Economists think London's property bubble will finally burst in 2017

[maverick73]

Looks like the FT are not the only ones to this were on the edge of small corrections price corrections (10%). Hopefully, the actions match the words. I used to be a home owner in Ruislip and bought a home in 2005 for £205k I recently saw a house for sale on the same street for £650k. It was a shock to me how much a three-bedroom terraced house is going for in London, especially when the salaries have been stagnant or dropping in some cases. I almost feel that an elite is trying to remove those who grew up in an area, to make way for richer cliental from abroad. 

http://uk.businessinsider.com/times-survey-londons-property-bubble-will-finally-burst-in-2017-2016-12

[Tempus]

They give the average property price in London as "£474,000 in 2016" yet Theresa May said in Parliament in July that it was £676,000. £474K sounds too low to me.

They also say the average London property price was " £257,000 in 2006". Again, sounds too low, but crazy to think we've had pretty much flat wage growth since then and yet £250K barely buys you a flat in zone 5 or 6 these days.

I see they say Royal Institute for Chartered Surveyors (RICS) forecasts "foreign investment offsetting a decline in UK buyers" and I fear that will be the problem. A small decline in prices is just going to attract investors who'll think London is having a sale. So until the government take steps to prevent investors...

 

Edited December 31, 2016 by Tempus

[spyguy]

Theyve had a sneaky look at the last few quarters figures.

[blackhole]

10 minutes ago, spyguy said:

Theyve had a sneaky look at the last few quarters figures.

+1000.  I know a team at one of the largest estate companies in the US (revenue in the $ billions) who've informed me that PCL 2m+ sales have stopped dead.  Times like this honest journalism might help, but alas, who I am kidding!

[honkydonkey]

I bought in Ruislip in 2004 (a flat) sold for a loss in 2012 taking inflation into account. Prices in the block now over 50% higher lol. 

Theres no way work will ever get me a house here anymore, so I work for myself and pay zero tax instead. I don't earn much, but what difference does it make, working a lot or a little will neither get me a house.

[thisisthisitmaybe]

 

9 minutes ago, honkydonkey said:

I bought in Ruislip in 2004 (a flat) sold for a loss in 2012 taking inflation into account. Prices in the block now over 50% higher lol. 

Theres no way work will ever get me a house here anymore, so I work for myself and pay zero tax instead. I don't earn much, but what difference does it make, working a lot or a little will neither get me a house.

The linked article says the London bull run went from 2006 to 2016, but it really accelerated from 2012-16 because of a carry trade, due to Sterling's overvaluation.

As that carry trade collapses, you might be able to move back into your flat at 2012 prices in another four years of years. But you would have to live in Ruislip:)

[honkydonkey]

Ruislip's a pretty good suburb as they go. I however will be waiting for those 2004 prices before I even get interested. 

[Tempus]

A 1-bed flat above a shop appears to start at £250,000 in Ruislip looking at Rightmove, though that looks unusually cheap. £300-£400K looks a more realistic budget for a decent flat. Basic houses start at £450,000.

Like the rest of London, an average earner hasn't got a prayer of buying using just their salary. 

[Bland Unsight]

3 hours ago, blackhole said:

+1000.  I know a team at one of the largest estate companies in the US (revenue in the $ billions) who've informed me that PCL 2m+ sales have stopped dead.  Times like this honest journalism might help, but alas, who I am kidding!

Henry Pryor's been tweeting about this fairly steadily.

 

[thewig]

If that isn't the top end crashing, I don't know what is.

When the top end crashes, what happens to the bit just below the top? Because that suddently becomes the same price as the top... ah right that crashes too I get it, what about the middle? because that becomes the same price as the top too... etc etc

 

mama always said MEGAbubble is as MEGAbubble does

Happy new year all!

[maverick73]

I’m presuming the crash will be driven by sentiment. I wonder what the Bank of England will do next, will they copy the American dream and raise rates in tandem or recline with their hands tied behind their backs.

[steve99]

12 hours ago, Tempus said:

A 1-bed flat above a shop appears to start at £250,000 in Ruislip looking at Rightmove, though that looks unusually cheap. £300-£400K looks a more realistic budget for a decent flat. Basic houses start at £450,000.

Like the rest of London, an average earner hasn't got a prayer of buying using just their salary. 

However what it may sell for or whatever justifies the price right now is nonsensical in any which way it is framed.  Ruislip is not PCL and never will be, no filmstar, rockstar or even any self respecting Chinese money launderer would choose Ruislip so in effect this suburb like many should be related to median or less wages in and around London.  In this case I would say 3x the median wage of £30K ie £90k for a flat above a shop.    So because £300K++ may be the normal selling price then a current asking price of £250,000 is still extremely expensive by any sane reckoning..   One day the prices in London will have to open up to locals with jobs, not just speculators on a mission to outdo each other with price paid... lets hope its 2017.

[long time lurking]

6 hours ago, maverick73 said:

I’m presuming the crash will be driven by sentiment. I wonder what the Bank of England will do next, will they copy the American dream and raise rates in tandem or recline with their hands tied behind their backs.

 

 

I`m no expert but i think the BOE will have no choice soon...just look out for the justification puff pieces ,the commons started the ball rolling with their unintended consequences of zero rate policy debate in the commons ...i`m just waiting for the savers have suffered long enough articles ...it`s game on then  IMO

[maverick73]

28 minutes ago, long time lurking said:

I`m no expert but i think the BOE will have no choice soon...just look out for the justification puff pieces ,the commons started the ball rolling with their unintended consequences of zero rate policy debate in the commons ...i`m just waiting for the savers have suffered long enough articles ...it`s game on then  IMO

Yes, savers have suffered for nine years to allow the financial markets to sweep their invisible messes under the hidden carpets, awaiting a British economist to be appointed as the leader of the monitory policy ahead of the Eurocrat's who sit at the round table.

[interestrateripoff]

Sounds like super Carney needs to come to the rescue.

[thecrashingisles]

7 hours ago, maverick73 said:

I’m presuming the crash will be driven by sentiment. I wonder what the Bank of England will do next, will they copy the American dream and raise rates in tandem or recline with their hands tied behind their backs.

They already need to back out of the post Brexit rate drop that just triggered a boom in consumer borrowing.  They have nowhere to go.

[Blod]

38 minutes ago, interestrateripoff said:

Sounds like super Carney needs to come to the rescue.

I do worry what that muppet will do to try to avoid HPC. Who knows how much harm he'll inflict, he's even bought into PCL so god save us from him.

[Bland Unsight]

8 minutes ago, Blod said:

I do worry what that muppet will do to try to avoid HPC. Who knows how much harm he'll inflict, he's even bought into PCL so god save us from him.

Source on the PCL purchase?

[SE10]

10 minutes ago, Bland Unsight said:

Source on the PCL purchase?

I thought he was having his rent paid by the British tax paper...

[thisisthisitmaybe]

Carney is a particularly bad B of E guv. He is a one-trick-pony - that being stoking house price bubbles.

But all guvnors since and including Eddie George are as much to blame. "Steady Eddie" should have let the Uk economy go into recession after 9/11, instead he began the house price inflation which has become such a huge political, social and economic curse. 

Infact, the only long term solution is to abolish central banks. 

[One-percent]

But surely, whoever is the b of e gov of the day, they are de facto puppets for their masters and just do what they are told to do.  If tptb decide that house prices come down, then carnage will spout this as a good thing and do all in his power to make it so

[zugzwang]

2 hours ago, Blod said:

I do worry what that muppet will do to try to avoid HPC. Who knows how much harm he'll inflict, he's even bought into PCL so god save us from him.

The Canadian dummy's already working flat out to ensure there's no hpc. The Term Funding Scheme announced last August gives lenders access to a so-called 'cost-effective' source of reserves (potentially £100bn @ 0.25% for the next four years) to support lending to the real economy. They key issue is how the air-money gets spent. Can Carney and the banksters entice significant numbers of FTBs into the market again, or will the lenders end up using it to bolster their own bottom-lines?

Edited January 1, 2017 by zugzwang

[maverick73]

1 hour ago, zugzwang said:

The Canadian dummy's already working flat out to ensure there's no hpc. The Term Funding Scheme announced last August gives lenders access to a so-called 'cost-effective' source of reserves (potentially £100bn @ 0.25% for the next four years) to support lending to the real economy. They key issue is how the air-money gets spent. Can Carney and the banksters entice significant numbers of FTBs into the market again, or will the lenders end up using it to bolster their own bottom-lines?

The banks could take the money and flush it into their own coffers.

[Blod]

12 hours ago, Bland Unsight said:

Source on the PCL purchase?

http://www.hamhigh.co.uk/news/bank_of_england_governor_mark_carney_moves_west_hampstead_1_3970947

At the time it was covered by one or two papers but that was all. Sorry can't find find them at the mo.

[honkydonkey]

Someone mentioned that he also bought a holiday home somewhere. Or at least that's what a local told them when enquiring about the big house having work done.