London Has Peaked

padington

alberty wrote: »

The biggest experts failed to predict the 2013 housing boom or the Tory majority, so the media saying housing is about to rise again probably means its a good time to sell?

You don't really need the media to tell you. Our cultural pull is enormous and we are the native speakers of the worlds favourite language. Our royal family are the biggest celebrities in the world. There are poor immigrants killing themselves to try to get here and extremely rich people the world over want or already have a London crash pad. We also have a highly regarded safe and transparent economic environment and enjoy the privileged position of being seen by many as a trusted environment to invest and live. Many more aeroplanes full of people arrive in Heathrow than leave Heathrow every month and there is every reason to think this will continue as the economic conditions improve in the UK.

On top of this for right or wrong, we can't control European immigrants arriving on these shores because free movement is the key condition of entry to the European market place which is a trade which allows us the unique opportunity of hosting the worlds companies in London as a European gateway because no other European country is so much fun to live in.

Also because lending has been tightened since 2008 we are experiencing a period of not much money chasing quite a lot of goods. This means interest rates can uniquely be low which for housing means very cheap mortgages for those that can get them and London housing being uniquely a rare form of goods because of planning permission and the green belt means London property is in an envious position.

On top of this, from what I understand - whilst the economic environment may change, banks might start lending more, more money might hit the high street, inflation may creep up and then interest rates may be used to temper this, however if banks start lending to more people to buy more houses, the price of houses will increase more as more people compete for a limited stock of housing.

A black swan event like another credit crises could happen and that could have a big effect on property prices for a shortish while but all that will happen is more low interest rates medicine and quantative easing will guarantee property owners and London bankers even more cheap money which will eventually push the prices back up.

It's possible we may start building lots of new high rise flats and this may change the supply side of the equation but what is for sure is that we won't be building many charming old period houses with gardens close to kings cross.

Looking ahead its fairly clear that any political challenges to this whole dynamic won't be changing much for five years minimum and many are now predicting ten years minimum which creates an incredible amount of stability.

We will have to overcome the European referendum however but just how I thought Ed Milliband didn't have a hope in hell of winning the election, I don't think Farage on his own has a hope in hell of getting the UK electorate to tear up our relationship with Europe when our economy is looking like it's ticking along so well. I'm not a Tory voter myself and do worry about the amount of inequality we are creating in the UK but Cameron's claim to have created more jobs than the whole of Europe combined, is one hell of an achievement and soon almost every political party will be saying to the electorate that staying in Europe is the best thing we can do right now. It's not too much of a leap of imagination to think this may sway the electorate to vote to stay in Europe and if so, will reinforce that feeling of a secure and stable environment which will continue to be attractive to more and more businesses.

Also rising property prices can actually create an alluring opportunity for busineses because the office itself can make a profit before you've even started trading. This all helps create a super attractive business environment.

So, all things considered , you don't really need the media housing forecasts, the facts speak for themselves, there is not going to be many other investments more safe than charming period houses within cycling distance of the offices at the centre of the cultured world if you ask me.

So let's quietly buy up and house our families in period London houses ourselves before the Chinese read the tea leaves.

lawriejones1

There's an awful lot wrong with the above post - Cameron's 'job creation' is a myth created from statistical manipulation and cruel employment deregulation. Businesses, by and large, rent office space.

The EU referendum will be an awful lot closer than people think, and the stability we enjoy in Britain is reliant upon that in the U.S., China or any of the other countries we are inextricably linked too.

I'm paying off a mortgage, running a business and doing well - but at any time we're one global event from collapse, with out housing market just one of the potential victims.

Look across the Atlantic - if America sneezes, Europe catches a cold.

padington

lawriejones1 wrote: »

There's an awful lot wrong with the above post - Cameron's 'job creation' is a myth created from statistical manipulation and cruel employment deregulation. Businesses, by and large, rent office space.

The EU referendum will be an awful lot closer than people think, and the stability we enjoy in Britain is reliant upon that in the U.S., China or any of the other countries we are inextricably linked too.

I'm paying off a mortgage, running a business and doing well - but at any time we're one global event from collapse, with out housing market just one of the potential victims.

Look across the Atlantic - if America sneezes, Europe catches a cold.

So, care to say where you think house prices will be in London over the next five years and where you thought they were going five years ago ?

Making value judgements about employment deregulation doesn't mean that global economic forces will not rally to countries with liberal employment regulation.

America did just sneeze, quite loudly actually, it happened in 2008. It effected most of us with limited wage growth but did you see what happened to London house prices when the medicine was employed ?

I don't profess to say that the housing market is immune from any events, however given dynamics at play, it's one of the best markets to survive and even thrive after most events.

Whilst at the same time it's a great market to do fairly well when things are going well.

Pretty super good bet then if you live and work and rent in London.

There will be a cooling when house prices themselves limit the potential of growth because it limits rental opportunities but I don't think we are there yet.

Still lots to play for.

In five years time we'll look back and see now as a golden opportunity and many people then (which didn't now), will no doubt declare that it was obvious that London property was going to continue to boom.

setmefree2

From a buyers' to sellers' market in 24 hours as a wave of luxury London homes complete

The market switches from gazundering to gazumping after the election as multi-million pound properties change hands

http://www.telegraph.co.uk/finance/property/11594042/From-a-buyers-to-sellers-market-in-24-hours-as-a-wave-of-luxury-London-homes-complete.html

Housing market frenzy after election results: Millions of pounds worth of luxury homes sold just hours after exit poll signalled David Cameron's victory

http://www.dailymail.co.uk/news/article-3074523/Housing-market-frenzy-election-results-Millions-pounds-worth-luxury-homes-sold-just-hours-exit-poll-signalled-David-Cameron-s-victory.html

caronoel

padington wrote: »

So, care to say where you think house prices will be in London over the next five years and where you thought they were going five years ago ?

...

In five years time we'll look back and see now as a golden opportunity and many people then (which didn't now), will no doubt declare that it was obvious that London property was going to continue to boom.

I can only speak personally.

Bought my first BTL in Clapham in April 2010 for £225k. Very similar one in the same block just sold for £440k.

95% increase in 5 years, with a rental yield of just under 8%.

Quite happy with that!

:rotfl::rotfl:

But did I think in 2010 that it would rise so much over the past 5 years? Not in my wildest dreams.

I honestly dont think we will see similar rises over the next 5 years, but there is always hope!!!

cells

homes now act like bonds, priced on their yields

If anything house prices are too cheap relative to bonds because their yield is much higher than bonds/gilts

It is quite possible London homes could double in price again over the next 5 years but would thereafter track rent price increases of 3-4% a year

chucknorris

cells wrote: »

homes now act like bonds, priced on their yields

I was pricing them on their yields 24 years ago, that is why I originally invested.

cells

chucknorris wrote: »

I was pricing them on their yields 24 years ago, that is why I originally invested.

few people knew 24 years ago that bond yields would go down so much.

Even 8 years ago few people knew that 5% yields on gilts and bonds was excessively high

now something like two thirds of all bonds issued by countries like the UK Germany France USA etc yield a coupon of 0% even now its hard to believe buts that the new reality

chucknorris

cells wrote: »

few people knew 24 years ago that bond yields would go down so much.

That also includes me, but what I did know 24 years ago was that London property yields were extremely good, and with the prices being so low, it was obviously an extremely good time to invest, because prices were only likely to go one way over the following decade. so I bought my first 3 London properties in 1991, and another in 1992 or 1993 (I honestly can't remember when it was).

cells

chucknorris wrote: »

I was pricing them on their yields 24 years ago, that is why I originally invested.

and of course the real question is what bond yields will be like in 5 or 10 years time. Personally I think they will be close to 1% but if they return to ~5% then the housing market cant go much higher as we are already at gross yields below 4% in much of London


eg house nearby sold for £500k but would only get £20k Max a year in rent. Thats 4% gross or perhaps closer to 3% net.

Can such a house double in price to £1000k ......... even over a 5-10 year time frame? I dont think its likely as rents in 5-10 years will only be 24-28k so if the house doubled in price its gross yield would be 2.5% while its net yield would be below 2%

The only way that could happen is if BTL mortgage rates drop to the 1-2% region.


not to mention in such a world London housing stock would be worth north of £3 trillion ...... a figure which would be about equal to about that of the whole housing stock of germany.....