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Where is that?! I see this all the time on here. Not disputing it but I can show you 3 bed Victorian terraces in zone 3/4 that are 20 mins from central London on the train for 200k with parking and large gardens. Not in a great area but what on earth are people doing paying 500k if the places are bad? A panic to buy and an ignorance of where they are buying or what else they could buy? A hope it will never drop I suppose and believing the rubbish in the Standard that those places are somehow up and coming, as they have a deli within 10 minutes walk and one (!) decent pub 20 minutes away.

I don't know where fru-gal is talking about, but my area (Surbiton in zone 6) is not much better. To live in the sought after part of the area, you are looking at £350k+ for a 2 bed flat, and £500k+ for the smallest 2 bed houses. The houses are in such short supply at the moment that they sell on the first day on the market for sealed bids often way in excess of the asking price. My favourite example lately is a very standard suburban semi that sold on the first day of being on the market at offers in excess of £900k!

OK, it should be noted that the area is far from a bad one, with a low crime rate, good facilities etc, BUT it is a long way out of central London and is in no way a fashionable, chi-chi are like Richmond, just a normal suburb.

Edited by worried1

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Well, firstly, QE money isn't "free", it's exchanged for an asset. So the banks are able to transfer high quality assets (usually UK government bonds) into cash, and the government has no problems finding buyers for it's debt.

QE is not designed to raise the profits of banks, and cannot directly do so, it is designed to improve liquidity. They don't get given a single penny of "free" money since they must purchase high quality assets/bonds before exchanging them for QE money, if they choose to do so. The BoE don't call it the "asset purchase facility" for nothing.

The problem however is that QE is rather like pushing on a piece of string, there is only so much balance sheet rebuilding necessary, and with weak demand for loans the extra QE liquidity is struggling to provide a productive use. This may be driving an equities bubble, but it most certainly isn't feeding into bonuses or such.

QE seems to be helping investment banks in Japan....

]Investment banks are among the first and biggest beneficiaries[/b] of Japan’s new economic stimulus policies, known as Abenomics. Since Prime Minister Shinzo Abe came into office in December with a plan to end more than a decade of deflation, demand for banks that help companies sell equity and debt is white-hot. Companies have more than tripled sales of stock to 1.7 trillion yen ($17 billion) this year through May 15, compared with the same period in 2012, according to data compiled by Bloomberg. Corporate bond issuances climbed to 3.3 trillion yen, the best start to a year since 2009, the data show. “This is the industry that’s benefiting from Abenomics,” says Shinichi Ina, a bank analyst at UBS (UBS) in Tokyo.

Investment banks are already enjoying rising brokerage fee income, thanks to the Abenomics-spurred stock market rally. Japan’s Topix Index of shares has jumped 71 percent since the start of Abe’s campaign on Nov. 14, as foreign investors buy into the market. On April 26, Nomura Holdings (8604), the country’s biggest brokerage, posted its highest quarterly profit in seven years. Mizuho Financial Group’s (8411) equity sales team is getting swamped with inquiries from overseas investors, and customers have been reactivating dormant trading accounts, says Mikihiko Kitano, a spokesman. “Our analysts used to struggle to get appointments with these clients,” Kitano says. “Now we’re trying hard not to turn down their offers to meet.”

Investment bank hiring is also picking up, according to executive recruiter John Byrne, a partner at Tokyo-based Ascent Global Partners who as recently as November considered leaving equities recruitment because business was so bad. “My work is much busier right now,” he says, adding that recruiting season, which usually lasts from January until June, will probably continue to September. “Japan used to be the ugly sister of Asia, but now it’s the Cinderella.”

Not all analysts are optimistic that the good times will continue for brokerages. Right now the explosive rally at the Tokyo Stock Exchange is being driven by foreign investors, who represent more than half the daily trading volume on some days. Azuma Ohno at Barclays (BCS) in Tokyo says growth at securities firms hinges on whether they can persuade Japanese households to move their savings into riskier assets. “Individual investors must be very skeptical given that they haven’t taken action yet despite the spike in stock prices,” says Ohno. “We have to wait and see if this favorable market environment will encourage them to move their funds.”

They're certainly making hay while the sun shines.

Edited by Eddie_George

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QE was introduced after the housing bubble inflated and popped, so had nothing to do with the housing bubble. You could argue that it depressed the yields on government bonds, making London housing a more attractive investment which inflated prime London prices. But QE didn't do this directly, and banks have not invested directly in residential London property, so it's arguable that it did it at all - especially since prime London started inflating before QE was launched.

The wider point though, is that QE didn't give "free money" to anyone. The banks already had the money, just tied up in high quality assets. What they then choose to spend that money on is really their business, but they are being forced to use it (quite rightly) to shore up their balance sheets.

You are out of your mind. QE is a replacement for the mortgage-debt driven demand that was lost when the original housing bubble burst. It has created and is creating a surge of inflation in equities and commodities, has helped re-inflate and super-inflate real estate and bond prices all over the world. Of course it's free money - when central banks purchase an asset they pay the current price for it, the net difference between that and what the commercial lender originally bought it for provides the surplus liquidity the investment banks use to speculate with. How else can US broad money (M2) growth be running at 8% when the economy is growing at less than 2%? The Fed and the BoE use the primary dealers as middlemen in the process of printing money indirectly.

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You are out of your mind. QE is a replacement for the mortgage-debt driven demand that was lost when the original housing bubble burst. It has created and is creating a surge of inflation in equities and commodities, has helped re-inflate and super-inflate real estate and bond prices all over the world. Of course it's free money - when central banks purchase an asset they pay the current price for it, the net difference between that and what the commercial lender originally bought it for provides the surplus liquidity the investment banks use to speculate with. How else can US broad money (M2) growth be running at 8% when the economy is growing at less than 2%? The Fed and the BoE use the primary dealers as middlemen in the process of printing money indirectly.

We are saying the same thing with regards to equities inflation, which is indeed approaching bubble territory, and I would agree that this is a negative impact of QE. I also think that QE is the wrong policy - it is pushing on a piece of string. There is weak demand for loans and investment into the productive parts of the economy, which means the liquidity provided by QE is sloshing around being unproductive and potentially harmful.

I don't see the same evidence with commodities though, and prime real estate inflated before QE began, so it's impossible to attribute it to that. We have to take an evidence-based approach, and the evidence for QE ramping up house prices simply isn't there, particularly as nations with large QE schemes are experiencing large falls in the value of property.

The evidence points in the other way, you could more strongly make a case for QE decreasing property values - but that would be a false correlation. QE isn't causing the decline in value of property in the US and Japan, and neither is it causing the decline in value in property across much of the UK. Nor is it fuelling prime London, which is being stoked by UHNW individuals. There isn't a credible connection between them.

QE is free money for the government, it lowers borrowing costs and ensures a market for government debt. But for the banks, the money is not "free" since their balance sheets remain as they where, they've simply swapped a high quality asset for cash, nothing more. If the government purchased my car at market value using QE money, I don't have "free" money, since I handed over an asset of equivalent value.

That's really the point I'm trying to make: QE is printed money, but it's used for an asset purchase, with the sole purpose of improving liquidity.

Edited by Dr_Mibbles

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Where is that?! I see this all the time on here. Not disputing it but I can show you 3 bed Victorian terraces in zone 3/4 that are 20 mins from central London on the train for 200k with parking and large gardens. Not in a great area but what on earth are people doing paying 500k if the places are bad? A panic to buy and an ignorance of where they are buying or what else they could buy? A hope it will never drop I suppose and believing the rubbish in the Standard that those places are somehow up and coming, as they have a deli within 10 minutes walk and one (!) decent pub 20 minutes away.

Here's the other side of the coin -

Here is a 2 bed for 210k in zone 4 suburbia http://www.zoopla.co...a947e5a81d25aee

A 3 bed semi-detached in zone 4 for 195k minutes from what will be a crossrail station and is currently 20 minutes to London Bridge, and soon to be 10 mins to canary wharf http://www.zoopla.co...0a2f665aa520e5f

3 bed nearby for 175k http://www.zoopla.co...2c31576d9747ea3

These areas are all at 2004 prices.

Unfortunately North London (Finchley area).

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Some friends of mine recently spent 430k on a small terrace in Walthamstow. They paid over the asking price in the end. They earn well over 100k between them, this is their first home, and it's tiny, not to mention situated in a crime-ridden run-down corner of outer London. They earn a huge amount of money, even for London, and yet that was all they could afford. Depressing.

The problem is these anecdotes mean nothing - the housing market is warped due to very few properties in affordable price ranges being sold (although that may be changing as pent-up supply comes onto the market and BTL'ers throw in the towel in the face of negative yields in London). Prices are distorted as a few well-heeled buyers are panic-purchasing the odd property, giving the impression that high sale prices are somehow sustainable. They're not.

So you have people caught up in ridiculous bubble mentality ("we'll miss out if we don't buy SOMETHING") paying over-the-odds for mediocre properties in run-down parts of London. This isn't rational. You can't think of it rationally. The tulip bubble wasn't rational and cannot be explained by the idea of rational economic actors interacting with a functional marketplace. The market is broken and people are being stupid.

Sales volumes are low enough at the moment to maintain the illusion, that's all.

For some people buying a house, when the rent on the equivalent place would be more or less the same as the mortgage interest, it is entirely rational, no matter how bat sh!t bonkers house prices are in London. The 12 month AST can be a pretty rubbish thing to live under, especially if you have kids in school. Unless the rental market is dead (I do hope you're right about this but I will believe it when I see it) tenants have little negotiating power over landlords. We tried to negotiate to keep our rent the same and LL simply called our bluff and said no, move out if you don't like it. The hassle and expense of moving again (after just one year in this place which we actually like a lot) was such that we simply had to eat their rent increase - not much evidence of empty rentals or falling rents in South London yet as far as I can see.

p.s. what it 'negative yield' in the context of prime rentals? I thought yield = rent/value. Not heard of negative rent yet!

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p.s. what it 'negative yield' in the context of prime rentals? I thought yield = rent/value. Not heard of negative rent yet!

Depends how you want to calculate it. If your mortgage interest payments are greater than the rent, you're losing money. If you own outright, which very few BTL'ers do, then you can apply the rent/value calculation. But many BTL'ers are highly leveraged, so there is a very real negative tipping point for them.

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Depends how you want to calculate it. If your mortgage interest payments are greater than the rent, you're losing money. If you own outright, which very few BTL'ers do, then you can apply the rent/value calculation. But many BTL'ers are highly leveraged, so there is a very real negative tipping point for them.

"Value" would have to be the last actual sold price for identical property, or else it would be meaningless? I bet a lot of BTL`ers (if they did yield calculations at all) pumped in some silly aspirational "value" from one month at the very peak in `07 :lol:

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It's a press release from a PR agency on behalf of an organisation with a vested interest in the notion that rents are increasing.

The reality is completely different. Rents are falling and more and more property is sitting on the market. I am looking for a place to rent around Shoreditch/Hackney at the moment, and prices are about 20% lower than they were 6 months ago - I can afford a much nicer place as a result.

From today's papers:

Survey shows London rents at record high http://www.cityam.com/article/survey-shows-london-rents-record-high:

"...rents have jumped 7.6 per cent in London in the past year, to a record high of £1,110 per month... according to David Newnes, director of LSL Property Services.

“The more fundamental squeeze is still coming from a lack of new building,” he added."

http://www.cityam.com/article/house-builders-suffer-torrid-quarter: ..."data from the Department for Local Government and Communities show(s) London ...saw a larger increase in average rents than any other region in England"

Also from the latter link: "RESIDENTIAL building in England fell 14.5 per cent between January and March against the previous year". NIMBYs clearly in control of national housing policy...for now.

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It's a press release from a PR agency on behalf of an organisation with a vested interest in the notion that rents are increasing.

The reality is completely different. Rents are falling and more and more property is sitting on the market. I am looking for a place to rent around Shoreditch/Hackney at the moment, and prices are about 20% lower than they were 6 months ago - I can afford a much nicer place as a result.

Are you looking on Rightmove? I just did a search for Shoreditch and there are only 7 one bedroom properties for less than £1000 per month. That seems crazy to me. Where are you seeing more and more properties coming on to the market or rents being reduced? What size property are you looking for? Do you use a programme to see price falls on Rightmove (Property Bee, Chome Property Tracker)?

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I would seriously take those figures with a huge pinch of salt. They've been released by a PR agency working for a company with a vested interest in the perception that rents are increasing.

The reality is that rents in prime areas are crashing. Yields are heading to negative territory. In the past 6 months, rentals on central property have noticably declined. I recently spotted a 1 bed in Shoreditch which was on the market for £480pw at the end of last year (I know because I viewed it!) back on the market at £395 this week. This is anecdotal, of course, but you couldn't find a 1 bed in Shoreditch for less than £450pw 6 months ago, now there are loads and prices are falling. The same story is being replicated across prime locations.

Indeed, you can now bag a nice two-bed for about £400pw in Shoreditch, which was unheard of 6 months ago.

Think this is the quote you need.

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Are you looking on Rightmove? I just did a search for Shoreditch and there are only 7 one bedroom properties for less than £1000 per month. That seems crazy to me. Where are you seeing more and more properties coming on to the market or rents being reduced? What size property are you looking for? Do you use a programme to see price falls on Rightmove (Property Bee, Chome Property Tracker)?

And the HB Cap for a 1 bed flat is £250 I believe.

Edit to add: That's £250 per week. Hence not much listed for less than £1000 per month. That's what the benefit cap does to rentals in London!

Edited by lastlaugh

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From today's papers:

Survey shows London rents at record high http://www.cityam.com/article/survey-shows-london-rents-record-high:

"...rents have jumped 7.6 per cent in London in the past year, to a record high of £1,110 per month... according to David Newnes, director of LSL Property Services.

“The more fundamental squeeze is still coming from a lack of new building,” he added."

http://www.cityam.com/article/house-builders-suffer-torrid-quarter: ..."data from the Department for Local Government and Communities show(s) London ...saw a larger increase in average rents than any other region in England"

Also from the latter link: "RESIDENTIAL building in England fell 14.5 per cent between January and March against the previous year". NIMBYs clearly in control of national housing policy...for now.

http://www.arla.co.uk/news/2012/11/prime-london-rents-fall-65758/

Prime rents are on the fall, without question - it's easy to witness for yourself if you're familiar with the areas, and a jolly good thing it is too.

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Are you looking on Rightmove? I just did a search for Shoreditch and there are only 7 one bedroom properties for less than £1000 per month. That seems crazy to me. Where are you seeing more and more properties coming on to the market or rents being reduced? What size property are you looking for? Do you use a programme to see price falls on Rightmove (Property Bee, Chome Property Tracker)?

£1000 is a total bargain for Shoreditch - compared to prices 6 months ago.

Toward the end of last year, you literally could not find a one bedroom flat around Shoreditch for less than £450pw. Now there are dozens, and some for as 'little' as £300pw. I know because I was looking, in touch with all the estate agents, and going on viewings.

One flat which I viewed last year was on at £480pw, and 6 months later is back on the market at £395pw. The number of properties is up, and the prices are way down.

Edited by Dr_Mibbles

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£1000 is a total bargain for Shoreditch - compared to prices 6 months ago.

Toward the end of last year, you literally could not find a one bedroom flat around Shoreditch for less than £450pw. Now there are dozens, and some for as 'little' as £300pw. I know because I was looking, in touch with all the estate agents, and going on viewings.

One flat which I viewed last year was on at £480pw, and 6 months later is back on the market at £395pw. The number of properties is up, and the prices are way down.

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http://www.arla.co.uk/news/2012/11/prime-london-rents-fall-65758/

Prime rents are on the fall, without question - it's easy to witness for yourself if you're familiar with the areas, and a jolly good thing it is too.

That's nice but the article is 5 months old and the drop was only 2.7%. Further "There are, however, exceptions to this as Notting Hill experiences a 0.5% growth in rents in the three months leading to the end of October, and 2.7% rise over the year."

Also "The lower price ranges (£500 to £1,500 per week), on the other hand, is the strongest in central London with a fall of just 0.1% in the three months to October. This is compared to a decline of 1.2% in the £1,500+ per week bracket." So the the lower range which might be thought to benefit from a downward cascade was unaffected.

Outside the narrow field of prime London/Shoreditch, the broader picture looks to me to be one of continual upwards pressure, which ties in with what I hear anecdotally. Of course if there are prime falls, and these are sustained, then there may yet be a cascade effect. But with smaller volumes the prime area is more volatile and trends can be short-lived. We can hope but I'm not convinced the wind has changed yet.

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Are you looking on Rightmove? I just did a search for Shoreditch and there are only 7 one bedroom properties for less than £1000 per month. That seems crazy to me. Where are you seeing more and more properties coming on to the market or rents being reduced? What size property are you looking for? Do you use a programme to see price falls on Rightmove (Property Bee, Chome Property Tracker)?

Shoreditch is adjacent to the City so you wouldn't expect it to be cheap - move further out and you can get plenty of places for £1,000.

Nice 2 bed in leafy Wanstead - where a lot of City professionals live - in a mansion block with parking for £1,000. And close to the tube - and Epping forest/the countryside.

http://www.rightmove.co.uk/property-to-rent/property-41741123.html

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Shoreditch is adjacent to the City so you wouldn't expect it to be cheap - move further out and you can get plenty of places for £1,000.

Nice 2 bed in leafy Wanstead - where a lot of City professionals live - in a mansion block with parking for £1,000. And close to the tube - and Epping forest/the countryside.

http://www.rightmove.co.uk/property-to-rent/property-41741123.html

That one says 'Type of let, short term'. Is it up for sale at the same time? Normally a property that's a permanent short letter will be quite a bit more expensive than the usual AST of 6 months+.

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QE is not designed to raise the profits of banks, and cannot directly do so, it is designed to improve liquidity. They don't get given a single penny of "free" money since they must purchase high quality assets/bonds before exchanging them for QE money, if they choose to do so. The BoE don't call it the "asset purchase facility" for nothing.

It's really excellent to hear your insights into the banking industry, but I fear you have been amongst the enemy a little too long, and have gone native.

it wasn't just a liquidity problem, it was an insolvency problem. "Rebuilding balance sheets" isn't just a question of moving a few asset classes around, it required and will further require, years of profits to make up for the losses. I admit my analyses was simplistic and exaggerated, but you simply can't ignore the concrete benefit that the banks are getting from this cheap money policy, not to mention the boost to sentiment. As well as the benefit they are getting from unnaturally low interest rate, the "high quality assets" that they did exchange for money were themselves already inflated by the same policy. Win win.

I hope you are right about the financial sector shrinking, and in that case, it probably is hard to claim that QE is actually causing price rises, but it seems likely that without it, they would be falling - if that makes sense. I'm still not sure if I believe the theory of the hot foreign money. I know you say you're getting it from the horse's mouth, but I just can't believe that there is a significant enough number to make a difference, and yet they remain so invisible.

The only other (half) explanation I can suggest, is that there are simply so few nice place with jobs in England. I know lots of people hate london, but it obviously does have a certain attraction. The only other places I can think of, where someone might have a nice environment and good prospects are brighton and cambridge, which have simiilar monster boom/bubbles (with apologies to all those of you who love the north).

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I'm still amazed that after 5 years of falling house prices ( in real terms ) the loonies in london are still bumping up prices and people are buying before they 'miss out'

I look at some of the asking prices round where my wife sold 2 years ago and it's insane, and with that insanity surely follows collapse.

The question is how and when ?

Will the banks deliberate collapse the bubble to cash in ?

Will people simply stop buying ( not many can be buying in reality ) ?

I don't see how it can go any higher and their will be some BIG losers at some point. it would seem London is different, it's got more idiots per square foot than anywhere else in the world.

Bubbles spell Troubles,

Or will people realise that London is now a third-world cesspit that no one in their right mind would want to live in?

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Or will people realise that London is now a third-world cesspit that no one in their right mind would want to live in?

i think todays events bare that out.

shocking really that has happened in the uk...but maybe not surprising, sadly.

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It's really excellent to hear your insights into the banking industry, but I fear you have been amongst the enemy a little too long, and have gone native.

it wasn't just a liquidity problem, it was an insolvency problem. "Rebuilding balance sheets" isn't just a question of moving a few asset classes around, it required and will further require, years of profits to make up for the losses. I admit my analyses was simplistic and exaggerated, but you simply can't ignore the concrete benefit that the banks are getting from this cheap money policy, not to mention the boost to sentiment. As well as the benefit they are getting from unnaturally low interest rate, the "high quality assets" that they did exchange for money were themselves already inflated by the same policy. Win win.

I hope you are right about the financial sector shrinking, and in that case, it probably is hard to claim that QE is actually causing price rises, but it seems likely that without it, they would be falling - if that makes sense. I'm still not sure if I believe the theory of the hot foreign money. I know you say you're getting it from the horse's mouth, but I just can't believe that there is a significant enough number to make a difference, and yet they remain so invisible.

The only other (half) explanation I can suggest, is that there are simply so few nice place with jobs in England. I know lots of people hate london, but it obviously does have a certain attraction. The only other places I can think of, where someone might have a nice environment and good prospects are brighton and cambridge, which have simiilar monster boom/bubbles (with apologies to all those of you who love the north).

The BoE isn't really creating 'free' money? Not much.

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Edited by zugzwang

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  • 296 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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