubble burst. Some houses in Florida have dropped by 70%. Im waiting until they come down by at least 30-40%. Some are predicting they will drop even lower.

[lasercat10cc]

Spot on, we can now see this comeing true.

[leafygardens]

A major consideration in buying a house is you are on a loser when you rent. Compare many mortgage repayments with the cost of renting. Also pushing up prices are parents, 4 out of 10 it is said, give their children money for deposits. Another price inflator is young people buying together to joint own the property. If a strict 3 times income ratio for mortgages based on one wage earner was adopted, prices would find their true level. Good video.

[prizegiving]

Thats right four eyes, keep whinging about the property market you English cunt. English fuckers should be murdered.

[riflemaster]

Great input. Do you have an argument or do you just dislike people with an English accent? I don't think people want to read about your own personal opinions of hatred. Get real. Why should English f*?%ers be murdered, in relation to this video?

[followyourgut]

jajaja you are so ignorant, Are you american by any chance?

[SteelyEyedKipper]

Prizegiving? I've got a prize for you if you'd like to come and collect it. Six weeks in intensive care.

[Sitcomstu]

WAKE UP PEOPLE! Type in 'zeitgeist federal reserve part 1'.

Booms and busts are manufactured by international bankers!

[electronuk]

I'm with you buddy, although people don't understand this it seems left field. People look at for "money is debt". Basically there is not enough money in the economy to service all the debt, except by borrowing exponentially. When enough people get "maxed out" on credit there is a credit crunch, each time this happens the central Bankers grab up more real world assets in exchange for "synthesized" bank credit. If you look at Money Supply and Debt and are the best indicators.

[riflemaster]

High house prices is causing a great divide in society. I personally feel we are regressing with this trend. As a socialist landlord, I propose that people that rent and have little commitments/responsibilities unite and agree a date where you offer to pay your landlord 50% of the rent & if not accepted offer nothing at all. Those that get turfed, pitch a tent in one of the cities many parks as a protest. There will be less buy to rents!

[curlythepig]

The bubble is certainly leaking quite badly and I am sure it is going to burst within the next 6 months. I am also sure that Estate Agents and those with vested interests will disagree! I know 3 people who have all had houses on the Market for over a year in London , Birmingham and Manchester. I don't believe what I read, see or hear in the media , I see many houses month after month with For Sale Signs that now seem to be permanent fixtures.

[Jonchess]

They are fair points but overall adds little new material to the debate.

Two main things affecting the market are interest rates and oversupply and the third little mentioned one is the lack of homogeneity in any market rise which make it almost impossible to know what is a good investment (a bit like stock picking on the stock exchange) property investments are quite large and thus it can be prohibitively expensive to diversify.

[BubbFromGEI]

Want some more arguments? Then have a look at my video: "Are the Builders signaling a 2008 UK Property Crash?"

[gordong156]

BubbFromGEI - Just watched your video. Very well researched and well put argument. Will check out your website.

[yobolion]

Sorry Bruno your videos were more crap mate!

[brunopowroznik]

Your video is absolute rubbish. Take a look at some of the videos I have made on Youtube under my account.

[brunopowroznik]

I think that your video does not reflect the true issues of the housing market.

[Avalon888]

STOPBUYINGHOUSESdotCOdotUK

STOPBUYINGHOUSESdotCOdotUK

STOPBUYINGHOUSESdotCOdotUK

[ChorltonM21]

Hi Gordong

Do you post on House Price Crash???

[gordong156]

ChorltonM21 - I've read good information at House Price Crash and at the on-line ROOF magazine, but any serious posting I do at Ablemesh.

[michaelclarke18]

house prices seem to be increasing. I tend to think of a pyramid scheme. There need to be enough folks at the bottom to support it. Now those people have effectively been excluded, a collapse is the only possible outcome.

[schizophrenic123]

I agree with Dovecott on this, the so called `property ladder` is nothing more than a pyramid scheme. Once you run out of people at the bottom you`re screwed.

[michaelclarke18]

cameronyusuf obviously has a massive mortgage.

[cameronyusuf]

3. The UK population is increasingly choosing to live alone; wherebefore, one house was occupied by 2 people (a couple), its now occupied by 1. Demand has therefore, not doubled (because not everyone is living alone) but increased becuase of this demographic change.

[gordong156]

cameronyusuf - Yes, we're living solo more, but unsold and unrented appartments seem to be a growing feature of the landscape. Funny that.

[VVendettaz]

Rubbish. Its a stupid conclusion.

[cam230723]

Cameronyusuf- we havent heard from you for a while-now why would that be? LOL! HPs down over 11% in a year with more falls to come!

[cameronyusuf]

Demand side;

1. Owner occupier status is embedded in the culture and is not likely to go away. Demand is therefore inelastic (not price responsive.)

2. Houses are considered to be a safe investment and as such, this contributes to an inelastic demand.

[glovesniffer99]

The aspiration to achieve 'Owner occupier status' has increased over the last decade & has consequently increased Demand. Houses are only considered a safe investment in an upturn of the cycle. In the downturn, people stay away from property as an investment like the plague. Why are there 1000s of buy to lets empty & empty flats if there are so many people choosing to live alone? Isn't it more likely that too many people have chosen to buy to let & to buy as an investment?

[cameronyusuf]

Factors which indicate that the house prices will continue to rise, and which you havne't addressed are as follows:

Supply side;

1. Planning permission effectively reduces the amount of land available to be built on. Land distant from public services and jobs has little value.

2. Houses are not being built at a rate which is keeping up with demand.

[gordong156]

cameronyusuf - your points are well made but I'd encourage you to browse the articles I have linked to the bottom of the link page (see link in info about this video). These challenge many of your assumptions.

[michaelclarke18]

''Factors which indicate that the house prices will continue to rise''

But who could possible afford to support the accellerating prices? My wages haven't gone up that much.....in my area some houses have gone up 50,000 pounds in 9 months. nuff said.

[VVendettaz]

YOur really stupid. Look at America. They have outsourced all their manufacturing jobs, import everything from China, shuffle bits of paper and data around (as if thats a real job) and continue to base the economy on borrowing. Do yo think the Uk is any different?

Bottom line this false economy based around house prices cannot continue forever.

[NearAbbeyRoad]

@VVendettaz said, "Bottom line this false economy based around house prices cannot continue forever."

That is true, but get the real substance it is based on - LAND!!!

[michaelclarke18]

i completely agree

[pejvan]

excellent. Let's all hope that the correction will come sooner than later!

to me, it's not a crash but just the home prices returning to their fair value.

[stevecamo1]

Well done Gordon, good research.America's debt level including unfunded liabilities is currently 97.6 Trillion dollars. Details at Grandfather Economic Report a site recommended by Nobel Prize Laureate Mr Milton Friedman. What is the current debt level of Great. Britian ?

[gordong156]

Steve - I've seen the site you quote - the figures are mindboggling. A Telegraph article dated 17/06/07 says UK households are currently '£1,300,000,000,000 in debt'.

[mrchekky]

Cheeres Gordon.

Should we all run and buy Gold and Silver. During the great depression the price of silver went from $1.50 to $52 over 8 years.

In your opinion, given the coming tribulation, what is a good investment, beside finding out who God is, finding out what he wants and do what he says for the great judgment day is at hand.

[gordong156]

Gold will rise but the link between gold and cash in circulation has long been severed, so I'm not really sure why someone would want a lot of it... except for fixing bad teeth. Soul searching offers the advantage of paying dividends every time though...

[IU90]

Weird lighting, but informative well-done presentation. The more frightening thing is that this is a global phenomenom simultaneously happening in numerous other countries happened throughout the world, most notably the United States, Spain, Australia, and many others. Could this trigger the first worldwide depression since the 1930s?

[bardolf2005]

Thanks Gordon .... informative and well put across. I will check out the info sources you mentioned, but tend to believe your suspicions. I've been reading other forecasts predicting UK recession for about 2012..... but whatever else has effected housing by then..... there will go our temporary EU workforce if it happens...... leaving a big hole in the bottom of the rental market.

[doomerjohnm]

A most intriguing video. I've been monitoring the RE situation in the UK, Ireland, etc. from afar for a while, and it does look pretty wild. Things certainly haven't got any more stable looking over the last two months!

[wrightrealtytrust]

I enjoy your videos! You are right on!

[resa237]

Thank you. I'm a first time buyer refusing to buy at this time but fortunate to be able to save. I'm holding out...I hope other FTBuyers do to.

[cam230723]

Well done for holding out and resisting the temptation to buy. Keep up the saving and watch those prices continue to fall!

[mmouillar]

convincing, compelling

All the more compelling since things look like they're getting sour everywhere...

[leedel20]

very interesting and spot on

[chrystinutzas]

people need to upload more clips like this. I prefer funnier stuff myself, check out dolphinhump. lostfrog . com , I laughed so hard I got kicked out of class! haha.

[guslingus]

Very well done, Here in OZ we are told that there is a shortage of land that pushes up prices. Our residentila footprint is only .3 of 1% .

It is all due to Govenrment controll of land release. The actual cost of building a house is 7% less than in 1970.(adjusted) We are just lucky to be able to dig up our vast counrty and sell it to China and India...

God help the USA if Petroeuros ever escape an invasion.

[dovecott]

I have always thought that the Property industry in this country is no more than a huge Pyramid selling scheme with the banks at the top end and the first time buyers at the bottom. Surly this type of market place cannot be self sustaining and is destined to go the same way as all other pyramid scams. Thanks for the posting.

[tenchama7]

Thank you,that was very good. I lived in Japan from

1989 to 2004 and watched things get worse and worse.

I think the U.K.crash will be much worse than Japan's.

[Ntone606]

- which are manufactured very cheaply by slave labour wages in China (which in effect exports deflation). In effect, the British public are being lied to and the vast majority through the mainstream media don't know otherwise (i.e believing that inflation is low as Labour repeatedly boast). Combined with the point you mentioned of dangerously relaxed lending practices, we've got a situation where the longer this market goes on, the bigger the crash and recession afterwards is going to be.

[Ntone606]

I liked your presentation, something I feel compelled to add here is our offiical rate of inflation - the consumer price index (CPI) is allowing the Monetary Policy Committee (MPC) - (controlled via proxy by Gordon Brown since he appoints the committee) to set interest rates unrealistically low. The CPI doesn't take into account mortgage/rent, transport or energy costs, but it does take into account such things as plasma tvs and dvd players (continued...)

[kryptosuperdog]

No keen on the presentation but info was great with no "side"

[yobolion]

Wow nerdy and weird presentation! But the subject matter spot on! Free from political and commercial bullshit! Accurate, and i'm afraid to say what will await us in the U.K over the next five years possibly longer! I think conservatively looking at the graphs that prices will fall back to 1998 levels!

[kaya051285]

well said. great vid. good info

[lauraunderdah]

Well said in explaining the housing bubble and the following reason for following recession. However,  this time around, the real estate trough will be much deeper than the last recession (1991-1996) because our manufacturing base is gone. Fewer jobs, and less money = much lower house prices. Due to this, I imagine house prices will fall to 1980's prices.