to think thank god the London property bubble is looking like bursting

[lexiepix]

www.property-time.co.uk/news/Featured-News-227/articles/Latest-Index-Shows-London-Housing-Bubble-Has-Burst-111171.aspx

Its been long overdue and the lr figures for the last few months show that pretty much all of inner London is falling. I know some will have pain from this, but its been waiting to happen for ages and the longer it inflates the worse the pop will be.

For what it's worth I don't live in London, but I think when they do pop the whole country will be better off. When I was working in London most of my older workmates were on about the UK average pay (22-30), but living in property worth between 500-800k, and calling a 300k one bed flat "cheap"

Doctors are departing for NZ every day. Lovely life there and much more reasonable property prices. Forgive me for the slight exageration.

And they must need lots and lots of foreign doctors in New Zealand to keep their population of, um, 4.5 million healthy

SchnitzelVonKrumm

Fewer willing and able buyers at these prices. MMR. The fact that Jilly's house owned outright is not making the banks any profit or income.

5 of the main major banks passed the most recent robust stress tests on the banks. See below.

Why are they even doing these tests if it is not a realistic possibility. And do you really think the banks are going to stay happy with so many older owners of family homes worth fortunes (for the moment), such as Jilly, owning outright, having no mortgage debt? The banks would rather have a fresh mortgage on it, at a coming future point. Better for the banks to write a £300,000 new mortgage on a £500,000 buying price, than for the Jillys of the world to go around smugly telling people how well HPI has done them over the decades. You're being lined up for it. Values can fall. HPC.

Sterling falls by about 30%
House prices fall by 35%
Bank rate rises to 4.2%
CPI inflation peaks at 6.6%
Unemployment rises to nearly 12%
GDP falls by 3.5%
Share prices fall by 30%

www.bbc.co.uk/news/business-30491161

charlie

Sterling falls by about 30%
Against what?
House prices fall by 35%
Nationally or just in London?
Bank rate rises to 4.2%
On what timescale and why would they with the impact that would have on corporate debt?
CPI inflation peaks at 6.6%
Incompatible with the above
Unemployment rises to nearly 12%
Only possible if Britain leaves the EU
GDP falls by 3.5%
Incompatible with Base rate and CPI
Share prices fall by 30%
Driven by what ?

You need to read more history.

Agree with Talkinpeace. I think a house price correction would be good for society at large, but cannot see one happening in the near to medium term at least.

Mortgage lending is increasing and rates are at an all-time low.

Come April, those retiring will be able to buy-to-let with their pension pots or fund the purchase of property for children/grandchildren.

The London property bubble will never burst, the best you can hope for are periods of slower inflation. If you can't afford it now, you never will.

London property bubble can burst, now k&c is down a massive 23%, what if all the arabs and oligarchs decide to stick their money into something else? The ripples will be huge. It will happen, its just when. Maybe a few months, maybe a few years.

what if all the arabs and oligarchs decide to stick their money into something else?
such as?

the risk / tax profile of London Property is so insanely beneficial that they won't go anywhere in a hurry.

the Arabs got here in 1970 after all

Maryj that's an entirely separate market which has no bearing on low/mid price standard properties.

Those are properties which are purchased outright for investment. no mortgage required.

k&c is down a massive 23%
What proportion of the total portfolio of K&C has changed hands over what timescale to have driven that statistic

just that I know of houses that have not changed hands for over 40 years - the actual churn of top end K&C houses is miniscule

No k&c affects the whole market, as people are pushed further and further out.

With 80% of new build property s in London bought by foreign investors, when London looks less attractive the consequences will be massive. For course the government doesn't care about its own residences so will try to keep this going, but it can't go on forever.

K&C can't keep going and going, eh?
In 1992 my parents thought about buying a house in W8 but then reconsidered because they thought it was just silly money.

It was £435,000

Today that house is worth about £7MIL.
They often rue that decision.

And it can't keep going up and up?

I think history would suggest otherwise.

Bertie

Agreed (and resurrected from below). High quality and "value for money" key workers in London (education, healthcare, social care, police, firemen, environment, transport) will end up moving out.

We have first hand knowledge of long serving support staff in a central London major hospitals finally deciding their 1hr+ commute simply isn't worth the pathetic "London weighting" in their payroll. They are moving to out of London jobs, cutting the commute time and cost and improving their quality of life at regional hospitals.

Those central London hospitals are already "allowed" to get up to 50% income from the private sector. The only people that can afford that kind of care are the same ones that can afford expensive flats and houses - the same ones that can afford high levels stamp duty, council tax and mansion taxes. To those reading this that live inside the M25 - can you afford that?

Bertie
When I was little my parents were offered the chance to buy our flat for £4000.
It last sold two years ago for £1.4m

The London property market will only sort out when the penalties for keeping properties empty are such that its uneconomic for owners to do so.

Serious question for Charlie: how long are you going to wait for the crash? Do you think there will come a point where you decide to buy anyway?

Bertie one antidotal over a tad over two decades isn't nearly sufficient enough to predict history.

No one thinks there won't be a correction ever, that would be daft, but the premise of the OP and of some posters is that a massive crash is on it's way now. So I'm asking again, what will be the catalyst? Interest rates aren't going up anytime soon (17 central banks have cut rates already this year, most from record lows), Europe and China are pumping in more of the stimulus that has inflated asset prices in recent years, no one is proposing any serious change to property taxation, there hasn't been a sudden outbreak of peace around the world, we're still not building any houses and we had record net immigration last year. And low or negative inflation as a result of cheaper oil means people will feel richer because they have more disposable income.

And TP got there before me but littlecharlie outline for me the situation in which Bank Rate increases nearly ninefold and sterling falls 30 percent (against the dollar presumably - great news for our foreign buyers again!)

There are millions of things that could be a catalyst.

You can only push people so far before they snap, now the middle classes are being destroyed it can't go on for much longer.

Here's a question.

Will any of our concerns or predictions make any difference to who we vote for?

Would a change in government have any material effect?

My guess is not. The swing from Labour to Thatcher to New Labour to Coalition has had no impact on the fundamental drivers to property inflation spanning 4 decades.

Like the 2012 rioters, for example?

Even if it becomes a major political issue - and it should - history suggests the vested interests in charge will find a way to address protestors' immediate concerns without reforming the system as a whole. And once we've paid a few key workers' deposits, or shaken out a few BTLers so they can afford to buy, they'll suddenly be on the other side of the fence.

You should never underestimate the power of the old adage "an Englishman's home is his castle'. If Germany is a nation of renters, then the English are a nation of homeowners, who whether they realise it or not, have an ingrained sense of worth based on their value of their homes. Look at any newspaper: you can't read a single article about something without a line like "speaking from their £300,000 Manchester semi" or "benefits family housed in £1.2Million house". We're unhealthily obsessed with this stuff. Affluenza gone mad.
So the collective depression of a house price crash is an unbearable thought, and Inshould imagine the Daily Mail will make it their mission to prevent it.
Along with the powers that be, as SchnitzelVonKrumm so rightly points out. (hmm, really fancy a name change to Hercules Morse tonight... )

I'm not smug at all. I've worked harder for 30 years of continuously having a mortgage than most mumsnetters. If my house halved in value it would not genuinely matter to me at all as I aim to live in it for 40 more years or however many years have left. I remember the 70s property crash( just). I remember the 90s crash. I know a lot about the 1929 slump which nearly destroyed my father's family.

It is possible London prices might fall but I doubt anyone buying now will find in 40 years' time over that period of several decades they will have been foolish to buy and own.

We are probably one of the safest places on earth to live and buy (and much of the UK still has relatively reasonable price costs compared to inner London and even where I live the freehold terraced in zone 5 are £350k - yes quite a lot of money but not so much if you are paying 2% interest rather than the 12% we paid when we bought 30 years ago. Money if flocking to London because of our stability. If I had to put my money on riots and civil unrest the UK is not the most likely country on the planet for that.

If I had to put my money on riots and civil unrest the UK is not the most likely country on the planet for that.
I agree

All the firebrand English people left in the 18th and 19th Century, leaving the peaceable types behind