Weekly Property Round Up
Today’s Monopoly Board
Monopoly, that fun game that has been around for 80 years, with games lasting about the same time and usually ending in tears. However, anyone who bought property when Monopoly was first introduced around the 1930s (when it became known as Monopoly), will be laughing at the value of their properties today.
The picture above produced by estate agents firm Hanover, is what London’s property market should look like today on a monopoly board. As you can see, what used to be £60 for Old Kent Road has risen to a staggering £261,499 and Mayfair has jumped from £400 to £3.5 million, interestingly still the cheapest and most expensive streets on the board. If you look closer, you can see how a lot of the streets have moved around the board, Marlborough Street comparatively a lot more expensive today, moving from the orange zone to the green zone.
We can all relate to and love (you know you do) Monopoly, but I think introducing this many zeros to the game might make it that more frustrating. If it ain’t broke….
London is NOT in a housing bubble and prices will remain high for decades
If you are hoping that runaway property prices in London are a sure-fire sign of a bubble waiting to burst, then you are absolutely wrong.
Soaring prices and record low interest rates at 0.5% for nearly six years have made people believe that the market is just waiting to burn out. But according to Reuters, that is wrong. The market conditions and the macro environment are entirely differently to the years that led up to the credit crisis of 2008.
The crux of the issue that Britain’s housing market faces – the chronic housing shortage – has not and will not be resolved any time soon. This means that there will still not be enough houses to go around and fundamentally, demand will always outstrip supply.
So, ultimately this means bad news – London property prices are not going to crash. Yes, they could fall but it is more likely that they will stabilise or grow at a slower rate. Yes, they will hit a ceiling eventually, but that ceiling is likely to be very high.
If you are a first-time buyer, you have to pretty much hope you find a job that pays you quadruple the national average, partner with someone to bulk up your household earnings or wait for a convenient death in the family which will leave you with enough capital to afford to buy your own pad.
That is what we are dealing with here in Britain’s capital. Prices are going stay high until at least 2020 and beyond.