High-end, new-build flats in London.

Crashy_Time

lisyloo wrote: »

In London it's not that simple.
For example you have to consider currency exchange rates, foreign tax regimes and safety of investments a roads. If it compares well over here then money will pour in - yes even if prices are falling.
There is also demand from plenty of people who want to buy long term and will get in when it's affordable as they have massive confidence in London housing long term and hey guess what really want to live here - yes they will buy even if prices are falling.
I would love a big crash but I really can't see prices for most of us falling a lot.
I also don't think anyone knows either.

That confidence will be SEVERELY knocked if there is a big downturn. Sentiment is very important, along with funding of course.

IronWolf

padington wrote: »

If there is a big crash in London, it will probably mean something really bad has happened and lots of people will be struggling because of that. Wishing for a big crash is like wishing for unemployment so you can snap up cheap workers.

London has been going bonkers for years, such rises have their advantages as it pulls huge ammounts of money into our economy but in extremes can also put off businesses and even young bright minds from joining the party so a few years of things going sideways will be good for London. It also means that people can move houses finally in a more leisurely way.

The new sideways dynamic should be welcomed. The time will come again for another uplift but for now this is a nice opportunity to move not under duress and have time to consider options with some calm. Also it helps ensure that London maintains it's magnetic charm which ultimately is what builds the foundations for long term prosperity for all of her inhabitants and subsequently ultimately increase house prices.

No popping, no dangerous bubbles, just a great city pausing before making it's next move.

I dont agree. So much in London property is from foreigners that I can easily see how a property crash could happen even if the city itself is booming. All it needs is a bursting of foreigners confidence that London property prices 'only go up'

Generali

Killerseven wrote: »

How can any chinese person buy a place in London

You can change an unlimited amount of RNB into currency with permission. Also, I don't know if you noticed but the Chinese sell quite a lot of stuff abroad. If I was running a Chinese company and wanted to buy a flat in London I'd probably sell my stuff in pounds and use those pounds to buy my flat.

gordon_retundo

I was having this exact discussion today. We searched basic accommodation in areas considered 'undesirable' when I was younger (90s). Commercial Road, Hackney etc. The prices went out of control and have since grown about 20% annually, pushing even the most basic properties out of reach of the 'normal' population.

I'm a lefty 2nd generation immigrant so far from the mindset of a UKIPer, but I think the handling of overseas investment by successive governments has been absolutely disgraceful. The SuperRich and Us (BBC) from the other day explained it eloquently. 80% - EIGHTY - FOUR IN FIVE - of new builds in London are sold overseas. The majority are marketed overseas only. After a bit of a political storm and ES's involvement, developers now pay lip service to the mayor's (non-statutory, I'm sure) directive/request to give Londoners a fair crack at the whip - however market forces remain in effect so whilst we may now be invited for a viewing or emailed a brochure, we're still competing with overseas investors who've driven prices beyond the reach of regular earners.
The example they had was an Oxford professor whose parents had bought in the city when average prices were 3x average salary. Now 11x. I'm assuming far more warped in London. The only people I know who can afford in London now are those on exceptional jobs looking at mediocre properties.
Alex Proud hit it on the head http://www.telegraph.co.uk/men/thinking-man/10744997/Cool-London-is-dead-and-the-rich-kids-are-to-blame.html
Only 10-15 years ago, different areas of London appealed to different groups/subcultures. Camden, Islington, Notting Hill etc - they all had their own unique flavours and typical residents. Now with a 2 bed maisonette in some areas costing £900,000, only one type of person is going to live there....forcing all the wanna-be rockstars/punk goth barmaids who brought a bit of culture to the city out of town, and consequently the city will suffer. It's not an immediately obvious effect, but one that will be irreversible by the time it's eventually noticed. What makes it great - an Alpha++ city (a rating shared only by NYC, which I believe we surpass in many, many other ways, making us the only truly global cultural, political, historical hub of the world) is the diversity (amongst other things). That diversity will be lost in a generation as things continue. I'm not just talking about colours of skin or countries of origin, but interests, passions, vocations, industries etc.

The problem? London - the UK in general, but the capital in practice - was opened up to the super-rich as part of our own brand of Reaganomics. Pander to the rich, and through capitalism, all sectors of society will be hauled out of the gutter in the slipstream of the mega-rich. Today, we bend over backwards to give tax-breaks to the rich. With so much global insecurity, from the financial markets, to the prices of commodities to natural and man-made disasters, so many gold standard investment options are now viewed as risky. The one that has constantly out-performed the market is London property. A finite resource is bought impassionately by an overseas tycoon who has no interest in it other than as a financial instrument. What they don't realise, what they don't care about, is the fact that this is depriving hard working Londoners the right to live in the city they keep alive. All rich eyes from all over the world are heavily focused on London - from the far east to Russia to the middle east and anywhere else there are oligarchs and mega-rich individuals.

I can see the mid-term future going a number of ways:
- we move to a continental style of long-term renting being the norm. This will require a seismic cultural shift, but to service the loans of the landlords, rents will still have to be high - perhaps not matching the capital growth of the asset - but still taking up a huge proportion of post-tax income for average families
- when the next generation reach pension age, they will be screwed as they have no large fixed assets
- some people will benefit from inheritances which will create a pretty big divide between the haves and have-nots - far bigger than say the gap between the average 'white-collar' and 'blue-collar' workers of the 80s.
- some country somewhere in the world will become jealous of London's inward investment and do a Cayman Islands/Luxembourg trick of bending over backwards to encourage outside money to flock to their economy. Investors are fickle (just look at the market's reaction to the 2011 Japan earthquake - billions were wiped off their values before the first humanitarian aid had been mobilised or the first news report filed), so a change in legislation or alternative investment options forcing investors to flock elsewhere will see a glut of investments liquidated, and in a market where supply far outstrips demand, prices will come crashing down, bringing a lot of people such as BTL investors and those who bought at the peak into negative equity.
- changes in current interest rates or global economy will rock the delicately balanced (and possibly highly geared?) market?


I'm no xenophobe by any stretch of the imagination, but I think successive govts have really dropped the ball on this. They are letting citizens suffer just to boost the economy from outside. The benefit? The super-rich who relocate here help push the economy into positive growth - an important measure during the recession and global turmoil. This is technically not great for us, as they concentrate the money into their own coffers and it doesn't seep into the general economy, but it does count in statistics which is what the ONS and press go by. So for the favour they do the chancellor, they are afforded certain breaks. And in their shadows, ready to take advantage of this, are the other super rich - not the multi billionaires, but those with 8 to low 9 figures and enough disposable income to toss about into investments they don't care about.

The only thing that can prevent serious multiple issues in the next decade and generation is to introduce tough rules on property ownership. Singapore is another popular city with finite housing and they implement this. Theirs are so tough that even genuine citizens with money can't buy unless they match other criteria (married or a certain age etc). We need to stop giving 80% of our already absymally short new housing stock to investors. We need to prioritise properties for those that want to live in them, and bring the market back down to prices that will allow them to buy. We need to make this place unattractive to overseas investors and take control of the market back before they decide conditions don't suit them and pull out en-masse.

It frustrates me so much because I'm a born-and-bred Londoner who's so in love with this place that I can't envisage living anywhere else. It's all well and good for the people who want to move to Welwyn Garden City and get a decent 3 bed with a patch of grass for their money, but for others, their life, family and everything else is here. 80% of my entertainment, social life and hobbies are London-based only, so I have no option but to live here. Unfortunately I also don't have the option to live here independently either and with prices being driven up the way they are, I fear the ship has already sailed.....in fact I think it's just about ready to dock in Hong Kong for a seminar where they're selling off more of our precious land as a faceless commodity.
The warning signs are all there. There've always been peaks and troughs, and unless someone with a bit of power and sense acts, the next crash will be a mega-cluster-mess for everyone involved. In the meantime, we don't have anywhere to live....and if we did by some miracle manage to an overpriced shoebox, the value will no doubt come crashing down unless the greed of overseas investors is curbed.
[/rant]

Crashy_Time

padington wrote: »

If there is a big crash in London, it will probably mean something really bad has happened and lots of people will be struggling because of that. Wishing for a big crash is like wishing for unemployment so you can snap up cheap workers.

London has been going bonkers for years, such rises have their advantages as it pulls huge ammounts of money into our economy but in extremes can also put off businesses and even young bright minds from joining the party so a few years of things going sideways will be good for London. It also means that people can move houses finally in a more leisurely way.

The new sideways dynamic should be welcomed. The time will come again for another uplift but for now this is a nice opportunity to move not under duress and have time to consider options with some calm. Also it helps ensure that London maintains it's magnetic charm which ultimately is what builds the foundations for long term prosperity for all of her inhabitants and subsequently ultimately increase house prices.

No popping, no dangerous bubbles, just a great city pausing before making it's next move.

:rotfl: Classic, that is a post crash T-Shirt right there :rotfl:

Thrugelmir

edinburgher wrote: »

I could believe that, aren't Chinese savings rates something like 30% on average?

China also has debt. Lots of it. Some of which may have flowed overseas.

lisyloo

I don't agree with you crashy. Living centrally in London is fantastic (I know I live here) and desired by many. The big benefit of owning is not paying rent for many decades.
I think there are plenty of people (me and bubble) for 2, who will jump at the chance to live in London if it becomes affordable (cheaper than renting) believing in prices LONG term. This support will form a floor and stop a big crash, hence we are at a permenently high plateau.
there are just SO many who want to live here long term who won't risk losing their chance.

lisyloo

Gordon - just curious, where do you live now?
You say you have nowhere to live. I assume you are living somewhere and you mean you're priced out if what you want?

padington

Crashy_Time wrote: »

:rotfl: Classic, that is a post crash T-Shirt right there :rotfl:

Some dweeb for a while was literally wearing my end of 2013 quote on his HPC moniker declaring no crash for 2014

:rotfl: He was laughing so hard at first but his wife must hate him now. :rotfl:

My place went up by almost 25%.

Bubble_and_Squeak

padington wrote: »

Some dweeb for a while was literally wearing my end of 2013 quote on his HPC moniker declaring no crash for 2014

:rotfl: He was laughing so hard at first but his wife must hate him now. :rotfl:

My place went up by almost 25%.

classic pre-burst victory