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QUESTION: If the UK is "in Austerity", then why are London property prices booming ? This disharmony struck me on my recent trip to the UK. And the puzzle was also mentioned at the beginning of a recent podcast on FBB http://commoditywatc...ullish-on-gold/ Any thoughts on why this might be happening? How long can it last?

Meantime, thanks to these sensational prices from Rightmove, the Delusion Index has made a new Notional high - at 149.9% In this case, it is Oct.Rightmove to Sep.Haliwide == Miles Shipside, director of Rightmove, said: "Sellers need to be mindful that the window of opportunity to sell before the traditional winter slowdown is a narrow one, and they risk being left out in the cold for months until the spring market thaw." Rightmove said that its own research found that fewer than two in five would-be buyers say they will arrange to visit a property they believe is over-priced, even if it matches their criteria.

Remember this?

The Oct. Rightmove rise was GBP 7000 or so in several previous years The Greater London jump this month was even bigger, and took it to a fresh high Mo. : Rt'mov : London : Rest of UK %chg / Nt'wide : H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx 2012 J. : : 224,060 : 438,324 : 146,967 - 0.28% / 162,228 = n/a = 160,907 158,879 : £160,554 : - 0.16% :139.6% : F. : : 233,252 : 449,252 : 149,658 +1.83% / 162,712 = n/a = 160,118 158,897 : £160,805 : +0.16% :145.1% : M : : 236,939 : 455,159 : 151,853 +1.47% / 163,327 = n/a = 163,803 163,419 : £163,373 : +1.60% :145.0% : A : : 243,737 : 464,944 : 152,815 : +0.63% / 164,134 = n/a = 159,883 161,180 : £162,657 : - 0.44% :149.8% : M : : 243,759 : 469,314 : 152,803 : - 0.01% / 166,022 = n/a = 160,941 161,785 : £163,904 : +0.77% :148.7% : J. : : 246,235 : 477,440 : 153,332 : +0.35% / 165,738 = n/a = 162,417 163,240 : £164,489 : +0.36% :149.7% : Jl : : 242,097 : 460,304 : 151,633 : - 1.11% / 164,389 = n/a = 161,094 162,619 : £163,504 : - 0.60% :148.1% : A : : 236,260 : 454,875 : 150,173 : - 0.96% / 164,729 = n/a = 160,256 160,200 : £162,465 : - 0.64% : 145.4% : S : : 234,858 : 456,237 : == n/a = : -- n/a -- / 163,964 = n/a = 159,486 160,437 : £162,201 : - 0.16% : 144.8% : O : : 243,168 : 478,071 : == n/a = : -- n/a -- / ========================================= mom:+3.54% : +4.79 % : Est. DI : : 149.9% / +0.??% = n/a = :- 0.48% : +0.15% : - 0.16% : Up there with Barratt / BDEV .. update

The Oct. Rightmove rise was GBP 7000 or so in several previous years The Greater London jump this month was even bigger, and took it to a fresh high Mo. : Rt'mov : London : Rest of UK %chg / Nt'wide : H-oldSA Halif.SA Hal.NSA: HNindex : mom : DelusIdx 2012 J. : : 224,060 : 438,324 : 146,967 - 0.28% / 162,228 = n/a = 160,907 158,879 : £160,554 : - 0.16% :139.6% : F. : : 233,252 : 449,252 : 149,658 +1.83% / 162,712 = n/a = 160,118 158,897 : £160,805 : +0.16% :145.1% : M : : 236,939 : 455,159 : 151,853 +1.47% / 163,327 = n/a = 163,803 163,419 : £163,373 : +1.60% :145.0% : A : : 243,737 : 464,944 : 152,815 : +0.63% / 164,134 = n/a = 159,883 161,180 : £162,657 : - 0.44% :149.8% : M : : 243,759 : 469,314 : 152,803 : - 0.01% / 166,022 = n/a = 160,941 161,785 : £163,904 : +0.77% :148.7% : J. : : 246,235 : 477,440 : 153,332 : +0.35% / 165,738 = n/a = 162,417 163,240 : £164,489 : +0.36% :149.7% : Jl : : 242,097 : 460,304 : 151,633 : - 1.11% / 164,389 = n/a = 161,094 162,619 : £163,504 : - 0.60% :148.1% : A : : 236,260 : 454,875 : 150,173 : - 0.96% / 164,729 = n/a = 160,256 160,200 : £162,465 : - 0.64% : 145.4% : S : : 234,858 : 456,237 : == n/a = : -- n/a -- / 163,964 = n/a = 159,486 160,437 : £162,201 : - 0.16% : 144.8% : O : : 243,168 : 478,071 : == n/a = : -- n/a -- / ========================================= mom:+3.54% : +4.79 % : Est. DI : : 149.9% / +0.??% = n/a = :- 0.48% : +0.15% : - 0.16% : Up there with Barratt / BDEV .. update

"House sellers have raised their asking prices by more than £8,000 this month as a shortage of homes for sale restricts choice in the market." That's a seasonal thing - that happens every October, and usually gets given back

Two opposing trends: + Wealthy foreigners buying properties they live in part-time, if at all (Visit Mayfair sometime, and you will see what I mean) + People sharing more, or moving in with parents, to save money

Housebuilding "disaster" - per Evening Standard ====== + Worst month for housebuilders since Dec, 2012 + Worst month for commercial builders since Feb. 2010 + House prices in shock 0.4% September fall, -1.4% down on a year ago + The longest continuous decline (in Orders) for three years ====== http://standardonline.newspaperdirect.com/epaper/viewer.aspx

London as "a gate community" - Mind the Gate, whoops: The Gap A different story The stagnation of average UK house prices disguises the fact that they have been falling sharply in some parts of the UK, particularly in the North of England and the Midlands. It is a different story in London. The capital can give the impression of being a gated community, with prices at record levels due to the influx of foreign money seeking a safe home away from the troubled eurozone economies of Greece, Spain and Italy. But even in London there is a lot of variability, according to Simon Rubinsohn of the Royal Institution of Chartered Surveyors (Rics). "For the last 12 months places like Kensington and Chelsea and Westminster have seen double-digit increases, while in parts of East London, such as Redbridge and other boroughs out that way, prices have fallen," he says. "So there might be a 15% gap in terms of the change in the last 12 months between the weaker and stronger parts of London," Mr Rubinsohn points out. http://www.bbc.co.uk/news/business-18722069

I have a nice collection of Gold related exposures, including Taels. Despite all the negative comments here, options on GLD have served me very well, with some of the profits channelled into various more physically backed Gold markers - including GoldMoney, the HK-stored Gold etf and Taels The huge advantage of GLD is the big liquidity in the options - and I am much more comfortable trading GLD calls than being straight long GLD. Different strokes for different folks! And I do hope people here can see the merits of GLD calls (and puts) even if they do not use them It is good to see G-Finger checking in here

NOT IMPRESSED ! The brokers of Luxury London properties talk a good game, But when I look at the charts and prices, I am unimpressed / Key : Red= Rightmove, Greater London, Green= Knight-Frank Prime Central London / THEIR COMMENT (excerpt): Luxury London property price rise in September with a year on year increase of 10% High-end London property prices in September rose at their fastest rate in three months, property firm Knight Frank said today. According to the “Prime Central London Index” compiled by the London-based firm, the price of the capital’s most expensive properties climbed by an average of 0.7% since August. Prices in the upper property band have risen by 10% over the last 12 months, Knight Frank said. Knightsbridge, Hyde Park and Marylebone performed the best with an annual growth of more than 14%. “Average prime property values in central London now stand at a new record high, some 15% above their pre-crisis peak in March 2008,” the report said. Prices seem to have not been hit by the March 40% increase in stamp duty for top bracket properties and expected changes on tax rates for homes owned by non-residents. However, the reforms have hurt sales volumes in the £2 - £5million band, which decreased by 20 per cent in the last three months, in comparison to the same period last year. But the drop has been countered by buoying demand in the under £2million tax threshold where sales rose by 23 per cent in the last three months, compared to 2011. Luxury prices continue to be aided by foreign interest, with foreign nationals - namely Russians, Indians, Italians, US citizens – accounting for just over 40 per cent of London homes, purchased for £1 million or more. /source: http://www.londonlov...er/3486.article LOOK AT THE ACTUAL DATA (& the chart above) Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-% 2012 J. : : 224,060 : 438,324 / 432,125 : 5,185.5 : +0.92% : +11.91%: F. : : 233,252 : 449,252 / 435,167 : 5,222.0 : +0.70% : +11.59%: M : : 236,939 : 455,159 / 439,908 : 5,278.9 : +1.09% : +11.31%: A : : 243,737 : 464,944 / 444,850 : 5,338.2 : +1.12% : +11.43%: M : : 243,759 : 469,314 / 448,175 : 5,378.1 : +0.75% : +10.73%: J. : : 246,235 : 477,440 / 451,592 : 5,419.1 : +0.76% : +10.53%: Jl : : 242,097 : 460,304 / 453,683 : 5,444.2 : +0.46% : +10.27%: A : : 236,260 : 454,875 / 456,083 : 5,473.0 : +0.53% : + 9.92% : S : : 234,858 : 456,237 / 459,167 : 5,510.0 : +0.68% : + 9.96% : ================================== mom:- 0.59 % : +0.30 % // +0.68 % : What they do NOT tell you is... + Prices were up +0.68% in Sept. 2012, sure. But that's a normal seasonal movem they were up 0.63% last year + The +9.96% rise over 12 months ago, is part of a slowing growth trend + Rightmove generally leads the Knight Frank index, and their Greater London index has now falled by GBP 21,203 (-4.44%) since its June 2012 peak.

NOT IMPRESSED ! The brokers of Luxury London properties talk a good game, But when I look at the charts and prices, I am unimpressed / Key : Red= Rightmove, Greater London, Green= Knight-Frank Prime Central London / THEIR COMMENT (excerpt): Luxury London property price rise in September with a year on year increase of 10% High-end London property prices in September rose at their fastest rate in three months, property firm Knight Frank said today. According to the “Prime Central London Index” compiled by the London-based firm, the price of the capital’s most expensive properties climbed by an average of 0.7% since August. Prices in the upper property band have risen by 10% over the last 12 months, Knight Frank said. Knightsbridge, Hyde Park and Marylebone performed the best with an annual growth of more than 14%. “Average prime property values in central London now stand at a new record high, some 15% above their pre-crisis peak in March 2008,” the report said. Prices seem to have not been hit by the March 40% increase in stamp duty for top bracket properties and expected changes on tax rates for homes owned by non-residents. However, the reforms have hurt sales volumes in the £2 - £5million band, which decreased by 20 per cent in the last three months, in comparison to the same period last year. But the drop has been countered by buoying demand in the under £2million tax threshold where sales rose by 23 per cent in the last three months, compared to 2011. Luxury prices continue to be aided by foreign interest, with foreign nationals - namely Russians, Indians, Italians, US citizens – accounting for just over 40 per cent of London homes, purchased for £1 million or more. /source: http://www.londonlov...er/3486.article LOOK AT THE ACTUAL DATA (& the chart above) Mo.: Rt'mov : GrLondon : KfPCadj : Kf-PrimeC : MoM% : YoY-% 2012 J. : : 224,060 : 438,324 / 432,125 : 5,185.5 : +0.92% : +11.91%: F. : : 233,252 : 449,252 / 435,167 : 5,222.0 : +0.70% : +11.59%: M : : 236,939 : 455,159 / 439,908 : 5,278.9 : +1.09% : +11.31%: A : : 243,737 : 464,944 / 444,850 : 5,338.2 : +1.12% : +11.43%: M : : 243,759 : 469,314 / 448,175 : 5,378.1 : +0.75% : +10.73%: J. : : 246,235 : 477,440 / 451,592 : 5,419.1 : +0.76% : +10.53%: Jl : : 242,097 : 460,304 / 453,683 : 5,444.2 : +0.46% : +10.27%: A : : 236,260 : 454,875 / 456,083 : 5,473.0 : +0.53% : + 9.92% : S : : 234,858 : 456,237 / 459,167 : 5,510.0 : +0.68% : + 9.96% : ================================== mom:- 0.59 % : +0.30 % // +0.68 % : What they do NOT tell you is... xx

(This fits the 18 year Cycle rather well): From today's SCMP: Home Prices Will Soar to All Time High by 2014 Sales of Hong Kong's new homes could reach record highs -- yes, another record high -- over the next couple of years as developers accelerate releases of residential projects, according to a report in the South China Morning Post. "We see the property up-cycle continuing until the end of 2014 at least," Lee Wee Liat, head of research at BNP Paribas Securities, said to the Post. "Primary-market transaction volumes should remain strong over the next two years, possibly hitting historical highs of 15,000 units and HK$150 billion in each of 2013 and 2014." Like Us on Facebook Lee expects the number of deals in the primary market to reach 13,000 this year with a total value of HK$136 billion, compared to 10,501 deals last year at a total value of HK$133.32 billion. He predicted that home prices would grow another 10 to 15 percent by the time 2014 rolls around. "Developers with the most projects available for sale can capitalise on high property prices will outperform," he said. Agents identified Cheung Kong as a likely outperformer, noting that it had more than 5,300 apartments available for sale until next year. Its major projects include City Point, at West Rail's Tsuen Wan West station, and Lohas phase three in Tseung Kwan O. It was expected to achieve sales revenue of about HK$50 billion if all units were sold, agents said. Cusson Leung, an analyst at Swiss-based investment bank Credit Suisse, said developers would now focus on the primary market. "They are becoming more flexible on pricing and focusing more on asset turnover, and buying power will be absorbed by all the attention on primary projects," he said. Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong said last week the group would not hoard its supply of new flats. "We will put the new projects up for sale once we secure pre-sale consent from the government," he said after the company's final result announcement last week. Victor Lui Ting, deputy managing director, said SHKP planned to release HK$35 billion worth of units for pre-sale for the year ended June next year. Henderson Land and New World are also likely to release more projects from now to next year, compared with their launch programme this year. Lee said the key focus would be on their two joint-venture projects, the 928-unit Double Cove phase one at Ma On Shan and the 2,580-unit The Reach at Tai Tong Road in Yuen Long. More than 400 units at Double Cove phase one have been sold this month. Henderson Land Development also would start to see returns from its redevelopment projects, with five potential launches this year and six next year, Lee said.

(This fits the 18 year Cycle rather well): From today's SCMP: Home Prices Will Soar to All Time High by 2014 Sales of Hong Kong's new homes could reach record highs -- yes, another record high -- over the next couple of years as developers accelerate releases of residential projects, according to a report in the South China Morning Post. "We see the property up-cycle continuing until the end of 2014 at least," Lee Wee Liat, head of research at BNP Paribas Securities, said to the Post. "Primary-market transaction volumes should remain strong over the next two years, possibly hitting historical highs of 15,000 units and HK$150 billion in each of 2013 and 2014." Like Us on Facebook Lee expects the number of deals in the primary market to reach 13,000 this year with a total value of HK$136 billion, compared to 10,501 deals last year at a total value of HK$133.32 billion. He predicted that home prices would grow another 10 to 15 percent by the time 2014 rolls around. "Developers with the most projects available for sale can capitalise on high property prices will outperform," he said. Agents identified Cheung Kong as a likely outperformer, noting that it had more than 5,300 apartments available for sale until next year. Its major projects include City Point, at West Rail's Tsuen Wan West station, and Lohas phase three in Tseung Kwan O. It was expected to achieve sales revenue of about HK$50 billion if all units were sold, agents said. Cusson Leung, an analyst at Swiss-based investment bank Credit Suisse, said developers would now focus on the primary market. "They are becoming more flexible on pricing and focusing more on asset turnover, and buying power will be absorbed by all the attention on primary projects," he said. Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong said last week the group would not hoard its supply of new flats. "We will put the new projects up for sale once we secure pre-sale consent from the government," he said after the company's final result announcement last week. Victor Lui Ting, deputy managing director, said SHKP planned to release HK$35 billion worth of units for pre-sale for the year ended June next year. Henderson Land and New World are also likely to release more projects from now to next year, compared with their launch programme this year. Lee said the key focus would be on their two joint-venture projects, the 928-unit Double Cove phase one at Ma On Shan and the 2,580-unit The Reach at Tai Tong Road in Yuen Long. More than 400 units at Double Cove phase one have been sold this month. Henderson Land Development also would start to see returns from its redevelopment projects, with five potential launches this year and six next year, Lee said.

There's always a risk: + Buy a US-traded etf, and there's a risk that the Gold get confiscated, or the Trustee has replaced some with paper Gold + Buy a HK-traded etf, and you are safe from US government confiscation, but maybe the Chinese will do it + Buy physical gold, and it may turn out to be Tungsten + Buy physical gold, and have it assayed, and you still have to store it somewhere + Put physical gold in a bank safety deposit box, and the bank may confiscate it + Bury your gold in your backyard, and your neighbor may dig it up There's no way to escape from all the risk, so I suggest you diversify

Dimitri Orlov has a sensible idea. He talks about how : + Because of the poor jobs market, children are moving back with their parents, + With a single household: children have little savings, and parents have pensions + The family is being "intermediated" by banks - the parents savings is doing poorly, and children cannot borrow The FAMILY SHOULD DISINTERMEDIATE THE BANKS - and act as their own bank, because the banking system is going to fail them. The parents might consider buying a bigger home, or even a farm or business with their pension money, that would provide a job for the children. This would have a better chance of working out, than "trusting" the banking system

Shipside : http://www.rightmove...tember-2012.pdf ======= Credit-crunch losers include: - Trapped renters: Over half of existing renters state they would like to buy but cannot afford to. Shipside observes: “The inability of the majority of tenants to move out of the rented sector leaves fewer vacancies for the fresh crop of households being formed, who are also struggling to buy. This demand pushes up rents, so tenants lose by not being able to get onto the housing ladder and end up paying more for living where they do not wish to be”. - Mortgage prisoners: People in negative equity or with insufficient equity to fund their next move. Shipside adds: “With property prices in the doldrums, the equity of many existing home-owners has been eroded and, with lenders demanding higher deposits, those affected are unable to escape from their restrictive mortgage predicament”. - Downtrodden down-traders: Those at the upper-levels of the housing ladder looking to trade down due to changing housing needs or a desire to release equity for retirement are finding they outnumber those willing or able to trade up. Shipside comments: “Those trading down are feeling the pressure of the ‘new market’. They had the upper-hand for years, selling to a seemingly endless supply of trader-uppers. Down-traders became accustomed to seeing their equity and potential retirement pot grow, and the current outlook is less rosy”. - Cash-strapped north: While there remain active sectors in the northern half of the UK, the new market norm punishes those with more restricted access to cash. Traditionally there is less access to equity in the north. Shipside concludes: “The challenges for the market are considerable in many parts of the country, but they are even greater in the north with its residents having not recently benefitted from the same equity gains of their southern counterparts”

RIGHTMOVE in September % Change in month % Change Past Year Ave house price Sep HPI -0.6% 0.7% £234,858 Aug HPI -2.4% 2.0% £236,260 Key points New sellers drop average asking prices for the third consecutive month, down by 0.6% (-£1,402) on the month and 4.6% (-£11,377) on the quarter The fifth anniversary of the run on Northern Rock provides an opportunity to reflect on the pre and post credit-crunch property market landscape: - Average price of a property coming to market this September is virtually unchanged on a year ago at £234,858 (+0.7%) - Prices this month also unchanged on five years ago (Sep 2007) at £235,176 – down just 0.1% - In contrast average asking prices in previous five years (Sep 2002 to Sep 2007) saw a 55% rise http://www.rightmove.../september-2012

That's a pity. If the posters their cannot get their minds around the virtues of gold, it is their loss. The move in gold blows away the other ideas there Having said that, THIS SUGGESTION makes sense: Well, paying 4.71% on a mortgage is something you can look at. No reason to continue doing that when you can easily get to 75% loan to value and find a better interest rate. Don't pay it all off, though, you can make more money investing in other ways.

Ray Dalio talks about deleveraging and a lot of other things http://www.alsosprac...her-things.html Ray Dalio, founder and co-chief investment officer of Bridgewater Associates, L.P., discusses global economics. This meeting is part of the Corporate Program's CEO Speaker Series, which provides a forum for leading global CEOs to share their priorities and insights before a high-level audience of CFR members. PRESIDER: Maria Bartiromo Wherein Ray explains to Maria what a bubble is - A bubble that she help to create

12 Sep 12 Prices Fall as Reality Bites Back (Report PDF) Better duck, before something hits you ! "Asking prices for homes on the market in England and Wales retreat from euphoric summer highs, as the stark reality of the UK’s economic woes and rising mortgage costs brings sobriety to the market. Asking prices fell in 8 of the 9 English regions and Wales over the last month."

Make sense, CS. / HERE's an EMAIL EXCHANGE that I had recently with an agent offering London Property / (First My most recent email, responding to the agent's email shown at the bottom) I probably follow the Price data in London as closely as you do. Here are two data sources: http://tinyurl.com/GEI-data http://tinyurl.com/GEI-london Here's a Chart showing the Ratio of Greater London to Haliwide http://imageshack.us/a/img337/8384/grlondtouk.gif Over the last 12 months, I have noticed the following price changes: ==== Haliwide (Halifax/Nationwide) : down - 0.93% (to Aug'12) Rightmove-Greater London : up + 8.81% (to Aug'12) Knight-Frank PC London : up +10.27% (to July'12) If prices are really up "moved significantly across Central London" in the last 12 months, that's an excellent reason not to buy - since I don't want to buy "an Olympic peak." The property I mentioned below was a new one, a 3BR penthouse, 10 minutes walk from Canary Wharf, and a new Cross London station. I decided not to buy for various reasons, the main one being that my partner was not prepared to live in the flat - so I would have needed a tenant. When I went to visit the site (after dropping the deposit), the agent nearby said that the property would have been hard to resell at a profit, and my partner wanted to flip it. I am pretty certain, that we will NOT be buying in so-called Prime London in the near future, because we have a price target, that is only achievable in areas not now considered prime. Even so, I will be looking for proximity to high-paying jobs, and infrastructure spending that is likely to benefit the area in which I invest. At the moment, we are more interested in North America, because we like the pricing dynamics there better. (THAT was written in response to the following one - which was a response to an earlier one, saying I had decided not to buy a property near Canary Wharf, priced at GBP 350 psf, and would not consider paying anything above GBP 500 psf): I appreciate the email. The market has moved significantly across Central London in the last 12 months (see attached). “The London property market has continued to defy gravity since it bottomed out in Spring 2009 after the City banking collapse. Foreign buyers have flooded into London, drawn by the relative weakness of the pound and the capital’s status as a “safe haven” from political and financial instability elsewhere in the world.” The boroughs that are highlighted are where we currently hold stock and are currently in the top 5 strongest boroughs of this year – our research is absolutely right. These are the areas you should be buying in. If you can find a property in Prime Central London for 500 psf you should snap their hand off for it. I look at literally hundreds of properties in Prime Central London and this price simply does not exist.

Greater London prices have SOARED relative to UK as a whole Er, ah... Obviously, there are opportunities for "arbitrage" - moving people and businesses out of London, to save money? How do you do that? You learn from London. Consider what makes it one of the greatest Walkable cities on the planet.