London property market bubble?

satchef1

yertiz wrote: »

http://truepublica.org.uk/united-kingdom/britains-house-price-crash-2016-predictions-mount/

My son sent this to me last week, asking what I thought. He is looking to buy a flat in or near London which is where he works. He is now indecisive, and I am reluctant to offer any sort of advice as my thoughts were, like many others expressed on here, that prices can go either way. Negative equity is no laughing matter, but neither is spiralling property prices which are beginning to be out of reach for most FTB.

That's quite a misleading article. While I haven't had the opportunity to look at all the sources yet, I notice that they have quoted Market Oracle's Nadeem Walayat in a very out of context way. While Nadeem does predict a crash for the UK housing market (and has done pretty much since the last one stopped early), he isn't expecting it to happen until the next decade. He certainly doesn't agree with the article's author that a crash is imminent.

I wonder how many other quotes have been taken selectively?

_CC_

economic wrote: »

why do people think London is a bubble? because they didn't buy and now regret it? clearly London is expensive, but bubble? no I don't think so. there is still demand to buy even at these prices.

How does the presence of buyers at high prices determine that there's no bubble?

It's illogical.

If there were no buyers to purchase assets at prices that are detached from fundamentals then bubbles wouldn't come to exist in the first place. The market would be rational. You wouldn't have the likes of the dot-com bubble.

Every bubble shares the trait of people continuing to buy at high prices. They continue to buy because they believe the price will continue to raise, despite the current prices being detached from any fundamentals.

marsman802

My area is red hot it seems. We currently have an offer 66% above what we paid 4 years ago.

That's quite a frightening profit

HouseBuyer77

Miss_Samantha wrote: »

That's not true. When there is a speculative bubble in any market it shows.

How so?

If a bubble was obvious in any market then they wouldn't exist in the first place (no-one would in invest to cause the bubble).

Miss_Samantha

HouseBuyer77 wrote: »

How so?

If a bubble was obvious in any market then they wouldn't exist in the first place (no-one would in invest to cause the bubble).

Hi HomeBuyer77,

there are a lot of resources freely available online, from the actual definition of an economic bubble to lengthy discussions on the economics and psychology.

legoanakin

Innys1 wrote: »

Do you really mean The City of London? If so, I hope you have deep pockets.

If not, and you actually mean within, say, the M25, it's a question of what's important to you. Personally, I'd commute because I enjoy the quality of life where I live. Some, though, prefer the convenience of living close to work.

Sorry, yes, I guess "the City" could mean a lot of things. No, I do not have deep pockets. I mean Zone 2 if I can and if not, Zone 3.

My primary reason for wanting to do it is a financial one. I want to buy a flat now that is likely to increase in value in the near future (say 2-4 years) so that when I want a bigger place I have greater equity. Living alone in a small flat for now is fine but I don't want to be still doing it in 10 years time.

My other reasons are to cut down the commuting time and to actually start paying towards something for me instead of paying off someone else's mortgage.

thesaint

legoanakin wrote: »

My primary reason for wanting to do it is a financial one. I want to buy a flat now that is likely to increase in value in the near future (say 2-4 years) so that when I want a bigger place I have greater equity. Living alone in a small flat for now is fine but I don't want to be still doing it in 10 years time.

Your small property may increase by 5%, whilst the bigger one you want to move to increases by 10% in 2 years. Your equity is not much use to you.

economic

_CC_ wrote: »

How does the presence of buyers at high prices determine that there's no bubble?

It's illogical.

If there were no buyers to purchase assets at prices that are detached from fundamentals then bubbles wouldn't come to exist in the first place. The market would be rational. You wouldn't have the likes of the dot-com bubble.

Every bubble shares the trait of people continuing to buy at high prices. They continue to buy because they believe the price will continue to raise, despite the current prices being detached from any fundamentals.

yes true however for property to be a bubble I would see people over extending them selves and overleveraging themselves to buy and banks lending easily. this isn't happening yet. so I don't really call it a bubble. an expensive market yes and one that could see a correction, but I don't think its a bubble like US subprime was. a bubble is a term easily said by anyone yet there could be different levels of severity as well.

jimjames

HouseBuyer77 wrote: »

How so?

If a bubble was obvious in any market then they wouldn't exist in the first place (no-one would in invest to cause the bubble).

Exactly. A bubble is only obvious with the benefit of hindsight whether it was the South Sea bubble, tulips or dotcom

People have been calling the London market overpriced for most of the last 10 years I think.

Miss_Samantha

jimjames wrote: »

Exactly. A bubble is only obvious with the benefit of hindsight whether it was the South Sea bubble, tulips or dotcom

Obviously, this will be the case for the most gullible, who are the ones who always get burnt the most when a bubble burst.
However, there are very telling signs of a bubble and not everyone gets caught out.

You used the dotcom era as an example: Well, if in 1999 you thought that all was normal because this was the way the "new economy" worked then some people made a lot of money out of you.

London is not a single property market.

There is certainly no bubble for standard residential properties. Prices are high and increasing because people want to buy these properties to live there.

However, IMO there are serious concerns where new luxury flats fly off the shelf for several million pounds only for the building to then be almost completely unoccupied.

So it depends on what loegoanakin plans to buy.