www.nytimes.com/2010...relon.html

v nadaljevanju copy-pasteam mnenje (debato) skupine ekonomistov iz celega sveta, predvsem o cenah nepremičnin v VB. meni je diskusija zelo zanimiva, ker lahko iz nje do določene mere potegnem zaključke o cenah naših nepremičnin, na drugi strani pa mi ponuja to, kar mi slovenski nepremičninarji ne ponujajo - analizo situacije z upoštevanjem ključnih makroekonomskih podatkov in pričakovanja, ki niso nujno samo napihovalna. sicer sta prva dva vpisovalca zaposlena v real estate advisory firmi, ki deluje globalno, četrti je CIO asset management firme iz Avstralije, za tretjega pa nisem prepričan. upam,da je vpis zanimiv. aja, začne se in medias res...:)

1. Interesting point you made on the UK real estate market. I would agree that there has been something of a recovery in both the residential and commercial real estate markets in the UK and of course QE will have been part of the reason. However, there are some other points, just briefly:

The commercial market in the UK is still significantly influenced by buyers from overseas - these guys, German pension funds etc have come back to certain prime sectors of the UK real estate market because there was a much more rapid adjustment in yields than anywhere else in Europe - property in London for example was historically good value, and particularly compared to property in many of the other major cities in Europe where yields did not move as much. Then of course there was the added sweetener of a good Euro/Sterling rate. Another factor in the commercial market has been the relative lack of good quality stock coming on to the market at times, pushing prices for the investible stuff.

The lack of stock has also been an issue in the residential market. People's perception of selling at the bottom of a house price crash seems to have deterred a few potential sellers, stabilising prices somewhat. Of course there has been some benefit to resi buyers from lower interest rates - but while interest rates are a bit better, actually getting a mortgage is still not much easier than a year ago. In the main I think QE and lower central bank rates benefited existing borrowers who, if they were lucky enough to be an interest rate tracking mortgage, either spent a bit extra, or more likely saved a bit extra.

My personal opinion on the date of the rise in UK bank rate is that if the BoE can hold out for a few months and see through what they believe to be a short term rise in inflation (as they have previously said they would), they will then be too close to the May elections to do anything controversial unless inflation really starts to power ahead (I'm not necessarily saying that won't happen). Following the election, they may need to let the dust settle and analyse the severity of any radical public spending cuts that may get announced, before they make any further interest rate decisions. So while I don't necessarily discount the chance of small rise in interest rates by the end of this year, I currently think the first move would come later than May.

2.
Just a few points to add to above post.
I think the rise of the UK inflation is basically just lagged indicator which demonstrate rise of commodity prices as well as weakness. But if commodity prices stabilise (and sterling has started to recover) these will not have a significant impact to the UK monetary policy.

In respect of the real estate yields, above comment is true but it gives only a partial picture of what is fully going on in the property market. Will comment about yields refers to the prime properties but the hidden part of the picture is that the spread between prime and the lower grade commercial property is at historically high levels.

The top of the London property market will always be desirable but I think 2010 will also be a tough year for real estate although in a different way than 2009.

The lack of the residential stock in London will remain an issue as long as, in my opinion, a major investment into infrastructure (fast trains in particular) is made, so that getting to London from its outskirts is faster and cheaper.
The English middle class does not like to live in modern houses and building millions of sq feet of New housing in London will not rectify this.

The space problem in London is probably not so much the lack of supply outright, but rather a lack of right type of supply that is the period houses.

So the only way is to make journey from Englishman's Georgian, Victorian, or Edwardian houses that are in London's outskirts to work quicker but people on general are not too bothered with whether they live in London or in outskirts.

The most recent data from the BoE is showing that lending is recovering but the process to a full recovery will be slow. Besides do we any more have a capability to recognise that he full lending recovery is achieved?

The tough conditions in mortgage market will surely remain for a while but things seem to be picking up. This makes any further QE unlikely and the reversal of policy may actually be possible. The reversal of QE could be a proxy for interest rate rise so this may be implemented in order to avoid the proper rate rise.

3.
London real estate, my favorite topic! Sorry for the rant below but...

I live in Central London and would love to buy a house. My personal
observations are the following:
- the deposit you have to put down is too big for me (20-30% of the
house price)
- house prices didn't really come down much (they are at 2008 levels)
- The number of transactions is probably half of what it was pre-crisis
- The only buyers out there are rich people (a lot of cash buyers,
and a lot of them from outside the UK) or people that have help from
their parents. Key data point is the age of the average first buyer
that does not have parental help: 37 years old!
- interest rates on new mortgages are not that low - almost twice as
in Portugal (where you can get rates below 2% as mortgages are priced
based on a small spread over 3 month Libor)

I think the real reason the British middle classes are living out of
London is because it's too expensive for them to have a decent
standard of living. The Victorian/Georgian houses that you talk about
cost around 1 million and ups in the decent parts of London, the
public/free schools in London are the worst in the country and a
decent private kindergarten costs 1,500/month and more. The cheapest 2
bedroom in a decent part of town is around 350,000 and is crappy and
in former social housing....

The median salary in the UK is 26,000 so you can imagine that having a
decent life in London is very much out of reach for the average
working Brit.

Also anedotically, inflation is probably driven by imports and the
weak pound. British retailing, restaurants, etc., seem to be on a
permanent sales season since the end of 2007... I don't see a lot of
businesses out there with pricing power.

So, overall, I feel the UK is still far from being an healthy economy.

4.
This is that weird thing. The lending standards are now pretty tight in London as described. Deposits are large enough that the customer has a lot to lose - and rates are relatively high. These are standards that would have suited a 1985 lender as well as a 2005 lender. [Believe me lending standards were MUCH looser only a few years ago...]

And YET the house price has not dropped massively (at least if measured in GBP!).

The simple story I have in my head - which is that bubble house prices are the flip side of bubble lending practices - a story that was true in California or Arizona - is not so obviously true in London or in Sydney.

I am massively bearish the price of my own home - and yet it still goes up without too obvious bad lending. (I live in Bronte - the most fashionable suburb - though not the most expensive - in the most expensive city of Australia. I do not need to cross a road to get to either Bronte, Tamarama or Bondi beaches).

In the sand states of America (home of the worst crash) the property price simply tracked lending standards. This is NOT true in London or Sydney. [Incidentally Sydney housing has been strong no matter what currency you measure it in - so the London excuse of it being weak in hard currency does not apply.]

I don't like it when my models don't accord with reality on the ground. Makes it hard to invest from the model. Besides - house prices that hang in the air in much the way that bricks don't bug me.