Wednesday, July 24, 2013

Bear nibbles

US QE-end could burst London property bubble - Fathom

London property investors could see house prices drop by as much as 40% if the US pulls its quantitative easing programme too sharply, a report has suggested. In a study of prime central London (PCL) house prices commissioned by Development Securities, Fathom Consulting found that while the gap between actual prices and the prices predicted by its model was almost non-existent in 2011, there was now a 13% difference in prices.

Posted by jack c @ 12:35 PM (4273 views)
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4 thoughts on “Bear nibbles

  • mark wadsworth says:

    Thanks for the delicious nibble, but surely the main course is going to be when the ECB-EU money runs out, the largest chunk of money piling into central London land purchases is from Greeks hiding their stash quick. The rest is from other kleptocrat countries like Russia or Arab countries, i.e. oil and gas rich countries. The Yanks aren’t usually the prime suspects when it comes to hiding money in plain view in London.

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  • @1 Could the two go hand in hand? Interest rates rise in the US, the dollar rises, London property is liquidated by foreigners chasing better returns on their money in a currency that isn’t going down the pan?

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  • Mark. The reason end of QE will send cash from London property, is that this is positive to the US Dollar. It will rise in value if the USD is not being debased. That will send capital from London to New York, plus, the relative political stability in USA mean that capital is far safer there than in Europe.

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  • mark wadsworth says:

    Libby, yes of course an end to US QE will have pretty positive effects all round, including pushing down UK house prices and increasing returns to cash savers, for the reasons the article explains.

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