Wednesday, Aug 26, 2015

Just like Tokyo 1989

The Wall Street Journal: Emerging Market Turbulence to Hit Luxury London Property

They said it would go up forever and would never end. Right?
Oil states - oil crash - even Saudi having to issue bonds to cover budget short-fall
Russia - sanctions & oil crash - oligarchs no longer in evidence around London
China - corruption crack-down (has been going for a while)
OECD - tax-haven crack-down
UK - offshore-owned properties now taxed with beneficial owners identified
In general - dawning realisation that public officials on public-sector salaries around the world can't also have hundreds of millions of clean money
And now the final shoe to drop:
China - stock market collapse; but if you can't sell your stocks, you have to sell something else to cover your margin call. Like that luxury London property you bought in the last year or two.

Posted by sneaker @ 04:34 PM (6380 views)
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17 Comments

1. hpwatcher said...

A daft report on the London News suggested that London property could rise as a result i.e. looking for a safe haven.

I can see lots of liquidations, as property is sold to meet margin calls/debt obligations in China.

Wednesday, August 26, 2015 05:56PM Report Comment
 

2. britishblue said...

Many of these international speculators bought when the pound was very low and in a few years have doubled or tripled their money. For instance there was 52 Russian Roubles to the pound in Feb 2009, now there is 106. For those that are forced to sell they may not be so sensitive about knocking 10% of the price or more as they may well have made a 300% markup on what they paid. They only bought as a speculation anyway, not as a home to live in. There will be some, that still have loads of money that see London as even more of a safe haven and others that now now have to sell, sell, sell to meet obligations elsewhere. I think the rich Chinese will be an interesting one. They are new to capitalism and housing an stock markets have been a one way street most of their speculator lives. They are now facing a reality check.

Wednesday, August 26, 2015 08:33PM Report Comment
 

3. libertas said...

NOTHING like Tokyo, which had and still has a SHRINKING population, whereas the population of London is SOARING.

British Blue, do you not think the Rouble will fall yet further against Sterling? Those Russians holding London real estate will no doubt not care if British house prices fall 10% if Sterling rises 20% against the Rouble. They will expect further capital appreciation. Furthermore, I think it ridiculous to think that people only invest in London as a speculation. Many invest here also for the lifestyle and ease of access to Europe. Many people prefer England's cool climate to the heat elsewhere during the summer.

Wednesday, August 26, 2015 09:37PM Report Comment
 

4. mister ed said...

"Those Russians holding London real estate will no doubt not care if British house prices fall 10% if Sterling rises 20% against the Rouble. They will expect further capital appreciation."

Spoken to a few of them, have you?

Thought not.

Wednesday, August 26, 2015 09:42PM Report Comment
 

5. sneaker said...

@libertas
I haven't been able to find data showing Tokyo's population has been falling since 1989 - not falling then.
Happy to stand corrected if you can show the way.

Thursday, August 27, 2015 01:03PM Report Comment
 

6. sneaker said...

*nor falling since then

(Darned autocorrect)

Thursday, August 27, 2015 01:04PM Report Comment
 

7. mister ed said...

@5 Sneaker

There isnt any data showing that Tokyos population is falling. According to the latest figures from the Japan Statistics Bureau (2010) the population is still rising. It predicts a small fall by 2035, though only about 3-5%.

I think the figures Libbo is referring to are the ones he got from his usual data source his backside.

Another "Libbyballs" to add to the ever-growing collection.

Thursday, August 27, 2015 01:48PM Report Comment
 

8. sneaker said...

Best I can find. Quality & veracity unknown.

http://www.newgeography.com/files/cox-tokyo-1.png

http://blacktokyo.com/wp-content/uploads/2008/12/a07_01n.gif

Thursday, August 27, 2015 04:53PM Report Comment
 

9. sneaker said...

I might add that the population of London is soaring only because of the EU's free movement of people rules.

Let's not imagine that that is a one-way bet forever.

In any case, population itself is not the driver of house-price growth. For much of the previous decade, Poland's population fell as house-prices rose. What drives house-price growth is the influx of capital. And capital has flowed into London because of a variety of factors: tax havens, conflicts, crises and ZIRP being the biggest of them.

Thursday, August 27, 2015 04:56PM Report Comment
 

10. britishblue said...

Sneaker @9 you are absolutely right about Poland. I own property there. The flow of capital for housing was easy due to the launch of swiss franc mortgages led by the Irish banks. Before that it was quite tricky to get mortgages. I think the government has now banned Swiss franc mortgages. There are zero products on the market and mortgages are tighter.

Also when making blanket statements about immigration rising, there is different types of immigration. There is migrant workers who sleep two to a room in every room of the house except the bathroom, kitchen and the toilets and there are those that pay 750k upwards for a central London flat.

The former don't buy property and rent the cheapest they can get. Yes this does push rents up, but people earning 5,6, 8 or 10 an hour can only push rents up so far before it becomes uneconomical to be an immigrant. The latter rich immigrants drive the central London prices up or down. But has anyone got any statistics for the number of rich immigrants increasing? Those that actually buy central London property? I suspect it is all about capital flows for the rich not about the whether they live here or not or whether the numbers are increasing. But i'd like to see the stats and proved right or wrong.

Thursday, August 27, 2015 06:06PM Report Comment
 

11. hpwatcher said...

whereas the population of London is SOARING.

The prospect of hundreds of thousands of more people delights him, for no other reason than he can make a few grand on his rabbit hutch in a flea pit called Enfield.

Thursday, August 27, 2015 07:26PM Report Comment
 

12. britishblue said...

HP @11. There should be a best quotes section in this site that your last remark should be added too. Hilarious!

Thursday, August 27, 2015 09:35PM Report Comment
 

13. sneaker said...

@11 hpwatcher
How do you add italics here? And on occasion graphics? Would love to know... The two graphics links I posted above would be better as real links if not actual graphics...

Friday, August 28, 2015 03:16PM Report Comment
 

14. hpwatcher said...

@13 - I just use HTML tags. See the bit at the top for the correct tags:- http://www.w3schools.com/tags/tag_i.asp

Friday, August 28, 2015 03:30PM Report Comment
 

15. sneaker said...

Woah. Thanks.

Monday, August 31, 2015 04:03PM Report Comment
 

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