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Damik

London Crash Trigger

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http://www.telegraph.co.uk/finance/personalfinance/houseprices/10519880/London-house-price-growth-to-slow-in-2014.htmlThe London housing market will cool next year as a proposed tax on property sales limits demand from overseas buyers, according to property website Rightmove.

Miles Shipside, commercial director at Rightmove, said: “Upwards price pressure remains but will show some signs of waning. The planned tax will take some gloss off overseas speculators’ future profits.”

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Perhaps it is enough if 10/20% of the foreign owners put the London properties on the market in next 6 months? Any signs of clever money leaving London property?

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The incredibility stupid asking prices and the forced removal of tax payers support due to the collapse of the pound or the US deciding the need to raise rates will cause downward pressure on the f***wits buying house in London and the surrounding area ( i.e. the UK ).

Caveat Emptor. You have been warned.

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HTB2 announced March 2013 to begin January 2014 (subsequently brought forward)

HP increase starts immediately (albeit slowly), if you know that prices will be going up in 2014 then surely it makes sense to buy straight away?

(In fact hopefully we are now seeing this go into reverse as HTB2 has started, it does very little to "help" anyone buy, but that's beside the point)

So with the London CGT issue, maybe the same thing will happen the other way round

- There won't be the same enthusiasm to buy from April 2015 as capital gains will be taxed

- Therefore what's the point in buying speculatively now? There won't be the same queue of people when you want to offload after April 2015

- So maybe the crash can start now (well hopefully anyway)

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http://www.telegraph...ow-in-2014.htmlThe London housing market will cool next year as a proposed tax on property sales limits demand from overseas buyers, according to property website Rightmove.

Miles Shipside, commercial director at Rightmove, said: "Upwards price pressure remains but will show some signs of waning. The planned tax will take some gloss off overseas speculators' future profits."

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erhaps it is enough if 10/20% of the foreign owners put the London properties on the market in next 6 months? Any signs of clever money leaving London property?

It feels to me more like a change from "buy" to "hold" rather than "sell"

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I thought a lot of the higher-end properties were owned by offshore 'shell companies' for tax reasons anyway? (Bonus: Also allows the actual owner/occupiers to dodge things like council tax). Not sure how that would fit in with CGT on individuals.

On the other hand, if lots of people are liable then the prospect of paying a hefty amount of tax on property profits might encourage a rush for the exit before it comes in.

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A few things. This tax might not have much effect in itself but it might have an effect on sentiment i.e. that more taxes/laws that are anti property owners to come, especially if Labour get into power and that London property is not a "safe", sure bet anymore (if the party of the land owners and capitalists can impose this tax, then what will the "socialist" Labour party do?)

Property is easy to tax as you can't move it offshore and property owned by rich foreigners is especially attractive since it gets the cash in via tax and is a popular vote winner since voters hate property speculators and especially rich foreign, tax avoiding ones.

Edited by fru-gal

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It's well documented that the Prime London market (top of the ponzi) has already started to stall. It's worth noting at this point that globally all of the greater fools have been exhausted.

Not only that but yields on Prime London property are already down to 3.6% which will soon be touching base with the rates on 10 year US treasuries (currently about 2.80%).

I would expect a sell off of Prime London property if you can get a better yield in bonds AND prices are not rising.

If savvy/greedy investors decide that they can make more money outside of London property and do decide to sell off before any potential falls, then this will suerly push prices down. Now, if banks are highly leveraged in London property (which they are bound to be as the bankers live their and own it) then it could spell another bail out/in round causing upward pressure on bond rates.

And there you have a potential positive feedback loop.

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When the London bubble finally does collapse it's going to make some people very very very upset.

I for one, can hardly wait.

Yes, I will certainly be gloating when it happens, there will be no sympathy from me, even for the ones who "just wanted a home".

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Yes, I will certainly be gloating when it happens, there will be no sympathy from me, even for the ones who "just wanted a home".

I doubt many people buying in London right now just want a home...they want a home that will make them a fortune just like their lucky friends who bough in 1999. A lot of those 40% Bank of Dumb and Mad loans are about to vanish if you ask me.

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I doubt many people buying in London right now just want a home...they want a home that will make them a fortune just like their lucky friends who bough in 1999. A lot of those 40% Bank of Dumb and Mad loans are about to vanish if you ask me.

People buying in Ireland 2007, just wanted a home too. Now they are deep in the shite.

Did you know that back in 2007, Ireland was different? The days of the Celtic tiger (apparently) totally unstoppable, everyone was going to be rich and property could only ever go up.

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Carney has indicated there is going to be no excessive HPI on his watch.

He's growing on me. I've watched some full QA sessions with him and he's not looking like a shill.

The policy they seem to be embarking on of keeping base rates low until 2015 and using leverage limits to control property values looks very credible.

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Carney has indicated there is going to be no excessive HPI on his watch.

He's growing on me. I've watched some full QA sessions with him and he's not looking like a shill.

The policy they seem to be embarking on of keeping base rates low until 2015 and using leverage limits to control property values looks very credible.

Watch what he does, don't listen to what they say.

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Carney has indicated there is going to be no excessive HPI on his watch.

He's growing on me. I've watched some full QA sessions with him and he's not looking like a shill.

The policy they seem to be embarking on of keeping base rates low until 2015 and using leverage limits to control property values looks very credible.

In that case, why has there been excessive HPI on his watch?

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Thing is its not the HPI that is necessarily bothering me, its the lack of past, present and future income from my savings. I don't necessarily want to buy a house for the same reasons as I never did: flexibility.

However I would like my cash interest to offset my rental costs.

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When the London bubble finally does collapse it's going to make some people very very very upset.

I for one, can hardly wait.

To be honest I don't care how high LOndon prices go....pricing Londons productive people out of London only means better things for the people outside London..... :)

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In that case, why has there been excessive HPI on his watch?

Spot on. :lol:

When he started the media ramping started.

The silly lending started

Osborne came up with his new HTB plan, then brought it in early.

The BoE wont tell me what a housing bubble is and rates are STILL at 0.5% and mortgage rates are STILL at all time lows ( if you have a deposit ).

As I've said before....Watch what they do, not what they say. This has never been truer.

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It's well documented that the Prime London market (top of the ponzi) has already started to stall.

any supporting evidence like newspaper articles? need some ammo when discussing this topic with my wife .. :)

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To be honest I don't care how high LOndon prices go....pricing Londons productive people out of London only means better things for the people outside London..... :)

The only problem is that them selling a crappy flat in london for 500K are coming to the shires and paying £500K for what to them is a relative nice house....the trouble being that the nice houses should be selling for about 20% more than 2007 bubble prices.

London is the root of all the housing market woes.

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any supporting evidence like newspaper articles? need some ammo when discussing this topic with my wife .. :)

just googling 1 months old articles about prime London prices and it really seems that there is some sell off:

http://www.ft.com/cms/s/0/9d51bc94-5913-11e3-a7cb-00144feabdc0.html#axzz2neQoy1jq

http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/10469268/London-house-prices-set-to-spike-ahead-of-new-tax.html

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PS has Carney defined 'excessive HPI' or what constitutes a bubble?

No, but he did go on prime time TV and tell savers that the low interest rates and loss of their savings is good for them.

He should have been locked up just for that if you ask me.

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any supporting evidence like newspaper articles? need some ammo when discussing this topic with my wife .. :)

IMO It would be risky to buy London property at all time highs:

http://www.independent.ie/business/commercial-property/london-developers-risk-being-squeezed-as-market-cools-29779170.html

Home values fell in some areas of central London in October, according to Knight Frank. They dropped 1.4 per cent monthly in the South Bank area, where Canary Wharf Group and Qatari Diar Real Estate are planning to build apartments and offices.

Home prices in the borough of Westminster, which includes the affluent Mayfair and St James's districts, fell for a fourth consecutive month in September to an average of £1.1m. Home values in London rose 9.3 per cent in the year through September, according to the Land Registry. (Bloomberg)

http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=72418&intNewsSitePageId=118921-0&intNewsMonth=03&intNewsYear=2012

Prime central London has shown the strongest rental growth over the past twelve months, up 3.2 per cent, but in the past quarter rents rose by just 0.9 per cent. At the very top end, ultra prime values have slipped by 0.5 percent this year to date, reducing annual growth to just 1.4 per cent.

Interesting Anecdotal (could do with a thread of it's own)

Link between FTSE and prime central London rents is indisputable

Prime London developers face stern test

With the luxury market cooling, developers of prime London homes which have been the UK’s best-performing property segment since 2009 are now faced with the risk of being squeezed by skyrocketing building costs and land prices, media reports said.

Mark Farmer, Head of Residential at consulting firm EC Harris, said: “The biggest risk for developers is overpaying for a site based on the assumption that sales values in two or three years’ time” will be increasing.

“That's a very dangerous game to play. More importantly, they need to be factoring in construction-price inflation.”

Prices of residential land in prime London areas surged by 14 percent in the year to September as investors bet on the boom to continue, noted Knight Frank LLP.

However, indications of a slowdown are beginning to emerge as the rising pound has made UK properties more expensive to foreign investors. Even billionaires are beginning to have second thoughts given the high asking prices.

Notably, values of prime London homes climbed 6.8 percent in the year to October, or the slowest increase recorded over the last four years.

Edited by Gone to Ireland.

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The only problem is that them selling a crappy flat in london for 500K are coming to the shires and paying £500K for what to them is a relative nice house....the trouble being that the nice houses should be selling for about 20% more than 2007 bubble prices.

London is the root of all the housing market woes.

I do understand that high London ripple prices also affect others, helping price them out......BUT and the big but is bringing good employment into an area will mean that good jobs can support the higher house prices.......there are plenty of good knowledgeable workers outside of London, there is plenty of low price commercial property with lower rents outside London.....the savings then can be passed to the workforce, who can then buy something better and live for less, less stress....win.win. :);)

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there are plenty of good knowledgeable workers outside of London, there is plenty of low price commercial property with lower rents outside London.....

This doesn't happen.

1) There is a surprising lack of useful commercial property rurally

2) Downsizers from London are often cash rich even after buying a new place so don't need to work very hard going forward

3) Most downsizers of working age (I know) end up travelling back to London every week for a few days and getting a 'cheap' flat there - causing further housing issues

They don't tend to want to use the 'real' local shops either - they prefer boutique farm shops and Waitrose delivery

Clearly some good comes from it, but probably not as much as should.

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