Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Ticks Higher as London Housing Market Crash Looms?

Commodities / Gold and Silver 2015 May 19, 2015 - 03:32 PM GMT

By: GoldCore

Commodities

- London property falls most in nine months in May
- Falls possibly due to pre-election fear of Labour housing policy
- Surge in sterling dampens demand
- Tory victory has led to surge of new sales
- London market still overheated
- Investors look for stores of value


High end London property prices crashed 6.3% in the last month while average prices in the city fell 2.3% – the largest fall in nine months, according to Bloomberg. Prices across the UK slipped 0.1% in the same period.

Gold has been moving steadily higher in the last week as the surging pound began to dip.

Media reports suggest that many buyers postponed closing deals in the run-up to the election due to fears over the implications of a labour victory on the property market.

Ed Miliband had indicated that labour would put a “mansion tax” on properties valued at over £2 million, which may have deterred investors from the market. International investors who, according to The Telegraph make up an entire half of all luxury property purchases in London, also feared “an attack on their non-domiciled status.”

Apparently, the Conservative victory has led to a surge in pent-up buying in the week following the election.

It is also suggested that the surging pound continues to dampen demand for London luxury property. The post-election spike has put a premium of roughly £33,000 per £1 million on properties bought by Americans, Chinese, Russians and investors from the Gulf states.

Eurozone buyers pay roughly €130,000 more today to transfer £1 million to the UK.

The Telegraph reports that Russian property investment in London has largely declined since the rouble crisis began.

It adds that ultra-rich Russians, buying properties valued over £10 million, were still a strong presence in the high end of the London property market.

We believe the London property market in particular to be in bubble territory. The upward movement has been led by the high-end market.

*The fact that high-end property could plummet by 6.3% in a single month – on rumours of a policy change – reflects a high degree of fear in the market.

*We do not believe that the pre-election fear over a Miliband government and a surging pound are the only factors affecting the London property market.

*The woes of the Russian rouble have curbed Russian demand. Lower oil prices have curbed demand from Gulf states. China has cracked down on money being funnelled through tax havens into property in London.

These factors have removed a large chunk of demand and now it would appear prices in the high-end market – which were already bloated – are teetering. Fears over Labour policy may have been a catalyst for the move but we do not believe it to be the main cause.

Bloomberg report that “In London’s most expensive districts, prices plunged 6.3 percent this month to 1.44 million pounds, according to the report. That’s a 7.4 percent drop from a year ago.”

Average house prices in London dwarf those of the rest of the country. London prices average £581,074 – more than 15 times the median salary – whereas the national average is £285,891.

The media have chosen to focus on a reported surge in demand following the reelection of the Tories. The fact that high end prices fell so substantially has been explained away.

This kind of risk-averse exuberance often augurs a crash in a market. Reports gush at how investment from the U.S., India, Brazil and Singapore are expected this year.

This may be so but it has yet to materialise and the absence of a dissenting point of view suggests that caution has been thrown to the wind.

The surge in the price of high-end possessions – such as property in London and in other major cities as well as in high-end art – reflects a desire for stores of value outside of the markets.

High net worth individuals, families and institutions are seeking a store of value for the almost limitless amounts of cash created out of thin air, particularly since the crisis of 2008.

The inflation which has been seen in these markets may spread to other asset classes as investors seek stores of value which have not yet moved into bubble territory.

Among those asset classes, an obvious candidate is gold – history’s most reliable store of value. Investors would be wise to have an allocation of gold at the heart of their portfolio.

When currencies fail gold has always remained as a store of value with which to begin building wealth again.

GoldCore Insight: Is London’s Property Bubble Set to Burst?

Click to read: Gold is a Safe Haven Asset

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,219.65, EUR 1,090.24 and GBP 785.31 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,228.15, EUR 1,079.41 and GBP 784.12 per ounce.

Gold climbed $0.40 or 0.03 percent to $1,225.30 an ounce on yesterday, and silver rose $0.15 or 0.86 percent to $17.68 an ounce.

Gold pulled back after a five day rally as traders cashed in gains and the dollar grew one percent stronger against other currencies.

Gold in Singapore near the end of trading slid 0.4 percent to $1,220.93 an ounce.

U.S. Federal Reserve President of Chicago, Charles Evans, said yesterday that the central bank could look at a rate hike in June if the economy was strong enough.

Gold’s direction will be guided from tomorrow’s release of the U.S. FOMC minutes from its last meeting.

Gold ETFs have seen outflows and the SPDR Gold Trust has seen its holdings dip to a four-month low of 718.24 tonnes.

Greece is close to a cash-for-reforms deal with its European Union partners and the IMF that would help it meet debt repayments next month, the country’s finance minister said yesterday. However, the debt-ridden country is not out of the woods yet and there is still an underlying chance of an exit from the eurozone.

In late European trading gold is down 0.38 percent at $1,219.50 an ounce. Silver is off 1.62 percent at $17.41 an ounce and platinum is also down in U.S. dollars 0.59 percent at $1,165.20 an ounce.

This update can be found on the GoldCore blog here.

Mark O'Byrne

Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

IRL +353 (0)1 632 5010
UK +44 (0)203 086 9200
US +1 (302)635 1160

W www.goldcore.com

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'

GoldCore Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules