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

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.

Reply to
Troy Steadman
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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.

Reply to
jameshamilton777

This is a housing bubble. Mabon Dane

Reply to
Mabon Dane

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

Reply to
Daytona

Are these mortgage approvals from people moving house, or people remortgaging?

Reply to
Jonathan Bryce

They're net of remortgages and cancellations if I've interpreted things correctly

Daytona

Reply to
Daytona

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

Reply to
John

Prices would never fall below the amount related to net rental income.

Reply to
Peter Saxton

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.

Reply to
Troy Steadman

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

Daytona

Reply to
Daytona

There is a book whose point is that in fact crowds are very clever!

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Reply to
Tumbleweed

I tried this arguement during the crash of 90(1,2?). Many people told me I was wrong.

tim

Reply to
tim (in sweden)

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