London house prices most overvalued in the world, says UBS

"overvalued" okay yes they are overvalued, but people still buy them so they can't be that overvalued.

I heard in 5 years the prices could reach over £750k on average. Feel sorry for ordinary people even those with good paying jobs are finding it a struggle e.g. earning £70k

Very true not to mention rents will soon probably go well over £2k a month currently I think average is around £1500 a month. Paying over £20k a year on rent is just... Not everyone earns over £20k as well so many will be refused rent or have to share between 5-6 people. Which is not always ideal e.g. cramped conditions, private space etc...




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Bank warns inflated prices are a bubble at risk of bursting with prices decoupled from incomes, and says new investors should expect no medium- or long-term gain


Link:
http://www.telegraph.co.uk/finance/property/house-prices/11963302/London-on-course-to-become-next-house-price-bubble-fatality-warns-UBS.html?utm_campaign=Echobox&utm_medium=Social&utm_source=Twitter#link_time=1446138549

Nearly all property in the uk is over valued by quite a lot especially the further south you go in England.

However a bubble will not burst until people aren't willing to pay those prices and that shows no sign of stopping. I think this bubble will get much bigger


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They might be some of the most expensive in the world but that doesn't mean they are the most over-valued. Value is a function of supply and demand and the fact that London house prices are de-coupled from incomes is irrelevant. Demand is being sustained by foreign investors and cheap credit, not wage increases.

Indeed it won't reach 750k from 250k in five years it is more likely to be something like 325 or 350 but when you then look at popular areas in the cities or traditional popular areas the prices could be easily double...




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lol they are the most over valued as they don't correlate with wages i.e market forces. Any insight on the Canadian market? i hear it's quite hot mostly due to Chinese money flowing in like mad!

Canada a lot more attractive for Asians now.

It's a bit of a mixed bag to be honest!

The Canadian market is in fact pretty hot in terms of national averages but localised markets are faring quite differently depending on where you are in the country and are still skewed by what's going on in Toronto and Vancouver and a few other places.

There's a lot of spillover. As Toronto became more expensive people moved to Mississauga. As that become more expensive people moved further out to Kitchener (where I live). It's a big ripple effect on the outside of these major growth markets.

Other cities are cooling down a lot. Calgary (and Alberta generally) is seeing prices slump as a result of a collapse in oil and gas prices. In places like Ft.McMurray, there's a real collapse going on as all the oil sands projects are put on hold and people are laid off. Same in Regina - potash and other commodities are still in a slump so there's continued downward pressure on housing.

Chinese money continues to flow in (Vancouver is still the favorite) but it's slowing down a bit as China itself begins to face its own economic challenges. But on the flip side the Looney (Canadian dollar) is very weak at the moment (it's deflated along with the fortunes of oil and gas) making housing a bargain for some overseas investors (Americans and again Chinese)

True! But i just don't think the dynamics are in place. It's a huge amount of habitable land but only has a population of around 30m? i think the Banks are playing their hand here. I'm guessing a market crash is on the horizon.

Canadian middle class have fared well so far in terms of the global slow down. But it's been mostly cushioned by government policy.

It does have a lot of habitable land but wtf wants to live in Nunavut?

Certainly, they've been talking about a crash for a while now. It could conceivably happen.

People have loaded up on cheap debt and over-extended themselves. Canadian household debt has never been higher - it became all to easy to refinance and spend the money on a new boat or a shiny new Harley and as a consequence the loan to value ratios on a lot of people's homes are pretty alarming (10% equity or less)

As jobs get cut or interest rates begin to rise many of these homeowners will soon find themselves underwater on their mortgages and then we'll see the same jingle mail that the Americans have had since 2008.

There's potential for a repeat of the slump we saw south of the border but the Canadians were always a bit more prudent in their lending practices - we don't have a big subprime market so I doubt it'll be so bad. We haven't overbuilt to the extent they did in the US either.

Canada's problem is that it is essentially a petro-state. Not much different from Russia. It has over-relied for the last decade on digging or pumping stuff out of the ground and exporting it. Unfortunately, we are now in a prolonged commodities slump and Canada is hurting as a result. Luckily, we now have Trudy in office and he's promised to print a bunch of money that SNC Lavelin can spend rebuilding bridges in Montreal (with Mafia supervision of course) so we're saved. Hurrah.