What would cause negative HPI in London

Jason74

MARTYM8` wrote: »

Certainly in prime London.

Less obvious that this is the case in the suburbs though - east London is still going crazy although a lot of properties don't seem to be selling at some of the mad asking prices.

Broadly the same here in the South London suburbs. The silly priced (relative to the rest of the local market) is sticking, but anything not priced speculatively is still moving. Confirmed sold prices are also noticeably up on just a few Months ago, so the perception of rises has nothing to do with "propaganda". There also seems to be a surprising amount of activity for this time of year judging by what is going under offer on Rightmove, which does seem to point to rises in the new year sadly .

"Prime" London does indeed seem to have hit a peak for now, but as yet, that hasn't rippled out to the less fashionable parts of town. Logic suggests it will (if it doesn't, a 2 bed flat in Croydon will cost half a million before too long, and that is just wrong!), but only time will tell.

padington

TheCountofNowhere wrote: »

All propaganda

Really ?

http://www.theguardian.com/business/2015/nov/05/house-prices-rise-record-205000-average

padington

Jason74 wrote: »

Broadly the same here in the South London suburbs. The silly priced (relative to the rest of the local market) is sticking, but anything not priced speculatively is still moving. Confirmed sold prices are also noticeably up on just a few Months ago, so the perception of rises has nothing to do with "propaganda". There also seems to be a surprising amount of activity for this time of year judging by what is going under offer on Rightmove, which does seem to point to rises in the new year sadly .

"Prime" London does indeed seem to have hit a peak for now, but as yet, that hasn't rippled out to the less fashionable parts of town. Logic suggests it will (if it doesn't, a 2 bed flat in Croydon will cost half a million before too long, and that is just wrong!), but only time will tell.

If you tax one area of the economy like houses over 2 million what can happen is you make everything else become more attractive. Just like if you tax beer too much, wine gets drunk more.

westernpromise

TheCountofNowhere wrote: »

Don't believe the propaganda

Thanks for the laugh over on HPC yesterday, when you posted

the interesting time is when they can't mask the London collapse anymore and we see a UK bank close and not open again.

I was trying to work out who "they" are. Presumably Carney, Osborne, David Icke, Kirsty Young and I guess Laurence Llewellyn Bowen. They all meet furtively in some palatial secret club in London and the agenda is always one item: how can we conspire to mask the London collapse?

They must gnash their teeth at their inability to fool that sharp-witted recruitment consultant from Northampton who sees through their cunning scheme.

westernpromise

mwpt wrote: »

A lot of discussion around here takes the form of "London prices will never go down because...."

Now maybe that is correct but I don't feel I'm learning anything new hearing the same old supply/demand arguments.

I'd be interested if a few of you could don your bear hats and describe a scenario in which we see negative HPI in London.

My take on it is perhaps a credit event would cause drops. We know that the supply/demand issue exists and so that will exert upward pressure on the market. If HPI had tracked rent increases more closely, I'd say that was "normal" HPI but add in the decreased cost of credit and you have much higher inflation. So what would it take for mortgage rates to go up significantly making current prices completely unaffordable to new buyers? At 6% rates I estimate new buyers would want somewhere around 40% discounts. How much can market forces influence mortgage rates?

That's just one view. Any other scenarios?

Secular population decline, regulatory or Brexit-type harm to the city, capital restriction on marginal overseas buyers.

Interest rates a little, but less so than in the past, because of the much wider prevalence of rate fixes these days.

Stamp duty hikes are short-term bearish - if your budget is x including stamp duty, and that goes up, then what you can pay for the actual house has to fall, even while your total spend stays the same. Long-term, though, stamp duty hikes dissuade Londoners from moving; they upgrade their existing place instead, because it's cheaper, which in turn increases house sizes and hence values, while reducing the numbers for sale. Excess demand over supply is the source of the price problem and hiking stamp duty makes it worse.

Of all the above, I'd say Brexit was the likeliest risk; a terrorist atrocity by a Syrian who came in via Germany's open borders policy is quite possible, and might be enough to swing a Leave vote. If so, it would probably be a buying / trading up opportunity for the cash rich or under-leveraged buyer, but painful for everyone else.

Blacklight

MARTYM8` wrote: »

Its been very much at a negative cost to a functioning economy and social cohesion and our young people.

Not sure you understand negative cost.

lonestar1

Failure of Thames Barrier ?

padington

Repeal the planning laws

Mistermeaner

A plague. .

Sapphire

Second Great Fire of London (failing a dirty bomb).

Meteor strike.

Comet falls on our heads.

WWIII breaks out.

Polar ice caps melt and flood London.