Blimey! UK home prices to fall by 33%

(and for those of you keeping score at home, add in inflation and that 33% turns into 50% pretty quick)

Excellent in-depth BBC report on the UK housing ponzi scheme and crash

In America we say "get some popcorn"

In the UK, grab some bangers and mash and settle in. You ain't seen anything like this one mate...

And then the Brits woke up to realize that they had the most obvious and laughable property bubble in the world

My only question is - what took so long?

Gordon Brown, get ready to be blamed for the biggest housing crash in UK history. Even though in the end the Housing-Ponzi-Scheme-obsessed Brits only have themselves to blame.

Anyone in the US want to give our friends in the UK any advice when it comes to housing crashes? Here's mine, it's pretty simple: Last one out's a rotten egg...

Any suggestion that Britain's overblown, over-hyped and over-valued property market is due for a soft landing after the excesses of recent years has just been exploded. We've had the boom: welcome to the bust.

House prices have fallen for seven successive months. Over the past six months, prices have dropped at an annual rate of 11.4% and over the past three months at a 16.1% annualised rate.

The International Monetary Fund has said that 30% of the rise in house prices in the UK cannot be explained by economic fundamentals: a fall in prices of that magnitude is now on the cards. A crash was inevitable.

IMF Report: Homes in the UK are 30% overpriced and will soon crash

If you are a homedebtor, homeowner or buy-to-let speculator in England, Northern Ireland, Scotland or Wales, and you have the good fortune of finding this blog, do yourself a favor.

Put your home on the market TODAY and get out. Now. As fast as you can. At whatever price you can get. And don't look back, no matter what Estate Agents tell you.

Trust us. We kinda know a thing or two about massive financial manias, crazy housing speculation and epic real estate crashes. And in the UK, 30% is being kind. The IMF didn't want to freak you out with the truth. Because 50% plus is more like it. The UK was the epicenter of housing specuation and greed, and the whole "Property Ladder Ponzi Scheme" is tumbling down.

Get out. Get out now. Don't look back. Cheerio.

House prices are 30 per cent too high in the UK and could soon crash, the International Monetary Fund warned yesterday.

After a decade-long housing boom, it fears Britain is one of the most vulnerable countries in the world to a devastating price collapse.

In a further blow, the Bank of England warned that the mortgage meltdown is going to get even worse.

The number of mortgage deals has now collapsed by 70 per cent since last summer's credit crunch began to cripple the country's lenders.

The IMF said the UK has experienced one of the world's "largest unexplained increases in house prices" over the past decade.

I have no idea how the realtortrolls, permabulls and NAR can spin their way out of this one: Unsold Home Inventory Soars as Housing Bubble Deflates

Demand is tanking (people know homes will be cheaper tomorrow)

Supply is exploding (as homedebtor panic sets in).

The available pool of homedebtors is shrinking (thank you subprime wipeout)

It's significantly cheaper to rent than buy today (it's always about the P/E)

Jobs are going away (thank you housing crash vicious circle)

Consumer confidence is plunging (housing crash, oil prices, jobs, iraq)

There should be so surprises to HP'ers. Everything is going exactly as it should. Exactly as it always does post-mania, post-bubble, post-Ponzi Scheme. It was all in the book. Now what will we do with all these damn houses?

Housing glut: From bad to worse - Some markets have seen a tripling of property listings since the housing market has cooled.

CNNMoney.com -- The number of homes for sale in major markets ballooned in April, according to a new industry report, adding further evidence that the U.S. housing slump is still trying to find a bottom.

In April, there were 743,367 existing house and condo properties listed for sale in the 18 major metro areas tracked by ZipRealty, a California-based real estate broker.

That was up 33 percent from a year earlier and 7.2 percent higher than in March.

Some of the markets ZipRealty covers suffered far bigger inventory expansions than the total jump. Los Angeles reported a 39.7 percent leap since April of 2006, Miami climbed 53.9 percent and Seattle soared 63.2 percent.

The year-over-year stats only tell part of the story. Many of the areas covered had already experienced a significant sales slowdown and an expansion of the number of homes for sale well before April 2006.

The once remarkably hot Las Vegas metro market, for example, now has more than double the number of homes on the market - 26,243 compared with 13,238 - than it did in September 2005, when the local housing market was near its peak.

In Los Angeles, inventory has more than tripled since July 2005, as it has in Miami since October 2005. In Phoenix, there were 50,062 homes for sale during April, compared with 11,656 in July 2005, for more than a threefold jump.

Think America is having a nice housing crash? Just wait, England will have one for the ages

If what goes up must come down, then England, which has much further to fall than the US, will land with a bang heard 'round the world. It's not a question of if, it's a question of when.

Get ready world for Housing Crash, Brit Style.

Here's a great column in The Observer. I especially like the point that the central bank must raise interest rates not just to fight inflation but to send a message to would-be housing speculators that yes, housing prices can and do crash. Because home prices will keep going up and up and up and up unless, like a bad doggy, someone gets a spanking.

The crash is coming and it could be soon - The Bank of England must act decisively and swiftly to curb the current house price madness

It is crazy and it defies logic. The continuous rise in house prices over the last five years has become one of the facts of British life. It divides the generations: parents often sit on hundreds of thousand of pounds of equity propped up by their children's willingness, as first-time buyers, to incur mortgage debt on a scale never before dreamt of. It has made millionaires many times over of those who have plunged into the buy-to-let market. We are obsessed by house prices.

The risk of history repeating itself is known, but too few people believe it. Not the clubs of four or five young people 'co-buying' in order to have a chance of getting into the housing market. Not the wave of buyers of flats that are bought speculatively either to be let or which just stand vacant (and which now constitute one of the prime drivers of demand). Seventy percent of the 20,000 flats built in London last year were bought by buy-to-let speculators.

Neither they, nor those who lend the money, appear to be concerned that prices will fall. Cheltenham and Gloucester has just decided that it will finance small buy-to-let borrowers to buy up to nine properties rather than the three at present. The Bank of Ireland, according to the Financial Times, has just raised the maximum it will lend to any one entrepreneur by eight times - from £2.5m to £20m. It is risk-free lending. It may be that the yield from rents is lower than the costs of borrowed money, spelling disaster, but as property prices only rise, nobody worries. It is stories like these that prove we are in a bubble.

House prices are now six times average incomes - 20 per cent higher than before the calamity of the early 1990s - and forcing ever higher amounts of mortgage and bank lending, which, in turn, push up inflation.

The bank has to act decisively on Thursday and give an unmistakeable signal of its intent. It should raise rates to 6 per cent. If it does not, it will only have to move them even higher next year because it bottled out of acting pre-emptively.

It has to break the folklore that the only direction of house prices is up.

So be cautious. Don't take out an extreme mortgage at the top of the market. Don't feel sympathy for the distress about to hit the buy-to-let market and the lenders who recklessly fed the fever. But do ask hard questions about how our financial system is managed.

View from England: How do you know when it's a housing mania? When people with jobs can't afford a home anymore.

Mortgage costs for many at over 3/4 of their take-home pay.

Home prices 24 times average incomes.

Soaring foreclosures and insolvencies nationwide.

Yup. Ponzi Scheme. Executed perfectly here in England. A country that thought soaring home prices were a good thing for society, that everyone could get rich, that property prices can only go up and up and up and up, and that inflation has nothing to do with housing costs - thems are savin's after all ma!

They do call it the "Property Ladder" over here, and you know nobody every goes down the ladder - only up! Right? Right?

We'll see...

MORTGAGE COSTS ARE CRIPPLING

Daily Express (UK)

Home owners are having to fork out crippling mortgage payments which eat up as much as three-quarters of their take-home pay. Millions struggling with record utility bills and rising interest rates are paying an average of 51 per cent of their net income.

But, with some parts of the country seeing house prices rocket to 24 times the average salary for the area, many are being forced to pay up to 71 per cent of their wages to put a roof over their heads.

The figures were revealed in a report which makes clear the shocking financial burden being shouldered by hard-working families because of soaring property prices.

The grim report reveals that the property boom pushed average house prices to more than six-and-a-half times salaries last year – up a formidable seven per cent from the previous year’s figure. It led experts to warn that while rising prices are felt by many to be positive, any significant increase in interest rates could have a damaging impact on households.

Rob McPherson, of management consultants Hay Group which produced the study, titled Home Truths: Pay and Property 2006, said: “Rising house prices are outstripping take-home pay, placing enormous pressure on home owners.“Increased house values may make consumers feel more wealthy, but the truth is that the buying power of wages has taken a serious hit when it comes to property.

Citizens Advice policy officer Peter Tutton said: “We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession.

“We know that some people are taking on mortgages that stretch them to the limit. Increases in interest rates could spell disaster.”