Forum Message

Topic: Property Price Crash
Posted by: Adrian Irving
Date/Time: 30/10/15 08:38:00

Below is an article from the trade press.

True or rubbish?

Good news or bad?

You decide.

Bank warns that London’s property market is world’s biggest housing bubble
Written by: ROSALIND RENSHAW | OCTOBER 30, 2015

A new report warns that London’s property market is at huge risk of being a bubble.

Based on past experience, the bubble is 95% likely to burst within three years and bring house prices down 30%.

Global financial group UBS says that London’s house prices are currently the most over-valued of any major city in the world.

It is one of only two cities – the other is Hong Kong – to be identified as a ‘bubble’ risk in the UBS Real Estate Bubble Report.

The report, which looks at house prices in 15 major cities, warns that London risks a “substantial” price correction and that house prices have decoupled from local income.

It says that London is less affordable for local people to buy than anywhere else, except Hong Kong.

London has the second highest price-to-income (PI), a calculation of the number of years a skilled service worker needs to work to be able to buy a 60 sq m flat near the city centre.

In London, it would take 14 years.

London’s PI has hit an all-time high and is only behind Hong Kong’s.

When cheap financing costs and “bullish expectations” are taken into account, there is a danger of the market decoupling from the whole economy.

London rates 1.88 on UBS’s bubble index.

According to the report, between 1985 and 2009, whenever the index exceeded 1, “a real price correction of an average 30% began within three years 95% of the time”.

In any case it expects London house prices to fall over 10% by the end of next year.

The report says that Sydney, Vancouver, San Francisco, Amsterdam, Geneva, Zurich, Paris, Frankfurt, Tokyo and Singapore are over-valued, while New York and Boston are fair-valued, and Chicago is under-valued.

UBS head of global real estate Claudio Saputelli said that in the world’s leading financial centres, housing prices are now “fundamentally unjustified”.

He said: “While it is not always possible to prove conclusively the existence of a bubble, it remains essential to identify the signs of one early on.”

Entire Thread
TopicDate PostedPosted By
Property Price Crash30/10/15 08:38:00 Adrian Irving
   Re:Property Price Crash30/10/15 10:09:00 Andy Pease
   Re:Property Price Crash30/10/15 10:56:00 John Keeler
      Re:Re:Property Price Crash30/10/15 11:14:00 Ann Williams
         Re:Re:Re:Property Price Crash30/10/15 11:48:00 Cllr Sam Hearn
      Re:Re:Property Price Crash30/10/15 11:46:00 Ken Munn
         Re:Re:Re:Property Price Crash30/10/15 18:01:00 Keith Iddon
            Re:Re:Re:Re:Property Price Crash31/10/15 16:57:00 Anne England
      Re:Re:Property Price Crash30/10/15 11:52:00 Andy Pease
         Re:Re:Re:Property Price Crash30/10/15 12:52:00 Ann Williams
            Re:Re:Re:Re:Property Price Crash30/10/15 13:31:00 Peter Millman
            Re:Re:Re:Re:Property Price Crash30/10/15 13:37:00 Adrian Irving
               Re:Re:Re:Re:Re:Property Price Crash30/10/15 16:08:00 Ken Munn
                  Re:Re:Re:Re:Re:Re:Property Price Crash31/10/15 13:36:00 Brian Coyle
                     Re:Re:Re:Re:Re:Re:Re:Property Price Crash31/10/15 15:55:00 Will Watson

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