BBC: 'And during the Financial Crisis there were lots of stories about Chinese buyers in their tour buses paying cash for properties. That happened, but it represented a tiny fraction of real estate.
Looking at the data there's serious cause for concern. The pre-referendum home price data indicate that the bubble continued to inflate right up until the referendum. Home prices were up over 8% year over year in June. That's just ridiculous. That's nationally, no less. Did U.K. wages also rise over 8%? Absolutely not.'
Because the property
market remains historically structurally under-supplied, and illiquid [frictional costs are high], changes in market valuations are usually caused by a relatively small amount of transactions.
The government have just recently [April IIRC] slapped an additional 5% stamp duty on investment purchases, whether by locals or overseas investors. I have little doubt that that together with BREXIT uncertainty is going to have an impact. The former is much less spoken about but will have the greater impact IMO. As will the on-going phasing out of mortgage interest relief vs net profit for tax. For a starter rents are going to go up. Increasing frictional costs reduces liquidity, which together with non-discretionary purchases forces prices up. But who wants to be a landlord when you’re treated like a cash-cow to be increasingly milked? This is perhaps why the new tenants [Aussies] who moved into my last remaining rental, my former/future home, effectively compensated for no rent reviews for 2 years, via the sweetener of paying 6 months up front, repeating throughout the term.
By your benchmark there is no credible data since BREXIT. Your gauge would be completions data from the Land Registry. But due to the time transactions take to ‘complete’ and get registered, that data can run on a lag of around 3 months [average].
8% YOY is not that unusual. I recall years when it has been 20% YOY. Structural undersupply of housing, and increasingly rents. Very low interest rates.... blah blah blah.
PNG>BBC: 'All true, but if the United Kingdom is counting on foreign buyers to keep its property market extra bubbly, "good luck with that." That "strategy" didn't work in Spain or in the United States, to pick a couple examples.'
I think the UK government looked at property
investment as an opportunity to levy additional taxes on a then booming sector. But as often seems to happen the legislation took so long to finalise/enact it’s been introduced when tempering the market [as they claim] is probably not required anyway.
The historic investment I know of in say Spain/US has from my perspective been about buying into the holiday-home dream. That’s quite a recent phenomenon for your typical Brit. To illustrate, as a youth I think our family only had two sets of friends who owned holiday homes abroad, and both were far wealthier than us. It was something reserved for the loaded. These days esp. with the broadening of financing options it is a far broader possibility. That said I only know one person who’s family own a property
[‘holiday home’, in France] and in that case his mother comes from that village, and he inherited it via her.
Spain and the US might be a closer parallel with Gold Coast property
being pitched at Asian investors. Good luck renting them out and turning a viable net profit. London (and a few other major UK cities) are quite different, x-ref the historic domestic demand/under-supply etc.