London house prices continuing to fall, says Rics

westernpromise

padington wrote: »

4) The dollar is 'pounding' ahead and looks like it might continue. London property will start looking like a 'buy' for those in dollars.
5) The London population is booming, possibly by more than anyone quite knows.
10) Interest rates look like they may stay for a long long while yet. It's a race to the bottom. at the moment, not the top.

These three points seem to me to be key, among those you make. To take an example from recent history, a Chinese individual with 10 million renmimbi in his pocket in 2008 would have had £715,000 sterling if he'd converted it to spend in Britain at that time. By 2014, after six years of Chinese interest rates of 6%, he'd have had 15 million renmimbi and they're now worth £1.6 million. A £715,000 property in 2008 is not now going to cost him £1.6 million, so Britain still looks very cheap. He's got 50% more renmimbi, but 100% more sterling.

On the interest rates point, a favourite theme of the crash troll is the "just you wait till..." argument. An especial favourite is the "just you wait till interest rates go back to 15%". This is always based on the assumption that the past was normal and will return, while the present is abnormal and can't last. In fact, the opposite is much more likely. 1973 to 1993 is the only period since records began when we had interest rates above 10%. The current climate is actually far more typical, especially if we are talking about mortgage rates of 3 to 4% as opposed to base rates of 0.5%.

Inflation in the past was caused by too much money chasing too few goods. We now have an unprecedented overhang of personal and state debt and paying this down is where any spare cash is being allocated. It is not, as in the past, being used to obtain credit to buy still more stuff.

This is deeply deflationary and I reckon it will take at least 15 years to come out of the system. Inflation and hence the main trigger for high interest rates are basically gone. I still expect the next move in mortgage rates to be down, not up, and I reckon we are looking at probably another 15 years of low rates like this, i.e. we are not even half way through.

It speaks volumes that the kind of people adamant that Armageddon's looming tend also to be people who've not accumulated much or demonstrated much acumen in any other area of their life, and who therefore tend to need this apocalyptic twaddle to be true.

The question really for the rest of us is how much account to take of the opinions of people who bury tins of food in the garden.

lisyloo

The question really for the rest of us is how much account to take of the opinions of people who bury tins of food in the garden.

If you really believe in some sort of apocalypse scenario (which isn't a happy way to live) then I'd have thought HPI would be the least of your concerns.

westernpromise

Generali wrote: »

That is outrageous! Labour Governments basically decided that they didn't want Birmingham to be an economic success as it was playing badly against their voting heartlands in the North so simply banned the expansion of the economy.



How could anyone think that was a good idea? It reminds me of these whinging idiots that are envious of the success of London. As Lord Coe said when London won the Olympics, where else are you going to have it, Poole?

It's a useful tangible of instance of how the Labour Party opposes prosperity because it thinks prosperous people don't vote Labour. It solution is to maximise poverty.

westernpromise

lisyloo wrote: »

If you really believe in some sort of apocalypse scenario (which isn't a happy way to live) then I'd have thought HPI would be the least of your concerns.

You'd think so, but the type of people who bury tins of food in the garden and who own their own generator seem to be the Provisional Wing of the HPC crowd.

There is a spectrum of apocalyptic panic that encompasses both.

Killerseven

lisyloo wrote: »

I don't get this - because I live in London and see loads of new property being built and up for sale, but I'm sure you had a valid point, so did you mean

we're failing to build enough
we're failing to build in pime central london
we're failling to build enough affordable accomodation
or something else?

As an example here's some new builds (all below £250k)

Bromley-by-bow (ex engineering works)
Greenwich kidbrooke village
houslow regeneration
Limehouse
Croydon saffron square
woolwich
hackney matchmakers wharf
Lewisham (from £180k)
Stanmore
Bow

there seems to be new builds all over the place, more than any other time in living memory.

lisyloo

there seems to be new builds all over the place

I always say it'll be nice when it's finished :-)

mobfant

Generali wrote: »

Why do you think a big crash would be a good thing?

Because I'm on a website called MoneySavingExpert and on every board saving money is a good thing.

A crash means property would be affordable for many more, it would take a lot of the speculation and foreign buyers out of the market, and most people who own a house and haven't recently bought won't be out of pocket. If housing looks like a sure thing investment, there'll be relatively less interest in buying flats just to see capital appreciation without living in them, and more flats for people to live in. Costs of living will fall so people have money to spend on other things that generate greater productive economic activity. People will be happier. Etc etc.

Of course it's not perfect. Some people will lose. but more who need to will win.

padington

padington wrote: »

Expect prime to burn and cheap side to boom. Especially if Ed doesn't get a majority for the latter.

Haringey up 3.6%, Westminster down 17.1%.

http://www.cityam.com/211623/slowdown-top-and-bottom-market-hits-london-house-prices

westernpromise

mobfant wrote: »

A crash means property would be affordable for many more, it would take a lot of the speculation and foreign buyers out of the market.

What about the people speculating on price falls? Will it take them out as well? Or is that kind of speculation OK?

cells

lisyloo wrote: »

I don't get this - because I live in London and see loads of new property being built and up for sale, but I'm sure you had a valid point, so did you mean

we're failing to build enough
we're failing to build in pime central london
we're failling to build enough affordable accomodation
or something else?

As an example here's some new builds (all below £250k)

Bromley-by-bow (ex engineering works)
Greenwich kidbrooke village
houslow regeneration
Limehouse
Croydon saffron square
woolwich
hackney matchmakers wharf
Lewisham (from £180k)
Stanmore
Bow

You are small London is big

London plan calls for 48k homes a year while around 20k a year are actually built