Sneaker

When childcare & housing are so expensive, is it any wonder people aren't having kids? We've outsourced childbearing to that influx of gorgeous, fertile Polish women. And well done them because without them we'd really be sunk. http://www.thenews.pl/1/10/Artykul/161201,Polands-baby-boom-in-UK

There's lots of stuff about this online. We all know about it. Yet debate consistently hinges on if and how to tax the onshore wealthy - even if we all know about the "squeezed middle" (i.e. our middle classes are seriously broke). So taxes are brought in in the name of clobbering the rich but are by the onshore middle classes -- who are already broke. It's not, say, City bankers buying up new-build luxury apartment blocks. It's a whole load of other people. And all the while the offshore super-wealthy simply enjoy the spectacle. Why are we so blind to the elephant in the room? It's even announced itself, yet we won't see it. http://uk.businessinsider.com/r-hong-kong-property-investors-go-trophy-hunting-in-london-despite-brexit-2017-8

And of course things that move at the speed of an internet packet are difficult - and sometimes even impossible - to tax. Many in the Offshore Class got rich because they understood this more quickly than governments did.

US tax changes mean that Offshore Dollars are heading over the USA. The Dollar rules everything. So this risks deflating anything dependent on them, and USD LIBOR (offshore dollar interest rate) is showing exactly the signs of distress one would expect from this...

This stuff rumbling on about Russian oligarchs and Unexplained Wealth Orders is just one component of a much larger topic. Ever since Blair opened the UK's doors to Non Doms, we have had a third class in our midst. Debate on taxation misses it completely: raising the higher rate of income tax to, say, 50% is wide of the target -- because it will be paid only by onshore tax-payers, who aren't the people buying £140m apartments in Knightsbridge. But somehow this is ignored and politicians to-and-fro about the top rate of tax, when any such solution looks nothing like the problem. So why don't we explore this new class in our midst: the Offshore Class? They aren't high-wage professionals. They often don't work here. They don't vote and often pay little tax. They have full benefit of access to our nation and have distorted our housing market to an extraordinary degree. Yet governments of all persuasion have, until now, been interested in promoting their interests over citizens' needs for affordable housing. It's changing though and as far as I can tell, almost every factor that has brought them and their enormous (if questionable) wealth into the UK appears to have gone into reverse. Russian sanctions (link) Oil price crash - oil nations have switched from pushing out dollars to sucking them in (link) OECD crackdown on tax havens (link) Chinese crackdown on capital flight (link) Panama Papers (link) and Paradise Papers (link) Unexplained Wealth Orders mean no more "no questions asked" (link) Onshoring of fund industry (link) etc. There's also talk in political circles of putting estate agents under the same AML & KYC requirements as any other professional. This would mean estate agents can no longer turn a blind eye to dodgy cash (link) as they could end up in prison. Anyone care to comment on this?

Prices weren't completely insane in 2007. The very brief house-price downturn into 2009 has been largely forgotten. Someone recently commented that house prices never went down and I asked them "what about 2009?" They didn't even have any idea that house-prices had taken a clobbering then. This was someone in their forties. And anyway, the government intervened to prop up the market not just with ZIRP but Help To Buy (whilst preaching free markets!). This time around we have a completely different picture. Almost everyone is calling for a solution to the housing crisis. Parties of all colours know they need to solve affordability: Labour to get more votes, Tories to stop the Labour surge, Lib Dems because they have always supported more building. Large amounts of building have been done. The eurozone is pulling out of recession and continental Europeans are going home. Brexit has made UK property a less attractive "investment" (read, speculative tool for the Offshore Class). Russia is under increasingly tough sanctions. China is cracking down on money leakage. OECD is bearing down on tax havens. The macro picture for house-prices is very different from 2007. It feels like a secular downturn has begun and could last many years. And that will be welcomed by anyone under 40 and anyone who has children.

How about we re-phrase this to something more accurate? FT Advisor - Property market hampered by 'high prices'

In a gold-rush, you make money selling shovels. Same old same old.

No, no, no, No, NO! The masses are supposed to roll over and let the Offshore Class own everything. How come the NZ government has fallen out of line? It's supposed to be crushing its own people's futures, like every other major government has been happily doing.

That 140 million pound apartment in Knightsbridge is 10,000 square feet. That's 14,000 quid a square foot. London used to be expensive at 500 pounds a square foot. Even today a grand a square foot is considered expensive. So that 140 million quid glass box on a polluted main road could drop 90% to 1,400 a square foot AND STILL BE EXPENSIVE.

A stress-test is not an expectation. Risk management is about checking all possible scenarios and then constructing a plan for each. But that is nothing to do with saying any particular scenario is going to play out.

I want to start a crypto-coin called VASELINE symbol LUBE. Its sole purpose is to short all other cryptos. Because you are going to need to dip your ass in a tub of lube if you are still long any of this nonsense.

Spot on, my friend, spot on. Never-ending growth on its own is a pointless metric. If huge growth is only going into a small number of hands, it's going to create massive social tensions and - eventually - upheaval and maybe revolution. Nobody wants that. Quantity of growth matters, of course. A shrinking world is very dangerous. But growth has extra dimensions: quality and distribution. For example, unemployment statistics are at levels unseen since the 1970s. But this has been achieved by generating millions of low-paid, "gig economy" jobs; leaving the fruits of this achievement to the investors at the top of the pile. This is the same as how the Robber Barons of the 1900s made fortunes. It led to the rise of socialism and communism, the consequences of which are well known. So the digital world has created Digital Robber Barons. They've done nothing wrong. They've seized the new world. They saw how it would work. But it has now ended in such unequal distribution of wealth that we are seeing radical and extreme politics rising everywhere. Economists of all colours agree that the marginal utility of an extra dollar of income is the greatest in the hands of the poor: they can make previously unaffordable, essential purchases. That same dollar in the hands of the already-rich doesn't go anywhere particularly useful. And thus, the social consequences we see now. The puzzle, then, is to work out how to get the fruits of this new digital world into the hands of as many people as possible. And that involves not just creating growth, quantitatively; it means working out how to have good growth - qualitatively - and how to distribute that wealth widely.

Not sure I agree! Just a few minutes on this excellent Forum will show you otherwise. And the internet let's you find out for yourself. So I'd say, sure, people who are intellectually lazy might believe that what we have now has always been the case. But the average person on this forum is far from intellectually lazy. Otherwise they wouldn't be here.

Excellent perspective. I have had to good fortune to work all over the world. If you take new ideas to companies or people in China, the USA or the Gulf and they like them, they will say "this is excellent ... can you make it bigger?" If you take the exact same ideas to companies or people in the UK, they will say "this is absurd ... it's way too ambitious ... it'll never work ... don't waste your time." You end up raising your finance overseas, even though London is the world capital of finance. How does that work???? And then we read in the UK press that it's a mystery why the UK (the inventor of computing and the World Wide Web!) hasn't created a Google, Facebook, Microsoft of Apple. Is it any frigging wonder! Because there is somehow this embedded small-mindedness and negativity, as if nothing can ever be made to succeed. We even laugh, knowingly, "anything invented in the UK is then better elsewhere in the world." How many times have you heard that down your local? We need to end this endemic negativity, people. To that extend: hear, hear, Wayward!

Because while everyone is agreed about the London Superbubble, there is absolutely no housing bubble in Middlesborough, the Glamorgans or Tyneside. Even in these times of "housing crisis" the bubble in only in certain places. Show these prices to a Londoner. So would an LVT be a flat % across the whole UK? Or should it be more nuanced?

There's a lot of good talk about a Land Value Tax. It has support from left (redistribute) to right (tax on consumption). But how would a Land Value Tax be set? If Council Tax is a blunt instrument (because its set by a bureaucratic, not market, process) how would LVT not be "same sh!t, different bucket"? Some key issues to get right: The dream looks great. But can it be achieved and how? In this case, land is taxed at 100% of its value, eliminating the landowner surplus completely. The ownership of land becomes worthless except to users (consumers).

Cannot believe how quiet this blog / forum has been about this. Share price topped in 2014 despite "endless London boom" reported for much of the time since. Nice to see some Real News in the sector after years of Fake News. https://www.ft.com/content/3c0e01ce-1c76-11e8-aaca-4574d7dabfb6 Foxtons profits slump as London home sales ‘near historic lows’ Estate agency’s earnings slide two-thirds as revenues drop

The thing that amazes most is that people have come to believe that "London property has always been expensive". Trust me, in the 1970s it wasn't. In the 1980's it rose and was a bit expensive in the early 1990's - but on a price/earnings multiple, nothing like what we see now. By the mid 1990's you couldn't give London property away. Central London apartments were 3 or 4 times a graduate salary. No way on earth was that expensive. By 2000, it was starting to feel a little out of the ordinary. But it held reasonably steady until 2007, when it took off into orbit in the spring. And we are where we are now, where even paying rent is a problem for many people. But by no means has London property always been so astronomically expensive that even highly paid professionals are struggling. It is simply an aberration caused by ZIRP, QE and the entire world being to pile into London over the internet via tax havens. It is an entirely new phenomenon. And successive governments just sitting there watching on while a social catastrophe unfolds across the nation is simply unforgivable.

Cheers mate. On wage inflation, multiple factors need considering, such as: National Living Wage going up... ... which makes robotisation / automation more attractive - it's getting cheaper and cheaper. EU workers leaving ... means UK employers will have to pay more to find workers. Shortage of doctors & nurses in the NHS - because GBP is weak so we can't attract them like we used to. This means GBP wages will have to go up. So for jobs that can't be automated, wages will have to go up. That's good. But for jobs that can be automated, wages can't go up. That's bad ... unless governments decide to tax robots. The purpose of an economy is to keep humankind going, not to reward digital/robotic asset owners while everyone else just sits around. But think of this: if robots take millions of jobs, who will companies sell to? Workers spend their incomes, generating someone else's incomes. If that stops, there will be no economy. And rich people don't spend in proportion to rising wealth: they don't buy more haircuts and there's only so many holidays you can fit into one year. In economic terms, the marginal utility of an extra unit of income is greatest in the hands of the poor. It is lowest in the hands of the rich. The problem that western governments need to fix is therefore how to get more money into the hands of the poor. Trickle-down economic experiments haven't worked. Wealth inequality is escalating. Digital business owners are getting unbelievably wealthy; they have done nothing wrong, but everyone else needs a chance. That's why social tensions are rising and politics is getting fractious and ugly. Unless governments work out how to address the gulf of wealth inequality, deeper social unrest is brewing. And doing that means tackling housing, robotisation and wealth distribution. There are no other answers.

Yeah sorry about the typo. Can't work out how to edit or delete posts here. Newbie doofus error. And yes, the UK government is the most absurd hypocrite: "we believe in open & free markets, so here's a bailout of the banks and Help To Buy to prop up an overpriced property market." So they preach free markets, misunderstand free markets and then do the exact opposite. Not just a bit opposite. Not even 179 degrees opposite. Absolutely, precisely opposite.

It's because the UK's belief in a "free and open housing market" means that you are made to compete with offshore oligarchs for said house. Anyone from anywhere in the world can buy UK property, which has a fixed supply and is protected by our prized legal system. But just you try buying an apartment in Moscow or Shanghai. You can't do it unless you're a local or married to a local. The UK's mistaken belief in free markets in everything means that the entire world gets to own our property and keep the rental income tax free and offshore. You can't do the same in reverse, because you don't have a stolen or sovereign or inherited multi-billion fortune. You also aren't trying to hide your wealth out of the reach of, say, the Chinese communist government - who robbed the middle classes of all their wealth in living memory under Chairman Mao. So the answer is you're being squeezed by Gulf royalty, Russian oligarchs and Chinese billionaires desperate to keep their fortunes in a safe jurisdiction. And successive governments have cheered this on in the name of "freedom". Get used the freedom, slave!

Oops, sorry pasted that post twice. Don't know how to delete or edit it. Apologies.

Amazing to look back on this thread from a decade ago. Prices dropped hard in 2009 - but also only briefly. They powered up to new record levels (of price - and perhaps insanity) because of offshore fortunes being laundered over the internet into what became called "Prime Central London" or "PCL". It never had that name before and the borrowing from butchers' language may be a clue. Using history as a guide, any financial phenomenon that gets a new monicker (and particularly a TLA or THree Letter Acronym( we are closer its than its beginning. Think TMT (Telecom Media Technology) stocks in 1999/2000. CDOs in 2006/7. What TLAs do we see now? First, I expect Bitcoin (BTC) will not break above $20,000 and will drop at least 60% by 2019. Second, I expect PCL (and especially K&C) will drop hard. Multiple factors are in play - somewhat ad libbing: (1) go out in South Kensington - the biggest "buy to leave" area in town - and restaurants and bars have closed everywhere. Walton Street was full of energy 10 years ago; now it's a ghost town. The old stalwart La Brasserie on Fulham Road has shuttered after decades. The Chanel shop next door has also closed - imagine, Chanel has closed! So many houses are vacant that there aren't enough customers to pay the rents. People won't pay up to live in dead areas. The overclass don't buy these houses to live there. At some point, if all the bars & cinemas have been turned into luxury apartments, there's no point living there as there's nowhere to go out. The trend contains the seeds of its own end. (2) Post-Grenfell there is now a Labour MP for the first time ever in Kensington. The Tory council have learned that if you continue to sell houses offshore to people who don't vote, all you are left with is Labour voters. The new MP is going to upend planning and consents; the Royal Borough will be repurposed so it serves everyone. This is an epochal shift. (3) The Government & London Mayor both understand that we need to fix the housing market and action is being taken. The Tories understand that if they don't fix housing, we're going to elect Corbyn. Sadiq Khan understands that Labour need to fix housing so Labour voters will continue to support him. (4) Global crackdown on tax evasion and money laundering. Not much is said about this but it's being spearheaded by the OECD. The Gulf kingdoms are introducing VAT to hold off the threat of put on the OECD & G20 Black List of uncooperative jurisdictions. The EU already put the UAE there as a warning shot. (5) With oil permanently below $100 and the squabbles in the GCC, the oil nations have switched from pushing out dollars to sucking them in. There's a slow hissing sound of deflation in anywhere that benefited from oil prices. Talk to anyone in London whose business sells to people from the oil states: 2017 was a terrible year and it's getting worse. (6) Over 200 apartment blocks with apartments over £1m are coming on to the London market. There's a huge overhang which, at peak sales volumes from a few years ago, represents 20 years of supply of "luxury apartments" coming onto the market at once. (7) The dodgy money that needed to leave the ex-USSR states has mostly gone and there is no new money waiting to leave; sanctions make it harder too. Talk to anyone who works in the property business in Knightsbridge and you won't wait long until they tell you it's trading at 40% below peak, in tiny volumes; and if you're a buyer, how many do you want? (8) The squeeze on UK incomes means that people are moving out rather than paying ever-increasing rents. It's polluted and at times dangerous in central London. It's clean and safer in the 'burbs and transport is so good that you can be in the centre of down quickly from anywhere. (9) There is a mini exodus of EU workers from London; it's being blamed on Brexit but it's actually down to EURGBP. With EURGBP at 0.70, you could come here from recession-mired Club Med or Eastern nations, get paid high British wages, learn skills, make an international network of friends and send money home. It was like being paid to be at university. But with EURGBP nearer parity and rents/food soaring, that merry-go-round is broken. The Continental economy is starting to pick up after years of the Great Recession (which still, 10 years on, nobody dares label "Depression"). It makes sense to go home. You can buy a house in Romania or Slovakia for a year--or-two's rent in London. (10) Buy To Let tax changes mean BTL landlords need more income to break even. But people are broke or leaving. If they put rents up, they have a void. They therefore have to sell. (11) Robotisation and Artificial Intelligence are going to put holes in the high-wage sectors. This means either fewer workers in total; or workers on lower average wages. They won't be able to afford current rents in current numbers. Who will BTL'ers let to if jobs don't pay big salaries any more? (12) Interest Rates are headed up globally. If houses are priced like bonds, then this means prices have to decline - at least in real terms. If rents are going down, prices have to decline - in nominal terms. I think rates will rise far further than anyone can imagine; inflation is going to be made to burn off the debt and leverage in the system. Central Bankers everywhere are desperate for inflation so they can normalise policy. In short, all London Superbubble demand factors are impaired - cyclically and maybe secularly. All London supply factors are improved, secularly and in some cases structurally. If "nobody rings the bell at the top", I'm not sure I agree. Russia's annexation of Crimea a few years ago appeared to be it. The sanctions that followed were, I think, the catalyst for the turn in PCL - but it's not a sudden, dramatic crash. Ever since then, rents and prices have steadily been marked down. It's a gentle, consistent slide. I checked a few estate agents on Ladbroke Grove recently and I saw prices that reminded me of this thread. Prices in the windows are beginning to look quite similar to those quoted above, nearly 10 years ago. Rents are definitely a LOT cheaper. Two years ago, you'd be paying £550-600 a week for a pleasant but not enormous 2-bed. You're now seeing rents at £450 or even £390. So, I expect 10 or more years of house price normalisation and everyone will look back on this period of madness and wonder what on earth we were playing at - where it became more important to look after a global overclass that doesn't live here, doesn't pay tax and doesn't vote than to look after our own people. And that, my friends, will be the end of that. Amazing to look back on this thread from a decade ago. Prices dropped hard in 2009 - but also only briefly. They powered up to new record levels (of price - and perhaps insanity) because of offshore fortunes being laundered over the internet into what became called "Prime Central London" or "PCL". It never had that name before and the borrowing from butchers' language may be a clue. Using history as a guide, any financial phenomenon that gets a new monicker (and particularly a TLA or THree Letter Acronym( we are closer its than its beginning. Think TMT (Telecom Media Technology) stocks in 1999/2000. CDOs in 2006/7. What TLAs do we see now? First, I expect Bitcoin (BTC) will not break above $20,000 and will drop at least 60% by 2019. Second, I expect PCL (and especially K&C) will drop hard. Multiple factors are in place: (1) go out in South Kensington - the biggest "buy to leave" area in town - and restaurants and bars have closed everywhere. Walton Street was full of energy 10 years ago; now it's a ghost town. The old stalwart La Brasserie on Fulham Road has shuttered after decades. The Chanel shop next door has also closed - imagine, Chanel has closed! So many houses are vacant that there aren't enough customers to pay the rents. People won't pay up to live in dead areas. The overclass don't buy these houses to live there. At some point, if all the bars & cinemas have been turned into luxury apartments, there's no point living there as there's nowhere to go out. The trend contains the seeds of its own end. (2) Post-Grenfell there is now a Labour MP for the first time ever in Kensington. The Tory council have learned that if you continue to sell houses offshore to people who don't vote, all you are left with is Labour voters. The new MP is going to upend planning and consents; the Royal Borough will be repurposed so it serves everyone. This is an epochal shift. (3) The Government & London Mayor both understand that we need to fix the housing market and action is being taken. The Tories understand that if they don't fix housing, we're going to elect Corbyn. Sadiq Khan understands that Labour need to fix housing so Labour voters will continue to support him. (4) Global crackdown on tax evasion and money laundering. Not much is said about this but it's being spearheaded by the OECD. The Gulf kingdoms are introducing VAT to hold off the threat of put on the OECD & G20 Black List of uncooperative jurisdictions. The EU already put the UAE there as a warning shot. (5) With oil permanently below $100 and the squabbles in the GCC, the oil nations have switched from pushing out dollars to sucking them in. There's a slow hissing sound of deflation in anywhere that benefited from oil prices. Talk to anyone in London whose business sells to people from the oil states: 2017 was a terrible year and it's getting worse. (6) Over 200 apartment blocks with apartments over £1m are coming on to the London market. There's a huge overhang which, at peak sales volumes from a few years ago, represents 20 years of supply of "luxury apartments" coming onto the market at once. (7) The dodgy money that needed to leave the ex-USSR states has mostly gone and there is no new money waiting to leave; sanctions make it harder too. Talk to anyone who works in the property business in Knightsbridge and you won't wait long until they tell you it's trading at 40% below peak, in tiny volumes; and if you're a buyer, how many do you want? (8) The squeeze on UK incomes means that people are moving out rather than paying ever-increasing rents. It's polluted and at times dangerous in central London. It's clean and safer in the 'burbs and transport is so good that you can be in the centre of down quickly from anywhere. (9) There is a mini exodus of EU workers from London; it's being blamed on Brexit but it's actually down to EURGBP. With EURGBP at 0.70, you could come here from recession-mired Club Med or Eastern nations, get paid high British wages, learn skills, make an international network of friends and send money home. It was like being paid to be at university. But with EURGBP nearer parity and rents/food soaring, that merry-go-round is broken. The Continental economy is starting to pick up after years of the Great Recession (which still, 10 years on, nobody dares label "Depression"). It makes sense to go home. You can buy a house in Romania or Slovakia for a year--or-two's rent in London. (10) Buy To Let tax changes mean BTL landlords need more income to break even. But people are broke or leaving. If they put rents up, they have a void. They therefore have to sell. (11) Robotisation and Artificial Intelligence are going to put holes in the high-wage sectors. This means either fewer workers or workers on lower wages. They won't be able to afford current rents in current numbers. (12) Interest Rates are headed up globally. If houses are priced like bonds, then this means prices have to decline - at least in real terms. If rents are going down, prices have to decline - in nominal terms. I think rates will rise far further than anyone can imagine; inflation is going to be made to burn off the debt and leverage in the system. Central Bankers everywhere are desperate for inflation so they can normalise policy. In short, all London Superbubble demand factors are impaired - cyclically and maybe secularly. All London supply factors are improved, secularly and in some cases structurally. If "nobody rings the bell at the top", I'm not sure I agree. Russia's annexation of Crimea a few years ago appeared to be it. The sanctions that followed were, I think, the catalyst for the turn in PCL - but it's not a sudden, dramatic crash. Ever since then, rents and prices have steadily been marked down. It's a gentle, consistent slide. I checked a few estate agents on Ladbroke Grove recently and I saw prices that reminded me of this thread. Prices in the windows are beginning to look quite similar to those quoted above, 10 years ago. Rents are definitely a LOT cheaper. Two years ago, you'd be paying £550-600 a week for a pleasant but not enormous 2-bed. You're now seeing rents at £450 or even £390. So, I expect 10 or more years of house price normalisation and everyone will look back on this period of madness and wonder what on earth we were playing at - where it became more important to look after a global overclass that doesn't live here, doesn't pay tax and doesn't vote than to look after our own people. And that, my friends, will be the end of that.