“The dinner-party perception that prices have always gone up is potentially a reason to worry. All that needs to happen is for investors to think price outcomes are asymmetric, with low upside and large downside.”

“The dinner-party perception that prices for prime London property have always gone up is potentially a reason to worry. That everyone strongly believes they will continue to go up further is a cause for anxiety. Still, timing any turn is hard and it has long been a losing battle to call an end to the froth in this market. But perhaps we are close to the turning point. … There are many arguments for the rise and rise in prices. Most, however, are plain wrong. … There are multiple catalysts to suggest that 2015 is the turning point (for London). The most significant are: impending higher interest rates, tighter macro-prudential policies and a deepening politicisation of the housing issue. Again, all that needs to happen is for investors to think price outcomes are asymmetric, with low upside and large downside.”
Deutsche Bank, Oct 2015

“Owning a house on Pepys Road, the fictional London street in John Lanchester’s novel Capital, “was like being in a casino in which you were guaranteed to be a winner.” Property prices in the city’s well-heeled districts today suggest the great lotto of London property has continued unfettered, to the point that even such fictional accounts seem understated. Prime London real estate has been going up for so long that new peaks are no longer news. In fact, any decline is a buying opportunity – or so everyone has come to believe.”
Deutsche Bank, Oct 2015

“When inexpensive financing is combined with bullish expectations, real estate prices eventually uncouple from the real economy. We have seen this in the current cycle, particularly in the world’s leading financial centers, where housing prices are now, in many cases, fundamentally unjustified. The risk of a real estate bubble in these cities has risen sharply. 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.”
– Claudio Saputelli, UBS head of global real estate, Oct 2015

7 responses to ““The dinner-party perception that prices have always gone up is potentially a reason to worry. All that needs to happen is for investors to think price outcomes are asymmetric, with low upside and large downside.”

  1. UBS global real estate bubble index

    Bubble trouble for London Homes?

    • 5 Gurney Dr, London – (1996-2013) 17 years price went up almost five-fold

      17a Dollis Avenue, London – (1996-2007) 11 years price went up nearly four-fold

      They were sold before and after SH shipped his BC buddy to London as his royal emissary.
      The current prices would be much higher, if these houses were for sale today. All things real estate have been pretty and rosy for over two decades. The investment flourishes and has little downside when comparing to retail businesses that eventually went belly-up. So “Urquhart” has no reason to stop the break.

  2. One week into Liberals “New Era”, CMHC is blabbering non-stop.

    “House prices overvalued in 11 of Canada’s 15 biggest cities, CMHC says
    Overvaluation may not be a problem in just Toronto and Vancouver”
    http://tinyurl.com/qc7ujvc

  3. Here is some perspective for everyone. Globe and mail just reported that canada gave away 300k, that’s right 300k, 10 year visas last year to Chinese citizens. These are visas that allow a person to stay in the country for up to 6 monthes a year for 10 years. So rather than waiting for years in the iip, the processing times for these super visas are much shorter. I will give you two guesses on where most of these people end up. This happened under one of the most xenophobic regimes in the history of Canada. I wonder what would happen under one of the most Chinese friendly parties in power.

    • The “10-Year Visa” is easier to obtain than the “Super Visa (10year)”. Visitors are given a six-month stay in Canada, and they can apply an extension of stay for up to six months each time.

      The “Super Visa” allows parents and grandparents a two-year stay per visit, and up to a two-year stay for subsequent visits so long as their security bond, health insurance and physical examination paper are up-to-date.

      I am sure they are not paid when baby sitting, or ransacking the neigborhood recycle bins for empty bottles. Yet some countries ban them for no reasons
      http://tinyurl.com/qbffqcx

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