Housing bubble forming in London, warns Ernst and Young

3 February 2014                   http://www.bbc.co.uk/news/business-26006214

The London housing market is exhibiting "bubble-like" conditions, economic forecaster Ernst and Young has warned.  It says the average price in the capital is expected to reach around £600,000 by 2018, 3.3 times the price in the north-east of England.

Asset-price bubbles occur after swift price rises set values at unsustainable levels, which then collapse.  Meanwhile, the independent think tank Civitas says curbs should be placed on overseas buyers of London property.

Civitas says these are needed to rein in "rampant" house price inflation.  Recent official figures from the Office for National Statistics showed average property prices rising strongly across the country.

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Prices were 5.4% higher across the UK in November, compared with a year earlier, but were increasing by more than twice that - 11.6% - in London.

Civitas's report says the UK property market is being used as an investment vehicle by the global super-rich while hundreds of thousands of younger residents are being priced out of the market and rents are eating into more and more of people's salaries.

The think tank says that non-residents of the UK should only be allowed to purchase a property in London if that investment will add to the number of homes, under a system similar to that in force in Australia.

There in Australia, non-residents are not allowed to buy an existing home but may be allowed to buy an unoccupied new dwelling, so long as they can satisfy the authorities that the housing stock has increased.

But there is no regulatory control here, no oversight in bad lending practices, no will to protect consumers and the Economy.  This email address is being protected from spambots. You need JavaScript enabled to view it.