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London's Crazy Housing Market Just Broke A New Record Level
Topic Started: 16 Sep 2014, 11:03 PM (1,688 Views)
peter fraser
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London's Crazy Housing Market Just Broke A New Record Level, And No One Thinks It's Sustainable

Mike Bird
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London’s absurd house price growth has just sent the average house price to £514,000 ($830,000), according to Office for National Statistics figures published this morning. The new number comes after price growth of 19.1% in the year to July. It’s the first time the average price has spiked above half a million pounds.

Prices are now 39.7% above their pre-financial crisis peak, after an astonishing climb in recent years, even while the UK economy has been struggling.

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Wales, Scotland, Northern Ireland and the north of England’s housing markets are still relatively depressed, with prices below 2008 levels, widening the gap between the increasingly wealthy capital and the lagging regions.

The price to earnings ratio, a key measure of how affordable housing is, has climbed to 10.43 in inner London last year, according to the Greater London Authority. In the north east of England, the average price is only 4.98 times the typical income.

Howard Archer, the chief UK economist of research consultancy IHS Global Insight, said in a note that despite the soaring prices, “some restraint on buyer interest is expected to come from more stretched house prices to earnings ratios,” which could put the brakes on further rapid acceleration.

The part about all of this that’s really scary is that nobody thinks it can last in the long run. UK workers, even those in London, just don’t have the income to continue buying houses at prices that are nearly 11 times their salaries. BBC economics editor Robert Peston tweeted, “To state the blinkin’ obvious, that’s unsustainable.”

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Edited by peter fraser, 16 Sep 2014, 11:04 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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van
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London might match Sydney's prices soon.
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hoofarted
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All the money printin' gotta go somewhere... Hey... can someone map that over the Sydney house price growth? If they map, could Sydney be in the same situation?
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Sydneyite
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van
16 Sep 2014, 11:10 PM
London might match Sydney's prices soon.
Their figures include (and are mostly) flats/townhouses etc I think you will find, so they are already *well* past Sydney's "all dwellings" median price of $515k (as per ABS data). Also, when you consider the average wage in the UK is only GBP26.5k (AU$48k) compared to AU$75k here, the difference is even more stark.

London is *way* more expensive than Sydney.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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hoofarted
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Sydneyite
16 Sep 2014, 11:42 PM
London is *way* more expensive than Sydney.
Keep telling yourself that.
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peter fraser
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hoofarted
17 Sep 2014, 07:42 AM
Keep telling yourself that.
Even at the current conversion rate the median London house price converts to $930,000 AUD.
When the UK pound rises to $2 to the pound, which is where it would be if the UK hadn't been madly printing money, then the median price would be $1,040,000. If it rises back to $2.40 where it was prior to the GFC then the price would convert to $1,280,000 AUD.

Sydneyite is correct that the median wage is lower than ours, so I think that it's you who should keep reassuring yourself, because you don't have one single fundamental to stand on.
Any expressed market opinion is my own and is not to be taken as financial advice
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Jimbo
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Sydneyite
16 Sep 2014, 11:42 PM
Also, when you consider the average wage in the UK is only GBP26.5k (AU$48k) compared to AU$75k here, the difference is even more stark.

People in London don't earn UK average wages to start with.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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newjez
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Sydneyite
16 Sep 2014, 11:42 PM
Their figures include (and are mostly) flats/townhouses etc I think you will find, so they are already *well* past Sydney's "all dwellings" median price of $515k (as per ABS data). Also, when you consider the average wage in the UK is only GBP26.5k (AU$48k) compared to AU$75k here, the difference is even more stark.

London is *way* more expensive than Sydney.
Can you spot the obvious error?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Jimbo
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peter fraser
17 Sep 2014, 07:59 AM
Even at the current conversion rate the median London house price converts to $930,000 AUD.
When the UK pound rises to $2 to the pound, which is where it would be if the UK hadn't been madly printing money, then the median price would be $1,040,000. If it rises back to $2.40 where it was prior to the GFC then the price would convert to $1,280,000 AUD.

The current conversion rate is the current conversion rate. A return to $2.00 or $2.40 is just speculation.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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peter fraser
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Jimbo
17 Sep 2014, 08:12 AM
The current conversion rate is the current conversion rate. A return to $2.00 or $2.40 is just speculation.
I don't know one Brit with savings back in the UK who hasn't been waiting and waiting to bring their money across after the exchange rate "normalises" and that includes Hoofa - Lol.

Any expressed market opinion is my own and is not to be taken as financial advice
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