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Londoners Cashing In Flee To Suburbs As Home Rally Wanes

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http://www.bloomberg.com/news/2014-07-30/londoners-cashing-in-flee-to-suburbs-as-home-rally-wanes.html

For equity-derivatives broker Andrew Adamson, it was a trade too good to pass up.

In October, he was offered 1,000 pounds ($1,700) per square foot for his London townhouse. Other homes in the area were going for about 30 percent less. Adamson accepted it immediately.

London’s housing market, having outperformed the rest of the U.K. with price gains of more than 50 percent in five years, is cooling as owners like Adamson cash out. They’re leaving the city for less costly suburban and country homes because they expect mortgage rates to rise and new lending rules to damp prices. London estate agents had the largest increase in instructions to sell homes in Britain in June and the biggest drop in people seeking to buy them, according to the Royal Institution of Chartered Surveyors.

“Now is the time people are cashing in,” said Adamson, 46, who used the 2 million pounds he raised from the sale to buy a country manor in Hampshire, southern England, for 400,000 pounds less. “I caught it before everybody else started talking about it. As soon as everybody starts talking about it you’ve missed the best deal.”

And that performance has certainly outperformed the majority of what wage earners will have earned in 5 years. All the house did was stand there and was economically more productive than workers.

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http://www.bloomberg.com/news/2014-07-30/londoners-cashing-in-flee-to-suburbs-as-home-rally-wanes.html

And that performance has certainly outperformed the majority of what wage earners will have earned in 5 years. All the house did was stand there and was economically more productive than workers.

All looking good. Would like to see the "manor" that was bought for £400,000..... think the description might be a bit optomistic!

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And that performance has certainly outperformed the majority of what wage earners will have earned in 5 years. All the house did was stand there and was economically more productive than workers.

Very few sellers get out at the peak. We've already had 'the ripple', or most of it, when they've sold in London past few years, relocated outside London, and still paid very high prices.

We'll see how the flow of buyers holds out... MMR, Russians, Global tapering. Values in the market set by as few as 1 buyer and 1 seller, for all owners of same asset, when it becomes a trend down.

Only a very few owners of a collapsing financial asset trade it for money at 90 percent of peak value. Some others may get out at 80 percent, 50 percent or 30 percent of peak value. In each case, sellers are simply transforming the remaining future value losses to someone else. In a bear market, the vast, vast majority does nothing and gets stuck holding assets with low or non-existent valuations.

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Very few sellers get out at the peak. We've already had 'the ripple', or most of it, when they've sold in London past few years, relocated outside London, and still paid very high prices.

We'll see how the flow of buyers holds out... MMR, Russians, Global tapering. Values in the market set by as few as 1 buyer and 1 seller, for all owners of same asset, when it becomes a trend down.

You forgot a biggie - money laundering from china is being stopped because they're in the middle of a slow down and need the cash back home.

http://www.breitbart.com/Breitbart-California/2014/07/18/China-Cracking-Down-on-Money-Laundering-to-Buy-Real-Estate

China is cracking down after the CCTV state-owned broadcaster secretly recorded a state-owned bank executive bragging that the bank illegally provides in-house money laundering services for wealthy Chinese nationals to violate currency controls and buy real estate in “world cities” as their off-shore safety deposit box.

http://sourceable.net/banks-scrutinized-over-foreign-property-buyers/

Australia’s leading banks are being grilled about their oversight of the investment activities of foreign buyers of domestic property

If the allegations are true, they certainly help explain how Chinese nationals have recently become the biggest investors in US housing and Australian commercial and residential property, despite Beijing restricting the amount of renminbi that individuals are permitted to convert into other currencies at a paltry USD$50,000 per year.

http://www.macleans.ca/economy/economicanalysis/the-flight-of-the-redback/

China: The flight of the redback If China is the future of the global economy, why do rich Chinese want to get their money out?

Yet, as the race for a piece of China’s currency action unfolds, it would be foolish to overlook an equally important trend. Wealthy Chinese are desperate to get their money out of the place. Anyone living in Vancouver doesn’t need to be told this, of course. Stratospheric real estate prices have benefited, in no small part, from the influx of rich mainland Chinese who have been flocking to buy properties there, and in other Western cities, as a safe, stable store of wealth.

Buying homes overseas is only one of the ways China’s elite have skirted Beijing’s currency controls, meant to prevent individuals from moving more than US$50,000 a year out of the country. Last week, another path for yuan to flee China was exposed. In a report that’s sent shockwaves across the country’s financial sector, China Central Television reported that rich Chinese have transferred billions of dollars’ worth of currency out of the country through a secretive remittance program sanctioned by Beijing and available through several large banks. CCTV accused one lender, in particular, the Bank of China, of using the program to help clients launder money. The program has since been halted, following an investigation by China’s central bank.

Carney and the MPC knew this was coming so dived in at the last minute to cap high LTV mortgages and save the UK banks for their own greed.

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In the area/sector check regularly (SW 17) there is a rash of new property coming on the market, and lately I am seeing more reductions, inc. one the other day of 15% from initial AP.

These are very largely period 2 bed flats, either conversions or PB maisonettes, which have never really been foreign investor territory so I think it must be MMR + FTBs backing off. I suspect also that lenders' surveyors will in many cases have refused to sanction some of the crazy asking prices. According to the LR the rise in APs in this area in the past year has been one of the highest in London.

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400000 less. Not 400000.

He paid 1.6 million if you do the math

oops, my mistake... only skimmed it.

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I am not so sure about this. I just did some research on fleet hampshire which is a typical escapte from London type area. Its very green around here, but communtable to London.

All I can see is most properties dropping in price

http://www.housepricecrash.co.uk/forum/index.php?/topic/200046-house-prices-appear-to-be-dropping-a-significant-amount-in-hampshire/

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Probably a degree of confirmation bias in the derivatives trader's mind. Even if the manor house ends up dropping like a stone, he'll still somehow justify it as a great decision.

Admittedly it's tourist season at the moment (and possible spill over from Chinatown, of course) - but I'm astonished at how many people of Chinese origin are in central London. I'd say they out number every other ethic group except white.

Edited by StainlessSteelCat

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