London property prices to fall 30%....

wotsthat

Graham_Devon wrote: »

I quite clearly stated I believe the ceiling has been hit...

Wotsthat was asking if I was seriously suggesting that the BOE changes had not been fully reflected in house prices.

Nice to see you pop in though.

What date did you think the ceiling was hit? Because the difference between 7 years and 6 years 364 days is so important when debating how long it takes for London house prices to fully price an interest rate change.

Graham_Devon

wotsthat wrote: »

Looking at annual HPI in London it accelerated peaking at 20% of so in 2014 - 5 years after the BoE dropped rates. That's the opposite of what really happens when interest rates rise - a reasonably quick assessment by the market followed by a longer tail.

Now, I wonder what possibly happened just before that?

Can't for the life of me think of the acronym....

Was the one a huge number of commentators suggested would see a surge in house prices, but those "in the know" on here said it wouldn't, it would only increase the supply of houses...

H something?

Help something...

danothy

wotsthat wrote: »

What date did you think the ceiling was hit? Because the difference between 7 years and 6 years 364 days is so important when debating how long it takes for London house prices to fully price an interest rate change.

Is the difference between the phrase "has been hit" and the phrase "has now been hit" equally important?

wotsthat

Graham_Devon wrote: »

Now, I wonder what possibly happened just before that?

Can't for the life of me think of the acronym....

Was the one a huge number of commentators suggested would see a surge in house prices, but those "in the know" on here said it wouldn't, it would only increase the supply of houses...

H something?

Help something...

Jeez. You're obsessed - Help to Buy had nothing to do with 20% HPI in London in 2014.

IronWolf

The flat I used to rent in London was bought for £250k in 2009, we paid £1400 rent a month in 2012.

Now that flat rents for about £1300 a month, but is worth ~£400k.

Logical? hardly

Graham_Devon

wotsthat wrote: »

Jeez. You're obsessed - Help to Buy had nothing to do with 20% HPI in London in 2014.

UBS appear to think it did.

Sentiment does a lot.

wotsthat

Graham_Devon wrote: »

UBS appear to think it did.

Sentiment does a lot.

They appear to think current valuations are largely explained by foreign demand and safe haven seekers.

Surprised they even bothered putting HTB in the list to be honest but they did mention the alluring yields of BTL in the capital so they clearly don't know what they're talking about.

I don't know if you really believe people in Hackney bid up terrace houses by £100k because of the sentiment of HTB or if you just want to believe it.

Foreign demand and demand deriving from safe-haven seekers largely explain current valuations. Global geopolitical risk and the high property valuations in Asian cities have helped to propel London house prices to new heights. Domestic buyers too have contributed to the appreciation. The “help-to-buy” scheme, alluring yields on buy-to-let investments and ongoing population growth have stoked demand.

westernpromise

IronWolf wrote: »

The flat I used to rent in London was bought for £250k in 2009, we paid £1400 rent a month in 2012.

Now that flat rents for about £1300 a month, but is worth ~£400k.

Logical? hardly

Yes it is.

It rents for less because the alternative to renting is buying. Buying carries the prospect of capital gains so renting is less attractive. So the price goes up as the rent goes down.

In a downwards price correction rents go up.

London is nothing to do with low rates. Scotland has the same interest rates as London but prices there haven't gone up in years.

London is about supply and demand and I don't see it changing.

Generali

westernpromise wrote: »

Yes it is.

It rents for less because the alternative to renting is buying. Buying carries the prospect of capital gains so renting is less attractive. So the price goes up as the rent goes down.

In a downwards price correction rents go up.

It's a very interesting premise. Do you have any evidence to support it?

Good signature BTW.

sebtomato

westernpromise wrote: »

Yes it is.

It rents for less because the alternative to renting is buying.

So the property prices are so high now that people can't afford to buy, but the rents are going down??

Surely, the rents should go up, when purchasing a property becomes unaffordable to most people (given salary multipliers to apply etc.).

To be honest, many investors should sell their property, if the property price has gone up by 60%, but rent is the same as before. Yield is significantly lower now, so should be incentive to sell for BTL, and therefore have property prices going down.

When BTL investors realise that property is no longer a great investment, because of low yields (before tax, maintenance, unpaid rents etc) and low capital growth (given the current prices), then there will be a large sell off.