London property prices could halve if the euro collapses

homelessskilledworker

http://www.guardian.co.uk/business/2012/may/30/london-house-prices-eurozone-collapse

House prices in London's glitziest districts will drop by up to 50% over the next five years if the eurozone collapses, according to research by City consultancy Fathom.
Wealthy European citizens have been pouring their money into Georgian townhouses and swish penthouses in the smartest parts of the capital, seeing London as a less risky place to keep their assets than Spain or Greece.

Itismehonest

Which begs the question for those that have already bought "Why sell your best investment?"

Surely they are buying in London a) because of the risk to the Euro & b) to part with substantial sums of money so they don't get clobbered for tax in their own countries?

If so, why sell when you can sit on your investment - maybe even rent it out & have an income from it?

The prices in Monaco are also rising. Will we see a crash there?

Maybe I'm missing the logic but it makes no sense to me.

Wookster

If the euro collapses, I suspect London property prices will be the last thing on folks mind.

macaque_2

Itismehonest wrote: »

Which begs the question for those that have already bought "Why sell your best investment?"

Surely they are buying in London a) because of the risk to the Euro & b) to part with substantial sums of money so they don't get clobbered for tax in their own countries?

If so, why sell when you can sit on your investment - maybe even rent it out & have an income from it?

The prices in Monaco are also rising. Will we see a crash there?

Maybe I'm missing the logic but it makes no sense to me.

London's prices are not supported by the fundamentals so it's purely down to confidence. If confidence evaporates, London prices have a long way to fall. As 'best investments' go, this is not great.

the_flying_pig

yeah, it depends.

lots of areas of london aren't really in a bubble as such. high prices are just the product of very high salaries in the City and [by historical standards] very high [joint] income multiples being offered by lenders.

the really insane increases, like Kensington & Chelsea, 50% increase from early 2009 to now, massively higher than 'peak' prices ever were, that's been a pure gold rush, flight [of international money] to pwoperdee, so I suppose that pretty much anything could happen. far from implausible that some/most/all of those crazy gains could be wiped back out.

[IMG]http://www1.landregistry.gov.uk/Apps2/house-prices/house-price-index-custom-reports/hpi_report.asp?g=1>=1&a=Kensington+And+Chelsea&ac=Southwark&s=01 April 2008&e=01 April 2012&t=4[/IMG]

sorry, i can't seem to embed the picture i want to.

http://www1.landregistry.gov.uk/Apps2/house-prices/house-price-index-custom-reports/hpi_report.asp?g=1&gt=1&a=Kensington+And+Chelsea&ac=Southwark&s=01 April 2008&e=01 April 2012&t=4

Graham_Devon

Itismehonest wrote: »

Which begs the question for those that have already bought "Why sell your best investment?"

Surely they are buying in London a) because of the risk to the Euro & b) to part with substantial sums of money so they don't get clobbered for tax in their own countries?

If so, why sell when you can sit on your investment - maybe even rent it out & have an income from it?

The prices in Monaco are also rising. Will we see a crash there?

Maybe I'm missing the logic but it makes no sense to me.

Erm, because selling it means you can free your cash and put it elsewhere?

Or of course, you could sit watching it devalue over 5 years 50% and think "thank the lord I didn't take the cash and keep 80% of it...now I've just got 50% left, that's much better".

If the investment is crashing, it's most likely no longer your best investment!

CLAPTON

according to research; if the EURO collapses (whatever that means) London house prices might collapse, rise or stay the same

I can provide full details if you send me your credit card number (and the three digit number of the back).

FTBFun

Can anyone find the original report? I can't seem to see it on their website.

I'd rather not listen to a journalists' interpretation.

kabayiri

CLAPTON wrote: »

according to research; if the EURO collapses (whatever that means) London house prices might collapse, rise or stay the same

I can provide full details if you send me your credit card number (and the three digit number of the back).

I can't justify supplying my details without some evidence. A fancy graph with some spurious statistics will do

Batchy

COULD and IF, are very different to, WILL and WHEN.

The world could have ended anyday when the cold war button pressers were getting itchy trigger fingers, but it never happened.

Live life, stop worrying, the house prices will be the last of your worries when/ or if it happens... crack on, you have a job to do!

Itismehonest

Graham_Devon wrote: »

Erm, because selling it means you can free your cash and put it elsewhere?

Or of course, you could sit watching it devalue over 5 years 50% and think "thank the lord I didn't take the cash and keep 80% of it...now I've just got 50% left, that's much better".

If the investment is crashing, it's most likely no longer your best investment!

Chicken & egg going on here.

Your reply implies that there is already a crash so people pull their money out when the current situation is actually that people are investing in London property which is why prices continue to rise so they, in part, are responsible for the opposite happening.

So, my view remains "Why sell when it is still one of the most viable investments?" Even if the number of UK homeowners in London decreases due to their financial position those people will still require housing. Those (including overseas investors) with the money to own & rent will still be making money. Before pulling out of a good investment they will pull their money from everywhere with a higher risk ........ most of Europe.

As opposed to many countries, UK borrowing costs are currently incredibly low because Britain is seen as a safe haven compared to most. It also applies to a large degree to certain areas & types of London property.