The Future Of London

[Dorkins]

As is the supply of London property. If prices hold, it will encourage foreign buyers, and if prices fall moderately, it will encourage a new swathe of foreign buyers who couldn't afford skin in the game at the higher price.

All resources are scarce, and there is no such thing as a one way bet.

[winkie]

I wonder what would happen the the UK's already dire balance of payments if we stopped foreigners buying London property. It's depressing but all we've got left to trade with Arabs for their oil are nice flats in Marylebone.

...fair enough, but once they are gone they are gone....the flat won't come back and the money that bought it won't come back.....short term gain, long-term pain for some.

[tomandlu]

...fair enough, but once they are gone they are gone....the flat won't come back and the money that bought it won't come back.....short term gain, long-term pain for some.

In the long run, it'll be okay. At some point, legislation, in response to changing voter demographics, will make it very expensive for non-doms to own UK property (and that's assuming a black swan event doesn't trigger a mass exodus before then).

[winkie]

In the long run, it'll be okay. At some point, legislation, in response to changing voter demographics, will make it very expensive for non-doms to own UK property (and that's assuming a black swan event doesn't trigger a mass exodus before then).

I suppose you have got to give people time to get their money's worth.

[Dr_Mibbles]

Foreign investors don't vote, so politically they are vulnerable to revenue raising initiatives. Particularly if Labour win in 2015.

But to be honest, the market is starting to correct itself. Yields are under 2% in prime areas, and there are more attractive investment options. That's the thing - people who live and work in London tend to rent these properties, and with massive job cuts in the banking sector, there simply are not enough highly paid individuals for all those £1,000pw+ one/two bed flats.

[winkie]

Foreign investors don't vote, so politically they are vulnerable to revenue raising initiatives. Particularly if Labour win in 2015.

But to be honest, the market is starting to correct itself. Yields are under 2% in prime areas, and there are more attractive investment options. That's the thing - people who live and work in London tend to rent these properties, and with massive job cuts in the banking sector, there simply are not enough highly paid individuals for all those £1,000pw+ one/two bed flats.

I tend to agree with you, unless they can persuade their employer to pay the rent on their behalf.....fine for the short-term if part of a career plan that keeps you on the move......but for most paying £1k a month for a repayment mortgage is bad enough......you then still require safe and secure long-term work to take on a uncertain long-term debt.

[Steppenpig]

Excessive sentencing. They'll lock you up for years for just throwing a brick.

I don't want to sound too much like a right-wing flogger and hanger, but rioting is one of those crimes that traditionally is more severely punished than it might appear to merit, because it undermines entire construct of or society und legal system. Like perjury.

[Tired of Waiting]

Spring surge sees average cost of new London home hit £542000: http://www.standard.co.uk/news/london/spring-surge-sees-average-cost-of-new-london-home-hit-542000-8623823.html

"A spring surge — in which the young competed with foreign investors for the relatively few flats and houses for sale — pushed the average asking price of a newly-built property in Greater London to £542,266, up 6.8 per cent in a month and 10.3 per cent in a year, according to new figures.

(...)

The new benefit cap will be fully rolled out by the end of September 2013. I guess we'll have to wait and see if it will have any effect on all this madness.

Property prices do have a link with rent levels. In the long run they can't stay too far apart. Rental yields in London can't stay below the rest of the country for too long. Investors would migrate, and eventually they would equalise.

[Executive Sadman]

London has become a very strange place indeed................

This is not sustainable.

Sounds a lot like a comment I read on zerohedge recently: There are only two housing markets at the moment: the ultra luxury market and the subsidized (mortgage or rental) market.

[Executive Sadman]

Foreign investors don't vote, so politically they are vulnerable to revenue raising initiatives. Particularly if Labour win in 2015.

But to be honest, the market is starting to correct itself. Yields are under 2% in prime areas, and there are more attractive investment options. That's the thing - people who live and work in London tend to rent these properties, and with massive job cuts in the banking sector, there simply are not enough highly paid individuals for all those £1,000pw+ one/two bed flats.

You cant be serious, can you? (although your suggestion that things will somehow be different when labour in in 2015 would imply, disturbingly, you are)

Our politicians are controlled by lobbyists, party is irrelevant. Voters are irrelevant. They have sold out to domestic lobbyists for decades, you are delusional if you think they'll be any different where foreign lobbyists are concerned. What the chinese or saudis want, the chinese or saudis will get.

[Dr_Mibbles]

You cant be serious, can you? (although your suggestion that things will somehow be different when labour in in 2015 would imply, disturbingly, you are)

Our politicians are controlled by lobbyists, party is irrelevant. Voters are irrelevant. They have sold out to domestic lobbyists for decades, you are delusional if you think they'll be any different where foreign lobbyists are concerned. What the chinese or saudis want, the chinese or saudis will get.

What evidence do you have to support the notion that moderately wealthy Chinese people are lobbying the government before they spend 600k on a two-bed 'investment' in Richmond?

[betonr]

I have just received this report

http://www.chestertonhumberts.com/global/chrome/may-2013-chrome-property-research.pdf

Some remarks:

According to the Greater London Authority, the average 21-year-old in London who regularly saves money and has no children will be 52 before they can buy their first home

The juggernaut that is the London housing market continues to roll on. The Land Registry reports that average house price growth in London accelerated to a hefty 9.6% in the year ending in March 2013. The average price is now £374,568, which is 6.7% above the pre-global recession peak of January 2008.

Hammersmith & Fulham (+13.1%) recorded the highest annual growth at borough level followed by Kensington & Chelsea (+12.2%). Strong growth is not limited to the traditional prime locations - Hackney continues to see strong growth (+10.4%) and average prices in the borough are now the 8th highest in London.

[Executive Sadman]

In the long run, it'll be okay. At some point, legislation, in response to changing voter demographics, will make it very expensive for non-doms to own UK property (and that's assuming a black swan event doesn't trigger a mass exodus before then).

Unions and corporate lobbyists decide elections, not voters. Voters might vote on the 'issues', but the issues are decided by the men behind the scenes. How much time is wasted on distracting people on non-issues like the dreaded 'gay marriage'? Does anyone care either way?

[Executive Sadman]

What evidence do you have to support the notion that moderately wealthy Chinese people are lobbying the government before they spend 600k on a two-bed 'investment' in Richmond?

Just look at who mandelsohn et al meet with. Camoron on his jollies to india recently..

You have to have a bit of intuition here mibbles, they arent going to spell it out for you... 'we're pricing the natives out of the market so you can have a saleable tax haven that will never depreciate in value'

[AvoidDebt]

http://www.standard.co.uk/business/business-news/reality-check-top-house-prices-take-a-breather-8642334.html

[Venger]

Britain’s great contribution to domestic architecture is being sacrificed to make white boxes for Russian oligarchs

30 March 2013

Muthesius was so impressed by our jigsaw of rooms, each with as few doors as possible, each with a fireplace, that he successfully imported das Englische Haus into the fashionable suburbs of Berlin. He noticed another odd thing about British doors. Where continental doors open in pairs into the middle of the wall, the shy British put single doors to one side of the room in their terraced houses. The Englishman ‘insists on having as few openings in his wall as possible’, he wrote.

What’s more, the Englishman hung his doors so that they hid the newcomer as he entered the room. This gave the shy Englishman a chance to slip into the room relatively unnoticed — not something most oligarchs consider particularly desirable.

As the property bubble — in London, anyway — expands, so does the oligarch’s hold over the city. Throughout the capital’s smartest streets, those handsome corridors, stairs, doors and walls are heading for the skip. And, with them, goes the odd, private, shy genius of the British terraced house: our greatest contribution to world architecture.

http://www.spectator.co.uk/features/8874701/the-home-wreckers/

Sorry for slipping that in.

I'm not convinced the flow of money will continue from Asia or elsewhere. A CNET founder just went from very very wealthy to bankrupt with his money never runs out attitude, and value doesn't matter. Although maybe his ex-wife will take some pity on him with her pre spend divorce payout. I hope more join him soon, for only a small tilt will have some of them bringing assets to market and an abyss in the market for others who could buy their homes at prices they've paid. Indian banks are also putting the squeeze on big debtors, with 10% of their loan book said to be non-performing or impaired. Vince Cable was out in South America recently, trying to encourage more students to come to British universities, with the overall number of foreign students said to have dropped recently.

[the shaping machine]

What evidence do you have to support the notion that moderately wealthy Chinese people are lobbying the government before they spend 600k on a two-bed 'investment' in Richmond?

Past Labour lobbying

[sparko]

Spring surge sees average cost of new London home hit £542000: http://www.standard.co.uk/news/london/spring-surge-sees-average-cost-of-new-london-home-hit-542000-8623823.html

"A spring surge — in which the young competed with foreign investors for the relatively few flats and houses for sale — pushed the average asking price of a newly-built property in Greater London to £542,266, up 6.8 per cent in a month and 10.3 per cent in a year, according to new figures.

Experts said it was the latest ominous sign of a property bubble in the capital, as the average asking price of all homes on the market across London also smashed the £500,000 barrier for the first time." "More than one in three of London’s first-timers have also received financial assistance from their families as they rush to beat rising prices."

Before someone points out asking prices <> selling prices: http://citywire.co.uk/money/house-prices-surge-15000-since-january/a672716 Sales achieving 97.05% of last advertised price.

Battersea Power Station flats sales break $1 billion barrier: http://www.standard.co.uk/news/london/battersea-power-station-flats-sales-break-1-billion-barrier-8623705.html

"A Malaysian consortium bought the station for £400 million last year..." "The flats have been marketed overseas in Singapore"

Chinese university in White City deal: http://www.standard.co.uk/news/london/chinese-university-in-white-city-deal-8623982.html

"One of China’s top universities plans to set up a new campus at the BBC’s former site in White City.". Expect even more Chinese investors buying flats for their kids to come study here. Don't expect any complaints about university fees or student loans.

This is why London property is so high right now: http://www.newstatesman.com/business/2013/05/why-london-property-so-high-right-now

"Singaporean buyers have benefited handsomely from the exchange rate making central London properties 10 per cent cheaper than five years ago and, further, strengthening of the euro has increased demand from continental buyers, particularly French and Italians." "The domestic market has also been buoyed by relaxed lending boosted by the launch of the Funding for Lending Scheme in August".

So the printing is devaluing the pound making it easier for foreign buyers and harder for locals, increasing inflation so decreasing locals' spending power, and directly inflating the bubble further.

London's £36bn benefits bill is bigger than the UK's whole defence budget : http://www.standard.co.uk/news/london/londons-36bn-benefits-bill-is-bigger-than-the-uks-whole-defence-budget-8623674.html

"The study by the Centre for Social Justice highlighted that £36 billion went on working-age welfare payments in 2011/12 in the capital, compared with defence spending of £33.8 billion."

"The number of children in workless households, nearly one in five according to the report, was the second highest in Europe, second only to the Former Yugoslav Republic of Macedonia."

The future then is a playground of opportunities for wealthy Asians and their offspring, serviced by a taxpayer-funded underclass. Where is the middle? That's who's paying the taxes.. and the rents. Probably around 53% of London households renting by now and I expect that figure to rise >60%.

I really wouldn't mind if they allowed new houses to be built by expanding the city to match the expanding population, which they resolutely refuse to. It feels like one goon

Edited June 4, 2013 by sparko

[winkie]

Many working Londoners are moving out to clear the head.....the rest of them seem to be running around like headless chickens....always on the go, going nowhere....noticed bullying on the road is at an all time high....late always late for a very important date.

[TheCountOfNowhere]

Riot anyone?

People being hacked to death on the streets in broad daylight anyone ?

Edited June 5, 2013 by TheCountOfNowhere

[Tired of Waiting]

(...)

London's £36bn benefits bill is bigger than the UK's whole defence budget : http://www.standard.co.uk/news/london/londons-36bn-benefits-bill-is-bigger-than-the-uks-whole-defence-budget-8623674.html

"The study by the Centre for Social Justice highlighted that £36 billion went on working-age welfare payments in 2011/12 in the capital, compared with defence spending of £33.8 billion."

(...) Where is the middle? (...)

I really wouldn't mind if they allowed new houses to be built by expanding the city to match the expanding population, which they resolutely refuse to. It feels like one goon

Numerically the benefits issue is by far the main problem. I doubt foreigners are buying tens of billions of £ / year? Not sure though.

But this illustrates the benefits issue well:

The benefits bill in Croydon alone was £1.7 billion, followed by Newham and Enfield, both £1.6 billion, and Barnet and Ealing on £1.5 billion, according to the analysis.

Barking and Dagenham had the highest welfare spend per head of just under £6,000 a year, followed by Newham with £5,256 and Enfield on £5,161 — with the lowest being Kensington and Chelsea at £2,695, apart from the City of London.

The saddest thing is that this report is by IDS' foundation. So he knows the problem, but is incapable of solving it due to political block by the media and majority of voters.

The report by the think tank, which was founded by Iain Duncan Smith before he became Work and Pensions Secretary, argued Britain is blighted by “welfare ghettos” where large numbers of people have been abandoned on unemployment benefits.

Centre for Social Justice managing director Christian Guy, said: “London is an economic powerhouse, but shamefully hundreds of thousands of people are held back from playing their full part. This is a tale of two cities with far too many people living in the shadows of success.”

It reminds me of an interview with the new Minister for Planning, Nick Boles, also fully aware of the planning blockage problem, but also incapable of solving it due to political block by the media and majority of voters.

.

Edited June 5, 2013 by Tired of Waiting

[Craig_]

When I saw the thread title I immediately thought of this beauty:

[Ulfar]

I predict the failure of the Thames barrier and massive flooding is the only thing likely to impact on London house prices.

Even then estate agents will be using it as a selling point such with entries such as river views, the new Venice.

Edited June 5, 2013 by Ulfar

[(Blizzard)]

But that doesn't make sense. The Tories are currently in power and generally (or at least used to be) against benefits. I don't see the Tories losing too many votes if they were to restrict benefits even more. Labour are the party of welfare voters. However the Tories have turned red (maybe the Lib Dems are rubbing off on them) as it seems to me that most of the big benefits cuts haven't really been that big and mostly affect the wrong people (child benefit cuts etc). There have been no real benefit cuts to those in workless households or those who work very much part time on purpose. In fact benefits increased last year well over most private sector pay rises and the government still has no plans to cap child benefit payments to 2 children and Universal Credit will not cut benefits to those who don't work (they have been very sneaky about this actually by emphasising that UC will allow people to be better off in work but what they don't say is that if you don't want to work, you still won't be any worse off than you are now).

If benefits were slashed, I suspect London would see significant social unrest. It would also cause serious short-term damage to the London economy which is increasingly reliant on handouts.

Basically, the economic changes of the last 15 years needs to be reversed, and benefits are a part of that. Undoing the last 15 years means putting London back to what it was, a significant fall from what it is now, and the government is going to do everything it can to avoid that.

Edited June 5, 2013 by (Blizzard)

[pig]

Reduce house prices, and you reduce the housing benefit bill.

Simples.