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fru-gal

London's Property Boom Is Losing Its Fizz

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http://www.telegraph.co.uk/finance/personalfinance/houseprices/10849683/Londons-property-boom-is-losing-its-fizz.html#disqus_thread

and an interesting anecdotal from the comments section;

soysauce1 4 hours ago

I have yet to see one financial commentator mention the effect that introducing CGT for foreign owners and expats is having along with the 15% purchase tax next april, as someone who has worked in central london Property for 33 years I have always found the media to be 6 months behind what the market is actually doing, perhaps that is because they rely on the honesty of Estate Agents for their information, not necessarily the best source... Contrary to popular belief rents and prices have been stagnant or falling for several months now along with void periods running to 4-5 months for rental property, behind the scenes I have been contacted by 5 overseas landlords who are selling up precisely because of the tax changes, the sentiment is definitely London is no longer as attractive as it was, we own our safe haven properties, time to rationalise the portfolio and look elsewhere to invest...

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Interesting reading. Rental 4-5 month voids? There are now a lot of deleveraging forces in play. China tightening, MMR, the existing tax-changes and ones set to come in.... a swell in overleveraged bomad, BTL, and complacent owners not coming to market yet with inventory on market recently reported at 2004 lows, but perhaps set to tick up.

Although plenty views from all market participants, including those who see no reason why an older owner would accept £1m for their house, to downsize, as it would cost them £40K in fees to buy a £600K property. Can only hope another £1m owner a few houses down sells for £900K in near future, followed by owner across the street accepting £750K, then probate next door accepting £550K from someone who managed to pass MMR and qualify for a mortgage (and probably still overpaying).

Perhaps all the "population growth = HPI" etc, and from those comments, how "We should thank our lucky stars for buyers paying ever higher prices." etc, will be proven correct forever against what I believe bubble prices. If not, no forgiveness from me. They have their position, I've long had mine and suffered others in the market paying ever higher prices. If it crashes, they take the consequences.

I doubt the bubble is about to burst in London.
The Government has invested too much time and energy in encouraging, enticing, and facilitating, the global super rich to reside there.
Over a few years, the UK investor has been able to make a lot of money developing, buying and selling on, to these people. In fact this area has been an attractive addition to any portfolio and it will remain so for some time.
At the point where people lose interest in borrowing, the rates offered will have to come down. This is especially true if the lenders are also being squeezed from the other end by a rising base rate. I can quite easily envisage base rates back at say 1.25%, but mortgage rates falling to 3% or so.
Meanwhile, all this is academic because 80% of London new build is being bought by Chinese investors and they don't need mortgages in any currency. And they are thinking on multi-generational timespans.

No need to repeat 2008 with all the excuses for then recent buyers paying silly high prices, lobbying for reflation. It's been similar past 2 years to 2006-07, including those this week offering £20K over on houses at asking price £250K without even viewing. Buyers made their own decisions.

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