The UK and London Housing Bubble

brit1234

The article mentioned on RTs Keiser Report today.

The UK and London Housing Bubble

UK housing prices have nearly quadrupled from the mid-1990s to 2008, briefly fell 20% in 2009 and have since rebounded enough to keep property prices firmly in the stratosphere. UK property prices are very overvalued, currently valued at 128% of their historic price-to-income ratio and 140% of their historic price-to-rent ratio. URL="http://www.theatlanticcities.com/housing/2011/12/worlds-housing-bubble/734/"]1[/URL In a pattern similar to France, the UK housing bubble (since 2008) has been primarily driven by price gains in the capital city of London. Prime London housing prices rose a hearty 11.4% in the 12 months to October 2011 URL="http://www.moneyshow.com/investing/article/29/GlobalPer-25560/London-Real-Estate-Bubble-About-to-Burst/"]2[/URL, up 40% from their post-credit crunch low URL="http://www.ft.com/intl/cms/s/0/d9f71096-2278-11e1-923d-00144feabdc0.html#axzz1mCUqOcvV"]3[/URL, while most other investment markets fell in a very volatile year.

Like Paris, the city of London has such a strong level of international “brand recognition” and a perceived safe-haven status that wealthy foreign investors are clamoring to buy property in prime areas such as central London. “London property is the ‘Swiss bank account’ of the 21st century,” says Robin Hardy, an analyst at London investment firm Peel Hunt. Rich people in places like Egypt, Syria and southern Europe are rushing to get their money away from the turmoil, and for want of a better alternative, they are plunking it down in the “millionaire’s playground” of central London. URL="http://www.marketwatch.com/story/the-worlds-hottest-real-estate-market-2011-04-19"]4[/URL The nouveau riche of China, India and other emerging markets are also keen on diversifying their wealth into prime Western property markets such as London, Vancouver and Manhattan, while one hedge-fund manager said that London property was a “laundromat for Russian money.” An entire generation is locked out of the city’s broken and outrageously-bubbled housing markets as the average Londoner would need to triple their salary to £87,000 to buy an average price property. URL="http://www.housing.org.uk/our_regions/london_region/london_news/generation_locked_out_of_broke.aspx"]5[/URL The prime London property bubble is highly vulnerable to the popping of the precariously-teetering China and emerging markets bubbles as well as job losses and decreasing bonuses for City of London financial workers. URL="http://www.guardian.co.uk/business/2012/jan/04/city-job-losses-bonuses-london-property-market"]6[/URL
UK and London Housing Bubble Articles List

http://www.thebubblebubble.com/european-housing-bubble/

Lets see what is in this months budget for tax avoidance on British homes by foreign buyers. I was aware of the Chinese wobble at the moment but am a little unsure on the state of the emerging markets and their fore coming problems.

julieq

You'd almost persuaded me that was a serious analysis Brit, until we got to the "outrageously-bubbled housing" bit which betrays the bias of the author, i.e. this is just another speculative neo-millenial blog.

Mind you, I'd agree with him about the China bubble, which is potentially very serious for them and for anyone thinking commodities - particularly gold and silver - are a safe bet. I just don't think that the "UK housing bubble" was ever a bubble in any normally accepted sense. Time will tell no doubt.

HAMISH_MCTAVISH

brit1234 wrote: »

Keiser Report.

:rotfl::rotfl::rotfl::rotfl::rotfl:

Ahhhh, comedy gold.

ALmost as funny as 50% off by Xmas 2009.:rotfl:

brit1234

julieq wrote: »

I just don't think that the "UK housing bubble" was ever a bubble in any normally accepted sense. Time will tell no doubt.

I think the trebling of prices in a short term period counts as a bubble, wages were far behind.

Easy credit was the cause, which has all but gone apart from low BOE rates.

I'm looking to get another 10 silver Britannias this week as well.

johncotter

brit1234 wrote: »

I think the trebling of prices in a short term period counts as a bubble, wages were far behind.

Easy credit was the cause, which has all but gone apart from low BOE rates.

I'm looking to get another 10 silver Britannias this week as well.

Yes, I remember when I was applying for a mortgage and you could get 5 times your salary! thinking back I was mad to take it!!

MrRee_2

The UK Housing Market isn't a bubble ....... too few houses for the people who need to be housed for the increase in price to be a bubble.

Those who can play the game can play it - others, sadly, need to rent the houses off those who play to win.

chewmylegoff

brit1234 wrote: »

I think the trebling of prices in a short term period counts as a bubble, wages were far behind.

Easy credit was the cause, which has all but gone apart from low BOE rates.

I'm looking to get another 10 silver Britannias this week as well.

i suppose it was a natural evolution for you to go from being an uber bear to being a member of the precious metals cult. be careful with that silver hoarding, it's not a particularly sensible investment strategy, especially if you can't afford to lose the money.

chewmylegoff

johncotter wrote: »

Yes, I remember when I was applying for a mortgage and you could get 5 times your salary! thinking back I was mad to take it!!

well, according to first direct's mortgage calculator they will lend 4.5x salary, and according to hsbc's calculator, 4.75x salary. of course, neither is going to lend that much to anyone without a 30/40% deposit.