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

Discussion in 'UK Finance' started by Troy Steadman, Mar 27, 2006.

  1. 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.
     
    Troy Steadman, Mar 27, 2006
    #1
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  2. 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.
     
    jameshamilton777, Mar 27, 2006
    #2
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  3. Troy Steadman

    Mabon Dane Guest

    This is a housing bubble.
    Mabon Dane
     
    Mabon Dane, Mar 27, 2006
    #3
  4. Troy Steadman

    Daytona Guest

    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
     
    Daytona, Mar 27, 2006
    #4
  5. Are these mortgage approvals from people moving house, or people
    remortgaging?
     
    Jonathan Bryce, Mar 28, 2006
    #5
  6. Troy Steadman

    Daytona Guest

    Daytona, Mar 28, 2006
    #6
  7. Troy Steadman

    John Guest

    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
     
    John, Mar 29, 2006
    #7
  8. Troy Steadman

    Peter Saxton Guest

    Prices would never fall below the amount related to net rental income.
     
    Peter Saxton, Mar 30, 2006
    #8
  9. 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.
     
    Troy Steadman, Mar 30, 2006
    #9
  10. Troy Steadman

    Daytona Guest

    That's far too logical, and shows absolutely no knowledge of the
    madness of crowds <g> !

    Daytona
     
    Daytona, Mar 30, 2006
    #10
  11. Troy Steadman

    Tumbleweed Guest

    Tumbleweed, Mar 30, 2006
    #11
  12. I tried this arguement during the crash of 90(1,2?).
    Many people told me I was wrong.

    tim
     
    tim \(in sweden\), Mar 30, 2006
    #12
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