Saturday, Mar 05, 2016

Fragility at the high end

City AM: Battersea panic stations: Investors flee luxury scheme as up to £2m is knocked off some asking prices

"More than 50 luxury flats on sale at London’s iconic Battersea Power Station have had their prices slashed since January, with some seeing discounts as large as 38 per cent in a sign that wealthy foreign investors are scrambling to desert the scheme. The news adds to fears that demand for prime homes in the capital is waning as the chancellor’s reforms to stamp duty and capital gains tax, coupled with the collapse in oil prices and falling Asian currencies, are leaving overseas buyers out of pocket." This is an extreme case not representative of the big picture but it's also a reminder that nothing is a sure bet.

Posted by quiet guy @ 01:38 PM (6101 views) Add Comment

23 Comments

1. libertas said...

Meanwhile, our suburban three bed house has gone up from 325k October 2014 to 410k now.

Is an international flipping contest of any relevance to real people? And Nine Elms will recover soon as the Northern Line reaches it. As is well known, the promise of a railway line bears no fruit in terms of prices until it actually exists on the Central London Tube Map, because most people are morons who can't plan ahead of their next step.

Saturday, March 5, 2016 10:13PM Report Comment
 

2. libertas said...

Aha, here comes the real truth of the story. Asking prices have been slashed to provide investors 30% gains, not the 50% gains they had hoped for. Frankly, nothing to see here, move on. The market is finding a fair price, and that price is inflated.

A Battersea Power Station spokesperson said last night: Some of our purchasers have decided to re sell their properties; as far as we are aware, in the first phase, only 10 per cent have reassigned and they have enjoyed a growth of on average 30 per cent.

Saturday, March 5, 2016 10:18PM Report Comment
 

3. britishblue said...

Libertas (multiple posts and many more to come). I think if you study any house price bubble you will see two things: Firstly that when the vastly overpriced central London speculative property starts being heavily discounted, it is the first in a trend and then it becomes a wave out of London. Secondly this can happen whilst the previous wave pushing up prices the went through London, from the better quality areas through to the suburbs, through to the lesser desired areas and is still continuing. This happens as these two separate waves can be up to a year apart. Take a look at what Central London was doing in early 2007 before price crashes hit the outside of London and also what happened in the late eightees. This is the comparison that major house builders will now be studying rather than looking at the area you live as an isolated example. That is not to say that you haven't made a smart speculative decision buying when you did. But now maybe a time to consider cashing in those gains. Also sometimes the market can wobble and then regain its upward trend. This happened in London 2003 with the IRAQ war. We now have many more reasons why the market may wobble from Brexit, less Arab, Chinese and Russian money, through to the changes in Buy to Let. There are many more reasons why the market this time, is much less likely to regain its upward trend.

Sunday, March 6, 2016 09:41AM Report Comment
 

4. britishblue said...

Libertas (multiple posts and many more to come). I think if you study any house price bubble you will see two things: Firstly that when the vastly overpriced central London speculative property starts being heavily discounted, it is the first in a trend and then it becomes a wave out of London. Secondly this can happen whilst the previous wave pushing up prices the went through London, from the better quality areas through to the suburbs, through to the lesser desired areas and is still continuing. This happens as these two separate waves can be up to a year apart. Take a look at what Central London was doing in early 2007 before price crashes hit the outside of London and also what happened in the late eightees. This is the comparison that major house builders will now be studying rather than looking at the area you live as an isolated example. That is not to say that you haven't made a smart speculative decision buying when you did. But now maybe a time to consider cashing in those gains. Also sometimes the market can wobble and then regain its upward trend. This happened in London 2003 with the IRAQ war. We now have many more reasons why the market may wobble from Brexit, less Arab, Chinese and Russian money, through to the changes in Buy to Let. There are many more reasons why the market this time, is much less likely to regain its upward trend.

Sunday, March 6, 2016 09:42AM Report Comment
 

5. libertas said...

We are not in 2007, when we did not have a migrant wave that looks like close to a million a year if you count all the 650k EU folk taking national insurance numbers plus non EU folk, plus huge amounts of uncounted illegal immigration. Most are moving to London. If the builder is correct in the article, flipping for 30% profit when they sought more is a non-story. This is actually a positive for bulls because more reasonable pricing will result in a more sustained bull market that I see continuing until 2026.

Sunday, March 6, 2016 10:06AM Report Comment
 

6. libertas said...

This is why a sustainable bull market REQUIRES a steady flow of bad news as HUMAN NATURE chases capital gains and yield until it doesn't.

Sunday, March 6, 2016 10:07AM Report Comment
 

7. techieman said...

Libby its possible you are right. Harrison reviewed 400 years and found a cycle of 18 years. The last 4 years being the "winners curse".

We do have the possibility as a society of takeing on more debt... which is the key driver for property speculation. But this cycle is based on previous times where were not so globally integrated. Your base analysis is that more and more migrants will come to the uk driving up prices.

If right then a huge dislocation will come if there is Brexit. Also if - as the article appears to be saying - there is a withdrawal of hot overseas money then we could easily see a reversal.

Very interesting times.

If the trend continues into 2019 / 2020 then after the last bear has bought we will have the mother of all crashes.

Sunday, March 6, 2016 11:52AM Report Comment
 

8. libertas said...

Techieman, my analysis is based upon cycles, my suspicion is that immigration plus a shift towards negative rates will drive this.

I doubt Brexet would have much impact because the overall market would be intact and rather than more numbers, on balance wages would rise, which would also drive prices higher. In any-case, there are rumours that the vote will be manipulated and we will not be allowed BREXIT. However, I do find it interesting that Orwell's 1984 was based upon his insider knowledge of the post WWII plan from the "club" and it did have Britain as Airstrip One. So maybe this will come to pass.

I am therefore expecting steady growth until maybe 2023, with the final years to 2026 being an election binge boom led by major tax cuts following the end of austerity that will be caused in part by negative rates converting the national debt into an income yielding asset. I am not sure what will cause credit to dry up in 2026, though have speculated that it could be a reversal, where continental Europe finally begins booming and folk start to migrate back to their home countries seeking financial gain in a comfortable homely environment, combined with maybe over-building here, possibly involving concreting of the Greenbelt.

By this time Crossrail 2 and an airport expansion project alongside HS2 will be well under-way, with major capacity coming in after then to drive another boom in the 2030s. That is what my gut tells me. We shall see.

Sunday, March 6, 2016 01:11PM Report Comment
 

9. libertas said...

In terms of reversal, it is possible that the Middle East and Africa begin booming and the migrational shift involves Europeans moving continents alongside people from the Middle East and Africa heading home chasing that boom. China's shift into African investment of late makes that a distinct possibility and the African continent has tremendous potential if only it can overcome corruption and IMF subjugation, both of which come hand in glove.

Sunday, March 6, 2016 01:14PM Report Comment
 

10. techieman said...

I think negative rates is a massive red herring. If we are in an inflationary era rates will be ratcheted up. If deflation , then rates will not be reduced for any mortgagor and even a headline negative rate will be offset by a huge arrangement fee.

The real question is will higher IRs modify the yeild curve that the long end illustrates more mortgage credit demand.

As you ypurself state infrastructure only affects relatively local areas.

if we do have a continued boom (after or not a retracement) perhaps the longer cycles will influence prices more. Three 18 year cycles equals an idealised K wave.

Sunday, March 6, 2016 05:56PM Report Comment
 

11. britishblue said...

Libby if you are into cycles, the cycle king is Martin Armstrong. He is predicting 18 years down on the housing market. He is also predicting that government will become more chaotic and Europe will be come apart. Charles Nenner is another cycle expert with similar views.
I suspect we have hit peak immigration. It not just Brexit, the whole of Europe has now had its taste of immigration and each country is becoming more nationalistic. Schengen is looking increasingly like a nightmare, rather than freedom .Many of the UK views are becoming more mainstream over Europe. Even if we dont brexit and there is another Paris attack Marine le Penn will win France and the borders will well and truly come up. If we do Brexit, immigration will start to be very tightly controlled and word will get through that the UK isnt the land of milk and honey.. Negative interest rates are possbly one of the biggest threats facing all economies around the world, not a great thing to be happening. The central banks are playing with fire. If the fire gets out of hand and there are bank runs, they would have to abolish cash. Then all the funny money coming through to the money laundering capital of the world and flushed into housing would dissapear. All the reasons for property going up have happened on steroids, many of the reasons for property going down are there ready to happen but waiting the right triggers. Cycles go both ways. my money is on this cycle turning sour for hous eprice speculators.

Sunday, March 6, 2016 07:09PM Report Comment
 

12. libertas said...

Armstrong also stated that his housing predictions were only for the US housing market. I also believe that he is talking real term stagnation rather than nominal. He has stated that prime London is having jitters but has not yet come out about the European housing market in general, which seems to be turning around.

I never said negative rates were good, but to think that government is taking a lead on this is ridiculous. Governments are FOLLOWING the market down negative rates as is the case when they hike rates because private global capital flows are stronger than any national government, which is part of the motivation towards creating global governance, to fight the market, but it never works.

Whilst Schengen may well be dead, none of these folk are coming over legitimately anyway and when as Merkel crazily did, announces that the system has no power or legitimacy, just come in, the Emperor has no clothes now and people will just flood over and there will be a collapse not only of Schengen but of border security, period. You simply cannot put up a wall big enough and simply dealing with the backlog is unrealistic. This is the equivalent of the fall of the Roman Empire when the Vandals, etc. invaded. and we see now as then, the Empire paying border states like Turkey to control it but this never works because laws rely on confidence and the majority complying. The collapse when confidence in government and compliance in laws end. For example, if 40% of people decided to not get a driving licence, that law could not be enforced. This will cause major disruption because Armstrong stated, this is in the worst possible moment, as various economic indicators are looking downwards, but it may be an intentional move towards battling deflation, flooding the land with more people. It certainly battles housing deflation.

Britain is in a good position to control its borders due to being an Island state, but the problem is that the EU is moving towards brushing the problem under the carpet by providing Turks free access to Europe because all the new immigrants will simply come via Turkey and get a fake passport. Thus, illegal immigration solved, and under Treaty, we will have to let them through the door if we vote yes, and as I said, hundreds of thousands if not millions could end up in London, focussed on areas like Stoke Newington, Haringey and Edmonton where existing Turkish communities exist and we could literally see areas cordoned off with sections of the Greenbelt used as refugee camps.

Sunday, March 6, 2016 10:06PM Report Comment
 

13. britishblue said...

Libby. I think you will find that Armstrong has commented more recently on the UK market where he specifically looks at how international investors will leave London.He has been scathing about George Osborne.

No you are completely wrong it is the Central Banks not the market that are leading to negative results. The Central banks fear the natural cycles of recession and depressions and are being played by the markets for both QE and NIRP. Hence we had the new word come into our dictionary, 'taper tantrums..' It has been a Central bank policy that has been manipulated by the markets, but the markets dont control them. No central bank head wants to be in power when the plug is finally pulled. The central banks could have stopped QE and now NIRP and let the world have the collapse and rebuilding process it needed. Instead they have just kicked the can down the street. All the world indicators whether it is the Baltic dry sea index which is now at 349 ( down from 11000) through to other commodity prices show that the world is very sick economically. When this happens money tends to move to the 'least dirty shirt' and may explain why money has flowed into London in the last few years. But eventually this parked money moves out as it i here for speculative purposes only.

You are wrong. Many of our immigrants come here legally. But if the EU is stupid enough to let Turkey into the EU and we remain then the game is up. Expect milllion's more legal ones to come here. It is shocking that EU policy is more based on showing that we have more in the club than Russia rather than common sense.
il make a be with you that in a year today, the London housing market will be quite a sick place.

Monday, March 7, 2016 08:26AM Report Comment
 

14. libertas said...

British Blue, things like Taper Tantrum are PROPAGANDA spewed by national governments and central governments to make it look like central banks are leading rather than following or front running the market. To suggest that the Bank of England can control global capital flows in more than a couple of sectors is absurd. You are correct to say that they act from fear, which is far from your other claim that they are in control.

Armstrong lives in the wealthy zone of life and has no comment to make right now about suburban London. He would never have to step out of Mayfair when he came here and so far as I know he has no thoughts or comments to make about presently affordable parts of Zones 4 to 6 that are literally on fire right now.

The EU HAS let Turkey in to the Schengen zone. The agreement COMES INTO FORCE this August. Why do you think Europhile Cameron is rushing a vote before that date?!?!

Monday, March 7, 2016 11:39AM Report Comment
 

15. libertas said...

EU 'sells soul' in migrant deportation deal with Turkey
Telegraph.co.uk‎ - 17 hours ago
European leaders stand accused of selling their soul as they hope to secure a deal with ...

http://www.telegraph.co.uk/news/worldnews/europe/eu/12185161/EU-sells-soul-in-migrant-deportation-deal-with-Turkey.html

-------------

Visa-free deal with Turkey to trigger 'new refugee influx' to EU
https://www.rt.com/news/334074-turkey-visa-deal-eu/
6 days ago - A visa-free regime for Turkish nationals in the Schengen zone could open a ... The focal point of the EU-Turkey deal is stemming the number of ...

Monday, March 7, 2016 11:40AM Report Comment
 

16. pete green said...

The issue of immigration from the periphery to global centres has happened many times in the past and is happening now - a factor that is often overlooked is the 'Land & rent crisis' and taxation thesis by Fred Harrison:



&



&

Monday, March 7, 2016 07:34PM Report Comment
 

17. libertas said...

BUT, that was 2,000 years ago. WE NOW HAVE GLOBAL FINANCE, IT, ETC.

If Europe collapses, capital would simply flee to the east or USA. and progress would continue with any dark age being no more than ten years long.

Tuesday, March 8, 2016 04:56PM Report Comment
 

18. Paul - Planet Earth said...

@Libertas....well if top end House Prices are crashing how does that not affect the home next door, the one next door to that, the one further down the street, the one in the next suburb?....and how does it not affect perceived buyer confidence and do investors not stop and start asking themselves have I overpaid, should I not sell up while the going is good, or should I get myself further into debt when prospects for further falls are high...If you can't answer this or choose not to then maybe its time for you to throw in the towel and leave these forums unless of course you are an estate agent or a paid troll!

Tuesday, March 8, 2016 07:53PM Report Comment
 

19. pete green said...

Libby you are still fighting the realisation that through history and today that it is both high rents and high taxes that make poverty and destroy economies. The reason we have high taxes is in a foolish attempt to mitigate the high rents of all monopolies. So the solution is for everyone to have a share of the economic rent in society.

Wednesday, March 9, 2016 09:28AM Report Comment
 

20. mombers said...

+1 Pete. We live in a kleptocracy, as do most people in the world today...

Wednesday, March 9, 2016 10:20AM Report Comment
 

21. libertas said...

Pete, you assume that I am making any moral judgement whatsoever. I never said it was good or bad, I simply pointed out the reality that exists and how to prosper as an individual, because there is one thing for certain, you can spend your time at Speakers Corner attempting to have the cretins at Parliament listen, but it will likely do you no good, meanwhile, your own precious life flashes before your eyes.

And if you hadn't noticed already, we already share in rents through high taxation that is widely re-distributed, not least to vested interests such as the military industrial complex, the nuclear industry, etc. etc. and look where that has got us?

Do not forget that what you are speaking of is the institutionalisation of theft and coveting your neighbour's property, whether it be a forced re-distribution via your method or the standard taxation method. Either way it is Marxist and anti-human. I do not take preaching as gospel that calls by a man called Pete to break of the Ten Commandments as necessarily virtuous. Meanwhile, I will protect what is mine, be as generous as I can and not covet my neighbours property.

Tuesday, March 15, 2016 10:52PM Report Comment
 

22. This comment has been removed as it was found to be in breach of our Blog Policies.

 

23. Paulinuk said...

Wow thats a big mark up.well was.

Thursday, March 24, 2016 09:53AM Report Comment
 

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