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Erewhon

Never Mind The Euro Crisis; Weak Sterling Pushes House Prices Out Of Reach For Many Brits

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Never mind the euro crisis; sterling’s weakness is closer to home and making British property a bargain for foreigners while pushing house prices out of reach for many Brits.

But I thought high house prices were a good thing?

Surely we should be cheering this development?

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If the pound continues to slip over the coming years (don't ask me - I have no idea on that!) then even foreign buyers will stop buying, surely? Why buy now, when the price will fall further next year?

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There is some truth in this. I was in Shanghai a few weeks ago on business and we met with numerous local investors/entreupeners and without question most spoke about the ridicolous amounts they had made in property. What was most interesting is that many saw the bubble being purposefully burst by the Gvt in China and so as a result they without exception all made a point of telling us that they were now investing in London property. They all thought the £ was at a low point and that the capital was a mecca for culture and business and that it was legally and politically secure.

What I found scary was one guy, in fact the richest guy by a mile that we met who had a "man in London" who was compiling a portfolio of more than 200 properties for him. These he assured us were "house for workers". In some mental way he was suggesting to us that he was doing it out of some kind of philanthropic desire to bring homes to the poor. His assistant who was no more than a glorified PA mentioned that he too was buying a number of London homes, with his daughter managing them whilst she was at college in London. It all seemed like the thing to do for these guys, as if owning a piece of London was way "cooler" than owning a share or stock and something to brag about down the country club.

I can only imagine that with Middle East instability a certain amount of cash will also head towards the capital. What is a scary shift in sentiment is this idea of residential property portfolios rather than commercial or high end property.

I have noticed in my neck of the woods and in Brighton alot of the houses are being snapped up by Londoners with a sudden amount of spare cash so I suppose there is some kind of ripple effect from this all?

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There is some truth in this. I was in Shanghai

Chinese history and culture is replete with rentierism. It is an end goal for many. For example Li Ka Shing is a pure rentier his companies do not add value in any way shape or form. And he is an idol to many Chinese people.

The Ferengi in DS9 were based off Chinese people in a way... i.e. they do not want to end exploitation they want to become the exploiters themselves.

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If the pound continues to slip over the coming years (don't ask me - I have no idea on that!) then even foreign buyers will stop buying, surely? Why buy now, when the price will fall further next year?

Nope. In that if the £ continues to tumble then it will be an even less risky bet for foreign investors. When the currency collapses the foreigner faced with buying a news paper or a whole row of terrace houses what do you think the rentiers will go for?

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Buying a house is not the be-all-end-all of life....there are far better options to investigate and enjoy....buying is an option but only when it is a realistic option...let others sell their life to buying a pile of overpriced bricks... ;)

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There is some truth in this. I was in Shanghai a few weeks ago on business and we met with numerous local investors/entreupeners and without question most spoke about the ridicolous amounts they had made in property. What was most interesting is that many saw the bubble being purposefully burst by the Gvt in China and so as a result they without exception all made a point of telling us that they were now investing in London property. They all thought the £ was at a low point and that the capital was a mecca for culture and business and that it was legally and politically secure.

What I found scary was one guy, in fact the richest guy by a mile that we met who had a "man in London" who was compiling a portfolio of more than 200 properties for him. These he assured us were "house for workers". In some mental way he was suggesting to us that he was doing it out of some kind of philanthropic desire to bring homes to the poor. His assistant who was no more than a glorified PA mentioned that he too was buying a number of London homes, with his daughter managing them whilst she was at college in London. It all seemed like the thing to do for these guys, as if owning a piece of London was way "cooler" than owning a share or stock and something to brag about down the country club.

I can only imagine that with Middle East instability a certain amount of cash will also head towards the capital. What is a scary shift in sentiment is this idea of residential property portfolios rather than commercial or high end property.

I have noticed in my neck of the woods and in Brighton alot of the houses are being snapped up by Londoners with a sudden amount of spare cash so I suppose there is some kind of ripple effect from this all?

If this is true it's an effing disgrace, just why don't we tax the sh1t out of these people?

Edited by pl1

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Britain is just a safe refuge for the super-rich and our politicians, media luvvies and those in senior public posts such as Police, civil servants, etc, are, IMPO, just servicing those super-rich at the expense of the British people.

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If this is true it's an effing disgrace, just why don't we tax the sh1t out of these people?

The govenment are doing the exact opposite of that . What was it in the last budget anyone coming here and depositing £5M could stay Britain is open for bussiness or something along those lines .

The way things are reading between the lines it means Rich People Of the World Come to London , don't worrie about paying taxes here we will get the little people who you will price out of homes to pay them for you.

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The govenment are doing the exact opposite of that . What was it in the last budget anyone coming here and depositing £5M could stay Britain is open for bussiness or something along those lines .

The way things are reading between the lines it means Rich People Of the World Come to London , don't worrie about paying taxes here we will get the little people who you will price out of homes to pay them for you.

Yes.

Well I suppose the plutocracy will be best mates with the kleptocracy.

5 mil in the bank for two years and you get a free British passport.

About a year ago we had a thead on London prices, where many were saying they'd drop like the rest of the country.

Nope. In some of the less desirable burbs perhaps, but London prime is going anti-parallel to the rest of the UK.

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If this is true it's an effing disgrace, just why don't we tax the sh1t out of these people?

Wouldn't surprise me one little bit that an intended side effect of sperading instability in the middle eat is to drench the fincial system in "stable" countries with the excess earnings made as a result of an inflationary monetary policy - double bubble for the banksters.

The problem is that once entrenched these positions get so big that governments are even less willing to rock the boat - hence they go even more after their general population for tax.

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UK housing yields are still paid in pounds though and governed by our interest/inflationary background.

Why get a measly 2-3% yield on property here (with the prospect of your pound denominated asset being further devalued) when you can get 6%+ on a deposit account in BRIC and developing type countries?

I dont deny wealthy arabs and chinese are buying top end London, dont see it spreading elsewhere though.

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UK housing yields are still paid in pounds though and governed by our interest/inflationary background.

Why get a measly 2-3% yield on property here (with the prospect of your pound denominated asset being further devalued) when you can get 6%+ on a deposit account in BRIC and developing type countries?

I dont deny wealthy arabs and chinese are buying top end London, dont see it spreading elsewhere though.

The general impression I got was that it was all about stability. Investing in BRIC/Developing countries doesn't offer you that stability.

Look at it from their point of view. Buy a 2 bed flat in Docklands for £300k, rent for £1500pcm, perhaps more. Hold a 50% mortgage on that property in £Sterling. Pay 5 yr fixed interest only of say £350pcm, add in agency fees and expenses so lets say £600pcm. So that is £900pcm profit towards paying off the capital. Give or take a few voids and 3 or 4 £2,500 makeovers and you have still paid off the mortgage in 15 years. At that point your £150k has doubled in 15 years and that is if we say the market remains perfectly static for the whole period. I think that works out at more than 5% per annum and at any point if the yuan strengthens technically your mortgage debt decreases and if the yuan collapses then your asset value increases. In the event of the latter your mortgage is being serviced in Sterling anyway so it doesn't matter and in the event of the former you can just buy more property at even lower prices.

The reoccuring theme was stability and also I sensed an almost colonial desire to own a part of England (This one guy had a picture of Big Ben on his mousemat). It is quite scary to think that we could be open to indirect colonisation in that way but I can only imagine that the Governement would have to put in place restrictions if this started happening. I did wonder if France or Germany would allow this and of course they would stamp down on it immediately, here in the UK we seem open to any kind of inward investment in whatever form it comes in especially in London.

My only reasoning is that they may be looking at the end game, how do you release your investment back into yuan. Is it possible to tax all that cash further on down the line or may be encourage the proceeds to be invested into UK businesses. Perhaps even the possibility of a new industry of huge letting agents working with 100000+ properties owned by Chinese investors. Is it possible the Government are thinking of the huge developers able to sell off huge swathes of apartments and the stamp duty as well as solving the UK housing crisis in one foul swoop?

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Look at it from their point of view. Buy a 2 bed flat in Docklands for £300k, rent for £1500pcm, perhaps more. Hold a 50% mortgage on that property in £Sterling. Pay 5 yr fixed interest only of say £350pcm, add in agency fees and expenses so lets say £600pcm. So that is £900pcm profit towards paying off the capital. Give or take a few voids and 3 or 4 £2,500 makeovers and you have still paid off the mortgage in 15 years.

Agree with the sentiment but think your figures look a bit optomistic :-

More like £150 k mortgage @ 5% = £625 pcm

Decent agent if managing a property for overseas client would want minimum 10% + vat = £180 pcm

Service charge depends on the block ect but £250 pcm is not unrealistic especially if the block has a lift

Total £1055

Leaving £455 gross for mortgage repayments , take off 20 % tax leaves just £364 .

To keep up with the market as there is quite a big choice in Docklands more would be spent over the years than £2500 every now and again on a makeover , people don't pay £350 per week to live with crap furniture and a few landlords trying to furnish on the cheap and not replace appliances have been caught out by doing this.

Given no figures for voids , cost of tennancy agreements ( agents love little add ons like those ) inventories, or legal fees if a tennent decides not to pay ( getting more and more frequent ) and waits to be evicted.

It is not as easy or rosy as it looks .

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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