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Central LONDON Property: Databank & Charts

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Central LONDON Property: Databank & Charts / for Data see Post #2, and #116

"Never goes down" - except when it does

================================

 

/ Key : Red= Rightmove, Greater London, Green= Knight-Frank Prime Central London /

 

lonprime.jpg : Data in Post#2

 

(Here's the Original Post from Cuthbert Calculus)

 

AGENT SPINS - Selling his Fund, as the Market Approaches its 2007/8 Top

============

 

Evening all,

 

As posted on HPC -

 

THIS EMAIL arrived this evening from EAs Douglas and Gordon.

 

Several things amazed me about it:

 

1. That they are sending it out to everyone in their email database (to me that suggests things are bad, otherwise they wouldn't need to)

 

2. The sheer bullsh*t and poorly researched laziness of some of their arguments.

 

Anyway here it is. I look forward to your thoughts - and the tearing apart of some of their arguments:

 

There is a lot of talk in the press about what might happen to Prime London property prices over the next few months. We, at D&G, thought you might be interested to read the views of the Fund manager of the only regulated and open ended Fund that specialises in investing in Prime London residential property -The Prime London Capital Fund.

 

For more information on the Prime London Capital Fund which allows you to invest in Prime London property for as little as £10,000 either call 0207 9634622 or e-mail at

info@dngam.co.uk or have a look at the website www.dngim.com

 

Ivor Dickinson, Managing Director / Douglas and Gordon

=== === ===

 

Is the Prime London party over and/or will the USA housing crash affect Prime London prices?

 

Summary

 

1 The Prime Capital London ( PCL ) market is quite distinct from the rest of the UK property market, let alone the USA one;

 

2 The areas in USA where prices are falling fastest, and where we have been warning since Q1 that UK prices will fall too, is where there have been recent large increases in supply of housing stock;

 

3 Supply in Prime London is diminishing, not increasing;

 

4 In next three months it is possible that, compared to the first and second quarters, demand will soften in Prime London for all but the very best stock. As price increases pause and the press write about the PCL party being over potential sellers will retreat, leading to stock shortages in first quarter 2008;

 

5 Demand for best PCL stock likely to remain strong;

 

6 City bonuses likely to be slightly down on expectations of a few months ago but still strong ( those paid in their Bank's stock are likely to get that stock at very good price );

 

7 UK interest rates likely to be coming down by 2nd quarter 2008;

 

8 Next three months presents good buying moment for investors in PCL with 5-7 year time horizon;

 

9 The value we are adding to the current portfolio ( refurbishment and/or improving lease quality) will not be fully reflected in the unit price until March 2008;

 

10 Rental market still strong -gross yields of 4% still achievable target for the Fund's properties.

 

11 The Prime London Fund performance this year

/ compares favourably to UK commercial Funds ( source : Sunday Times July 15th ) :

 

- Prime London Capital Fund : + 7% ( since Feb 2007 -launch )

- Scottish Widows SWIP......... : -19.5 %

- New Star Property Fund....... : - 5.1 %

- Aberdeen Property Share...... : -16.2 %

- Norwich Property................. : - 4.6 %

 

12 Sound fundamentals supporting the London economy.

=== ===

 

What lessons can one draw from the USA housing market situation?

 

Firstly, all property investment, like politics, is local. In the USA some regions are suffering, others continue to grow. Of course, in any huge and diverse economy, like the USA, different regions will be at different stages of their economic cycle and that tends to be reflected in local house prices. What is different about this US housing cycle is (a) supply, (cool.gif rising insurance premiums, © the sudden and dramatic move up in US interest rates.

 

In the USA it is " sub-prime " mortgages that have attracted all the headlines. But it is important to draw a distinction between the effect that these loans have had/will have on the financial markets and the cause of falls in median USA house prices. In terms of the USA housing market these sub-prime mortgage problems are tiny. The root cause of falling prices is a dramatic increase in supply, and it is a reminder, once again, that when trying to make money out of property supply uncertainties are the major headache for any investor.

 

1 The US mortgage market is worth $10,400 billion;

 

2 13% of that ( $ 1,350 billion ) has been lent to " sub-prime " borrowers;

 

3 14% of that 13% is delinquent ie the mortgagor is late with payments or has defaulted -so less than 2% of the total USA mortgage market is affected to date;

 

4 About 5% of that $1350 billion is in foreclosure ( $67 billion ), of which half is likely to be recovered;

 

5 Known losses so far are therefore about $33 billion;

 

6 That represents about 0.047% of the USA total national wealth.

 

So, our observation would be that the current malaise in USA housing is less down to the sub-prime lending per se but more to the fact that there is an unprecedented overhang of inventory ( source : Joint Center for Housing, Kennedy School of Government, Harvard, June 2007 ). Median USA house prices have fallen because of very large drops in those specific areas ( eg the South and South East ) where supply has been greatest. This has dragged down the national numbers. The " median " USA house price is that number where 50% of all USA houses cost more, and 50% less, than this number. It is not the average price. When there is a big overhang of stock ( up to 1 million units -see above report ) that hugely increases the numbers below the old median, and so the new USA median house price falls significantly. This tells you little or nothing about what is happening to the value of houses above the old median. As ever, statistics can be made to tell you anything but the moral is - average/median/index house prices are virtually worthless when it comes to assessing the strength and/or the outlook for prime areas where the supply/demand dynamic is totally different.

 

The second, less-commented upon contributor to the fall in median house prices in the USA -insurance premiums. Since Hurricane Katrina ( 2005 ) household insurance premiums have risen by 300% in the very same areas where the supply of housing stock has been greatest ( the South and South East ). This has added hugely to the entry cost of any new home buyer and has meant many have been unable to enter the market.

 

Thirdly, do not under-estimate the extent of the monetary tightening that has taken place in the USA. In June 2003 Fed Funds were at 1%, by June 2006 they were at 5.25 %. This is a 425% rise in USA interest rates in three years.

 

Conclusion

==========

If I told you that the average number of goals conceded by football teams throughout the English professional leagues was 1.5 a match would that be a helpful statistic when trying to work out how many goals Chelsea were going to concede per match this year? Of course not. What happens to football teams in the fourth division has no relevance to what happens to Chelsea -they are, effectively, playing a different game by different financial rules. Why do people continue to think that what happens to the general UK housing market, let alone the USA market, is relevant to what happens in the Prime London market? They are as different as the said football teams, perhaps more so. There are many differences but the big one is supply. In Prime London there is not only no extra net residential supply coming on stream but, arguably, supply is diminishing as flats get knocked into bigger flats or houses. That is what makes the PCL residential market totally different from the rest of the UK and it is why the USA example should be a reminder to investors that, in a mature market, demand will fluctuate to some extent during different parts of the economic cycle but what really disrupts/destroys property investment returns are supply shocks. If you can rest at night because there is no risk of further supply, as you can with PCL, that makes life a lot easier. This differentiates PCL residential property investment from not only the rest of the UK housing market, but also the London commercial property market where large amounts of fresh supply look like spoiling the London commercial property party for the next couple of years.

 

So do you think Prime Central London average prices will fall over the next quarter or two?

 

It is not our central forecast but it is possible that the Savills PCL Index could show a small decline over the next two quarters. That should not unduly worry investors in the Prime London Capital Fund. The Fund is a " stock-picking " Fund and picks the best properties from within the PCL universe. The properties within PCL that are most likely to show price declines will be the " sub-prime " ones ( basements, walk-ups, ones on busy roads, new builds ). The Prime London Capital Fund looks at about 30-40 properties before it makes an offer on any one and has done so since we launched. By definition, the properties we have rejected/failed to offer on we think have been overvalued, and it is these that could show some small capital decreases over the next six months. But, the best stock will remain in demand and will continue to get top prices and, as potential sellers react to talk of a softening sales market, so stock will dry up again. Once again, it all comes back to supply in PCL and we expect that to dwindle even further over the next six months.

 

The next couple of months will be a good time to buy PCL stock if you are a long term investor.

 

Why are you so confident?

 

History. Over the last 20 years when there have been financial market jitters potential sellers of Prime London pull their stock, leading to supply problems..and, after a pause, a continuation of the long term trend growth ( + 9% p/a ).

 

1 1994 - Mexican devaluation crisis.

 

PCL - March 1994-March 1995 : + 19.2%

 

- March 1995-March 1996 : + 3.2% ( slowing but still positive growth )

 

Due to the slow-down in growth during 1995/96 stock was pulled leading to a rise of + 13.6% for period March 1996-March 1997.

 

2 1997-1998 - Russian and Long Term Capital Management crises

 

PCL - March 1997-March 1998 : + 23.8%

 

- March 1998-March 1999 : + 2.9 % ( slowing but still positive growth )

 

As in 1995/96, the slow down in capital growth in 1998/99 led to stock being removed from market leading to rise of + 23.3 % for period March 1999-March 2000

 

3 2000 bursting of tech bubble

 

PCL - March 2000- March 2001 : +15.2 %

 

- March 2001-March 2002 : + 6.8% ( slowing but still positive growth )

 

The pattern continued - slow down in growth in 2001/02 led to supply shortages and capital growth for the March 2002-March 2003 period was + 9%

 

4 Finally, September 11th 2001/Enron collapse 2002

 

PCL - March 2003- March 2004 : - 0.6%

 

- March 2004- March 2005 : + 2.5%

 

After these, relatively, slow years stock diminished and period March 2005-March 2006 was + 4.4%, and March 2006-March 2007 + 22%.

 

Conclusion

==========

What no-one can predict is when (a) the slow down in growth rates will take place, and (cool.gif when the next big + % year will be. What can be observed from the last 20 + years of PCL price action is that when the slow down occurs (a) it is likely to be a slowing in growth rates, not an actual decline, (cool.gif any slow down soon affects seller sentiment and thus supply levels, leading to © a demand-supply imbalance and a resumption of long trend growth. The time between (a) and cool.gif and (cool.gif and © is anyone's guess. The risk of not being invested for the © leg of the process ( ie the big % year ) is clearly greater than the risk of investing in a year of sub-trend, but still positive, growth. Of course none of the above takes into account rental yields which tend to rise at times of capital growth slow-down and make a significant contribution to total returns ( which have not had a negative year since 1992 ).

 

So what about units in the Prime London Capital Fund -where will they go over the next few months?

 

I am restricted from making any hard and fast forecasts but what I can say is that we are in the midst of adding, we believe, significant value to some of our properties. We will be spending capital to improve the look of the estate and/or improving the quality of the lease through lease extensions. We expect the added value in the units to be fully reflected in the price of the Fund's units by March 2008. There are, at least, a couple of dealing days ahead of March 2008 and the intention is to move the Fund to monthly dealing next year.

 

Wouldn't it make sense to wait a bit before entering the PCL market?

 

If you can pick the highs and lows of any market, let alone the PCL one, you don't need us. Nobody knows for sure where prices are heading and what the outlook will be. What we can say with 100% certainty is that the lesson of the last 30 years in PCL is that the longer you have been invested in the market the more money you have made. We have been buying, selling, investing, managing Prime London properties for nearly fifty years and there are far more examples of people regretting that they delayed buying or getting out of the market than there are of people who have successfully sold at the top and bought at the bottom. The strategy of this Fund is not to trade -we are not pretending to know when the top of this cycle will be ( although on an historic basis there is at least another 100% in capital increases to go in this cycle which started in June 2003 ). We are an investing Fund looking for quality and value and we will leave calling tops and bottoms to others. We will get on with seeking the best Prime London stock, improving it and making it sweat a steady 4% p/a gross yield.

 

Isn't one of the lessons of the USA-led financial market volatility that now is a time to reduce risk?

 

I would put it differently. The events of the last month are a salutary reminder that you should always invest in things (a) you understand, and (cool.gif where the risk is transparent. The extraordinary aspect to the current bout of market jitters is that the so-called financial market experts did not understand the risk they had bought. Many, apparently, thought they had triple A grade debt but it turned out they didn't.

 

The risk profile of the Prime London Fund is easy to understand and transparent :

 

1 We invest only in the very best residential Prime London real estate;

 

2 We borrow, on average across the portfolio, 50% of the purchase price;

 

3 Our net yield from the rent more than covers our mortgage payments;

 

4 We seek to improve the underlying asset through refurbishment and/or lease improvement;

 

5 We are seeking long term p/a total returns of 9%. This is made up of 6% capital growth ( long term average for the PCL index is 9% ), and 3% net yield;

 

6 We will never be a forced seller of the underlying assets because the Fund will never have to redeem more than 8% of its NAV in any one year.

 

Our strategy is a simple one and our borrowing is modest. The trick comes in (a) getting access to the best stock, and (cool.gif acquiring it at the right price and that is very labour-intensive. That is what you pay your Fund manager to do for you, and to make sure that the assets are improved and made to sweat. But there are no hidden complications and the model and the Fund is straight forward and transparent.

 

The moral of the recent USA " crisis " according to the great Mr W Buffett is " don't fear risk, make sure you understand it ".

 

Is the growth in PCL based on a secure economic footing?

 

The financial and business services sector of the UK economy doubled between 1980-2007 ( from 15% to 29% ). In London the sector went from 20% to 42% of the region's economy over the same period. This sector of the UK economy grew by 10% in the year to the first quarter 2007, compared to 2.8% growth for the rest of the economy. In London 28% of the workforce is in this sector.

 

In short, the importance of financial services to the UK economy is huge as is the centrality of London to that sector. No Government will risk the pre-eminence of London to the UK financial services sector and that is why the Prime Minister, and his right hand man Ed Balls, have resisted calls to revisit the tax status of private equity and wealthy overseas non-domiciled residents as well as insisted that they will work to continue to make the City the financial centre of choice ( see attitude of FSA vs SEC to markets regulation ). They know that it is these high earners who can decide where to base Fund management and Private equity firms, and if they leave London it will have a serious impact on tax revenues.

 

As for the future, the consensus is that economic growth in London will out-strip the rest of the UK by up to 1/2 % - 3/4 % p/a every year for the next decade ( source : Cambridge economics ). There are also the planned infrastructure projects associated with the Olympics.

 

So, future demand look set fair.

 

What do other market participants thinks this all means for the future of PCL prices?

 

One of the joys of being a residential property Fund manager is that everyone is a property expert. The press love to write the story about " booms " and " fat cats " and then "busts" and " pricked balloons ". Remember the press need to sell newspapers and so there is no point in a property page sub-editor being understated when he prepares the headline for the next property story. Over the next few months it is quite possible that the press turns on the housing market in general and the Prime London market in particular. This could well have the effect of scaring off marginal sellers in Prime London, reducing supply ( see above ) but have little or no impact on the competition for the best properties, except maybe there will be 3/4 after each rather than 8/9.

 

On a longer term perspective, investment bank Investec undertook some research in August 2007 and found that over half of all London agents thought that, within two years, £4,000 per sq ft would be common place for the best stock. The Fund is currently buying the best stock for between £1100-£1600 per sq ft.

 

For more information on the D&GIM Prime London Fund please either call or e-mail me at the number/address below and/or go to our website www.dngim.com

 

==== ====

Link to Here----- :: http://tinyurl.com/GEI-london

London Population :: http://www.londononl...ile/historical/

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lonprime.jpg

 

 

GPC - DATA bank: / LONDON House Prices

 

Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-%

When?: 18th? - 18-20th :

2008:

J. : : 230,428 : 398,476 / 397,033 : 4,764.4 :

F : : 237,856 : 402,233 / 399,367 : 4,792.4 :

M : : 239,655 : 407,383 / 399,717 : 4,796.6 :

A : : 239,521 : 403,545 / 394,975 : 4,739.7 :

M : : 242,500 : 404,541 / 388,350 : 4,660.2

J. : : 239,564 : 399,010 / 381,442 : 4,577.3 :

Jl : : 235,219 : 400,258 / 374,283 : 4,491.4 :

A : : 229,816 : 379,162 / 367,875 : 4,414.5 :

S : : 227,438 : 394,248 / 360,108 : 4,321.3 :

O : : 229,691 : 395,560 / 346,050 : 4,152.6 :

N : : 222,979 : 390,340 / 333,600 : 4,003.2 :

D : : 217,808 : 391,721 / 326,217 : 3,914.6 :

2009:

J. : : 213,570 : 386,653 / 314,125 : 3,769.5 :

F : : 216,163 : 387,988 / 309,442 : 3,713.0 :

M : : 218,081 : 398,867 / 304,350 : 3,652.2 :

A : : 222,077 : 387,161 / 305,525 : 3,666.3 :

M : : 227,441 : 397,646 / 310,492 : 3,725.9 :

J. : : 226,436 : 397,140 / 315,750 : 3,789.0 :

Jl : : 227,864 : 402,761 / 320,542 : 3,846.5 :

A : : 222,762 : 387,265 / 323,858 : 3,886.3 :

S : : 223,996 : 390,768 / 328,142 : 3,937.7 :

O : : 230,184 : 416,157 / 335,000 : 4,020.0 :

N : : 226,440 : 403,069 / 338,933 : 4,067.2 :

D : : 221,463 : 398,426 / 346,217 : 4,154.6 :

 

Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-%

2010

J. : : 222,261 : 407,731 / 350,100 : 4,201.2 : +1.12% : +11.45%:

F : : 229,398 : 427,987 / 361,233 : 4,334.8 : +3.18% : +16.74%:

M : : 229,614 : 417,461 / 363,917 : 4,367.0 : +0.74% : +19.57%:

A : : 235,512 : 421,822 / 368,808 : 4,425.7 : +1.34% : +20.71%:

M : : 237,134 : 420,203 / 373,975 : 4,487.7 : +1.40% : +20.45%:

J. : : 237,767 : 429,597 / 377,200 : 4,526.4 : +0.86% : +19.46%:

Jl : : 236,332 : 422,248 / 375,500 : 4,506.0 : - 0.45% : +17.15%:

A : : 232,241 : 405,058 / 375,325 : 4,503.9 : - 0.05% : +15.89%:

S : : 229,767 : 399,019 / 374,675 : 4,496.1 : - 0.17% : +14.18%:

O : : 236,849 : 418,778 / 373,808 : 4,485.7 : - 0.23% : +11.58%:

N : : 229,379 : 417,279 / 377,025 : 4,524.3 : +0.86% : +11.24%:

D : : 222,410 : 408,248 / 381,992 : 4,583.9 : +1.32% : +10.33%:

2011

J. : : 223,122 : 413,259 / 386,142 : 4,633.7 : +1.09% : +10.29%:

F. : : 230,030 : 430,680 / 389,975 : 4,679.7 : +0.99% : + 7.96% :

M : : 231,790 : 424,307 / 395,208 : 4,742.5 : +1.34% : + 8.60% :

A : : 235,822 : 431,013 / 399,233 : 4,790.8 : +1.02% : + 8.25% :

M : : 238,874 : 430,936 / 404,742 : 4,856.9 : +1.38% : + 8.23% :

J. : : 240,394 : 438,622 / 408,558 : 4,902.7 : +0.94% : + 8.31% :

Jl : : 236,597 : 432,641 / 411,417 : 4,937.0 : +0.70% : + 9.57% :

A : : 231,543 : 418,008 / 414,925 : 4,979.1 : +0.85% : +10.55%:

S : : 233.139 : 427,889 / 417,575 : 5,010.9 : +0.64% : +11.45%:

O : : 239,672 : 450,210 / 420,600 : 5,047.2 : +0.72% : +12.52%:

N : : 232,144 : 444,724 / 424,600 : 5,095.2 : +0.95% : +12.62%:

D : : 225,766 : 434,871 / 428,192 : 5,138.3 : +0.85% : +12.09%:

 

Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-%

2012

J. : : 224,060 : 438,324 / 432,125 : 5,185.5 : +0.92% : +11.91%:

F. : : 233,252 : 449,252 / 435,167 : 5,222.0 : +0.70% : +11.59%:

M : : 236,939 : 455,159 / 439,908 : 5,278.9 : +1.09% : +11.31%:

A : : 243,737 : 464,944 / 444,850 : 5,338.2 : +1.12% : +11.43%:

M : : 243,759 : 469,314 / 448,175 : 5,378.1 : +0.75% : +10.73%:

J. : : 246,235 : 477,440 / 451,592 : 5,419.1 : +0.76% : +10.53%:

Jl : : 242,097 : 460,304 / 453,683 : 5,444.2 : +0.46% : +10.27%:

A : : 236,260 : 454,875 / 456,083 : 5,473.0 : +0.53% : + 9.92% :

S : : 234,858 : 456,237 / 459,167 : 5,510.0 : +0.68% : + 9.96% :

 

O : : 243,168 : 478,071 / 4XX

==================================

mom: +3.54% : +4.79% / / +0.68 % :

 

(Kfr-PC-A: is Kf-PrimeC x (1000/12)

 

Note : KfPrime = Knight Frank Prime Central London Index

/Kf-PC: http://my.knightfran...ales-index.aspx

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London's yield is very low at the moment and the rents are breaching the limits of affordability.

 

However, there is full employment and alot of foreign buyers, especially from Asia, Russia and the Middle East.

 

It may stagnate but how can it fall when you have so much money coming in. Outside London is a completely different story.

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...there is full employment and alot of foreign buyers, especially from Asia, Russia and the Middle East.

 

Wonderful lagging indicators.

Let's bring this on, lower the water levels, and see who is swimming naked

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Wonderful lagging indicators.

Let's bring this on, lower the water levels, and see who is swimming naked

 

 

I love the aggression :angry: The water levels have been lowered before and then interest rates were cut and the water rose again.

 

Gordon will not let his 'good work' go to waste and will drop the rates (sorry - influence them). Regardless of whether it work or not overseas buyers will always buy into London as its 'the place' to be. NYC has lost its shine and Russians, Asians and Arabs like it.

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I love the aggression :angry: The water levels have been lowered before and then interest rates were cut and the water rose again.

 

Look at the charts of the UK builders.

and it will be clear this present drop is the deepest in over 10 years.

Their charts are much more predictive than the indicators you have mentioned.

Just look at the same indicators in the US, and it will be perfectly obvious which work.

 

If you are still bullish on UK property, you are probably in denial (of present reality)

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Don't you think that's a bit harsh ? :angry:

We need bears AND bulls, otherwise the system would break down and there would be no trading ! :)

 

I think my answer would be this.

Any rich investor is going to be looking at the market and looking to at least not lose money on it.

In the current climate, it looks more and more likely that prices will fall, and so however rich someone is, they are not going to throw their money away, they are going to haggle the price down with regard to the current climate.

 

I agree with DrBubb though on leading and lagging indicators. Future job cuts in the city being more relevant than past employment levels or bonuses :)

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Look at the charts of the UK builders.

and it will be clear this present drop is the deepest in over 10 years.

Their charts are much more predictive than the indicators you have mentioned.

Just look at the same indicators in the US, and it will be perfectly obvious which work.

 

If you are still bullish on UK property, you are probably in denial (of present reality)

 

 

I tend to agree with you that in aggregate UK property will follow the builders lower. There can be no mistaking the clear signs that demand will be weak in Q4 and during 2008 and we are starting to see that now with the HPI's tailing off a good nine months after the peaks of the UK builders. What I would say though is that the correlations are breaking down more than usual between various regions of the country ie the lead times (versus the UK builders) vary considerably depending on which part of the country you live in.

 

I live in central London (Mayfair) and I can tell you that £ persqft levels are still rising for prime residences. Personnaly I think this is suprising, and indeed I am in the process of tryng to offload my place to try and lock in these prices, but for sure the market in my neck of the woods is still extremely well bid. It's worth remembering that something like 50% of real top end property in London is purchased by non residents ( Middle East, Russian, Far East etc) and these guys are all doing very nicely thank you ytd.

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It's worth remembering that something like 50% of real top end property in London is purchased by non residents ( Middle East, Russian, Far East etc) and these guys are all doing very nicely thank you ytd.

 

Some foreigners are too rich, and too late...

so they spend their money based on out-of-date assumptions.

 

But dumb-rich investors will not go on buying blindly for much longer IMHO

You are not the only one trying to cash in on their naiveity

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It seems the MPC will drop rates when 'necessary'. Is it beyond the imagination that they could prevent a drop in house prices by flooding the money with cheap money, alomng with a negative real rate for borrowing?

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Some foreigners are too rich, and too late...

so they spend their money based on out-of-date assumptions.

 

But dumb-rich investors will not go on buying blindly for much longer IMHO

You are not the only one trying to cash in on their naiveity

 

 

Ego is a very powerful force. These guys are not buying investments , they are buying lifestyle, and at the moment in many cases their personal wealth is growing at a much faster rate than London property. A London residence is a must have these days for a lot of wealthy people and consequently there is still a shortage of very high quality places in the "right" areas. In many cases the odd 10-20% in price is a rounding error.

 

Interestingly we have seen a similar (though less extreme) example of this in NewYork where top Manhattan real estate is still up year to date, even though other urban areas are crushed.

 

I'm not saying I disagree wth you just that I think the spreads between prime areas and some regional UK markets will widen considerably.

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Ego is a very powerful force. These guys are not buying investments , they are buying lifestyle, and at the moment in many cases their personal wealth is growing at a much faster rate than London property..

 

Sure.

Newly rich (nouveau riche) like trophies, but they are not totally brain dead.

Once they see prices falling all around their trophies, and a weaker sterling, it will eventually dawn

on them that they are mugs.

 

Besides, the Rich Feast in London :

is almost over. The brilliant lifestyle they are seeking, will soon look less brilliant for all kinds of

reasons, but mainly because of a slowing economy, and rising political tensions

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London House prices already down by 10% as falling prices gather momentum

Article by Toby Serter

Tuesday 23rd October 2007, 00:05

 

The full extent of the housing slump has already begun to take effect and 9 out of 10 London estate agents are owning up to a very significant fall in house prices. The full extent of the UK property market correction may not be realised until at least 2009 and experts say that London has already fallen by an average of 10% - in some areas, house price falls are as much as 17%.

 

Leonard Svenssen, magaing director of City Bank says “We are experiencing a drop off in house prices due to the global credit squeeze and the fact that interest rates have really started to bite”.

 

Arnold Harris of Moving Home says “The National Estate Agents Association is reporting that 90% of their registered agents are reporting falling house prices in London and in fact sellers are being urged to drop their asking prices by a minimum of 10% but still it isn’t enough to tempt buyers back to the market to buy”.

 

Some experts are saying that the London housing market has already fallen by at least 15 – 17% and that the capital will not see any improvement until at least the Spring of 2009.

 

“The global credit crunch has become a bit of a cliché” says Ron Alerman, chief economist at homesforyou – “the truth is, is that there has been a massive crash in global funds due to the enormous number of defaults in the US – the UK however, is not far behind.

 

According to the International Monetary Fund Britain's housing market faces a devastating slump.

 

In its twice-yearly report on the state of the global economy this week, the IMF warned property prices are overvalued by as much as 40 per cent.

 

/more: http://functionpix.com/index.php/article/L..._momentum/1631/

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Well, Kensington and Chelsea still has steady , if not, rising prices. There is such a shortage of houses on the market that it isn't going to get better. Flats are selling much higher than last year. Even if it were to drop it would have to by a huge percentage to get to a 'reasonable' level, whatever that is in such a booming city.

 

For Russian, Middle Eastern and asian investors there is no comparable city to London. New York is not exactly as friendly out of 2 of those 3 groups. The rest of the cities in Europe do not hold a candle to London.

 

Granted Brent, Tottenham etc may see price declines but not the prime areas. Even if they decline it wont be by much. Globalisation at work.

 

 

Make the money elsewhere and live where its nice.

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There is no fall in prices in the prime bits of St Johns Wood just off central London. We live next door to an end of terrace house that was on the market for probably 2 weeks at most and has sold for £2.75million. The day the vendors moved out; in moved the builders with Kango hammers to gut the place! A refit is going to cost £200000+ in my opinion. The right property sells quickly at very firm prices. The market in London has polarized very sharply. If the area and location is right price is a side issue.

Sincerely

Hogwild

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Well, Kensington and Chelsea still has steady , if not, rising prices. There is such a shortage of houses on the market that it isn't going to get better. Flats are selling much higher than last year. Even if it were to drop it would have to by a huge percentage to get to a 'reasonable' level, whatever that is in such a booming city.

 

I find this very hard to believe. How recent are your valuations?

 

In Hong Kong, we have access to sites like...

this: http://evalue.hangseng.com/eng/val01.asp

 

Where you can do quick and up-to-date valuations.

And work out important parameters like: Value per Square Foot.

 

Illustrative Valuations

 

Property== Value Usesf / GrSf : perSf

TC blxx hiF 2,070 0560 / 0729 : 2,840

TC blxx hiA 4,020 0940 / 1220 : 3,295

TC blxx loF 1,630 0481 / 0646 : 2,523

TC blxx hiC 2,070 0560 / 0729 : 2,840

===== == 9,790 2541 / 3324 : 2,945

 

Is there anything like this for London?

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...has sold for £2.75million.

The day the vendors moved out; in moved the builders with Kango hammers to gut the place!

A refit is going to cost £200000+ in my opinion.

 

From what you described, the actual price was agreed some time ago,

so the valuation is not up-to-date

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From what you described, the actual price was agreed some time ago,

so the valuation is not up-to-date

 

 

Interesting to see the latest Land Registry report for September (released yesterday).

 

http://www.landreg.gov.uk/houseprices/

 

States that London prices rose 1.3% last month with 32 of the 33 boroughs increasing. Kensington & Chelsea higher by 1.7% and 30.5% mtd & ytd respectively. These numbers are on actual completed sales so lag the market by a few months but even so hard to reconcile with 'Toby Serter ' article above.

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Interesting to see the latest Land Registry report for September (released yesterday).

 

LandRegistry prices are THE MOST DELAYED.

Chances are, those are transactions where prices were agreed in June or July.

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LandRegistry prices are THE MOST DELAYED.

Chances are, those are transactions where prices were agreed in June or July.

 

 

I did also mention that fact in my post but my point is that the Land Registry report for say November/December is not going to show London prices down 15% against this Septemebr survey.

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I did also mention that fact in my post but my point is that the Land Registry report for say November/December is not going to show London prices down 15% against this Septemebr survey.

 

Sure. Those looking for big falls in the major indices will need to be patient for a while. But falls are being reported in the indices without big delays...

 

Both sales and rentals softening

Primelocation.com: Prime London sale and rental prices decline for the second consecutive month

Average prices for prime London property for sale decline for the second month in succession, down 1.3% and wiping over £14,000 off the value of the average London home. The market for prime London property to rent witnesses a drop in average rental prices monthonmonth, down 0.8% in September 2007. However, stock levels have hit record levels, up 9.6% since August 2007.

 

[spotted this while looking for a new place to rent - looks like Assetzzz and the BTL brigade may be wrong with their forecasts of rising rents]

 

/see: http://www.primelocation.com/priceindex/

 

2/

 

House prices fall for the first time since 2005 as buyers get the jitters

By OLINKA KOSTER - 28th October 2007

 

House prices have fallen for the first time in two years.

 

The downturn comes after months of declining sales and increasing uncertainty among buyers.

 

The value of the most expensive homes is cooling most quickly, with larger falls hitting wealthy parts of London, Hampshire, Cambridgeshire and Oxfordshire.

. .

Richard Donnell, director of research at Hometrack, the housing intelligence business which carried out the survey, said: 'The fall over October is not unexpected.

 

'After several months of weaker buyer confidence, falling levels of demand and declining sales volumes, prices were bound to be affected.'

 

Hometrack said decline was likely to be focused on the areas which have seen the greatest price rises over recent years.

 

The 0.1 per cent fall in October followed two months of stagnation in house prices

 

/more: http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770

 

- ENJOY the slide.

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LandRegistry prices are THE MOST DELAYED.

Chances are, those are transactions where prices were agreed in June or July.

 

Agreed.Future expectations are going to roll over into a repeat of the mid 1970's. Difference then was that the fall in values was masked by high wage inflation rates. A 30% fall was suffered in REAL terms but the general population was fooled. This time round people wont be so fortunate as wages are barely rising (except for the Public Sector) and food and energy prices are rising. The stars are not in an alignment that will lead to a happy ending for many people, and that probably includes the folks who paid £2.75m for the end of terrace house;it would have been smarter to rent!

Sincerely

Hogwild

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...The stars are not in an alignment that will lead to a happy ending for many people, and that probably includes the folks who paid £2.75m for the end of terrace house;it would have been smarter to rent!

 

RIGHT. from the "Major Transformations" thread:

 

Some possible implications the Meyer talks about:

 

a/ In the US, people are beginning to retire at a massive rate, this may bring:

 

+ A possible mass selloff of 4 bedroom homes, with rising demand for condos

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MYTH EXPLODING ... so Central London is different, is it??

 

Whodathunkit?:

the wealthy are losing confidence in bricks and mortar as an investment. There has been a big drop in City bonuses...

 

http://business.timesonline.co.uk/tol/busi...icle2759795.ece

 

QUOTE

House prices fell for the first time in two years this month, sending a shudder through millions of homeowners already hit by rising mortgage repayments and more expensive borrowing.

 

The outlook for homeowners is likely to worsen with news that the wealthy have lost confidence in bricks and mortar as an investment. There has been a big drop in City bonuses being used to purchase prime property in Central London and in the popular second-homes areas, triggering fears of price falls in the South West, East Anglia and the Cotswolds.

 

Today’s figures will increase the anxiety of millions who have banked on ever-rising prices to fund their old age and pay off mortgages. To add to their misery came a new warning from America that Britain would not escape the fallout from US as the property market there went through its worst recession in 16 years. Robert Shiller, professor of economics at Yale University, who forecast the end of the dot.com bubble in March 2000, told The Times that the slow-down would start in London.

. .

The amount of City bonus cash flowing into prime London property and into second and third homes will fall by 60 per cent to £2 billion in the coming year, according to one of the country’s largest property agents. This will lead to at least six months of falling prices in Central London, predicted Savills, the estate agency, which specialises in selling houses worth £1 million and more. Also at risk are the Cotswolds, the South Westand parts of Norfolk, Suffolk and Kent.

 

Savills gave a warning that the top end of the property ladder and the second-home market could be hit hardest because financiers, accountants and lawyers no longer saw property as a good buy and were more likely to put money into hedge funds.

 

Meanwhile, the Centre for Economics and Business Research predicted that the credit crunch, combined with five interest rate rises in just over a year, would cause prices to fall for the rest of this year and into early 2008. But it suggested that the housing market would shrug off the difficulties within a year and that by 2010 annual growth would be back at up to 7 per cent because of an imbalance of supply and demand.

 

= =

 

Now where are those exaggerating sacks of VI spin when the reality comes spilling out??

Some EA's should now be chewing some tough crusts of humble pie on this news.

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