Wednesday, Oct 25, 2006

Prices to rise by ONLY 34%

BBC News: London faces 'housing timebomb'

The average price of a London home is expected to rise to nearly 400,000 by 2011, a new study has suggested.
House prices are set to increase by 34% over the next five years, said the London Housing Federation's report.

Posted by ben @ 09:26 PM (1462 views)
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1. Basil said...

What are people's thoughts on this report - is this really likely with the property dip in the US? Is that not likely to be replicated in the 51st state, or are we somehow immune, innoculated by our healthy appetite for exploitable immigrant labour? What PR can be generated to accelerate a sorely needed correction in prices? What effect will the emerging indebted but educated classes have on the market 2-3 years from now when they realise it will take them 10 years to offload an insupportable student debt before they saddle themselves with mortgages. What will happen in 5 years when legions of eastern european workers can legally seek employment in Germany and France with higher living standards and closer proximity to their extended families than overcrowded, overpriced UK? Is there such a thing as olympic effect?

My guess is that we will suffer increasing inflation rather than asset price correction. A recession provoked by debilitation of the next government (cf Major, 92-97) allied to high interest rates will cripple many and we'll be thrown back to the early 90s. Does anybody have any thoughts on the greater conservative and capitalist instincts of the ipod generation, 20-30 yr olds who have only known growth and good times? Is this only my perception of that age group?

Wednesday, October 25, 2006 11:39PM Report Comment

2. Nohpc said...

I think they are probably right but it will probably dip a bit maybe 10 - 20% or so on the route to this astronomical price. London really is the land of opportunity when it comes to britain and people are always going to flood there. The olympics will only worsen the situation of lack of housing supply two fold. If you need to move up the housing ladder the time is now while prices are still relatively cheap.

Wednesday, October 25, 2006 11:40PM Report Comment

3. Nohpc said...

Sorry i didn't realise it said 34% I just read the article again. It says house prices will rise by 7% somewhere further down the article which is what I was reading. 34% may be a slight over estimation. I am hoping for 20% capital growth on the value of my property which I bought in Sept 2005 and am planning to hold onto until the olympics.

Wednesday, October 25, 2006 11:44PM Report Comment

4. harold said...

But don't worry, because with all the money the BoE is printing by 2011 inflation will be running at 50%, so in real terms prices will have dropped! It's a funny old world... in VI loony land.

Wednesday, October 25, 2006 11:59PM Report Comment

5. geed said...

The BBC are quick to print articles that "suggest" booming house prices but fail to even mention the many surveys/economists that "suggest" a huge bubble is about to burst. The good ol' impartial BBC aye, lets keep a balanced perspective on the housing market - NOT.

Thursday, October 26, 2006 01:48AM Report Comment

6. Nohpc said...

Why on earth would the london housing federation have a vested interest in rising prices. If anything they have a vested interest in lower prices. Not everybody that suggests rising prices is a VI.

Thursday, October 26, 2006 06:25AM Report Comment

7. paul said...

I think that with all the honking and braying the BBC has done about rocketing house prices over the last 3 years (while prices have actually stagnated), no-one really believes what they say any more.

Thursday, October 26, 2006 10:45AM Report Comment

8. inbreda said...

They seem to print a lot of 'this survey says something positive' stories, but have become very quiet on actual facts over the last few years.

Thursday, October 26, 2006 01:50PM Report Comment

9. magnifico said...

Geed, you mentioned numbers of economists predicting house price falls. If there are some they are definetly not mainstream. Not that this means they are less likely to be right then the vociferous herd of VI inspired "free thinkers".
I just find it increasingly difficult to keep upbeat about the prospects of a correction, when even on the Predictions Section of this website the thinning numbers of downturn forecasts are dated up to a year and a half ago.

Thursday, October 26, 2006 06:40PM Report Comment

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