Bank warns that London’s property market is world’s biggest housing bubble
Friday, 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.”
We were really impressed by Kremer Signs and how quickly they could get our boards printed and delivered to our board movement providers. All the staff that we dealt with are extremely friendly. I worked closely with Ryan Little and Sam Collins - both very helpful and quick at responding. Thank you for your help - we are super happy with our boards from Kremer Signs.
Georgie Lower
Great customer service
The process of ordering boards for my company New Door Real Estate was so easy from the get go with Kremer Signs! I was kept informed every step of the way by Nick and Ryan and I really couldn't fault them. Great customer service and the quality of the boards is brilliant. We're really happy with them!
Danielle Murray
Delivered in great time
Just wanted to say a big thank you to Kremer Signs (especially Ryan Little) for getting me set up with my dream for sale signs. As a very new independent estate agent, I was reassured with the great customer service and the fact I was looked after from start to finish. Really happy with the finished product which was delivered in great time too. Thanks again, I will be back for more (hopefully soon)!
Holly Price
Great job on our first ever boards
Kremer did a great job on our first ever boards to be produced, so many comments already on how they stand our from the crowd. effortless process, special shout out to Ryan who always kept in contact and helped through out the process. Many Thanks
Daniel Dobson
Huge thank you to Kremer Signs!
Huge thank you to Kremer Signs! Ryan Little has been very responsive and helpful from start to finish. Boards arrived on time and have been a much better quality than our previous boards. This along with the excellent customer service is a win win!!! We hope to continue to work with Ryan and the team going forward. Thank you!
