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Eddie_George

The One Piece Of Data That Could Pop London's Housing Bubble

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The key takeaway from their findings is that most of the press reports on the housing market in London are wrong, because they are based on the “asking price” of a property, rather than the actual price it sold for. To get the figures which feed the hysterical headlines, journalists and researchers take figures from websites like Rightmove, which is an advertising sites on which estate agents attempt to get the most money they possibly can for a property. The difference between this asking price figure and the actual sale price is often as 10 percent or higher, meaning the stories often overestimate the size of the bubble. Worse, the figures they rely on includes data from prime central London, a collection of enormously expensive areas which have become the playground of the international super rich.

The high-end properties have enormous data-skewing potential simply due to their overheated price, Rawlings pointed out. Many of them are also listed with several agents, who each put their own advert on Rightmove. This means that if you take an average of the housing market using the asking price of these properties, the data becomes hopelessly skewed. So although the headlines scream housing bubble – and we all believe them – the market is actually calmer than meets the eye.

http://www.forbes.com/sites/jasperhamill/2014/02/28/the-one-piece-of-data-that-could-pop-londons-housing-bubble/

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All very well in theory, but plenty of us could quote bubbly examples from very non-prime London. E.g. the 2 bed maisonette in a pleasant but non fashionable part of SW17 I looked at with daughter. Sold April 11 for £250k, re- sold March 13 for £350K (AP was £365K). There had admittedly been some work but the place had been quite liveable - we had seen far worse.

An identical property a few doors up, in a far less immaculate state, recently went on the market for £410K, quickly reduced to £395K and very soon sold. I have yet to see what it went for but I suspect not a lot less.

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London will continue to offer a safe haven for foreign investors.

There's plenty of Chinese/Indian/Russian/etc... millionaires who will happily dump large sums into the capital because they know that Westminster is the current world vanguard of safety deposit box housing schemes.

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