Sunday, Mar 04, 2007
Oversupply Kicks In
mform: Plummeting prices for London apartments
The price of a city apartment has fallen by 4.9 per cent since December and the cost of an Essex flat has crashed by eight per cent, according to a study by independent estate agents, Team Association...................................
Posted by kagiso @ 08:58 AM (147 views) Add Comment
6 Comments
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1. sirgoogle said...
INTERESTING News.
Many thanks kagiso for digging this one up.
Maybe this is the tipping point.
I bet this news is buried and not reported by anyone else. FTB might actually feel some hope
2. sirgoogle said...
However ... I still recon we have a year of rising prices in Central London - with a knock-on in house price rises to the South West as the old folk cash in and flee the capital with the proceeds from cash (bonus) sales.
3. harold said...
SirG, continued rising prices in London will depend a lot on the performance of the stock market over the next few weeks. If the markets do unwind and the carry trade that has sustained them comes to an abrupt halt, S2R1's 18 year cycle that sees a recession in 2008-10 may be brought forward a little.
4. sirgoogle said...
Harold
I hope you are right.
Unfortunately the economic pundits on the World Business Report of the BBC World Service were talking about the need to lower interest rates to stave off global recession. If that occurs then the HPC is toast and HPI will get yet another leg up from cheap credit.
Why they (the experts) do not consider property in their calculations I do not know (it must be the largest asset class by far). If is was a "normal" traded asset on the stock exchange then nobody would touch it with a barge pole due to the difference between earnings from the asset and capital valuation.
5. Kagiso said...
Oversupply is oversupply. If demand stays constant, and supply goes up, prices go down.
Walk down any London Street and you can see a buckets of flats that will be coming on to the market soon, the builders will have to sell them or rent them.
London flat rental rates are going to go down, rental yeilds are going to go down. Some BTL landlords are going to go bankrupt. Their flats will be sold off at auction at 10% - 20% below market rates. Then they will be rented out at rents 10% below market rates. Rents keep going down......prices keep going down.................
6. dohousescrashinthewoods said...
I wonder, if the carry trade unwinds, will there still be cheap credit, even if IRs head south again?
If the institutions can't get it cheap from Japan, they may need wider margins here.
I'm not qualified to say for sure - can anyone comment?