London real estate has been considered very expensive. According to Union Bank of Switzerland, their house prices are the most overvalued in the world.
The Guardian reports that UBS warns that the inflated prices in London are "a bubble at risk of bursting with prices decoupled from incomes, and says new investors should expect no medium- or long-term gain." It appears that there is no slowing down of house prices in the city.
An economist from UBS revealed that among the 15 major cities in the world, London real estate has the most over-valued house prices. Included in the list of these cities that has been examined by UBS Global Real Estate Bubble Index are "Hong Kong, Sydney, New York, San Francisco and Geneva."
Report says that there could be a "substantial price correction" if the conditions for investment deteriorated in London. At this point, it has been noted that London is in "bubble-risk territory." As of the moment, the foreign investment in the area is being given with "the help-to-buy scheme, "alluring" yields for buy-to-let landlords." The increase of population is observed to "have all led property prices in the city to decouple from local incomes."
As of this time, the average cost of a housing in London has already increased to £500,000. As recalled, "the city rated 1.88 on UBS's bubble index, and the report said that between 1985 and 2009, whenever the index exceeded 1.0 a real price correction of on average 30% began within three years 95% of the time."
In a separate report of Management Today UK, it says that the prices real estate property "could crash down to earth with a bang." According to the figures presented by the Land Registry, there has been an increased of 9.6% since last year of October. But the magazine says that there is "a very real danger they could go into reverse soon."
Report says that this over-valued real estate property is chiefly blamed to "high demand because of the high concentration of well-paid jobs."
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