London now in a permanently high house price environment?

pricedout_1

About a decade ago we had the financial crisis. At the time the Bank of England printed money out of thin air (QE) and pushed central interest rates down to 300 year lows, but assured us all this was a temporary measure, and that they would go back up again. They have, as we all know, failed to do this. Also, for the first time in history, this central banking policy was mirrored around the world, artificially inflating asset prices, which, in our globalised world, simply served to compound the inflation.
My sources of financial advice tell me that if there were to be another dip in the economy, or recession, the BoE would do the same again, lowering interest rates even further from the current lows and instigating fresh rounds of QE, or different forms of QE.
This being the case, it does indeed look like there are a good few years left in the current bull market for the following additional reasons:-

• Gov schemes are going to prop the market up for the foreseeable future.
• The growth of new forms of fintech (p2p/crypto/blockchain) will create new and innovative flexible forms of property finance enabling new sources of finance into the property market and this already happening.
• Immigration is still high and will likely remain so despite brexit. (New immigration system will probably bring numbers down, but from the existing high levels).
• Despite the naysayers, Brexit may well lead to some kind of economic boom in the UK with new trade deals with the US, EU, Canada, Aus etc establishing new trading opportunities, increased efficiencies of trade, and new suppliers of goods and services, and London will become the centre of it all attracting more legal migrants etc. 
• BoE QE + ZIRP at any sign of a recession.

However, this combination of factors is still creating a "race to the bottom" which will likely go pop at some point in the future as the debt bubble inflates. There is a property cycle I believe, that is due to end around 2025/6, which seems like potential flashpoint where things could come to a head, but, of course, if you are thinking of buying now, you aren't going to wait on the off chance are you? I think is now just a case of sucking it up and jumping in. It appears we have indeed transitioned to a perma-high house price environment.

Sailtheworld

To do list..
- sell in December 2024.
- buy in February 2025 after the debt bubble goes pop.
Thanks for the tip.

pricedout_1

Sailtheworld said:

To do list..
- sell in December 2024.
- buy in February 2025 after the debt bubble goes pop.
Thanks for the tip.

You're welcome... happy to help!

[Deleted User]

I'm looking to buy in the next five years if possible.  It would be nice to see a crash before I do lol.  

I don't think you can be certain about anything.  But I'm well aware that once I do buy I am then committed to it, crash or no.

My biggest fear would be a rise in interest rates.

pricedout_1

Whilst it is not easy to predict the future, we still are going to try in order to decide a particular course of action. I take it the general lack of responses to this post means that most on here agree with the OP.... We are in a long term bull market which, it would appear, has many years to run?

Sailtheworld

pricedout_1 said:

Whilst it is not easy to predict the future, we still are going to try in order to decide a particular course of action. I take it the general lack of responses to this post means that most on here agree with the OP.... We are in a long term bull market which, it would appear, has many years to run?

What particular course of action would you take if you couldn't predict what will happen to house prices and, importantly, when these changes will occur? Why even make future price changes a factor in a buying decision when you can't predict them?

lisyloo

amywoodmead said:

I'm looking to buy in the next five years if possible.  It would be nice to see a crash before I do lol.  

I don't think you can be certain about anything.  But I'm well aware that once I do buy I am then committed to it, crash or no.

My biggest fear would be a rise in interest rates.

You may well be aware, but you can get a fixed rate mortgage to remove the risks of rising interest rates for a period.
usually you’re going to lose that bet, but if it helps you sleep better then it may well be worth paying a premium for the safety

lisyloo

pricedout_1 said:

Whilst it is not easy to predict the future, we still are going to try in order to decide a particular course of action. I take it the general lack of responses to this post means that most on here agree with the OP.... We are in a long term bull market which, it would appear, has many years to run?

Trying to predict the future is foolish. Basing anything on opinions on forums is crazy (although I’ve certainly used it to clarify my thinking).
having said that I see no reason for London’s popularity to wane.

Thrugelmir

pricedout_1 said:

About a decade ago we had the financial crisis. At the time the Bank of England printed money out of thin air (QE) and pushed central interest rates down to 300 year lows, but assured us all this was a temporary measure, and that they would go back up again. They have, as we all know, failed to do this. 

QE was introduced in an attempt to avoid Japanese style secular stagnation post their credit crash of the early 90's. Little to suggest that the policy has entirely worked. While stablisation of the financial system appears to be achieving it's objectives. Little direct impact on employment or output. As far as bringing the major developed economies out of stagnation doesn't appear to have been an effective policy tool. 

Sailtheworld

Thrugelmir said:

pricedout_1 said:

About a decade ago we had the financial crisis. At the time the Bank of England printed money out of thin air (QE) and pushed central interest rates down to 300 year lows, but assured us all this was a temporary measure, and that they would go back up again. They have, as we all know, failed to do this. 

QE was introduced in an attempt to avoid Japanese style secular stagnation post their credit crash of the early 90's. Little to suggest that the policy has entirely worked. While stablisation of the financial system appears to be achieving it's objectives. Little direct impact on employment or output. As far as bringing the major developed economies out of stagnation doesn't appear to have been an effective policy tool. 

It's a rewriting of history to suggest it was intended to prevent a Japanese style secular stagnation. QE was an emergency measure and introduced with haste to try and prevent the GFC turning into a great depression. The only way to work out its effectiveness is to compare today with what would've happened if QE hadn't been implemented. Obviously that'll keep economists busy for decades.

pricedout_1

Sailtheworld said:

pricedout_1 said:

Whilst it is not easy to predict the future, we still are going to try in order to decide a particular course of action. I take it the general lack of responses to this post means that most on here agree with the OP.... We are in a long term bull market which, it would appear, has many years to run?

What particular course of action would you take if you couldn't predict what will happen to house prices and, importantly, when these changes will occur? Why even make future price changes a factor in a buying decision when you can't predict them?

I didn't say "can't predict future house prices", I said it "isn't easy". That is different from making a judgement on favourable times to buy a property based on current economic conditions and likely economic trends. It is something that most people do at some level when making that decidsion.