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Small London Flat To Cost £36M By 2050

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Hugh Best, LCP's investment director, said: "The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change. Mumzy got me a set of crayons and a Hello Kitty Ruler for my birthday, so I just drew a line. I also drew a doggie, but I forgot to put a tail on him"

At a 9% growth rate, the average £1.5m flat will fetch £6.3m by 2030 and £36m by 2050. In the shorter term, LCP, which has invested about £600m in London property, reckons speculators will earn even more – about 14% a year – over the next five years.

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Can't actually believe this... http://www.theguardian.com/business/2014/mar/04/average-small-central-london-flat-36m-2050

'Cause we all know we can extrapolate a trend 36 years into the future...

This would be hilarious if it weren't so sad. These people are entrusted with people's hopes, dreams, and hard-earnt.

Why not, just let the morons get on with it....

They will either be correct and the price of a loaf of bread be £10,000 (sorry just a quick token estimate of the amount) or they will be totally wrong.....

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Why not, just let the morons get on with it....

They will either be correct and the price of a loaf of bread be £10,000 (sorry just a quick token estimate of the amount) or they will be totally wrong.....

left to its own devices, the market would remunerate morons appropriately - but its not a market we have anymore thanks to govt interference... Who can blame him for taking a govt backed bet

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Can't actually believe this... http://www.theguardi...n-flat-36m-2050

'Cause we all know we can extrapolate a trend 36 years into the future...

This would be hilarious if it weren't so sad. These people are entrusted with people's hopes, dreams, and hard-earnt.

Welcome back to 2007.

Brilliant.

London collapse imminent.

You have been warned.

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You can see why the patented Precision Bloo Loo price and trend calculating devices are selling so well...we also do a digital version payable in Bitcoin.

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Can't actually believe this... http://www.theguardian.com/business/2014/mar/04/average-small-central-london-flat-36m-2050

'Cause we all know we can extrapolate a trend 36 years into the future...

This would be hilarious if it weren't so sad. These people are entrusted with people's hopes, dreams, and hard-earnt.

Ads in 2050: Small london flat for sale, cost £36 million, or 100 loaves of bread. Bread preferred.

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Boris Johnson, the mayor of London, said in January it would be "utterly nuts" to deter foreign investment in the housing market.
I agree. However buy flats is speculation, building them would be investment there is a big difference.

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It's precisely the logic of HPI.

Perhaps more interesting is the calculation I did in 2007 based on the logic of HPI.

Take a pensioner with an average house but nothing but the state pension in income. Compare a worker with no assets. How much does the worker have to earn to keep the wealth gap constant at the (2007) value of the house? Assume living costs (all-but-rent) to be the same for both at the value of the pension, and that neither borrows.

The answer was, the worker needs to earn a little over £95k headline wage. Cost to employer (including jobs tax) £107k. The breakdown of the £95k has two big components: tax, and an amount of savings to match exactly the pensioner's HPI. Rent is a distant third and all-the-rest fourth.

Of course that calculation was inaccurate too: it ignored the pensioner's benefits package, such as bus pass, "fuel allowance", free NHS, etc. Not to mention costs of working, such as going to the sandwich shop for lunch.

Of course, in reality the HPI didn't happen, and since 2007 I've closed that wealth gap myself - and on a lower income[1] :D

[1] Part of that time (a little under three years) was on an income in the same ballpark. It helped, and in particular it got me started on avoiding taxes.

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good stuff.

helpfully this "small London flat", with a 'value' of £1.5m, is 'worth' pretty much spot on one millionth of the UK's c. £1.5trn p.a. economy.

how long before the pwoperdee outstrips the economeh? only a matter of time, surely*?

* - strictly speaking, GDP estimates include the 'value' of, amongst many other things, residential newbuild, so mathematically there'd only need to be one average London flat built per year to stop this ever happening, but, still, you get my drift.

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The Crimea crisis would not halt London property's inexorable rise, said Naomi Heaton, LCP's chief executive. "The Russians are only a part of the market and have been dwindling in number over the past few years … we could instead have the Ukrainians coming in with their money. London is the destination for the high net worth community of the world, and we are only just beginning to see the mainland Chinese. The loss of some Russian oligarchs is not a fundamental loss for the market."

Would that be the same Ukraine that's having to use emergency loans from the US and EU to stave off imminent bankruptcy?

Free the wealth!

:lol:

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Can't actually believe this... http://www.theguardian.com/business/2014/mar/04/average-small-central-london-flat-36m-2050

'Cause we all know we can extrapolate a trend 36 years into the future...

This would be hilarious if it weren't so sad. These people are entrusted with people's hopes, dreams, and hard-earnt.

I remember these stories in 2006. Everyone loves to extrapolate a trend as if it lasts for ever. Since the early 80s we have devalued our currencies, that is the only reason that asset prices and the stock market have zoomed upwards. We are not materially richer; the only thing that makes our lives "better" has been technology which has consistently fallen in price. All consumer staples that have been built for convenience are probably purchased on the back of debt in one way or another.

The pyramid system we created is breaking down as population growth didn't keep up so we needed immigration which has lowered services / wages / quality of life for the population but increased asset prices for the wealthy. The government now deems the wealthy to be anyone who earns over 40K - just as an aside - in 1910 the only people who paid income tax were those who earned more than £5m a year the equivalent of £80m/year today. Sure, services have improved and poverty is better than the 1900s but there must be a lot of inefficiencies there to provide the services the population needs.

http://katchytitle.blogspot.co.uk/2011/10/future-of-britain-uk-it-looks-bleak.html

Edited by katchytitle

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Er where's my fee for this brilliant insight, I've already worked out a £100k house will be worth £1.38bn in 100 years.

I see no reason to disagree with such calculus.

After all, given the average Land Reg sold price is now IIRC around 160k, that means by 2050 assuming 9% the average gaff will be £3.56m.

I’m being generous here on the wage inflation, but I’ll assume average 26k and 2% rise p/a – an average salary of 53k come 2050.

A mere 60 year mortgage term, nothing that an intergenerational arrangement with kids you don’t even have yet can’t sort.

Of course the 100 year arrangement begs a whole different quandary. Extrapolate to that length of time at 9% and we find the average gaff to be a mere back of the sofa scrummage snip at just over £800m. Meanwhile the same wage rise at 2% gives us a cumulative average of 185k per annum, a mere 4000 odd year mortgage term for those pent-up first time buyers come 2114.

So while it may be that come the middle of the century debt ties in the family with those yet even conceived may be commonplace, early at the onset of the next century, if evolution if the theory we go with here, we could find those pent-up savvy investors signing contracts with a whole new species that doesn’t yet exist!

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I see no reason to disagree with such calculus.

After all, given the average Land Reg sold price is now IIRC around 160k, that means by 2050 assuming 9% the average gaff will be £3.56m.

I’m being generous here on the wage inflation, but I’ll assume average 26k and 2% rise p/a – an average salary of 53k come 2050.

A mere 60 year mortgage term, nothing that an intergenerational arrangement with kids you don’t even have yet can’t sort.

Of course the 100 year arrangement begs a whole different quandary. Extrapolate to that length of time at 9% and we find the average gaff to be a mere back of the sofa scrummage snip at just over £800m. Meanwhile the same wage rise at 2% gives us a cumulative average of 185k per annum, a mere 4000 odd year mortgage term for those pent-up first time buyers come 2114.

So while it may be that come the middle of the century debt ties in the family with those yet even conceived may be commonplace, early at the onset of the next century, if evolution if the theory we go with here, we could find those pent-up savvy investors signing contracts with a whole new species that doesn’t yet exist!

Brilliant! Very funny. :D:D

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Can't actually believe this... http://www.theguardian.com/business/2014/mar/04/average-small-central-london-flat-36m-2050

'Cause we all know we can extrapolate a trend 36 years into the future...

This would be hilarious if it weren't so sad. These people are entrusted with people's hopes, dreams, and hard-earnt.

The problem with extrapolating existing trends into the future is that there was this geezer once who was called like Malthus.....

People tell me that I am slightly odd...

itsarandomworld

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Small London Flat To Cost £36M By 2050

My imagination has tomandlu still feeling sorry for free-will competitive market buyers when they reach £30M in 2040.

And all the other apologists doing the same 'They just wanted a home.' (No matter what the debt and fact they outbid others with credit).

And Si1 accusing those who are doing the free-choice buying and paying higher prices as being trolls, unable to accept other market participants make decisions of their own; even bad ones where they have a belief forever in HPI. Just like the types who write and lap up these articles. They exist. Stop polishing their shoes. Life isn't fair. People lose out, and for decade+ it's been those waiting for house prices to correct who are the losers.

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Spoke yesterday to a guy who took his wife up to London for a night. They stayed with a friend who lives in a grace & favour flat just off Covent Garden. Ex-council property.

The friend asked them how much they thought it was valued at. Being rubes, they said £500k? Nuh-uh: £3.1m.

The guy said they had a hard time getting to sleep: the bedroom was so narrow they kept elbowing each other. (Fire away with your dreadful puns ;))

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