When will London burst ?

lisyloo

Why do you always remove the name of the person you are quoting?

Not intentional at all - will fix.
If you really want to know it's because I manually quote (because I often pick out specific sentences) and it just gets missed off - no agenda there but will make amends.

cells

mwpt wrote: »

I said that my observation is that London rents have risen broadly in line with general inflation (gentrifying micro markets excluded).

From that, you get to "rentals are cheap and plentiful"?

So, to be direct then, do you disagree with this observation? If lack of supply was the major cause of > 10% pa house price rises, I'd also expect to see > 10% pa rent increases.

housing, stocks, gilts, savings accounts etc are all linked by investors moving from one asset class to another. So their yields will more or less be similar

worldwide interest rates have been falling for twenty years.

That means that the housing market had two choices.
1 Capital prices increase to lower yields
2 Rents decrease to lower yields

In the UK due to a big under supply we saw capital prices increase to lower yields

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Also the rental market is actually more fluid and efficient than the owners market as price discovery is on a 12 month AST basis.

If rents go up by 10%, renters re-evaluate what they can and are willing to spend. They will choose to live more dense or stay living with parents longer or live in HMOs etc to try and counter their personal cost increase. That will limit rent rises.

Whereas Mrs Smith who bought 30 years ago fixed her costs then and doesn't care or look to interact with the market

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Also I would simply point would that France has more than 5 million more homes than the UK and both nations have almost the same population. So if we have no shortage the French have a ghost city larger than London thats all empty.

buglawton

Why is price discovery not on a 6 month AST basis?

Also, France has sort of done what you say. In the UK we managed to make ghost towns out of some Northern enclaves, where whole 1920s/1930s built housing estates - quite attractive ones - are being demolished due to chronic local unemployment.

But the French have outdone us by a country mile - they manage to make ghost towns and villages out of places in quite attractive potential tourist areas with excellent and current state funded infrastructure.

Whatever. Perhaps Cells you should have given our Hamish some economics lessons to give him a more rounded view of life!

cells

buglawton wrote: »

Why is price discovery not on a 6 month AST basis?

Also, France has sort of done what you say. In the UK we managed to make ghost towns out of some Northern enclaves, where whole 1920s/1930s built housing estates - quite attractive ones - are being demolished due to chronic local unemployment.

But the French have outdone us by a country mile - they manage to make ghost towns and villages out of places in quite attractive potential tourist areas with excellent and current state funded infrastructure.

Whatever. Perhaps Cells you should have given our Hamish some economics lessons to give him a more rounded view of life!

Renters interact with the market each time they need to renew or rent another place be that 6 months or 12 or.... Buyers only really interact when they buy and sell and that might well be once every 20 years. Also buyers are much less inclined to move into a cheaper place to save money on a mortgage because they have historically seen HPI beat mortgage payments so in the Long run buying a bigger place has not been a bigger cost for them

The UK does not really have any empty towns or streets. There are some but often it is local conditions (eg I know a street that is almost fully empty but then it is literally within walking distance of a coal power station a steel plant a coal coke oven works and some chemical plants etc. You can smell the !!!! in the air. Combined with the stock being council and old and small and !!!!...they are empty.....nowt to do with jobs plenty of jobs within walking distance but no one wants to live there quite rightly)

With regards to the French, they do have more empty homes but empty homes is needed to limit rents and prices.

In the hotel trade the saying is......if your occupancy rate is 100% you are not charging enough. Well in the UK the occupancy rate is close to 99% and as a result prices and rents are going up because of it

buglawton

Well you may be right that the UK does not have empty houses - if you knock 'em down, you don't have empty houses. Stalin would have admired the statistics management!

N Ireland
http://www.bbc.co.uk/news/uk-northern-ireland-23405185

Stockton
http://www.thenorthernecho.co.uk/news/11768070.Demolition_scheme_reaches_its_conclusion/?ref=mr

Wirral
http://www.dailymail.co.uk/news/article-2561408/Last-house-standing-Man-refuses-leave-home-born-despite-council-knocking-600-homes-estate.html

Mallotum_X

buglawton wrote: »

Well you may be right that the UK does not have empty houses - if you knock 'em down, you don't have empty houses. Stalin would have admired the statistics management!

N Ireland
http://www.bbc.co.uk/news/uk-northern-ireland-23405185

Stockton
http://www.thenorthernecho.co.uk/news/11768070.Demolition_scheme_reaches_its_conclusion/?ref=mr

Wirral
http://www.dailymail.co.uk/news/article-2561408/Last-house-standing-Man-refuses-leave-home-born-despite-council-knocking-600-homes-estate.html

You may want to read those stories, two are being cleared to make way for new homes.

The Wirral one you do have a point with but the other two...

antrobus

Landofwood wrote: »

Is there a US forum with a thread "When will New York burst?".

Is there a French forum with a thread "When will Paris burst?".

Or is this purely a British pastime?

I wouldn't be surprised if there was a Swedish forum with a thread "When will Stockholm burst?":)

http://www.bloomberg.com/news/articles/2015-02-23/sweden-s-manic-housing-market-gets-jolt-from-rate-cut

lisyloo wrote: »

It's very much a British pre-occupation.
In europe they rent and have a different system.....

That is simply just plain wrong. It is simply not the case that in "Europe they rent and have a different system".

Owner occupation in the UK is below the European average. There is more to Europe than just Germany.:)

Conrad

Just prior to coming on here I was pondering wildly rising prices here.
We've been trying to get a buy to let for the last few weeks and I've never seen such a gold rush with crowds of people at the now familiar viewing sessions and 5 offers on every place.


It took all my efforts and skill to secure a place today and I enjoy various advantages such as being in the finance game and having a large deposit, being very familiar with local EA's and having no chain. I got it by the skin of my teeth and am still uneasy that the agent will sell it to another.


I have had to grit my teeth and face up to falling yields as prices rise faster than rents. Most of us LL's increase the rents by modest sums each year, we cant just willy nilly hike up the rent in the way property prices are inflating.


Whats my alternative? I want to live off rent alone within a few years. I detest work!
Can't wait for the day I buy and old van and with my dog next to me (I don't own one yet) pop round to the properties and basically feel a lot more relaxed about life (I am an experienced LL, I of course know there are still stresses).


Sure I'd love to be all teutonic and set up a manufacturing plant but the risks are far too high. Those that preach investors ought to be setting up a 'proper' business, off you go then, no one is stopping you. My mates Father had a medium sized engineering firm which recently went bust, who the heck wants that sort of risk hanging over them?

Conrad

antrobus wrote: »

That is simply just plain wrong. It is simply not the case that in "Europe they rent and have a different system".

Owner occupation in the UK is below the European average. There is more to Europe than just Germany.:)

I wrote a post arguing the same as you, but lost it, grrr!


Total urban myth when it comes to Europeans being all willing and happy to rent. Even the most iron curtain of nations such as Albania and Montenegro have populations with a deeply ingrained ownership mentality.

MARTYM8`

Conrad wrote: »

I wrote a post arguing the same as you, but lost it, grrr!


Total urban myth when it comes to Europeans being all willing and happy to rent. Even the most iron curtain of nations such as Albania and Montenegro have populations with a deeply ingrained ownership mentality.

Its quite interesting that the level of home ownership in Europe is often inversely proportional to the wealth and prosperity of that country.

Romania, Slovakia and Lithuania have the highest levels of home ownership and Switzerland and Germany the lowest.

http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

Maybe there is a message there somewhere!