Our Opinion: 2015

Property Bubbles emerging

Our strategic partner, UBS, today issued a report on global house prices. It underlines the fact that when inexpensive financing is combined with a positive long-term economic outlook, property prices eventually uncouple from the real economy. In some of the world’s leading financial centres, prices are now fundamentally unjustified and the risk of a bubble has risen sharply.

In London, average house prices have soared by almost 40% since January 2013, making it one of the most expensive cities in the world based on price-to-income levels. London’s real estate market is now totally decoupled from the rest of the country where, in real terms, prices are still 18% below the previous peak in 2007. London is up 6%.

The increase is understandable given continued foreign demand, as so much of the world remains unstable. Domestic buyers have helped too as government schemes such as ‘help to buy’ has stoked demand.

UBS advise caution in the London market. It also concludes that a price correction seems imminent in Hong Kong and that Singapore is sensitive to unexpected economic shocks.

Is there a city it notes as undervalued? Yes. Chicago.

Property remains the biggest single asset most people hold.Purchase is, of course, not always an investment decision, but more usually a lifestyle one.  Whatever the reason, it is clear that buyers require the highest quality of advice when selecting and researching property. Knightsbridge Wealth has teamed up with a number of property professionals to ensure they make the right choice, regardless of market conditions.