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Tuesday, 10/21/2014

Avoiding overpriced London property

POSTED BY OffThePeak (2 yrs ago)

Avoiding overpriced London property

Hey, people of Hong Kong:
If you think the property salesmen from the UK "saw you coming," then you are probably right.
= = = = =

The Estate Agents from the London seem to think that HK people will buy anything, and pay some silly prices, way beyond what local people are willing to pay.

This thread is to collect examples to show how little some agents respect the intelligence of the HK-based property investor.

I will start with these:

+ What is a "prime location"? The EA's seem to think it is anywhere that the developers are willing to ask a cheeky price for a property?

+ What's the rental return going to be? It has nothing to do with what properties in the area actually achieve, it is calculated by taking the price and multiplying it by about 5% - and then stating flatly: "this is what we expect landlords to achieve."

+ What are that likely tax and other costs associated with owning a Uk property? If you want to see what an EA looks like when the are "playing dumb", then just ask this question.

Have they told you, as the SCMP did today that:

+ "The UK government announced that as of April next year non-resident "non-natural persons" will pay capital gains tax (CGT) on the disposal of a UK property."

+ "With immediate effect a non-UK company that purchases residential property in Britain valued at over GBP 2 million will have to pay Stamp Duty Land Tax at 15 percent."

#1 POSTED BY OffThePeak (2 yrs ago)

(This shows how the agents think Hongkongers will buy almost anything)

Dornoch Castle knocks at Hong Kong's door

"A Scottish castle that has been turned into a hotel is now on sale in HK and on the mainland... after languishing for seven months on the British market with no offers."

Price: GBP 2.5 million = HK$ 31.5 million

"The hotel stands opposite the 12th century Dornoch Cathedral where Madonna and Guy Ritchie had their son Rocco christened the day before their wedding at nearby Skibo Castle in 2000."

Let's see...
Madonna? That's an ageing pop singer who is into various bizarre occult rituals, and she divorced her husband after having offered to have the children of various NBA basketball players who liked to dress up in women's clothes. And they may have parked one of their bastard sons in the hotel briefly before a quickie wedding, or was it a quickie christening? ... Now why was it again that they wanted buyers to know about this ??

Yeah, exactly the sort of pedigree that should sell well in Hk and China, right?

#2 POSTED BY OffThePeak (2 yrs ago)

You can still lose plenty on a GBP 300-400,000 property.

But I would question your price point. That seems to be more like the minimum price, rather than the average these days.

I think one good mission of this website is to question "conventional wisdom": when it is likely to cost you money. And if you look at the threads that I have started here, they all have that common theme.

#3 POSTED BY OffThePeak (2 yrs ago)

"well-built Dockland's apartments should be OK"

Not all share that view. One British friend of ours think that the Docklands will be a disaster, because a big loss of jobs in the UK's financial sector is coming. That's his opinion, as a recent senior guy from one of the UK banks

#4 POSTED BY OffThePeak (2 yrs ago)

DOUBLE POST - also on Safe Haven thread, but relevant here too.
It refers to an article from July 2007: The Rich Feast in London:
http://www.financialsensearchive.com/fsu/editorials/2007/0705.html

===============
The article was published in July 2007, and anyone who sold then caught the Top. Here is the key EXCERPT:

"Meantime, the lower and middle tier of the property market is beginning to look tapped out. Hometrack announced in the past few days that the number of properties on offer in London has suddenly jumped by 10.9 percent in June, as compared with May. That is the biggest single month rise since January 2005, when the big jump in supply triggered a pause of more than six months in the property market. Another indicator that I particularly like is the price of traded Builder shares. Normally, this will lead the market by perhaps six months. In the USA, the builders gave a great early warning (almost a year ahead) that the US property market was peaking. They may be doing something similar now in the UK. The average builder stock peaked around the turn of the year, and is now down about 25-30%.

A similar drop was a good warning in the UK. This suggests that UK prices may be peaking out this summer, even in London, where the market had been so hot through the spring."
(End quote )

The subsequent falls are given here:
Index----- : At Peak (month) : drop#1 (month) /percent : latest (month) /percent
Hali-Wide : 192,490 (08/07) : 153,477 (02/09) - 20.3% : 162,657 (04/12) - 15.5%
RM- U.K. : 241,474 (08/07) : 213,570 (01/09) - 11.6% : 243,769 (05/12) +0.95%
RM- Lond.: 412,731 (11/07) : 386,653 (01/09) - 6.32% : 469,314 (05/12) +13.7%
ratio L/UK : 163.3% (08/07) : 181.0% (01/09) +10.84% : 192.5% (05/12) +17.9%
/source: http://tinyurl.com/HPC-data
========
I regard Hali-Wide (the average of Halifax and Nationwide) as more reliable, since the Rightmove figures are for Asking prices, and they bounce around a great deal.
As I said above, the main factor that has saved-the-day, preventing much lower house prices, was the UK quick move to Ultra-low interest rates at the tail end of 2008. Those very low rates allowed people to enjoy mortgage costs that were below Rents, provide a strong dis-incentive against selling. Rates are now already at or near the lowest level in history, so there is little more that the BofE can do to prevent the next crash - which I reckon may be developing, and will show up as big price drops after the Olympics- even in London.

#5 POSTED BY OffThePeak (2 yrs ago)

The message from the post above:

Be careful buying oustide London - prices have been weak. But be careful buying in London too:

From 2007 to 2012 - that's 5 years - average prices in Greater London have risen only 13.7%, and that's for the secondhand market. As you may know, new property prices are generally higher than the nearby secondhand market by 10-20% (per sf), and sometimes more than that.

When you buy: it is new. When you sell: it is secondhand, by definition.
So this suggests that those who bought new at or near the 2007 peak, are probably still underwater. And most new properties in London are priced at higher than 2007 levels.

On top of that, for those in the know, there are many signs that a cyclical peak is being put in. If prices fall, the BofE will have no tools to prevent the market from sliding furtherm since rates are already at Ultra-low levels - the lowest in history.

#6 POSTED BY OffThePeak (2 yrs ago)

I wonder how many properties you have owned, and in how many countries, walk-up. I am now in double digits in terms of the number of properties I have owned - made money on every one so far.

I always start from the Big picture, and from the cycle.

There are other ways to make money, but I know what works for me. All of London looks like it is at a cyclical peak, for me. The UK as a whole peaked in August 2007, and the "special features" that allowed London to continue to rise are very vulnerable to some of the economic changes that I think are likely in the months and years to come. For instance, I don't think Londoners can be complacent on interest rates. The consensus ideas that rates will stay down fpr 2-3 years could be very wrong, and if they are right it will be because the economic environment gets worse than most can imagine.

I provide facts, figures, information. You sling mud. Why not be more constructive in this discussion?

#7 POSTED BY OffThePeak (2 yrs ago)

And your contribution to this thread: Less than Zero

If the New properties offered at these shows were truly in Prime Parts of Central London, rather than in fringe areas like Collindale, Poplar, Hammesmith ("375 Kensington High Street"), then we could talk about Prime Central London.

As it is, properties are market in HK as "prime", are often not prime.

Have you lived in London? If so, when?
And why do you support deceptions of Property agents?

#8 POSTED BY OffThePeak (2 yrs ago)

The Advert says:
"Exclusive, Prime Central London - A Rare opportunity"
"Prime Kensington location... in the heart of Central London"
"The development is at --- and is within easy reach of the couture boutiques of Sloane Street and the luxury shopping at department stores like Harrods and Harvey Michols."
"Some of the city's most fashionable restaurants and bars can be found in the streets nearby, and the area's royal heritage is clearly evident."

My Map : http://img228.imageshack.us/img228/1884/olympialondon.gif

Where is this property on the map?
(Shall I mark it with an "X"?)
Where would you call this "Central London"?
Harrods? Mayfair? Kensington Palace?

None of those are on map.

Why, because the property is actually on the edge of Hammersmith and Shepherds Bush - both are places I know well - I have either lived there, or worked there.

How long would it take to walk to one of the above?
If you lived in this "prime location" How long would it take to commute to a job near Bank Street, for example?

If you ask these questions, you may make yourself unpopular with agents.

#9 POSTED BY OffThePeak (2 yrs ago)

Okay.
I think we are agreeing that, this area is really not prime Central London, even though it is offered at a price (GBP 1,500) which is decidedly super-prime.

It is the false advertising that bothers me, and inspired me to start this thread.

#10 POSTED BY OffThePeak (2 yrs ago)

A BEARISH Assessment : London 50% Overvalued !

"The debt profile over the whole economy was unhealthy. Household debt, at 98% of GDP, was second only to Australia’s 105% and well in excess of the U.S.’s 87%. Non-financial corporate debt was 109% of GDP, third highest and far in excess of the U.S.’s 72%. And, finally, government debt was hovering at 80%, a level that economists Ken Rogoff and Carmen Reinhart identified as a danger threshold for economies.

Authorities like the Bank of England shrug off these numbers. Yes, financial-sector debt was high but the domestic economy was sound. Households and companies could sustain their debt levels because of the high asset prices against which they borrowed–in large part, houses and commercial real estate.

But, looking at housing suggests this view is wrong. Against long-run metrics, such as price-to-household earnings or price-to-rent ratios, U.K. real estate is still significantly overvalued, probably in the order of 30% countrywide to 50% within London. Prices at the peak could only be sustained by terrible banking practice, like 125% mortgages, to which the Bank of England turned a blind eye when it wasn’t actively offering encouragement."

+ UK Zombie economy:
http://blogs.wsj.com/source/2012/06/15/the-bank-of-englands-zombie-economy/?mod=google_news_blog

#11 POSTED BY OffThePeak (2 yrs ago)

COMPARISON:
High Point Village, in Hayes, Middlesex - vs- "Prime London"

I do believe that there is less downside and greater potential percentage returns in the first versus the second.

Here, I am comparing the development described below with 375 High Street Kensington (at GBP 1500 psf), which the property agents have called "Prime Central London", but it isn't. The really funny thing is the so-called Central London location on the edge of Hammersmith, will be less convenient in some respects than the Hayes property, assuming we can believe the advertised transport times, which are:
Heathrow : 6 mins
Paddington : 17 mins
West End : 37 mins
The City : 47 mins
(Note: It could easily take 1 hour to get from 375 Ken.High St to bank)

I don't necessarily believe the advertised times (they are often inaccurate), but this comparison does show the importance of actual transport links, rather than "brand name addresses" like Kensington High Street.

High Point Village...
"is situated within the fast-emerging business hub of Hayes. And seamless transport links mean it is equally well-connected to Heathrow Airport, some of the most prosperous business areas, the M4 corridor and Central London. Heathrow Airport is only six minutes away. Hi-tech business parks surround High Point Village. The West End is just over 30 minutes. And with Crossrail being just seconds away, the West End and the city will become even closer."

/link: http://www.highpointvillage.co.uk/location

It will be interesting to see what price per sf they are asking for the Highpoint property. The advert does mention: a "projected return of 6.8% pa Gross Yield"

#12 POSTED BY OffThePeak (2 yrs ago)

Check the map, Walk.

375 High Street Kensington is exactly where Kensington meets Shepherd's Bush and Hammersmith. (It is walking distance from the BETTER location where I used to live, and it is where the Inland Revenue office used to be.)

The only transit stop nearby is Olympia Station, which runs an irregular service.

I have shown the above comparison to a friend who lives in London, and his reaction was:

=== Quote =====
I used to live close to the Highpoint development.
Transport wise, although it is a nice location, it is quite far for any tube lines.
£1500psf is outrageous (for 375 HSK.) Better to look at the old Victorian conversions around Earls Court - better location, vfm, and closer to the tube.
=== Unquote ======

An interesting test might be:
How long does it take to get to Bank Station from each property ?

It is not impossible that the timeframe from 375 High St. Ken would be longer.

#13 POSTED BY OffThePeak (2 yrs ago)

Confidence seen in Q1 2012

Despite uncertainty surrounding the implications of the Budget changes, there has been a growing confidence in the market in the first months of 2012. In the first quarter of the year we have seen increased levels of activity, particularly for the most desirable properties in the most prime locations which are selling well.

While stock levels still remain low by historic standards, we saw an increase in instructions in March and this provided a much needed boost in new choice for previously frustrated buyers. The new Crossrail service has also helped to create interest and there is a general 'buzz' over the Olympics later in the year.

A quarter of properties sold in 2011 in the West End would have incurred the additional Stamp Duty Land Tax of 7%, resulting in an average additional stamp duty bill of £87,000. While some purchasers may balk at this extra cost, we expect any effect on the market to be felt most closely by those with properties already for sale just above the threshold. Achieved sales prices could be negotiated down for a short time but we believe this will soon be factored into the asking price.

The average sales price across the West End in 2011 was £1.4m for flats and £4.4m for houses. However, there are parts of our market which offer more value for money than others, particularly further to the east. That said, sales in prime parts of Bloomsbury are now in excess of £1,000 per square foot, with properties achieving record prices of £1,150 per square foot. This is in part a knock-on effect of increased demand in other parts of central London, such as Belgravia, rippling out to Mayfair, Marylebone and then the West End.

“In the West End, the mood is buoyant. Demand for property remains unabated despite the Budget announcements, which we expect to mainly affect the £2m to £2.2m market for a short time only”.

- WW
=====

I would "fade" this forecast.
I think there will be a marlked deterioration in the London property market after the Olympics,
whatever property sector you may want to focus upon.

Time will tell who is right.

#14 POSTED BY OffThePeak (2 yrs ago)

yeah.
Thanks for acknowledging that. Calling it "super prime" and charging such a high price, is rather cheeky IMHO

I lived for 20 years inside a triangle of Ken High St., Gloucester Road, and Earls Court tube. Not the best street, but a great overall area to be in. So I know the area well.

#15 POSTED BY OffThePeak (2 yrs ago)

Henry Lancaster, senior investment analyst at Coutts :
“Economic activity is negative. With the economy in recession, unemployment rising and wage growth sluggish, the domestic economic environment is unsupportive for house buyers.

“Valuation appears expensive. House prices have broadly kept track with the growth of nominal – that is, not adjusted for inflation -gross domestic product (GDP) – a measure of economic output – over the past 60 years, reverting back to trend after both booms and busts. House prices are currently 11pc above their average value against nominal GDP.

“Our conclusion is that UK residential property appears unattractive as an investment. Prices appear to have been bid up by investors seeking ‘safe havens’ to preserve their wealth given record low interest rates. However, the UK residential property market is far from risk-free.”

+link http://blogs.telegraph.co.uk/finance/ianmcowie/100018122/house-prices-could-fall-by-11pc-predicts-coutts/

#16 POSTED BY Ed (2 yrs ago)

Prices for London's Top Homes Fall by Record Amount
http://www.bloomberg.com/video/london-house-prices-drop-by-3-6-6ZIJjnahQ~u~Zmtb~SVLrA.html

#17 POSTED BY OffThePeak (2 yrs ago)

"LARGEST DROP FOR FOUR YEARS" - Rightmove
London down -3.6% in a Month - I call that a "crushing" fall

Key points
=========
+ This month’s sellers cut asking prices by -1.7% (-£4,138) the largest price drop in July for four years
+ UK Wide: Only +2.3% up in the past 12 months
+ Greater London was down a "crushing" -3.6% (-£17,136) in one month !
+ New sellers outnumber successful buyers by nearly 2:1, with miserable ‘viewing’ weather plus Olympic distractions adding to the ‘summer selling challenge’
+ "The fact that we have not (yet) seen major price falls in the UK and that many areas are not awash with agents’‘For Sale’ boards may lead some sellers to be over-optimistic with their pricing, but it is vital that they are dispassionate and face up to what they have to do to get their property fit to sell. New seller numbers may be down some 30% on the period prior to credit-crunch,"
====
Even so, London is 6.4% higher than July 2011.
But that hardly covers closing costs.

#18 POSTED BY OffThePeak (2 yrs ago)

(For the Record - I am calling the Top in London):

BirdHK: Are you "flipping us one"?
Your:
"I buy new build,as old builds = trouble and expense. London has historically been the best property market since at least 1952 and WILL double its equity value without fail every 10 years so..." (19 hours ago)

Your comment is beyond Idiotic, and is moving into the area of "sublimely ridiculous". If you want to Buy-the-Top in London, I suppose that is your business. But don't expect others to follow you in such wealth-destructive behavior. (And buying new properties is an excellent way of over-paying at the top of a pricey market.)
Please put me down as calling the Top in London property prices, here and now - this summer. From where it is, I could see it falling 15-20%, and perhaps more than that, especially for overpriced new properties. What could drive it far lower, is if London somehow loses its status as a Safe Haven - Or if the UK has to shrink back the size of its banking sector, due to tighter regulation. I thnk this is likely, and needed.

London is and remains one of the Great Walkable Cities on the planet. If you have a good job, and loads of wealth, it can be a great place to live. I lived there for almost 20 years, before coming to HK. But at today's prices, property is just Too Expensive, and a Correction is due.

Bragging about hold many properties now is ridiculous. You should be boosting about how many you have sold. I once owned (over half a dozen), and I am down to one now. You seem just like the sort of fool who gets caught out by market moves. And I suggest you be careful, not cocky in a market like this.

/original source:
http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/147360/property-investment-advice-needed/

#19 POSTED BY OffThePeak (2 yrs ago)

Trees don't grow to the sky.
Nor do property prices go up forever.

This is for you, Bird-HK:

Massive Wealth Destruction Coming
Marc Faber: Rich may lose up to 50 percent of their total wealth
. . .
How? “Somewhere down the line we will have a massive wealth destruction. That usually happens either through very high inflation or through social unrest or through war or credit-market collapse.” And as if to punctuate his message, in Barron’s recent “Midyear Roundup,” Faber was asked, “Will things get worse before they get better?”

Answer: “Yes, possibly much worse,”
. . .
So when comes the change? “Down the line.” “The breaking point could be three, four, five years away. The world is heading toward a major crisis.”

The next “collapse will come on Bernanke’s watch.” Warning to investors: Bernanke’s second four-year term as chairman of the Fed ends Jan. 31, 2014. (He will remain a board member until 2020.)

+more - http://www.marketwatch.com/story/how-bernanke-will-cause-the-next-crash-before-2014-2012-07-17?link=MW_story_popular

#20 POSTED BY OffThePeak (2 yrs ago)

Marc Faber's a true Internationalist.

Has he been to Tunbridge Wells?
Can he spell it? Would he want to?

#21 POSTED BY OffThePeak (2 yrs ago)

Mortgage approvals slump to a 15-year low as property purchases dive by a fifth

24 July 2012 |

Mortgage approvals for house purchases fell to the lowest level for at least 15 years last month while house purchase approvals have dropped by a fifth compared to this time last year, statistics have revealed today.

There were 51,610 mortgage approvals in June worth £6.5billion according to the British Bankers’ Association (BBA) figures - this is the lowest number of approvals it has on its records which stretch back to September 1997.

Of these approvals, [b]there were 26,269 agreements for house transactions worth a total of £4.2billion which represents a 41-month low - and these are down 20.5 per cent [/b]compared to this time last year.
. . .
Lenders had also been tightening their borrowing criteria in recent months and raising rates for new borrowers and more than a million existing ones, blaming the weak economy and increased costs of funding a mortgage.

The Bank of England expects borrowers with lower deposits to have a particularly tough time taking out a mortgage in the coming months.

However, the effects are hoped to be offset by the launch of its new funding for lending scheme aimed at pushing £80bn through to mortgage borrowers and businesses.

Howard Archer of IHS Global Insight, says that rather than public holidays and wet weather, the weak performance is down to the stamp duty holiday ending.

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-2178225/BBA-mortgage-approvals-slumped-15-year-low-June.html#ixzz21XvdAZW2

Just as REALITY was beginning to settle in, the BofE wants to distort it:
"the effects are hoped to be offset by the launch of its new funding for lending scheme aimed at pushing £80bn through to mortgage borrowers."

#22 POSTED BY Ed (2 yrs ago)

How Long Until the London Property Bubble Bursts?
http://www.cnbc.com/id/48296525

#23 POSTED BY OffThePeak (2 yrs ago)

When Will it Burst?:
How Long Until the London Property Bubble Bursts?

EXCERPT:
The author of the research, Andrew Heywood, says that overseas buyers are using the London market for investment ...

“Investment in luxury homes has doubled to over 5 billion pounds ($7.75 billion) a year – five times more than the annual investment in affordable homes in London and a third of all loans made for house purchases.”

The research shows that 60 percent of new homes in central London are being bought by overseas investors. Their anecdotal evidence also suggests that this property is being left empty.
. . .
Back in March the Financial Times reported that wealthy foreign investors had doubled their spending on luxury homes in London since the start of 2012.
== ==

When the Foreigners wake up, and stop buying aggressively.
The big buying from Q1 is stalling now, I think

I have called the Top - It's here and now - since I think the buying will be cooler after the Olympics

#24 POSTED BY OffThePeak (2 yrs ago)

shocking UK GDP figures. -0.7% vs -0.2 expected

The progress of the UK economy is... well, "shocking"

#25 POSTED BY OffThePeak (2 yrs ago)

In theory...
That's the argument they use for foreign buyers.

But I reckon that travel on Cross Rail is going to be very expensive

#26 POSTED BY OffThePeak (2 yrs ago)

Is there any evidence that it will NOT be expensive?

I think the example of the Heathrow Express suggests the cost of travel will be very high, and the older lines will be cheaper.

If they boost the prices on the whole Underground system to "equalise" prices, then all of London will be losers, and the buses will gain

#27 POSTED BY OffThePeak (2 yrs ago)

I am calling you out, WalkUp.
What a sad poseur you are.
You are not fooling anyone - and I expect that will become more and more obvious as weakness spreads from the UK-wide market throughout the London property market.

How many properties have you bought and sold in both places? Certainly, with respect to HK, there's an excellent chance my experience with the number of profitable property sales dwarfs your own.

And I lived in London for most of 20 years, and have many years of success in calling turns in the market there.

Your supposed experience is wearing very thin here. You have not said a single intelligent thing, only attacked my comments. So buzz off to someplace where you might fool someone. It's not here.

#28 POSTED BY Ed (2 yrs ago)

House prices fall for first time in seven months

House prices have fallen for the first time in seven months in July as the number of potential buyers shrinks while the volume of homes going on the market rises, said Hometrack.

http://www.telegraph.co.uk/finance/economics/houseprices/9437532/House-prices-fall-for-first-time-in-seven-months.html

#29 POSTED BY OffThePeak (2 yrs ago)

Keep it up, Walk-up.
WE will have plenty of comments to throw back at you next year (if they prove wrong.)

Likewise, with my precise comments about turning points (the Top is here!), then you will have ammunition to "dis" my forecasts too, if I am wrong.

I am not always right, but I have been able to make a decent living using my own forecasts as the basis for investments.

So say: "You talk your book!" but it is more accurate to say my investments ("my book") reflect my views.

How about you, Walk-up, are you letting your investments dictate your views, as expressed on this thread?

#30 POSTED BY OffThePeak (2 yrs ago)

(This article resonated for me):

WANTED: Journalists that understand statistics

July 30th, 2012
Author: Dominic Dean aka The Misplaced Economist

Read more: http://www.economicvoice.com/wanted-journalists-that-understand-statistics/50031460#ixzz22KbVPVUs

EXCERPT
The lead story in the paper I picked up was ‘House prices on the slide'
==
This surprised me, as I think house prices have broadly been going sideways for a few years now, so I read the article with interest. Once again I was left despairing at the state of British journalism.

The article referred to the Hometrack house price index, which to start with is not an especially great series. Hometrack, like Nationwide and Halifax, measure house prices at the ‘mortgage approval’ stage, rather than when contracts or exchanged or transactions completed. Their data cover England and Wales, and are based on a survey of just 1,500 estate agents, who are of course one of the most honest and reliable sources of information around. (In contrast, Nationwide and Halifax actually track the loans they approve.) The Hometrack measure has also only been going since 2001 – among the pantheon of house price indices, it is not so much the little brother as the distant cousin. In terms of data sourcing, backrun and sample size, there are reasons to be cautious about taking it literally.

What is more, the [b]article actually referred to prices falling by just 0.1% in July 2012[/b]. Yes, that’s right – prices fell by a whopping one-thousandth of their value on the month. This was the first fall for seven months.[/i]

Read more: http://www.economicvoice.com/wanted-journalists-that-understand-statistics/50031460#ixzz22Ka5sWxV

(as the poster on GEI wrote, and I agree):
LOL. Right.
And if they'd been up by 0.1%, the headline might have been about HOME PRICES RISING.
It shows the British obsession with house prices, though few who right about them,
actually have anything sensible to say.

When I examine THIS CHART
http://img820.imageshack.us/img820/2517/haliwide2004.gif

A post-Olympics rollover looks very likely to me

#31 POSTED BY Ed (2 yrs ago)

Looking more like a head-butt...


LONDON, Aug 1 (Reuters)- British house prices fell at their fastest annual pace in nearly three years last month, data from mortgage lender Nationwide showed on Wednesday, as the effects of nine months of recession spread further across the economy.

Nationwide reported a 0.7 percent decline in house prices in July, a much bigger drop than that forecast by any economist polled by Reuters. Prices are now 2.6 percent lower than a year ago - their biggest annual fall since August 2009.

http://www.cnbc.com/id/48432997

#32 POSTED BY OffThePeak (2 yrs ago)

"Nationwide reported a 0.7 percent decline in house prices in July"

There's a strange way they do their calculations. I think their method is very misleading.

"July stood at stg164,389, down from the stg165,738 level hit in June"
Using my calculator, that's : - 0.81%, not -0.7%, as was reported

When I want more reliable figures, I check in here:
http://tinyurl.com/HPC-data

#33 POSTED BY OffThePeak (2 yrs ago)

(For the record here - from the Main property thread):

"Nobody buys/sells Inner London property thinking about Government housing policies"

Nobody who buys inner London property now is "thinking" at all. They must have switched their brain off.

Prices seem to be set to enter the realm of "crash cruise speed" (look it up.)

#34 POSTED BY traineeinvestor (2 yrs ago)

I've always considered the term "crash cruise speed" as a somehwat stupid piece of meaningless terminology invented by panic merchants to make a falling market seem like the begining of financial armageddon - here is a completely inane example: http://www.greenenergyinvestors.com/index.php?showtopic=10251 It basically says that once prices start falling, they will keep falling until they stop falling (Duh!) and implies that the bottom is a very long way off.

(Although not relevent to my comments, the author of that particular article got it completely wrong.)

#35 POSTED BY OffThePeak (2 yrs ago)

The record shows that real crashes function that way : there is an extended period of mostly month-by-month losses - maybe 5 months out of 6, or 10 months out of 12, or more. That's history.

Crashes of just six months, as we saw in HK, are pretty rare. The extended drop that we saw in the US, Spain, and Ireland is more common for a real crash.

Here's the GEI definition:
"Crash Cruise Speed":
An extended period where price falls average more than 0.5% per month. This is to help describe the reality where property crashes do not happen all-at-once in a brief 2-3 month period, as many stock markets crashes do. Rather they extend over many months, or years, with a near-steady erosion of prices.

UK Chart: http://img855.imageshack.us/img855/9367/haliwiden.png

The 2010 CCS period that was predicted there, lasted only six months and was less than -5%, much less than the six months drop we saw in HK.

No doubt, ultra-low interest rates helped to reverse the six months drops in both HK and the UK.

I think the UK could see MORE than a six months drop now. But that might be enough to correct any excesses in HK, if the fall was sharp enough, and interest rates here stayed low.

#36 POSTED BY traineeinvestor (2 yrs ago)

with respect, the GEI definition os something of an oxymoron - if the markets fall by 0.5% per month (even if it does so for a year or more), by definition that is not a crash: http://en.wikipedia.org/wiki/Stock_market_crash

Describing a 5 or 10% fall over many months as a "crash" is wrong at best and half baked panic mongering at best. If that were otherwise, most stock markets would experience several crashes a year (sometimes several in a month).

No views on the UK market (other than to say that what the cold callers are offering me looks like pretty poor quality rubbish).

#37 POSTED BY OffThePeak (2 yrs ago)

The point is that the month-by-month prices changes are subject to "runs" especially in the crash periods.

If your eyes see "random price moves" in this chart:
http://img705.imageshack.us/img705/5003/hpc2010.gif
Then your eyes work differently than mine do.

Property markets behave differently that stock markets, because it takes longer for people to cut selling prices. The "adjustment period" is slower and often extended.

That is all that the phrase "crash cruise speed" was designed to signify.

Do you think reality is different from that? If so, how?

Sure.
The 5% drop over six months in the UK in 2010 was not a Crash. But it could have developed into one, if the period had extended and the rate of decrease had picked up.

I reckon we are moving into another period of weak prices in the UK which may or may-not develop into a crash. This isn't the right time to buy. I would recommend waiting a few months, to see if the Crash scenario is developing.

#38 POSTED BY OffThePeak (2 yrs ago)

(Do you think prices will keep rallying in London, with THIS going on?):

Olympic London deserted: it's a great time to be a tourist in the capital

Londoners were warned of huge queues for everything during the Olympics. Instead the roads are quiet, restaurants empty and museums deserted. It's tough for business, but good for tourists

/more: http://www.guardian.co.uk/uk/2012/aug/04/london-wish-you-were-here?newsfeed=true

#39 POSTED BY traineeinvestor (2 yrs ago)

Price movements in financial markets do exhibit periods of "runs" - this is true of most financial markets (property, shares etc). (Interestingly, so do randomly generated numbers, although that's a bit off topic.)

I also agree that property markets move slower than equity markets for a number of reasons and, as you say, the adjustment period is usually slower and frequently more extended. I don't disagree with that at all.

What I take issue with is the term itself - it's oxymoronic subjective hyperbole at its worst. If we need a term to descibe an extended period where prices are slowly moving lower we should use something that is meaningful.

It dosen't help that the first several hits I got when googling the term this morning all came from websites promoting the end of the financial world and, like the one I linked to above, usually getting it wrong.

#40 POSTED BY OffThePeak (2 yrs ago)

Slower to the downside - because sellers are reluctant to cut prices

That's CCS in a nutshell

GEI is not perfect. No one gets it right all the time- Nor does this site.

But GEI posters predicted the Crash in 2008, and the downturn in UK property in 2007, and also (as Bulls) caught the exact low in March 2009.

Here on AX, I have been trying to signal some turns in Property Stocks. It isn't easy. But there have been some useful comments on Turning points and key level.

As an example:
If HSI can stay above 20,000 on the next two closes, that will be a Bullish indications. At this stage, I think that is unlikely. But in the end, you have to trade with the idea "Anything can happen."
(In the end. I like to let the market tell me if a forecast is right.)

#41 POSTED BY OffThePeak (2 yrs ago)

Most London home buyers 'think prices are unfair'

LLB: 6 August 2012

Around two-thirds of people looking to buy a home in London believe prices in the capital are above what is “fair and reasonable”, a survey has found. Some 65% of people living in London believe prices are higher than what is fair. Asking prices in the capital have risen on the back of strong interest from foreign buyers.
. . .
MyLondonHome.com director Andrew Griffith said: “Around 50% of buyers are from overseas and one of the reasons the property market is as healthy as it is in London is because of the number of foreign buyers compared to the rest of the UK.

“It pushes prices above what many typical Londoners may be willing to pay.

“It is a reflection of the amount of interest in central London, which has always been there but with the Olympics and the Jubilee celebration it is greater than ever.”

Griffith noted that other cities which have hosted the Olympic Games had seen property prices fall after the event left town.

He said: “If you look at other Olympic cities, such as Beijing, Athens and Sydney, their property markets have taken a dip after the Games. Whether that happens here in London remains to be seen.

/more: http://www.londonlovesbusiness.com/property/residential-property/most-london-home-buyers-think-prices-are-unfair/3134.article

#42 POSTED BY traineeinvestor (2 yrs ago)

Meanwhile, a survey of property owners looking to sell their properties showed that while asking prices were fair and reasonable, buyers expectations were unrealistic and out of touch with reality.

#43 POSTED BY OffThePeak (2 yrs ago)

LOL
Actually, the Buyers are right, since they compare with what they can afford,
and what the cost would be to rent. They also compare London prices to those in other parts of the UK. The gap is huge, the Ratio on London to UK-wide is massive.

#44 POSTED BY OffThePeak (2 yrs ago)

THE OLYMPICS ARE OVER - so what next ?

House Prices Falling And More Drops Expected

Surveyors have delivered the most negative reading of the housing market since June 2011, according to the RICS. House prices are falling and more drops are expected in the coming months, according to surveyors...

http://news.sky.com/story/972239/house-prices-falling-and-more-drops-expected

#45 POSTED BY OffThePeak (2 yrs ago)

Ha !
I thought you might say that.
Let's see what happens in London over the rest of the year.
The media seems to be saying that: "London remains stable."
I don't think it will play out that way.
Of course, I could be wrong, but I have my own forecasting methods.

#46 POSTED BY OffThePeak (2 yrs ago)

OVERVALUED Housing is not helping the UK economy
Why does it matter?

Country : Rents / Income / Average
US------- : - 15 / - 24 ... = - 19 %
Britain--- : +23 / +17 ... = +20 %
Germany : - 18 / - 21 ... = - 20 %
The IMF says UK homes are overvalued by almost a third.

Moneweek thinks it matters.
MoneyWeek roundup: Why house prices have to keep falling
http://www.moneyweek.com/news-and-charts/economics/global/moneyweek-roundup-why-house-prices-have-to-keep-falling-23300

+ High home prices are holding back the UK economy
+ They make it more expensive to do business in the UK
+ But the government wants to keep them propped up to protect weak banks
+ Result: money flows into the wrong parts of the economy, and some productive parts are not getting the capital that they need
/More comparisons: http://tinyurl.com/Hse-Global

Sure, wealthy foreigners can keep London prices afloat for years, but in the long run the UK may need to "bite the bullet" on its overpriced housing assets, if it is to return to a competitive situation. How long can they limp along with such huge cost disadvantage.
Maybe if the currency crashed, that would restore global competitiveness, but what are the foreign investors going to do if the UK adopts policies to weaken its currency?

#47 POSTED BY OffThePeak (2 yrs ago)

Another Frigging Lie !


New builds worth more than period properties

24 August 2012

Period properties have slipped down the value scale according to a new survey. The research by CBRE has found that new build flats in London are worth approximately 30% more than older ones.

The gap is most pronounced in Kensington & Chelsea where new builds were sold for 55% more than older flats.

“New builds are outperforming old properties for several reasons,” Jennet Siebrits, Head of Residential Research, CBRE.

“For the buyer, new builds come with the reassurance of the NHBC 10 year guarantee. For the seller, particularly in prime boroughs where land values are high, properties need to look and feel contemporary in order to secure the best prices.”

London boroughs showing largest new build premium on flats sold in 2012 Q2

/see: http://www.londonlov...es/3280.article

=== ===

I hate this type of distortion : It needs to be called the GARBAGE that it is!

This only tells us that buyers are paying TOO MUCH for newbuildings.

The only way that New builds "outperform" are in the Excessive prices that Builders achieve when they sell them. This story is spun to have the exact opposite meaning from what the numbers really show: Newbuildings are priced too high !

Let's call a spade a spade, and a distorted lie a DISTORTED LIE!

Does any one believe this ridiculous spin? Shame on the spinning liars at CBRE.

#48 POSTED BY OffThePeak (2 yrs ago)

???
The lie here is about : "New builds are outperforming old properties"

If you pay much more for a new property, then the Builder does well, since he pockets the extra price.

Once you buy (at that high price) what sort of "performance" is the buying going to obtain?

Pretty lousy, since he now owns a property that will be "secondhand" when he sells it - so when he sells he must compete with secondhand neighboring properties.

The article is a con. And the way it is entitled is totally misleading

#49 POSTED BY Ed (2 yrs ago)

London Luxury Homebuilding to Jump 70% on Foreigner Cash
http://www.bloomberg.com/news/2012-09-02/london-luxury-homebuilding-to-jump-70-on-foreigner-cash.html

#50 POSTED BY OffThePeak (2 yrs ago)

Haha

Building a bubble.
I notice the HK papers, and my email box, are now FULL of new launches in London/

What a poor time to buy !
- especially new properties

#51 POSTED BY traineeinvestor (2 yrs ago)

Yeah - I for one am sick of cold calls from slimy sales people trying to sell me overpriced London shoe boxes. Most of them start with the assumption that I am a blithering idiot with an unlimited amount of cash to compensate for my lack of common sense. The quality of the sales mis-pitch always deteriorates from there. I even had one person claim that London property always goes up by "at least 20% pa".

These days I just hang up on them.

#52 POSTED BY OffThePeak (2 yrs ago)

" I even had one person claim that London property always goes up by "at least 20% pa"."

You might say:
"Great. What do you need me for.
Take the project to the bank, and buy the whole thing. Then you can easily repay the loan as prices rise 20% per annum. Why do you want to do me the great favor of letting me in on this incredible opportunity?"

Then, you hang up. Or maybe give them Walkup's number. (haha, just kidding)

#53 POSTED BY traineeinvestor (2 yrs ago)

Hmmm.....maybe I should ask for a guarantee.

These crooks really should be regulated.

#54 POSTED BY OffThePeak (2 yrs ago)

Do you get ads like these in your mailbox, Walk?

(1) www.canalettolondon.com
• Spectacular architecture designed by
award-winning UNStudio, Amsterdam
• 5 Star Residents Club House facilities
with swimming pool, gymnasium,
24th floor Club Terrace, residents cinema,
restaurant, entertainment centre
• First Release prices from GBP390,000

(2) Providence Tower - by Ballymore
• Finest Tower on the Thames, next to Canary wharf
• Residents facilities including a business centre,
athletic gym, 25 metre pool, spa
• Two Beds from GBP460,000

Things like: a Swimming pool, just shout OVER-PRICED,
and the first question I ask is: How much is the management
fee, and I get an answer which is multiples of what I pay now
for much better facilities in HK (where they are useful)
== ==

"These crooks really should be regulated."

Agreed.
What are salespeople allowed to lie about very expensive property, but when someone tries to sell you a share costing 1/10th as much, they can get jail-time for lies. Someone should really point the HK government to this thread. Even HK agents seem more honest than some of the "international property agent" crowd

#55 POSTED BY OffThePeak (2 yrs ago)

I did not say there were "lies" in the ads that I summarised.
But if you go along to a show here in one of the Hotels, you might hear some.

London is not the place for outdoor pools, so these must be indoor. They add plenty to the management fee, and so I think they are impractical - a negative salespoint for me, and maybe for others too.

#56 POSTED BY OffThePeak (2 yrs ago)

Sure. There's a market for that.

But when I buy, I always think about RESALE. I don't think Brits born in London will pay much for those facilities- especially swimming pools, and will be put off by the high management fees.

It is dangerous to buy something that can only be sold to certain types of rich foreign buyers. Something may keep them away.

#57 POSTED BY OffThePeak (2 yrs ago)

It has boomed already !
They should instead be explaining why there might be more upside

(Walkup, this is for you):

Knight Frank has its own Index for Prime Central London Property

Not surprisingly, it shows big increases since 2009, and also reflects a market they say is at Record Highs

HIGHLIGHTS

Prime central London prices hit new high but pace of growth slows

Prices are now more than 13% higher than the previous market peak in early 2008, but stamp duty and the uncertainty surrounding proposed tax changes for houses worth £2m+ begin to weigh on the market.

Key Findings

+ Prime central London property prices rose 0.5% in July, taking annual growth to 10.3%

+ Prices have now risen by 49% since the post credit-crunch low in March 2009

+ Prices are at a new record high and are 13.5% above their previous peak in
March 2008

+ Properties in the lower price bands have outperformed in recent months
====
/The Index: http://project.knightfrank.com.hk/xmasref/marketing/reports/reports/PrimeCentralLondonSalesIndex_2012july.pdf

#58 POSTED BY OffThePeak (2 yrs ago)

Why London's Luxury Property Market is set to Boom

Crazy, misleading headline !
Why do they make headlines like this AFTER something has already happened?
Is it to signal to the savy, that the trend is ending??

http://www.businessweek.com/videos/2012-09-03/why-londons-luxury-property-market-is-set-to-boom

The story itself shows a despicable Estate Agent pumping "high end" London, while the reporter talks about plans to "keep on building", 15,000 new Luxury properties, in Central LonL. Sounds more like the End of a Boom, rather than the beginning

#59 POSTED BY OffThePeak (2 yrs ago)

REUTERS GETS IT RIGHT !

After viewing the horsefeathers from the "despicable Estate Agent" (whoops! that's redundant.)
Try reading the Reuters article
= =

Luxury developers "facing threat of Crash" in London

Companies racing to cash in on bonanza driven by overseas demand could crash market

+ Over 15,000 homes in development worth more than Pds 38 Billion are due for completion in the next 10 years
+ Total floor area covers almost 20 million sf = size of London Olympic park
+ "Developers are racing to get first to site, because they don't want to miss out on the boom that is happening
+ Prices for the best central London homes rose 1.8 percent in the three months to August (Knight Frank)
+ About 4,000 high-end homes will be built in London in 2016 alone - an eight fold increase on the average per year !!

Even foreign developers like SP Septia and Sime Darby are getting in on the act - They will build 3,000 homes at Battersea Power Station

(Wow! what a difference between Quality journalism, and schlock spin!)

#60 POSTED BY OffThePeak (2 yrs ago)

Err, No.

Reuters is a quality news source, don't you agree ?

And if you read the argument, Reuters makes sense. The "despicable estate agent" does not.

A massive increase in supply after a long run-up in prices is not bullish... obviously.

Can you make a different argument ?? If so, I would like to hear it.

#61 POSTED BY OffThePeak (2 yrs ago)

The Reuters reporter is doing his best to count future supply, and it is worrying !

Of course, bull market sentiment often triggers overbuilding. And the reporter makes that possible connection. Naturally, a rapid decline in prices and sentiment might change plans people have for 2016. But I think the tme-to-build in the UK is longer than in HK (for similar sized properties.) So many if will soon be diffficult fully stop projects with a planned completion date of 2015 or 2016.

Estate agents deserve our derision, when the spout nonsense like this guy did.

#62 POSTED BY OffThePeak (2 yrs ago)

(Duplicated from Main thread - for the Record here):

LGMV:
"HK not that expensive... New one bedroom flats in Kensington High Street, London, marketed at from 805,000 pounds - or HKD 10 million"

A piss-take for foreigners -especially suckers based in HK. I wouldn't even buy one with Walkup's money. Locals won't touch them, based on what I have heard from friends based there.

Anyway, I'm off to London (for a 2 weeks plus stay) before the end of the month. I'll let you know if anything has changed.

BTW, here's a Chart, showing:
RATIO: Of Greater London prices (per Rightmove) to HaliWide:
http://imageshack.us/a/img526/8384/grlondtouk.gif
Now: 280% / Up from: 175%

Great time to sell. And if you want to be long something in the UK - Buy OUTSIDE LONDON, where you get so much more for your money.

#63 POSTED BY Ed (2 yrs ago)

The London real estate market was abuzz. A wealthy Greek banker wanted to spend up to £60 million (nearly $100 million) for a home, and was in a hurry to make a deal.

Evangelos Meimarakis, the president of the Greek Parliament, is among the more than 30 Greek politicians under investigation for possible tax evasion and the illegal accumulation of wealth.

Real estate agents recall sifting the listings for some of the most prestigious, and expensive, properties in South Kensington, a favored area for London’s international set.


http://www.cnbc.com/id/49206696

#64 POSTED BY traineeinvestor (2 yrs ago)

"The fish rots from the head"

#65 POSTED BY OffThePeak (2 yrs ago)

QUESTION: If the UK is "in Austerity", then why are London property prices booming ?

This disharmony struck me on my recent trip to the UK.
And the puzzle was also mentioned at the beginning of a recent podcast on FBB
http://commoditywatch.podbean.com/2012/10/15/michael-hampton-bullish-on-gold/

Any thoughts on why this might be happening? How long can it last?

#66 POSTED BY malka (2 yrs ago)

Rich french moving over to escape high tax?

#67 POSTED BY OffThePeak (2 yrs ago)

Here's one possible driver of very high London property prices - near record lows in 10 year UK Gilt yields:

http://imageshack.us/a/img51/488/ukgiltyield.png

#68 POSTED BY OffThePeak (2 yrs ago)

(Here's is the Type of EMAIL that I have recently been receiving in Hong Kong.)

60k GBP Buys Prime Central London
============

Central London (W1, W2, W9, W14, WC1, SW1, SW3, SW6, SW10 & SE10) is the only place to buy and is where the smart London money is going.

You will have also seen dozens of UK property exhibitions marketed in Hong Kong every week and you need to be very careful.

New builds in London are generally associated with oversupply, poor capital appreciation and disappointing rental returns
- particularly when the rental guarantee(s) run out:

http://blogs.indepen...-rental-market/

Overseas buyers account for over 70% of new build sales in London and it's because new builds don't sell in London (as local money is too smart to fall for new build product) hence it ends up in Hong Kong exhibitions where some buyers may not know the pitfalls.

Notwithstanding this, think about who pays for these weekly exhibitions at 5-Star Hotels, the champagne, the canapés, the flights, the friendly sales staff, the lawyer, the tax advisor and the rent guarantee(s) - YOU DO - it's buried in the price.

If you're looking to enter the UK market, buy what the locals buy - period properties in Central London.

For example: I have a very bright ultra-modern, well portioned studio in a portered building with a long lease, located in the heart of Chelsea, SW3.

The property:
Is located in Chelsea SW3
Is newly refurbished
Has a long 98 year lease
Has a separate kitchen, separate bathroom, and residential parking (by separate negotiation)
Unlike new build, has a proven track record of capital gain at 10%+ per annum
Genuinely rents locally with a 5% yield without the help of some overinflated rental guarantee hidden in the price
This property can be purchased for £299,999 with up to 80% funding.

All you need is GBP 60,000 deposit and the (proven) rental income of this property pays the mortgage.
=====

My response: "How many sq. feet is that property, please?"

From their website, this one looks interesting:

Pimlico, SW1 : £245,000
Pimlico, SW1 : 2BR on three floors
£245,000 / 1,423 = £ 172.2 psf
generous reception room with Juliet balcony and excellent views, sleek open-plan kitchen with integrated appliances, master bedroom with Juliet balcony, built-in wardrobe and chic en suite shower room, good-sized second bedroom, and elegant bathroom.

#69 POSTED BY OffThePeak (2 yrs ago)

NEW HK TAX - May have an impact on London Property prices
===========

(A very recent Skype conversation):

A: it looks like I will be stuck with my HK property for a while
B: How come?
A: the HK govt pulled a fast one yesterday
B: what's that?
A: they imposed a 15% tax on Non residents who buy here. it will drive prices down somewhat, at least new ones.
B: Surely they have to give warning first

A: they anounced it yesterday at 6pm, and mainland chinese bought hundreds of flats before it took effect at midnight
B: Bloody hell
A: London should do something like that
B: They won't
A: they dont have the guts
B: Mind you they are attacking London property. I think now is a terrible time to buy
A: this HK govt has guts and discipline, like Chinese people do

B: No stock at all...
A: tough love comes with the territory - In the West, we've lost the will to act like the Chinese do... No stock?
B: No stock of houses for sale
I'm saying now is a bad time to buy in London. There is nothing for sale. It is driving prices higher

A: There's plenty, plenty, plenty - with more coming. Its all being sold here in Hong Kong
Do you know how many overpriced new properties are being marketed here now??*

B: But I don't want a new property. I hate them
A: the new tax will drive prices in HK lower, and hit London property sales here - but I doubt that agents and developers from the UK have figured that out yet !
A: You dont need new - But if the new supply gets tossed into the London market, rather than here, it will drive all London prices lower

B: But stuff around the 1 million range is immune ... at present. Only thing that will kill it is higher rates
A: There's a fantastic amount of new supply coming, and they hope to sell much of it here
B: That's several years away. The Chinese all buy new property in London then send their kids to uni here
A: They are offering it here now: off plan. Do you have any idea how many London properties come thru here?
=======

*Just this weekend, there are three major London Properties being marketed here:


+ Fitzrovia collection: Newly refurbished: 2-3BR, from GBP 500k, ave.: GBP1,500 psf
+ Fitzroy Place occupies an entire city block in Fitzrovia; studio: GBP 800k, GBP2,000 psf / completion: late 2014
+ ??? New Tower in Spitalfields area (2 years away)

We see these overpriced properties : 2, 3, or 4 new ones each week here, and they get more & more expensive.
If price here Dip (thanks to this new tax), HK people may shift their buying back to HK, and leave the London developers high &dry

#70 POSTED BY londonestateagent (24 mths ago)

Rich HK nationals and HK investment companies have had a strong appetite for residential and commercial developments in London since 80s and its nothing new.

Most of the new Asian buyers prefer to buy newly built apartments on the east side of the city, though they are actually paying an un-necessary premium as they are buying a new build.

London is a mature market and always will remain in demand not just because of the HK and Asian buyers, but mainly because of the Middle Eastern, Russian and now CIS buyers, investors and funds (though HK funds also a big role to pay at certain sub sectors).

If you are looking to get a good deal, you would need to first look at the distressed properties. Properties that are not in a good condition, where by spending some money on them, you could actually add alot of value to them and save on the premium you pay to a developer for a done up property.

Also to note, most of the good deals in London are never advertised and agents mainly advertise and show properties that are in a ready status for buyers to move in, but the real gems are kept off-market, where developers and investors fight to get their hands on them.

So the notion of over-priced to be fair, only applies to newly built properties and recently refurbished properties but comparison to the distressed assets, as they are valued at the real market value which is verifiable by independent valuers and banks.

An example would be:
1000 sq.ft distressed flat at a prime location for £1m, works out at £1000 / sq.ft.
Estate agents value the same size flat on the same road, refurbished at £1.7m, this equates to £1,700 / sq.ft.

Cost of refurbishment at £200-300 / sq.ft. -> So you are saving about £400-500k on your acquisition but comparison to the real market value.

#71 POSTED BY OffThePeak (24 mths ago)

I heard the most convincing reason why some HK buyers are buying London flats.

They buy a property, and then use it as their address for their children who are in school there. If they have the address for more than three years, then they may be able to enter a UK University, and pay the (lower) national tuition, rather than the (more expensive) tuition that a foreigner would pay

Thus, owning a UK property is an arbitrage mechanism

#72 POSTED BY OffThePeak (22 mths ago)

Telegraph: Demographic timebomb puts paid to hopes of house price revival

http://www.telegraph.co.uk/finance/comment/jeremy-warner/9776435/Demographic-timebomb-puts-paid-to-hopes-of-house-price-revival.html

Most households continue to believe that, in time, the UK property market will recover, and that, given even more time, we will eventually return to the easy property gains of recent decades. This belief may, in turn, be one of the reasons why housing transactions remain so depressed, at roughly half their pre-crisis high and some 35pc below their 20-year average; those who might sell hold back because they think that if they wait long enough, peak 2007 prices will again return.
. . .
In London, prices are continuing to rise quite strongly, particularly in the posher, central locations favoured by rich foreigners. For London as a whole, prices are already back above their pre-crisis peak, and, in certain areas, prices are again rising at rates well above that of ordinary price inflation. Where London leads, the rest of the country has traditionally followed, with a one to two-year lag. Regrettably, this may not be true this time around.

The London housing market is sustained as much by foreign interest as anything else. Chuck in an acute shortage of the sort of properties people want to live in, together with a strong economy relative to the rest of the country, and it’s easy to see why prices in the capital are bucking the trend.

One leading international estate agent recently told me that about 60pc of all new-build apartments in London are now sold to foreign investors. As one of the great global cities, London may now be almost wholly decoupled from much of the rest of Britain. Indeed, compared with a number of other global cities, London continues to look quite cheap.
===

So wealthy foreigners are the "greater fools" that are always sought? (But for how much longer?)
"...compared with a number of other global cities, London continues to look quite cheap."
NO, it doesn't ! That's simply not true. It's Estate agent talk: is complete bullcrap, like most of what they come up with !

#73 POSTED BY kchow (20 mths ago)

Hi OffThePeak,
Following your comments couple years ago here. Finally, I save enough installment and looking for buying my first London property. I am thinking of st Pancaras/ Camden Town area. However, following the price there, it seems I can't afford anymore, price is going higher and higher.
May I sincerely seek for your comments on future forecast in Central London 300-500 pounds properties trend please?

Thanks very much if you can help

#74 POSTED BY OffThePeak (20 mths ago)

I would suggest making a trip to London to find properties yourself,
rather than buying what is brought here by the agents.

The property opportunities that come here, are rarely bargains, but if you visit London, you may find one.

A "bet worth taking" could be something near Crossrail. Someone else is spending billions on that new transport infrastructure, and so buying something within walking distance of a new Crossrail station, particularly in an area which is still cheap, could be a good way to bet on future gentrification.

The Currency exposure is important too
Over the past several months, I think that any gains you may find, were most probably eaten up by currency losses.

#75 POSTED BY OffThePeak (18 mths ago)

Warning on Life Residential is noted.

Be very careful whom you rent to. Read the contracts, and do not think just because the word "corporate" is used in connection with the lease, than there is less risk.

There may be more risk, rather than less. The lease may be written in favor of the tenant, and you may also get a series of short term tenants (under the same lease) who do not look after your flat.

#76 POSTED BY OffThePeak (18 mths ago)

Denmark BOUGHT Trouble - now the UK wants to do something similar (!)

“Eighty percent of homeowners under 35 years of age are under water. That’s a lot,”
Curt Liliegreen, head of the Center for Housing Economics in Copenhagen, said yesterday in a telephone interview. “This is a problem that threatens the Danish economy.”

Denmark’s housing crisis, which started when the nation’s property bubble burst in 2008, is showing signs of deepening. Prices sank 2.8 percent last quarter from a year earlier...

Denmark’s $590 billion mortgage industry -- which is about twice the size of Denmark’s economy -- in 2003 started giving borrowers the option of deferring amortization for as long as a decade. The interest-only mortgages were popular, and have since grown to account for 56 percent of all outstanding home loans...
===
/ more: ??

A 2.8 percent drop in a quarter is Baby Step stuff.

WE see that in three weeks in HK.

#77 POSTED BY OffThePeak (17 mths ago)

The UK government's surprising and dangerous subsidy of downpayments is HELPING to push up property prices in the UK.

But this might hurt them:

" Landlords have been liable to pay a council tax - a local government charge - on their empty properties since last month. "

" Many Chinese investors were ill-informed about laws and taxes affecting landlords in Britain. "

/ HK landlords warned over UK illegal tenants.
: Today's SCMP, P3 - Property section

#78 POSTED BY OffThePeak (17 mths ago)

London High-priced = London High-risk

HK's SCMP reported this with a different headline:

"London luxury market takes a hit

Capital suffers its smallest annual increase since 2009.
with Knightsbridge prices actually falling."

London's Luxury Homes Gain Least Since 2009
Bloomberg-2 Jun 2013

Central London luxury-home values rose last month by the smallest annual ...
The market for luxury homes in London is cooling at a time when prices ... low amid a dearth of revenue, according to data compiled by Bloomberg.
===
/see: http://www.bloomberg.com/news/2013-06-02/london-s-luxury-homes-gain-least-since-2009.html

=== ===
Are HK People going to wake up ?
And realise that expensive London properties are NOT the low-risk safe have that the agents tell them they are ??

#79 POSTED BY OffThePeak (13 mths ago)

The UK's HELP-to-Buy has brought a "shot-in-the-arm".
But is that really a good thing?

Some think this is THE LAST RALLY
Chart:
http://img22.imageshack.us/img22/8190/ukhaliwrest13pred.png

WHEN will it pop?

Within 23 months, says Max Keiser :

Here's the VIDEO - with Max

http://www.youtube.com/watch?v=3GHnEpp1B3A

"A NATION of Real Estate Agents !"

"They think that George Osborne's Help-to-Buy scheme is frigging genius."
"25% of new jobs... are in the Real Estate sector.
"A triangle of fraud, a Bubble... which will pop within 23 months."
"It's WEALTH SHIFTING."

25% ? !!
How many in Real Estate sector in other countries:

+ In (Carney's) Canada, it is 8%
+ In the US at the PEAK of the Housing Bubble, it was just 5%

It sounds like the UK is headed to something (a Crash?) Bigger and Worse !

#80 POSTED BY OffThePeak (9 mths ago)

The Shard in London's Eye

London's Shard skyscraper almost empty one year after opening

27 January, 2014 / The Guardian in London

The London Bridge skyscraper - the capital's newest landmark, with views stretching 70 kilometres and which is visible to drivers crawling around the M25 orbital motorway - bills itself as "Europe's first vertical city".

It is the highest building in western Europe and, together with the Place, a 17-storey "baby Shard" next door, it cost its Qatari backers £1.5 billion (HK$19 billion).

The skyscraper's observation deck can be hired out for corporate events at £30,000 an hour and tables at its three restaurants are reported to be in huge demand.

But despite the stunning design by the Italian architect Renzo Piano and glamorous marketing, almost a year after its opening the building remains practically a shell.

Ten apartments, designed to pull in some of the richest people on the planet with price tags of £30 million to £50 million, lie empty - still for sale just as the so-called ultra-prime London property market seems to be slowing.

===
> http://www.scmp.com/news/world/article/1414259/londons-shard-skyscraper-almost-empty-one-year-after-opening

#81 POSTED BY OffThePeak (8 mths ago)

London's dirty little secret - rents have fallen for the last 21 months!

Knight Frank: Rental yields dropped below ˜risk-free" government bond yield at end of 2013

Rents for London's best residential properties rose 0.2% in January, which was the highest monthly increase since September 2011. Rents fell 2% versus January 2013, which was the lowest annual decline since August 2012. Prime central London rental GROSS yields fell in January to 2.86%, the result of falling rents and strong investor demand. The full extent of this demand was demonstrated in December, when yields fell to 2.88%, dropping below the benchmark 10-year UK government bond yield of 3.02% recorded at the end of the month. Good job BOE can't see any bubbles.

===
> http://housepricecrash.co.uk/newsblog/2014/02/blog-londons-dirty-little-secret-rents-have-fallen-for-the-last-months-40839.php


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