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My Old Council Flat Sold For Half A Million – This Madness Can't End Well


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HOLA441

Suzanne Moore in the Grauniad. Not a lot of insight but welcome all the same.

http://www.theguardian.com/commentisfree/2014/apr/02/london-housing-bubble-property-market-madness

International finance moves into the centre of London as families cling to its edges. Money is spent on commuting. It's still worth it to get on that ladder. You can't fall. Or look down. Keep the faith and the bubble will not burst. Wages will not rise much but huge personal debt is being encouraged. Off-plan schemes sell shares in flats before they are built. Old council estates are spruced up. The dread basement dig-outs clog the pavements with skips of earth.
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HOLA446

The mathematics are sacked well in HPC's favour.

Le't say pwoperdee starts off at 250k and then gains 10% per year.

2008 = 250k

2009 = 250k + 25k = 275k

2010 = 275k + 28k = 303k

2011 = 303k + 30k = 333k

2012 = 333k + 33k = 366k

2013 = 366k + 36k = 402k

2014 = 402k + 40k = 442k

2015 = 442k + 44k = 486k

2016 = 486k + 49k = 535k

2017 = 535k + 53k = 588k

As demonstrated above, for property to increase 10% year on year it takes larger and larger amounts of money to be added year on year thus you would require exponential growth against a backdrop of static rents and wages which underpin property valuations.

-- pOnZi --

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HOLA447

One hopes that some of this 'global rich' are leveraging up.

If London manages to bankrupt some of them, then I would say 'job well done!'

I would suggest it is mostly leverage. If you are bullish on London property leverage is rational. Why buy one flat when you can buy five? A deposit on an off-plan new build is just leverage.

Most of the money is coming from the Far East. In the Far East in general, and in China in particular, property developers are using collateral from other property to buy and build new property. It's a giant Ponzi scheme. It's impossible to say how much of that money is leaching to Western cities.

Ghost cities in China? Ghost streets and ghost tower blocks in London! Get your popcorn my HPC friends, this will be spectacular!

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Now we're complaining because there are too many bearish/critical articles in the MSM? Oh, HPC, never change... ;)

Bit like me gorging on chocolate and saying "how terrible, this isn't going to end well, I'll be fat!" then bite off another chunk.

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