Beware the housing bubble.

[vickyplum]

Wake up and realise they can afford their own home, presumably?! I don't think "people" are asking to pay current prices and would be very happy for life to be more affordable. Of course there is negative equity but I cannot ever see the London bubble bursting by that large an amount.

 

So if present prices equate to about 1 million dollars the future prices would be about 1.5 million. You can get a fantastic home in the outer east of Melbourne for a lot less than 1 million dollars today if you like a pool or big back yard. You can stick your pokey London houses thanks. I hope there is a crash and people wake up in London.

[Guest]

To those that say they can't see the London bubble ever bursting, as I mentioned in a previous post it did in the early 1990's and I would have said the same then

 

 

We bought in 1989, along with lots of our friends, many of whom ended up with their houses repossessed as interest rates soared (15% who remembers that?) and job security faltered.

[Rallyman]

Do people not remember the 90's most people in London were in negative equity ,it did come back but it took a good 4-5 years ,it just can't keep going up and up, everything was good until 2007/8 then boom GFC, some of us could see it coming others didn't ,always expect the unexpected and take nothing for granted in life

[Life on easy street]

To those that say they can't see the London bubble ever bursting, as I mentioned in a previous post it did in the early 1990's and I would have said the same then

 

[ATTACH=CONFIG]23686[/ATTACH]

 

We bought in 1989, along with lots of our friends, many of whom ended up with their houses repossessed as interest rates soared (15% who remembers that?) and job security faltered.

 

I agree

Work colleges bought in the height of the 1980’s boom and when the market correction came

In the early 1990’s they had their house repossessed.

 

I also know a few who had negative equity for several years!

[Que Sera Sera]

I wonder how much the Olympics played a part in keeping London's house prices up?

[KIRK AND CO]

To those that say they can't see the London bubble ever bursting, as I mentioned in a previous post it did in the early 1990's and I would have said the same then

 

[ATTACH=CONFIG]23686[/ATTACH]

 

We bought in 1989, along with lots of our friends, many of whom ended up with their houses repossessed as interest rates soared (15% who remembers that?) and job security faltered.

I remember that yes it was hard got through it and now living in a cash cow bloody brilliant year it was.

[Guest Andy]

I wonder how much the Olympics played a part in keeping London's house prices up?

 

None whatsoever would be my guess

[Addy]

Just a bit of info for the thread to show that things vary from area to area in both countries. We still have a property in the UK in South Wales which we have had on the market for a year at 50 thousand pounds less than the purchase price 7 years ago which hasn't had a sniff of interest.

 

Our neighbours house in Adelaide which is very similar to ours sold after one open for 130 thousand dollars more than the purchase price a year ago. Out of interest we had ours valued and the estimate was 100 thousand to 130 thousand dollars more than we paid 14 months ago. We were told our suburb is going up very quickly.

 

I don't think you can generalise as I know areas of the UK are shooting up but others are stagnant and the same in Australia.

[zk2102]

To those that say they can't see the London bubble ever bursting, as I mentioned in a previous post it did in the early 1990's and I would have said the same then

 

[ATTACH=CONFIG]23686[/ATTACH]

 

We bought in 1989, along with lots of our friends, many of whom ended up with their houses repossessed as interest rates soared (15% who remembers that?) and job security faltered.

 

Your quite right. I had friends who were in negative equity for years. Thing is now though, London's population has grown considerably since the 90's. There just isn't enough property to house everyone. Supply and demand with not much supply.

[surfndirt]

Quick surfndirt strawpoll to ascertain the level of financial literacy;

 

PPOR (House): Asset or liability?

Qantas Shares: Mental to buy into such a basket case or best opportunity ATM

Govt / Bank Complex Housing Ponzi Scheme: UK and Australia or surfndirt is an idiot

 

First to answer correctly gets a chocolate mouse.

[akiralx]

Chinese buyers are only interested in 1 million plus premium property. They see Oz as a safe and cheap place to invest. They just buy it and sit on it. A friend who lives in the exclusive suburb of Camberwell in Melbourne said Chinese people bought a house in his street two years ago and no one has ever lived there.

 

Yep, we rented in the affluent Melbourne suburb Toorak for a while and realised after a few days that nearly all the large mansions around our apartment block were totally empty, pitch dark every evening. Just bought by wealthy overseas investors I suspect, as land banking. They can't be bothered getting tenants, just not worth the hassle to them.

[Gbye grey sky]

Your quite right. I had friends who were in negative equity for years. Thing is now though, London's population has grown considerably since the 90's. There just isn't enough property to house everyone. Supply and demand with not much supply.

 

That was me too. Bought first place in 1989 with sky high interest rates. Flat lost about 40% of its value and did not get back to the price paid for it until around 1996 if memory serves. Rode it though and my 25 year mortgage is finally paid off this June.

[zk2102]

That was me too. Bought first place in 1989 with sky high interest rates. Flat lost about 40% of its value and did not get back to the price paid for it until around 1996 if memory serves. Rode it though and my 25 year mortgage is finally paid off this June.

 

Nightmare. At the time I couldn't afford a mortgage. That's the difference between now and then (as well as the EU immigration) interest rates are so low now! Great to hear you've paid it off! Where bouts in Surrey r u?

[Graemsay]

People keep on citing demand as being a reason why property prices will remain high in London, Sydney or wherever. What you need to remember is that it means people who have the means and desire to acquire something.

 

For example, I might want a nice house on Richmond Hill (I'm just down the road from you zk2012), but I can't afford the several million quid price tag. Therefore I don't add to demand for it. If I won the Lottery this weekend then that would be a different matter.

 

What's really driving prices at the moment in parts of the UK and Australia are a combination of the following:

 

• Record low interest rates.
  
• Foreign buyers looking for a safe haven for their assets.
  
• Local investors seeking a higher rate of return for their assets.
  
• Government support for buyers, such as Help to Buy or the FHB grant.
  

 

Interest rates are probably going to rise in the UK and USA in the next twelve months. The latter will probably put pressure on the RBA to hike theirs. This will reduce mortgage serviceability and reduce demand.

 

Plus, buying at a time of low interest rates isn't quite as affordable as the property pundits would have you believe...

 

http://grandemotte.wordpress.com/modern-myths-2-interest-rates-are-lower-so-buying-an-expensive-house-is-cheap/

 

What would happen to foreign money if (say) China's property market implodes? There are signs it's starting to turn.

 

http://www.smh.com.au/business/are-chinas-ghost-cities-building-towards-economic-ruin-20140321-358l2.html

http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

 

Or if sanctions are imposed on Russia over its expansionist tendencies? OK, the British government is unwilling to allow these to bite, due to complicity in London attracting capital from over there...

 

http://www.nytimes.com/2014/03/08/opinion/londons-laundry-business.html

 

The number of investors in some markets is also worrying. Over 50% of mortgages were for investment properties in Sydney in the last few months. It all feels a bit speculative, particularly when growth rates are predicted to run way above wage increases or inflation, and from what is already a high base.

 

If things did turn sour, I suspect a number would head for the exits...

 

And lastly there's the governments of the UK and Australia, who've decided that a housing bubble is the best way to get the economy going. I'm not sure how that's going to work, given that was one of the causes of the crisis we're slowly crawling out of.

 

I don't think that a crash is imminent, but given current price levels I wouldn't buy into the London or Australian property markets right now.

 

There are also a lot of predictions of above inflation rises in both these places, and anyone who believes that this is sustainable on a long term basis is mathematically illiterate.

[Xenon4017]

There are also a lot of predictions of above inflation rises in both these places, and anyone who believes that this is sustainable on a long term basis is mathematically illiterate.

 

Or literally innumerate.

 

And yet the market in some places (Sydney, for example) continues to defy gravity. SEQ has seen a correction, but it's taken the form of stagnation rather than a bubble burst. Why won't NSW simply do the same?

[Slean Wolfhead]

Just a bit of info for the thread to show that things vary from area to area in both countries. We still have a property in the UK in South Wales which we have had on the market for a year at 50 thousand pounds less than the purchase price 7 years ago which hasn't had a sniff of interest.

 

Our neighbours house in Adelaide which is very similar to ours sold after one open for 130 thousand dollars more than the purchase price a year ago. Out of interest we had ours valued and the estimate was 100 thousand to 130 thousand dollars more than we paid 14 months ago. We were told our suburb is going up very quickly.

 

I don't think you can generalise as I know areas of the UK are shooting up but others are stagnant and the same in Australia.

 

Very true. The UK stories are mainly about London which is sky high.

If you check the sold figures for the regions, nothing's changing much yet. As ever, the media and estate agents are hyping it up based on nothing, especially north of Watford. I've just sold a UK property after 6 months on the market, but it went for below "market value" for an easy sale. I've looked at the sales amounts for the last 6 months and they don't even match the stories of the same website that's promoting rising sales, there's just no evidence for it. The "market value" is overstated, houses are only worth what somebody is prepared to pay for them. If you can't sell a house, it's worth nothing.

 

A good tip to prove the end of a recession is the tipping point when house builder's share prices start rising, far more accurate than politicians who have a vested interest in trying to make up good news even if it's untrue.

Regionally, there is so much land banked by builders that's just sitting there....when they decide it's worth expanding and building again then I'd be sure.

[bunbury61]

Britain is on the verge of a dangerous housing bubble, the Treasury’s chief watchdog warned yesterday.

Soaring property prices are being inflated by speculators banking on further gains, according to Robert Chote, who heads the Office for Budget Responsibility.

‘With very rapid house price increases in some parts of the country you might see bubbly activity where people are willing to buy stuff off plan or not intend to live in it,’ Mr Chote told MPs.

Prince Charles gave a separate warning yesterday that soaring prices in London will drive a generation of young people out of the capital. He said the dream of home ownership was becoming further and further out of reach for swathes of workers.

The average price of a home in London is expected to jump from £458,000 to £650,000 over the next six years.

 

Sound familiar.

 

http://www.dailymail.co.uk/news/article-2590306/Beware-house-price-bubble-Treasury-watchdog-sounds-alarm-runaway-property-market.html

 

 

 

once again , at risk of repeating myself ....LONDON IS THE CAPITAL OF THE WESTERN WORLD , AND THE LIFEBOAT OF EUROPE ....if you told me a garden shed sold for £1 million , I would not be surprised, anyone who wants a safe . secure haven for their finances , puts it in London

That's why people of wealth , have left their homes empty, in sought after London suburbs , go to wrack and ruin , knowing they are sitting on a bloody gold mine , its like printing money .

Although London is the capital of England , it operates by completely different rules to the rest of the UK

[newjez]

Why would you wish that unless you were planning on moving back?

 

 

So if present prices equate to about 1 million dollars the future prices would be about 1.5 million. You can get a fantastic home in the outer east of Melbourne for a lot less than 1 million dollars today if you like a pool or big back yard. You can stick your pokey London houses thanks. I hope there is a crash and people wake up in London.

[Ausborn]

Chinese buyers are only interested in 1 million plus premium property. They see Oz as a safe and cheap place to invest. They just buy it and sit on it. A friend who lives in the exclusive suburb of Camberwell in Melbourne said Chinese people bought a house in his street two years ago and no one has ever lived there. The only thing to do to level off prices is to stop foreigners buying residential property but I suppose they would always find a way around it.

 

the chinese will buy up anything.They buy cheap property , rent it out. They buy retirement villages , or at least front the money. I build some house and land which sells for around $350 000 , all bought by Chinese investors. Usually they have family living here and they are overseas. Trying to get hold of them proves a pain in the ass.Its not just the Chinese now either.It's not a case of them only buying the expensive properties.

[Guest Guest66881]

The chines buy lots of housing all over britian as they do here too