Thursday, Jun 01, 2006

An alternative reason for the lack of a crash

Money Week: What's propping up UK property markets?

There is an unusual phenomenon of price rises without increased demand from occupiers, albeit mostly in London. This article examines who is propping up the residential and commercial property markets.

Posted by talking rot @ 08:59 AM (468 views)
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1. denzil said...

Interesting although very London centric which goes some way to explain why most areas of the South outside of London saw price falls (according to Land Reg) over the first quarter. What I've started to noticed in Somerset over the last few months is some higher value properties 400K upwards have started to shift albeit very very slowly.
As for what is propping it all up, my take is:
- BTL (Still a few mugs around)
- Lack of lending criteria. People over-extending themselves
- High numbers of immigrants during 03-04 fueling rental demand.

The market is noticeably slowing around my way after what looked like an extended suckers rally since September. Talking of September it was interesting that new loans are back at the point they were at post August base rate cut. So are we at the end of the suckers rally? Nothing has changed regarding the fundamentals of the market so it still looks very prone for a drop.

Thursday, June 1, 2006 10:06AM Report Comment

2. Autopilotengage said...

Money week have published a few hawking articles of late. I agree completely with the findings of this article, lately people have been trying to persuade me to take the plunge and buy somewhere, there's no way i'm buying at the top of a slope, every now and then i take a reality check on the price of new property vs the estimated cost of building. We don't have a land shortage in this country, far from it; a friend of mine has just come back from Japan and he says they make do with much less space over there. A one bedroom flat for around 3 x average salary in a reasonable area is the long term norm i and I believe eventually we'll return there. Eastern economies have been playing us at our own game, and winning! Fair play to them. Take on short term debt at these prices by all means; get a 0% credit card and pay it off after the intro period, perhaps even get a 2 or 3 year loan at a fixed rate of less than 6%, most of that will be eroded as hidden inflation anyway. Not a good idea to take out a 25 year loan though, the current conditions will NOT prevail! It's fiscal suicide!

Thursday, June 1, 2006 10:18AM Report Comment

3. inbreda said...

It's a shame that Goldman Sachs PUT options on house prices end soon. Another 12 months may have been worth buying.

Thursday, June 1, 2006 10:34AM Report Comment

4. Retired Banker said...

Immigration is definitely fuelling the rise in property prices. You only have to walk around central London,
viz, Kensington, Holland Park, etc. to see that vast numbers of very expensive houses have been bought
by people of Arabic appearance. This creates a ripple effect on prices spreading out to the suburbs.
I live in S.W. London, and must confess I am puzzled how "asylum-seekers" who only 2 years ago were
in a reception centre, can now afford to buy houses in the 450/500k range, and then spend a considerable
amount of money extending their properties.
Not all that persecuted in their own countries then!

Thursday, June 1, 2006 04:41PM Report Comment

5. Afinemess said...

@Retired Banker.

So let me get this straight. You are saying that someone with no resources and no credit history can come to this country and in only 2 years raise enough to buy houses in the 450/500K range?

If only it were that easy, despite relaxed lending criteria! I think you've been reading the Daily Mail too much old son...

Thursday, June 1, 2006 08:26PM Report Comment

6. Ticktock said...

its not just immigration, most foreign buyers dont actually live here at all. Its the global REIT industry, and the flush with (petro-dollar) cash Arabs that have fueled the 'mini boom' (or dead cat bounce) that we have seen of late.

Thursday, June 1, 2006 08:33PM Report Comment

7. Paul said...

RB, many asylum seekers are not actually short of money - it's nationality that they often don't have and what thy're looking for in the UK. Money won't buy them that. Ask Mohammmed Al Fayed.

Thursday, June 1, 2006 10:26PM Report Comment

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