London property prices could halve if the euro collapses

Mr._Pricklepants

FTBFun wrote: »

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.

http://www.developmentsecurities.com/devsecplc/dlibrary/documents/PCLinaclassofitsownFINALpdf.pdf

Graham_Devon

Itismehonest wrote: »

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 is why prices continue to rise so, 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.

This is no different to shares. As soon as some start selling, others see them selling, and see the decline in prices, so more start selling.

Dominoes.

The article stated 50% down in 5 years. Why would you sit there watching and waiting for 5 years when you can sell and release the cash?

I got so much abuse for selling my shares some months ago on the shares board. They are now worth 60% less than when I sold (XEL if interested)....and people still sit there insisting people shouldn't sell.

You are doing nothing different to what they stated at the time.

Conrad

macaque wrote: »

London's prices are not supported by the fundamentals so it's purely down to confidence.

One fundamental you ignore is desire and income expectation.
If the Euro burns, if anything London will be even more attractive as a beacon.

In the end over decades people make big capital in London, then move out to the sticks and so far it's always been an excellent Tax free way to gain financial security. I doubt this will ever change.

10 years from now you will grind your teeth as yet another 'Escape To The Country' show reveals a smug London couple with £1m equity to use on moving to Hampshire.

Itismehonest

FTBFun wrote: »

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.

http://www.developmentsecurities.com/devsecplc/dlibrary/documents/PCLinaclassofitsownFINALpdf.pdf

Edit: Sorry Mr P. I posted before your post had appeared

Ma77hew

Graham_Devon wrote: »

This is no different to shares. As soon as some start selling, others see them selling, and see the decline in prices, so more start selling.

Dominoes.

Except, a lot of people actually live in there houses rather than them being purely investments.

The % of people from the eurozone who have bought london property in this scenario is I would have thought tiny in comparison to total property in london, so I cant imagine the impact of some of them pulling out really being that great.

Though I do hate the commute, and wouldnt mind a cheap 1 bed in the city.

Itismehonest

Graham_Devon wrote: »

This is no different to shares. As soon as some start selling, others see them selling, and see the decline in prices, so more start selling.

Dominoes.

The article stated 50% down in 5 years. Why would you sit there watching and waiting for 5 years when you can sell and release the cash?

I got so much abuse for selling my shares some months ago on the shares board. They are now worth 60% less than when I sold (XEL if interested)....and people still sit there insisting people shouldn't sell.

You are doing nothing different to what they stated at the time.

The day that selling a property in a falling market becomes as easy as selling shares then I will agree with you. However, who do you suggest they will sell to if everyone is pulling out?
Most of these people will be used to investing in the long term. Unless they have an urgent personal need for money many of them are likely to sit it out, I think.

chucky

Graham_Devon wrote: »

This is no different to shares. As soon as some start selling, others see them selling, and see the decline in prices, so more start selling.

Dominoes.

The article stated 50% down in 5 years. Why would you sit there watching and waiting for 5 years when you can sell and release the cash?

I got so much abuse for selling my shares some months ago on the shares board. They are now worth 60% less than when I sold (XEL if interested)....and people still sit there insisting people shouldn't sell.

You are doing nothing different to what they stated at the time.

You've been saying the same thing for years and you've been wrong each and every time.

One year you'll be right and then you'll say that you've always told us it was the case.

A stopped clock is right at least twice a day.

chewmylegoff

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!

except the article is suggesting that the price of housing in london will collapse because people paying in € will only be able to pay 1/2 of what they now can (i.e. a £1 million house will cost you €2.4 million in the future rather than €1.2 million now). so if you bought the house using € and the sterling price collapsed because of withdrawn demand from € buyers due to the € falling sharply against the £, you would be hedged against currency risk. i.e. even if the price in £ fell from £1 million to £500k, that would still give you the same amount of € back.

basically the article is written by someone who doesn't understand that property in london is priced in £ and not €.

and it's all just a made up guess which tries to ignore the fact that london property isn't just bought by people with €.

FTBFun

Thanks to those who found the report.

Firstly - unsurprisingly given the OP but the header of this thread is wrong. The report is actually about "Prime Central London" properties, rather than across London itself. To be fair it is the Guardian who make the mistake on the article.

The main arguments if the Euro were to collapse
- sterling will appreciate substantially if the Euro were to collapse compared to the replacement Eurozone currencies
- Global equity prices will collapse by 30%
- therefore PCL property will fall up to 50% as investors diversify across Europe

Other arguments if the Euro remains:
- recapitalisation of the European banking system will need to a small drop in PCL prices but ultimately it will be a blip
- middle east tensions (I assume Syria at the moment) will lead to increased oil prices, and ultimately a 20% fall in PCL property

I'm of the impression that PCL is in a market of its own but I'm sure some of you would disagree.

Interestingly they seem to have used Zoopla for some of their data!

austeritydave

Could the imminent collapse of the euro not lead to an increase in UK property prices if our european neighbours try and move euro assets to UK?