January 20, 2006

Hello HP readers from bubble-rific jolly ol' England

Good god, if anyone wants to see the bubble in all its glory, come here, to London

A 2-bedroom flat in a bad neighborhood for the low low price of $1.2 Million


And you can tell it's a sucker's game. There's a desperate estate agent (retail storefront) on every friggin corner. One word - disintermediation. But what I see are tons and tons and tons and tons and tons and tons and tons of listings - and likely no buyers, as rent only covers a percentage of the carrying costs.

What a joke. What a nice ponzi scheme on the way up. But what a hangover on the way down

London, Dublin, Sydney, Phoenix, Miami, Vegas, Boston - what happened in these cities that so many people go so stupid at the same time?

Cheers all - sorry I'll be out of pocket for a bit more as I get settled in - please post articles with links here



Anonymous said...

Hello Keith,

London, Dublin, Sydney, Phoenix, Miami, Vegas, Boston .....

I recommand you to visit (quick, because things are changing ) Paris, (the "Tour Eiffel", "Versailles")....
and you will see also the biggest french estate bubble in the history

A french reader of houspanic !

Anonymous said...

jolly good ol chap, please don't post when you are drunk

Anonymous said...

$1.2 Million! Is that in pounds? euros? dollars? Holy sh;t!


Anonymous said...

Looking for a 100,000 Euro public toilet or a 99,000 Euro 30' X 10' slab of muddy tidal water? Would you like to pay twice the asking price for a home...and get outbid by a lad with a 100,000 Euro parental subsidy?

Or would you just want to visit a place where every man woman and child has drunk the "property always rises" koolaid. Come on over to Dublin! Parts of London and Paris might have a slight edge in price per square inch (Eiffel and Buckingham come to mind), but these cities have experienced property depreciation so you can't live a complete bubble fantasy there. Come to Bubblin' Dublin.

Bubblin Dublin.

If the 100% ARMs, P/E, median income/median home price ratios, parental subsidies and falling rents don't scare you, how about the fact that non Irish, most of whom are builders some of whom must renew their work permit on an annual or biannual basis, are buying property and assuming that if they lose the right to live in Ireland, they will be able to quickly sell at a profit. Two years ago Irish politicians made a lot of noise, blaming immigrants for crime and problems with health care. So they tightened immigration. Health care and crime continued to worsen but now Ireland absolutely depends on immigrants for demand and supply in the building industry which makes up much of our economy.

Grinch34 said...


I have been saying that there is a housing bubble for a year now. I just wanted to say that I really enjoy housing panic and I think the articles are great. Everybody thought I was crazy saying that there was a housing bubble. I do not hear that as much anymore. Anyway I wish you luck in the UK and I am looking forward to hearing more on the European bubble.

Take Care

Anonymous said...

Hi Keith,

Welcome to my town.
I'm from North London. I moved to Silicon Valley back in the .com days.

Anyways,yes things are crazy in London. I sold my 2 BR flat back in 2003 for a profit of $100 k. I definitely knew it was a bubble then. Well the sucker who bought it even made more money because it went up even more between 2003 nd now.
I know what the average income is in London. I just do not understand how so many Londoners can be hypnotized into housing mania. You add the taxes and all the expenditure and it just does not make any sense to buy.

I'm glad I immigrated.

Happy Londoner in Silicon Valley, CA.

cereal said...

holy smokes.

every now and then i get this crazy thought that we're being set up for a global end - times economic destruction - the kind the bible talks about. you can also throw moscow into the equation. i recall reading that it's the most expensive city to live in.

Anonymous said...

Keith, good points and interestingly familiar analogy. What happened is that (speaking from this side of the Atlantic) Americans have falling incomes, jobs being exported overseas, they're losing benefits, and their salary increases are below the inflation rates if they get them at all...so...all the money that avoided the stock market after the bursting in 2000 flowed into housing, and with the Feds lowing the rates to the lowest since the 1950's, credit became cheaper than cheap, and greedy lenders dropped standards and promoted smoke and mirror interest only loans to people who'd have never qualified to buy a home in the past to jump in a soaring housing market. Existing homeowners ignored economic reality and felt wealthier because they saw the homes around them explode in inflated bubble value, so they cashed out equity and enslaved themselves to more debt, while obtaining Equity Loans to buy everything in sight (illusiary wealth). Now it's all falling apart and we're going to see a lot of people who foolishly bought with no money down end up with no homes when they can't pay the adjustable rate hikes, and both the no-downers and homeowners who overdrew bubbl equity will find they owe more on their homes than they can sell them for as prices drop, effectively eliminating job mobility while cutting off the supply of equity cash for spending. The majority of homeowners in this country are screwed. And with the dollar about to dive in world markets, interest rates will have to go up..sharply. Poverty rates will shortly be surging in the good ole' U.S. of A.

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