Carney: I can't stop rising London property prices.
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10:40 am
Feb 17, 2014
THE WALL STREET JOURNAL
Bank of England Governor Mark Carney admitted at the weekend that foreign cash buyers have put London’s property market beyond the central bank’s control.
Mr Carney was at pains to reinforce there’s not a lot the BOE could do about rampant price inflation given that so much of the top end of the market is driven by cash sales, with a big slice of that being foreign money.
And undoubtedly some of China’s latest massive infusions of credit–twice as much was extended during January as December–is also likely to find its way to the British property market, among others.
The accelerating pace of price rises suggests that the London property market will easily achieve price growth of 20.2% in 2014. Only around 55% of the current for sale stock in this region is being marketed below the £600,000 threshold for the Help to Buy scheme. As prices continue to rise, this portion of the market will almost certainly become a minority.
http://blogs.wsj.com/moneybeat/2014/02/17/boe-cant-stop-the-craving-for-london-should-you-worry/
Wow. Almost half of all London homes are now above £600,000 HTB threshold....HTB is rapidly losing any effect on prices in London, if indeed it had any in the first place.
Feb 17, 2014
THE WALL STREET JOURNAL
Bank of England Governor Mark Carney admitted at the weekend that foreign cash buyers have put London’s property market beyond the central bank’s control.
Mr Carney was at pains to reinforce there’s not a lot the BOE could do about rampant price inflation given that so much of the top end of the market is driven by cash sales, with a big slice of that being foreign money.
And undoubtedly some of China’s latest massive infusions of credit–twice as much was extended during January as December–is also likely to find its way to the British property market, among others.
The accelerating pace of price rises suggests that the London property market will easily achieve price growth of 20.2% in 2014. Only around 55% of the current for sale stock in this region is being marketed below the £600,000 threshold for the Help to Buy scheme. As prices continue to rise, this portion of the market will almost certainly become a minority.
http://blogs.wsj.com/moneybeat/2014/02/17/boe-cant-stop-the-craving-for-london-should-you-worry/
Wow. Almost half of all London homes are now above £600,000 HTB threshold....HTB is rapidly losing any effect on prices in London, if indeed it had any in the first place.
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Comments
what part of the "BoE isn't in charge of house prices" doesn't he get?
That's because there have been calls to raise the rate which would be futile anyway in moderating mortgages since a large part of London transactions are in cold hard cash paid in full.
But isn't that because returns are so poor elsewhere; because interest rates are so low?
That and its a relatively safe investment compared to say the stock market, and they get possession of their investment unlike gold/silver.
unemployment down, inflation down, so he changes the rules.
we need the interest rate to go up to dampen down property prices, and to stop shafting savers.
I doubt very much if most (London) houses are bought for cash.
anyway, that's easy to stop. just prevent foreign nationals owning UK property.
Just a query do the banks have the money to fund the rise in interest rates?
Yes bankers bonuses blablabla
Edit - rephrase the question, are our banks solvent enough?
I was amazed that Barclays raised 6 Billion from shareholders, and have now given half (approx) of it away as bonuses.
and giving bonuses as shares will ultimately dilute the value of everybody else's shares.
Not going down that road.
I thought that was what you were driving at.
And it's VERY easy for rich foreign nationals to do just that.
488 properties in Croydon on Right Move are less than £600,000.
42 properties in Croydon on Right Move are more than £600,000.
239 properties in Sutton on Right Move are less than £600,000
51 properties in Sutton on Right Move are more than £600,000.
The majority of properties in Richmond-on-Thames on Right Move are already more than £600,000 (149 to 91). So it all depends where you look. Purley, Surrey - the epitome of the stockbroker belt - has a majority on Right Move under £600,000 (77 to 35) while Woldingham where many of the celebrities live in very large mansions had an annual increase in house value of 1% in 2013. More figures to follow. As for the predicted rises, pure guesswork.
Yes it's only 1 million pounds.
http://www.ukba.homeoffice.gov.uk/visas-immigration/working/tier1/investor/
Unofficially it can be done for less.
Surely there should be some sort of duty of care to hard working savers, pensioners etc..
Properties on Right Move under £600,000 - 705
Properties on Right Move under £600,000 - 506
This is closer to what is stated in the OP.
Lambeth adjoins Croydon and is also closer to Central London. The differences between the prices in the two boroughs are huge as has been stated. What will buy you a two up, two down terraced house in parts of the former could buy you a five bedroom detached house in a leafier, less crime ridden, suburban road in the latter. The stark juxtaposition between these two boroughs is replicated in other inner and outer boroughs across London.
As it happens, it is very possible to travel more quickly to Central London from parts of Croydon than it is from parts of Lambeth - and trains run through the night to the former. For professionals to present Greater London as one thing rather than two things is highly misleading. It should be added that where there has been a vast hike in house value, the areas mostly return Labour MPs. Where they are small, the MPs are all Conservative and Lib Dem.
London Borough of Lambeth -
Properties on Right Move under £600,000 - 705
Properties on Right Move OVER £600,000 - 506
The messages remain the same.
Yes the London property market probably sees more money laundering than anywhere else.
The problem I have is that property is bring bought by people from countries where there are strict rules on foreign ownership. They can buy here but we cannot buy there! So perhaps we should have a tit for tat ban on those nations who won't allow us to buy in their country.
Just because top end London housing is in demand and fashionable at the moment I would have thought makes it risky. What would happen if we get a more left wing Govt, possibly a Lib Lab pact with 50p tax rate and a Mansion tax. Then we get the rich flight we've been promised and hopefully more affordable property.
Not going to affect them. The majority of property sold to foreigners in SW1 these days isnt to live in, its just to park cash. Large parts of the knightsbridge mews areas are like ghost towns at night, no one lives there any more.
There is nothing wrong with the UK attracting inward investment, it’s a sign of confidence in the UK and it can create jobs.....that’s what it’s all about....
No its not, its a sign of a failing economy.
Building factories = good (but rarely happens)
Buying UK assets = bad (means too many pounds notes floating around abroad).
That is exactly what he delivered in Canada - and housing there is now incredibly expensive. Indeed Canada's housing market is considered the most overvalued in the world (using the rent - what income you earn from property - to value). Most Canadian mortgages are also insured by a state corporation - so like in Britain if house prices do fall in the future the taxpayer takes a huge hit which is very very wrong.
He may make the middle aged and older people feel wealthier - but he is the destroyer of the future of young people. Once a banker - always a banker!
We will rue the day we ever allowed him and Osborne near our economy!