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London house prices most overvalued in the world, says UBS watch

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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


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    http://www.telegraph.co.uk/finance/p...ime=1446138549
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    "overvalued" okay yes they are overvalued when compared to other parts of the nation, but people still buy them, so you could argue that they aren't overvalued , because if they were wouldn't people stop buying them?

    People will only pay for what they think something is worth
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    (Original post by TheNote)
    "overvalued" okay yes they are overvalued, but people still buy them so they can't be that overvalued.
    LOLOL
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    Editedfor clarity
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    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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    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
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    (Original post by ineedtorevise127)
    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
    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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    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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    (Original post by ineedtorevise127)
    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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    [/QUOTE]

    The average rent for the uk is just under 800 pounds


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    My bad I meant London
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    (Original post by Bill_Gates)
    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/p...ime=1446138549
    Ah I saw this yday. Personally, I hope the bubble pops in 5-10 years time, cos then..cheap property, ripe for the plucking!
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    (Original post by paul514)
    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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    There'll come a point when nurses, doctors, cleaners etc... can't get to the capital and when people are effectively forced out of their homes.

    The market is going to crash, but the question is when.
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    You need over half a million quid to buy a 3 bed terrace in an inner London borough these days.
    Crazy times.
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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.
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    (Original post by Howard)
    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.
    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.
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    (Original post by paul514)
    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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    Average house price in London is 500k not 250k...
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    (Original post by Bill_Gates)
    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)
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    (Original post by Howard)
    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.
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    (Original post by Bill_Gates)
    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.
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    (Original post by Howard)
    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.
    I know everyone is pretty crazy about finance deals over there for literally everything! cars are a big thing. But i just think if a downturn does occur Canada would feel it harder than say the UK. Even the central bankers are saying a 20-30% fall is not out of the question for property.
 
 
 
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