Today's London Evening Standard reports big surge in London house prices


T

Troy Steadman

They forecast 10% in 2006. Their headline tonight:

Average cost of a terraced house in London central is £1,000,000.

I'm with Crowley on the colossal slump, but I'm forecasting it to be
postponed until 2013. After the Olympics.
 
J

jameshamilton777

I thought they'd gone up 1%?

My friend's brother is predicting 10% rises as well. But then, he is
retarded (in special housing).

Some economist is predicting a 50% fall.

etc etc etc

Isn't the 1st rule of economics that the market always ultimately moves
in the direction that causes the most hurt to the most people? Most
people think prices will rise >>> most people are stupid >>> prices
will fall.
 
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D

Daytona

Troy Steadman said:
They forecast 10% in 2006. Their headline tonight:
It's probably based on the value of new mortgage approvals published
by the BoE which, in real terms, are at there highest level ever; the
annual increases being comparable with the period H2 2001 - 2002 when
house prices were rising at ~15%.

No doubt this dose of economic reality will prompt some to cover their
ears, shut their eyes and hide under their desks rocking backwards and
forwards, humming loudly until they've made the bad numbers go away;
and after which, when they've recovered sufficiently, to enter into
another frenzied session of plastering internet forums with the
'Truth'.

Daytona
 
J

Jonathan Bryce

Daytona said:
It's probably based on the value of new mortgage approvals published
by the BoE which, in real terms, are at there highest level ever; the
annual increases being comparable with the period H2 2001 - 2002 when
house prices were rising at ~15%.
Are these mortgage approvals from people moving house, or people
remortgaging?
 
J

John

I think the historic data shows that this is far from a bubble.

Employment levels in the City are at all time highs and the bonuses
paid out were very good. The CIty has a big impact on the overall
economy of London.

Tangent: If you look at the data you will see that the City performance
is even visible in the national statistics so the impact on the GDP is
national. It is true that the City's national impact means little to
the London housing market.

The interest rate trends are pretty stable, the employment levels are
good, and salaries are not out of line (salary inflation is not a
worry; salaries are rising slightly). Though we might be having higher
taxes and some other negatives compared to the past there is nothing
that is causing obvious pain to the housing market the short term other
than affordability. It is hard to argue that London has ever been
affordable. London did have a long period where there was a falling
population year on year. That period ended a few years ago.

Most houses are purchased because someone needs a place to live for
them and maybe a family. Hence London prices reflect more the
prevailing mood about employment and the need to live somewhere. As
prices did not move much in the last 2 years there is some pent up
demand and sellers are not throwing their homes on the market to
capture a high price. Hence the supply is low.

I am not saying that housing can never go down. Just that housing does
reflect a number of variables and the most important housing variables
are neutral to positive (interest rates, employment (relates to
population trends) and inflation).

John Corey
 
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P

Peter Saxton

They forecast 10% in 2006. Their headline tonight:

Average cost of a terraced house in London central is £1,000,000.

I'm with Crowley on the colossal slump, but I'm forecasting it to be
postponed until 2013. After the Olympics.
Prices would never fall below the amount related to net rental income.
 
T

Troy Steadman

Peter said:
Prices would never fall below the amount related to net rental income.
London is already the most desirable destination in the world, so there
isn't much point comparing it with Beijing. Just the mention of the
Olympics (arguably) has triggered this latest round of house price
rises.

In the next 6 years rents will presumably rise and rise, carrying house
prices with them, culminating in a mad final 2 weeks where rents go
into orbit...then what?

Isn't that going to be a "Mrs Thatcher withdrawal of MIRAS" moment?

I can't be arsed to check this, but aren't all these cycles high at the
moment?

1) House prices
2) Share prices
3) Sterling
4) Gold

(1) and (4) are safe havens, so I don't see any calamity - bird flu for
example - causing a short term slump.
 
D

Daytona

Peter Saxton said:
Prices would never fall below the amount related to net rental income.
That's far too logical, and shows absolutely no knowledge of the
madness of crowds <g> !

Daytona
 
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T

tim \(in sweden\)

Peter Saxton said:
Prices would never fall below the amount related to net rental income.
I tried this arguement during the crash of 90(1,2?).
Many people told me I was wrong.

tim
 

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