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The Housing Bubble explained

by James Cole

This weekend’s Independent on Sunday contained one of the clearest explanations of the 2000 – 2008 Housing bubble that I have read.  Two simple graphs: one showing the spike in ‘House price to average earnings ratio’ between 2002 and 2008 and the other showing a corresponding spike in ‘UK Net mortgage lending’.

The relationship between a huge net lending increase (credit creation) and house prices seems undeniable.

I won’t add any value with additional commentary so head over the the Independent website to read the full article:

Hamish McRae: Glimmers of light on road to ‘normality’

In fact print it off and keep it in your purse/ wallet and hand it to any bubble deniers you encounter.

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