Fears: "Massive global property crash"

luvpump

http://www.telegraph.co.uk/business/2017/01/02/fears-massive-global-property-price-crash-amid-dangerous-conditions/

Seems inevitable to me, they have pumped it up with QE & ultra low interest rates, no bullets left when the slow down in the economy begins this year .

wymondham

Property crashes are no longer allowed - Government policy!

michaels

I was with some 1% broadsheet readers last week who were contemplating selling their second/third homes in the uk because they wanted less exposure to property in general and uk property specifically.

economic

i am seeing london asking prices falling specially luxury flats an those in the 700k + range. should start hitting 500k flats too. camden down 25%.

parking_question_chap

Whilst the rise cannot go on forever (probably). That article is just woffle, whats the following supposed to mean ""raising the risk of massive price falls if markets overheat" Overheat you say, what is this? A seven year old Alfa Romeo?

I am very simplistic in my views. Speaking for the UK, currently there are low interest rates, too many people and a shortage of good houses in employment areas. For the time being I cannot see much reason for a "massive property price fall".

economic

parking_question_chap wrote: »

Whilst the rise cannot go on forever (probably). That article is just woffle, whats the following supposed to mean ""raising the risk of massive price falls if markets overheat" Overheat you say, what is this? A seven year old Alfa Romeo?

I am very simplistic in my views. Speaking for the UK, currently there are low interest rates, too many people and a shortage of good houses in employment areas. For the time being I cannot see much reason for a "massive property price fall".

agree for outside london. maybe even outer london too. but inner london and central london the top end is already crashing. this is now filtering out to the 700-800k normal flats too. i bet it will eventually hit the average 500k property sooner or later.

parking_question_chap

economic wrote: »

agree for outside london. maybe even outer london too. but inner london and central london the top end is already crashing. this is now filtering out to the 700-800k normal flats too. i bet it will eventually hit the average 500k property sooner or later.

Yes I agree, central London is an curious case.

AFF8879

The problem is that the population of the world, not just the UK, is increasing. Generally speaking this will help to support prices, but in a case where there was a crash (due to economic reasons e.g significant and unexpected rise in interest rates), this growing population still needs a place to live. Hence rents will likely rise further and faster than previously. In fact one of the benefits of rising house prices in the UK at least is a (relative) stability of rents. This inverse relationship will hurt the poorer of society far more if house prices crash / rents skyrocket, as obviously they are much more likely to be renting.

A decade of low interest rates and QE seem to have left the politicians of the world in a bit of a predictament, falling house prices are generally not a good sign of economic health (I.e. if prices fall it's not as though everyone who couldn't afford to buy previously will now suddenly be able to), but at the same time growing numbers of people are being priced out of areas they/their families have lived in their entire lives. No matter which way prices go you're hurting one big swathe of voters.

Housebuilding (cheap to mid-range, not luxury apartments) and further punitive measures against second / empty homes are the only feasible ways to stabilise prices and rents IMO.

Martinslovechild

It's definitely worth taking a look at Nationwide's House Price Indices data, in particular the 'First Time Buyer House Price Earnings Ratios' under the 'Affordability Estimates' section.

According to their figures, London house prices now require 10.1 times the average salary. Before the final quarter of 2015, London had never previously hit double-figures. Historically, London has always been higher than the rest of the UK but a figure of somewhere around 6.5 would be a more realistic historical average. When you need to borrow 10.1 times your income to afford a home in London, you know that there's something very wrong!

The figures for the rest of the UK (except Outer SE and Outer Met) are pretty much at their long-term average, so I personally don't see a housing crash any time soon - but I do foresee a correction or at least a period of zero growth in London. The chart from the HousePriceCrash website shows that house prices are actually below their long-term trend -



Judging by the crazy amount of building going on within 20 miles of my house, the housing market looks like it's only heading upwards in the short- to medium-term.

AFF8879

I think you can replace the term London with "South East" when it comes to property now, as outside of prime zone 1 there really isn't much, if any, difference between Greater London and the Home Counties. I paid £315k for my one-bed flat in zone 2 London, and near where my parents live in Hertfordshire I'm regularly seeing flats being advertised for more than I paid in London!

economic

AFF8879 wrote: »

I think you can replace the term London with "South East" when it comes to property now, as outside of prime zone 1 there really isn't much, if any, difference between Greater London and the Home Counties. I paid £315k for my one-bed flat in zone 2 London, and near where my parents live in Hertfordshire I'm regularly seeing flats being advertised for more than I paid in London!

When and where did you buy the one bed?