London property bubble 'about to burst'

Wookster

Apologies if this has been posted before.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8746833/London-property-bubble-about-to-burst.html

PPR Estates said it had seen rising number of inquiries from property owners in London looking for a quick sale below the current market price. It said rising unemployment, an increase in the number of company liquidations and a collapse in buyer interest – particularly in areas hit by the recent riots – were to blame.
Nick Hopkinson, the director of PPR Estates, said that over the past few years there had been a rising number of "distressed" sellers in other parts of the country, but London had appeared to be immune as prices continued to rise.
This has changed though within the past two months, with the company now reporting a jump in the number of inquiries from both residential and commercial property owners in the capital who need to access the equity in their home quickly.

EMphasis added.

Well well well. It seems that the tide is changing.

worldtraveller

Another major factor is that there could be a bloodbath in the City/Canary Wharf very soon as investment banks lay off large numbers of staff over the next few months due to poor returns. The "fake" boom of 2009, due largely to QE, and the resultant huge bank revenues & massive employee bonuses, has now pretty much dried up. I would think that many London property owners/investors may well now be looking to sell pronto!

julieq

OK, so once again we meet the "vested interests are only VIs if they disagree with what a bear wants to believe" principle.

PPR are a property investment company investing in the London property market. They have not changed their business model on the basis of their "distress index", i.e. they are still trying to acquire assets at low prices to generate income and capital growth.

So what does that suggest about motivation for talking up any weakness in London sales? And why would they be suggesting there is competition for people wanting to sell to them below market prices?

Sounds a properly vested interest to me that.

Actually if you look at the numbers, the shift is marginal only and small in magnitude. Doesn't mean that London property isn't overvalued, but it's not evidence, it's a partisan argument.

Flight2quality

worldtraveller wrote: »

Another major factor is that there could be a bloodbath in the City/Canary Wharf very soon as investment banks lay off large numbers of staff over the next few months due to poor returns. The "fake" boom of 2009, due largely to QE, and the resultant huge bank revenues & massive employee bonuses, has now pretty much dried up. I would think that many London property owners/investors may well now be looking to sell pronto!

Another major factor is globalisation and the abilty to work from home. Now if someone does not need to live near the city for work, but can work from a laptop anywhere in the world, then they will prefer to live in the countryside with a nice view.

dtsazza

Flight2quality wrote: »

Another major factor is globalisation and the abilty to work from home. Now if someone does not need to live near the city for work, but can work from a laptop anywhere in the world, then they will prefer to live in the countryside with a nice view.

...and a cheaper mortgage than on a place half the size in EC1.

Flight2quality

There are many reasons why London house prices have further to fall.

However, the one thing that could hurt prime London prices the most is a strong pound, as this would drive away many of the overseas buyers. I'm not saying sterling is going to get very strong again, just that it is losing the race to the bottom that all currencies are heading for.

So I'm looking for falls,

Loughton_Monkey

Unless you are an idiot, you cannot believe there is a bubble. If there's no bubble, then it can't burst. End of....

Flight2quality

Loughton_Monkey wrote: »

Unless you are an idiot, you cannot believe there is a bubble. If there's no bubble, then it can't burst. End of....

If you are an idiot you believe there was no bubble in house prices, they can keep going up from here and we are still not in a bubble.

End of.

the.ciscokid

Loughton_Monkey wrote: »

Unless you are an idiot, you cannot believe there is a bubble. If there's no bubble, then it can't burst. End of....

There was a credit bubble. Credit is used in a significant number of house purchases. Q.E.D.

Flight2quality

the.ciscokid wrote: »

There was a credit bubble. Credit is used in a significant number of house purchases. Q.E.D.

A significant number, yes. Unless someone comes along with enough cash to buy outright then someone with a mortgage of some kind is needed.

Most people smart enough to have that much cash are smart enough to wait until house prices come back down before they will buy.

Thrugelmir

worldtraveller wrote: »

Another major factor is that there could be a bloodbath in the City/Canary Wharf very soon as investment banks lay off large numbers of staff over the next few months due to poor returns.

They have been for a while. Hence why now pressure in now mounting. I know a hedge funder trader that was out of work for 14 months. Only just back in employment.