June 12, 2007

FLASH: ABN Bank sees housing crash on a global scale, reports UK 50% overvalued, USA 25% overvalued

Oh dear god, this is going to end nasty.


You'll never see this type of leverage, this type of credit stupidity and this type of insane worldwide asset overvaluation again in your lifetime.

The biggest bubble in recorded human history. Followed, of course, by the biggest crash. You think the US is having a nice housing crash? That's just an appetizer. The main course is being prepared here in Europe, where speculation-mad, over-leveraged, housing-crazed Brits have fueled a European-wide real estate frenzy. And then the music stopped.

Get popcorn and settle in. The show is about to start.

ABN fears world housing crash - Soaring borrowing costs could spark a housing slump on a 'global scale', investment bank ABN Amro has warned.

Families have taken on 'unsustainably large' mortgages, leaving them vulnerable to the sharp increases in bond yields and official interest rates seen in recent weeks, wrote economist Dominic White.

Britain is one of the most exposed markets thanks to rampant speculation over the past decade, though it is by no means alone.

Claims that shortfalls in the supply of new homes will lead to an inexorable rise in UK property prices in coming decades have 'as much credibility as Britney Spears' latest comeback,' he wrote.

'The decline in global interest rates has now been largely reversed,' White said. 'Rising real interest rates could result in greater economic volatility. I believe this leaves housing markets vulnerable to a correction on a global scale.'

Although fears for the health of the US housing market have captured headlines, the degree of over-valuation is more 'severe' in Britain, Australia, Spain and Ireland, ABN Amro calculates.

A note by the bank in April found that UK residential property is 50% overvalued, whereas US houses are 25% too expensive.

36 comments:

Still amazed. said...

Yep. Despite analysis and coverage by many analysts and serious research (and just walkign around) it is amazing that you have posters (and even more "serious" media types) that deny there is a bubble or that a correction is now underway. It really is amazing that some deny reality. My point? There are still a few greater fools running around. Yes, there are people in New Jersey and the Midlands in England who still think buying a condo in Miami is a good idea. A denial of reality and fundamentals created this bubble and this same denial will prolong the process of deflation--but deflate it will.............

Anonymous said...

What happens here in Ireland will make the US crash seem minor

Anonymous said...

Buying a condo in Miami is about a false dream for middle-aged middle-class workers of a lifestyle they could never have...has been that been way for every Miami boom generation, nothing to do about money, those kind of dreams die hard and slow...but they die hard.

RAYNLA said...

Time to put down the latest issue of PEOPLE MAGAZINE and dust off your bibles folks!

It was written...

RayNLA

Happy European said...

I live in France, bought in 1998, right before the prices started taking off. In 2002, I thought that prices had lost touch with fundamentals, but they still kept climbing. But since beginning 2006, in the little village I live, one can notice that houses stay longer on the market before, that some will not even sell at all. Of course, I am not looking for a house to sell, so I do not perform a market research, maybe those houses are just insanely overpriced, but my feeling is that most buyers are not willing anymore to go in mortgage slavery for 30 years. Before the boom, a 12 to 15 year mortgage was normal to pay for your house. So prices will have to go down before the market becomes dynamic again. But to what percentage - no clue whatsoever. At least it might take long.

Anonymous said...

Got the popcorn - let's get this going!

Anonymous said...

Okay, the U.S. market is 25% overvalued. But what about the U.S. dollar????

SPECTRE of Deflation said...

`I've Made Mistakes'
Tan Jiong, 33, a security guard in Shanghai's Lujiazui financial district, invested 90,000 yuan ($11,737), equivalent to about half of his savings, in local stocks in March. He said he was ``extremely upset'' by the government's decision to triple the stamp duty but decided to maintain his holdings.

``To sell now would be admitting I've made mistakes, which I can't reconcile myself to,'' Tan said. .......

Everywhere you look we have bubbles, and the Chineese may well blow up first. I'm reminded of 2000 when I read the quote. When China does blow, they are gonna have some mighty pissed off peasants.

Anonymous said...

I thought we weren't supposed to listen to banks. Aren't they all liars and thieves?

So convenient than when ABN or Morgan Stanley says what Keith agrees with he posts it as fact. When they say the opposite he mocks them as shills.

Anonymous said...

Buying a condo in Miami is a good idea if you live in Miami and you want to live in a condo.

I never understood why people would buy a condo in Miami or anywhere for that matter as a vacation property. No matter how nice it is, it would cost less to stay at a 5 star resort once or twice a year than the cost of owning a condo.

Same goes with ski condos, cabins by the lake, etc.

christiangustafson said...

Keith!

Must-see this video clip with Fort Myers FBs!

It will make your day.

Anonymous said...

"FLASH: ABN Bank sees housing crash on a global scale, reports UK 50% overvalued, USA 25% overvalued"

For those paying attention, this has been well known for a while.

http://www.economist.com/images/20061209/CFN615.gif
http://www.economist.com/finance/displaystory.cfm?story_id=8381960

Anonymous said...

Keith,

http://tinyurl.com/2umxry

Benjamin Franklin said...

Am I the only one who doubts those bumbers as being a bit optimistic? In California, the estimates I've seen suggest prices have risen 2.5-3x above the trend line for "non-bubble" appreciation...

Of course, morons in the U.K. will read that and conclude, "well, if properties are ONLY 25% over-valued in the U.S., then let's buy property THERE!!" Much like specuvestors decided California was too expensive, so exported their bubblevestments to places like Seattle, etc.

Guy Daley said...

Standard Pacific Corp. (SPF : Standard Pacific Corp
News , chart , profile , more
Last: 19.26-0.62-3.12%

10:29am 06/12/2007


SPF19.26, -0.62, -3.1%) said new-home orders for the first two months of the second quarter fell 16% from a year earlier. That's 20% below the company's business plan for the period. The Irvine, Calif., homebuilder said its cancellation rate for April and May fell to 28% from 35% in the year-ago period.

Anonymous said...

I'm sure it's George Bush's fault...

Anonymous said...

Sorry I missed out on all the fun for the "What really pisses you off about the bubble" thread!

So many clever (and correct) posts! Just last weekend I went to my nephew's HS graduation and it was a lot of fun. Afterward everyone congregated in the cafeteria and I heard the same sense of relief from the grads! Namely all the things they *won't* miss about HS!

Since it's SO obvious we've reached a very real tipping point it does fell more like we're "looking back". Most of us had a good time in HS but I'm willing to bet (no matter how long it's been) there are still certain events that steam us as bad as the day it happened! The pain the bubble caused will all but block out any memory of "the good times".

DinOR

shtove said...

"Anonymous said...
What happens here in Ireland will make the US crash seem minor"

LOL! Not quite - it may be comparable to Florida, or some other discrete part of the USA.

I think the UK will be like California. Even some of the more bubbly - now deflating stuff - in the US seemed quite reasonable at its peak compared to UK prices. And that's without the recent decline in the dollar. And when the Brits default in Spain on their holiday properties it will add to UK misery.

France doesn't seem too bubbly, and Germany not at all. And eastern Europeans might be relieved to see the bubble outsiders going belly up, so they can reclaim their housing market.

Bird said...

http://www.thespectrum.com/apps/pbcs.dll/article?AID=/20070612/NEWS01/70612003



fire Fire fire 3 of them sounds fishy. Some Flipper flipping out

burn baby burn said...

Only 25% in the US?

joe barely cares said...

It will drop 40% along the coasts and 10% in flyover country for the 25% average. It sucks for most people who bought after 2002.

Anonymous said...

I hope ABN is wrong and prices drop much more than 25% in the US.

HauspocalypseNow said...

wow UK is scrooed.
you cant get a decent place under 1 mill here in LACA - i cant imagine how uk could be more expensive.

everyone must be rich over there!

sweet potato said...

I spent the month of Sept.06 in northwesteren Ireland, (mostly in Galway Co. area)
The balance in the economy is horrible, in a weird way it felt like in the mid evil days.
It seemed like everyone is poor, it was especially surprising since we’ve been reading how the Irish economy was one of the best in the EU and how opening the European borders etc. was suppose to help the economy, what really happened is everything got expensive (massive inflation) not only housing, food, energy, transportation, everything… not sure what the ‘official numbers’ provided by the polititions or the FT are. But being there reading the local papers shopping locally, my gut tells me the European housing meltdown will end in blood, I would advise Muslims to watch their backs.

Man. A lot of European land will be freed up when this is all over.

Anonymous said...

Anyone know what is the median income in UK? How can these prices be sustainable? Seems like there must be alot of flipping going on in UK like in U.S.

Anonymous said...

The crisis in Britain's housing


Abandoned homes in Benwell, Newcastle. Ordinary families have been priced out of new developments in the city (Pic: Ray Smith)

The decade long surge in house prices is undermining the ideology of a “property owning democracy”, writes Anindya Bhattacharyya

The lack of affordable housing has become a political crisis for the main parties. For over a quarter of a century, the policies of British government have been geared towards a single goal – encouraging private home ownership.

Ever since Margaret Thatcher introduced the “right to buy” for council tenants in 1980, both Tory and Labour governments have promoted the idea of a “property owning democracy” where housing is decided by the market rather than the state.

But today this policy is in crisis. The past decade has seen house prices spiral upwards, while real wages have been held down. The result is that increasing numbers of people simply cannot afford to buy a house, and have little prospect of ever getting onto the “housing ladder”.

Combine this with the chronic shortage of council housing and you can see why millions of people – especially young working class families – despair of ever having access to a secure and ­settled place that they can call home.

The average household now spends some 36 percent of their earnings on housing costs. The last time this figure was that high was 1990, just before a housing crash which saw tens of thousands of homes repossessed.

Even right wing newspapers now acknowledge that there is a serious problem. “The future of house prices: ten times pay” ran a front page headline in the Times last week.

It noted that in 1995 the average price of a house was around three times average yearly earnings. Today it is six to seven times average earnings – and if current trends continue, this ratio is set to rise to ten by 2026.

The fact that it is becoming increasingly difficult for people to afford to buy a home is reflected in other figures. In 1993 some 55 percent of people buying a house were “first time buyers”. Ten years later this had dropped to 29 percent.

Today some 4 million people in England believe they will never own their own home, and 74 percent believe that sky-high house prices in their local area are a “problem”.

These figures prompted the government last week to launch an “advice unit”. But its proposed solutions involve little more than tweaking regulations in order to make the market “work” properly – rather than taking on corporate interests or offering an alternative to private home ownership.

In particular, the government insists that ever-rising house prices are fundamentally caused by a “lack of supply” of new private homes for sale and by “obstacles” to the development of an even larger and more complex mortgage market.

The solutions it offers are, on the one hand, to water down existing planning regulations in order to encourage the building of more private homes, and on the other, further deregulation of mortgages to encourage financial institutions to lend larger sums of money to people.

But these market oriented solutions are unlikely to have any serious effect. Private house building in Britain is dominated by a group of five or six companies, who are unwilling to dilute their revenues by building more houses.

Many of these companies already own land with planning permission to build on – they choose not to, since they stand to make more money in an environment of ever rising prices.

Moreover, there are already hundreds and thousands of privately owned properties up and down the country that are currently lying empty – some 291,000 private homes in England have been empty for more than six months, on top of over 75,000 in Scotland.

If you include second homes in the figures, then there are at least 680,000 empty properties in England.

Market

It is the irrationality of the housing market that is responsible for this state of affairs. The long running boom in housing prices has encouraged property speculators to buy up houses and then just sit on them, in the hope of making a killing by selling them off at a higher price at some point in the future.

If “lack of supply” was the problem and “free markets” the solution, these empty properties would come onto the market – but they don’t.

So what has caused house prices in Britain to spiral upwards to historically unprecedented levels?

Ever since the Second World War, the ratio of house prices to annual earnings has hovered between three and five – it is only since the mid-1990s that they have climbed up to current record levels.

The crucial reason for this relates to the relationship between housing and other aspects of the economy.

One of New Labour’s first acts on getting elected in 1997 was to hand control of interest rates to the City and to deregulate financial services. This further fuelled the explosion of cheap consumer credit, which in turn has kept the economy afloat for the past decade.

The fact that interest rates on loans have been relatively low has encouraged people to borrow larger and larger sums, which in turn encourages those selling houses to put prices up. But this is a dangerous game.

If interest rates were to rise by just a few percentage points, many people would find themselves unable to make ends meet. This could trigger a crash in the housing market – leading to homes being repossessed – which would in turn burst the consumer credit bubble that the economy relies upon.

The ideology of home ownership also has a part to play in encouraging an unsustainable housing boom. Typically, papers like the Daily Mail and Daily Telegraph present rising prices as a good thing, since it means their presumed readership of “middle class” home owners are getting richer – on paper at any rate.

The other factor driving house prices upwards is the buy-to-let craze. Just as the number of people who can afford to buy their first home has been dropping, the numbers of people who already own a home but now want to buy a second or third to rent out has been increasing.

Buy-to-let

In 1999, financial institutions signed some 59,000 buy-to-let mortgages totalling £3.6 billion. Last year they signed 850,000 such deals totalling £94.8 billion. The number of people remortgaging their houses in order to get into the buy-to-let market, or to gain access to the value of their houses, has also shot up.

The overall picture, then, is of a housing bubble fuelled by cheap credit and rising numbers of private landlords – and this is all happening in a context of widening inequality and a freeze on people’s real wages.

New Labour’s dogmatic insistence on “market solutions” will do nothing to halt this vicious circle, since it is the market that is responsible for the mess in the first place.

Instead of producing ever more complex schemes to encourage people into the private housing game, the government should be taking on the vested interests in the City and the property industry that have allowed this chaos to fester.

These measures could include punitive taxes on second homes to discourage buy-to-let speculators and racketeers. The government could also crack down on the tax loopholes and breaks that encourage the rich to snap up private properties and leave them empty.

But ultimately we have to recognise that the whole notion of a “property owning democracy” is a mirage. It ­perfectly understandable why people want to own their own homes – we are relentlessly told that we should aspire to this status, and that it is the only means of gaining the security and personal space denied to us elsewhere in our lives.

Nevertheless, the private housing market has never been able to provide affordable housing for the bulk of people in this country.

The pro-market dogma currently embraced by all mainstream parties has been tried in the past – and it failed, leading to nothing but homelessness and exploitative private rents. That is why subsidised and council-owned housing was introduced in the first place.

Subsidised housing is the only serious means of housing people fairly and rationally, and council housing – which is democratically controlled by tenants – is the best means of doing that. Until the government recognises that fact, the misery and insanity caused by a boom-and-bust market will only intensify.

Anonymous said...

They're totally wrong about the UK and the USA.

In London, where I lived the last few years (until moving back to Bubbleland, California), the level of inflation is WELL beyond 50%. Shitty brick council-house flats in Southwark with rough neighbors who beat the shit out of passers-by on Halloween night sold for 25,000 pounts (about US$50K ten years ago). They're now selling for 300,000 pounds sterling (about US$600K).

They're worth perhaps 50,000 pounds if they have recent improvements like plumbing retrofits and modern water/sewer. A lot of them lack even basic cable access and high-speed internet beyond the slowest level of DSL! Since London is the leviathan economy of the UK, its prices dropping 80% or more will result in similar declines throughout the rest of Britain, which will become a lot less desirable to people seeking to buy in London who were priced-out and competing for terraced homes in Milton Keynes.

Look at the Bay Area exurbs for another example of how the US market is overinflated. Boarded-up crack houses in Oakland go for over $330K in unlivable condition, and a barely-habitable cracker-box house on the peninsula can easily fetch $1 million. The former house sold for less than $100K not 15 years ago when it was still habitable -- the latter house sold for under $300K at the same time. And this in an area that's been losing population and jobs the last 8 years.

25% is a *minimum* possibility. I'm looking more towards 50%+ -- even worse in less desirable exurbs built to accommodate people priced out of Palo Alto, San Francisco and San Jose.

Anonymous said...

U.S. Mortgage Foreclosure Filings Rise 90% in May
By Kathleen M. Howley

http://www.bloomberg.com/apps/news?pid=20601103&sid=aVVr0Jrm19OE&refer=news

June 12 (Bloomberg) -- U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.

There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors. The filings rose 19 percent from April.

A jump in foreclosures at a time of year that traditionally is the busiest for home sales means the slide in prices probably isn't over, said James Saccacio, chief executive officer of RealtyTrac. Typically, more than half of all home sales occur in the April to June period, according to Freddie Mac, the No. 2 mortgage buyer.

``Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,'' Saccacio said in the report. That will add ``to the downward pressure on home prices in many areas.''

Ranked by the number of foreclosure filings, California topped the list, with 39,659 in May, and Florida was No. 2, with 21,704. Ohio was No. 3 for the third consecutive month. It had 13,214 filings, said the report. Rather than count the number of unique households in foreclosure, the study counts the number of foreclosure-related legal filings, which could result in some properties being double- or triple-counted.

Nevada, Colorado

Taking into account the number of homes, Nevada was the No. 1 state, with one filing for every 166 households. Colorado was second, with one filing for every 290 households, followed by California, Florida, Ohio, and Arizona.

Michigan ranked No. 8, with one foreclosure filing for every 448 households, Connecticut was No. 10 and Massachusetts was No. 11.

New Jersey was in the No. 15 slot, with one foreclosure filing for every 843 households, and New York ranked No. 30, with one foreclosure filing for every 1,818 households.

In the report, 43 regions reported an increase in foreclosure filings from a year ago, including the District of Columbia, and eight states had a decline.

Oregon saw a 50 percent drop from last year, the biggest decline in the study, followed by New Mexico, down 39 percent, Oklahoma, declining 34 percent and Texas, down 33 percent.

RealtyTrac, started in 1996, sells subscriptions at $49.95 a month for access to an online database of foreclosed properties. The company began issuing market reports in January 2005.

Anonymous said...

i also spent several days in Galway last september. my friend's aunt owns a place near the Claddagh (harbor) area. i think it used to be public housing. basically a 50 yr old townhouse, maybe 800 sq ft. total. market value at the time was $300-400 K USD. yes it did seem very overpriced. as for the atmosphere, yes everyone seemed in a rush and stressed out, but hard to tell who are locals and who are immigrants out in public.

Macaca (Maryland, USA).

LongisWrong said...

I work on an institutional trading desk. Today, I watched US 10 year Treasury yields rise almost 0.25% from 7-5pm EST. This will destroy demand for housing and crucify the housing market over the next 12 months if rates don't start pulling back and yet the media isn't reporting it. I've been very surprised by how long the correction has taken to actually get going... but somehow I think we're REALLY going to get going now.

good luck kids, it's about to get ugly.

ralph moscatiello said...

Rich foreigners will buy everything up. Fuhgettabowdit!!!

Daniel said...

But Keith, my realtor told me that all real estate markets are local! Now it appears this will be the first housing bust that is not only national, but global. Talk about ugly.

Anonymous said...

Here's how they're doing it!

One pleads guilty, 5 others indicted in Los Angeles mortgage fraud
Friday, May 25, 2007 at 12:45PM
The Editor - Ian Shuter in Indictments, Flipping, IRS Investigation, California

In the following press release The United States Attorney’s Office for the Central District of California announced that a West Los Angeles mortgage banker has agreed to plead guilty to federal criminal charges in a massive mortgage fraud scam that caused more than $18.5 million in losses to banks, including his former employer. Click here for the press release

This afternoon in United States District Court in Los Angeles, federal prosecutors filed criminal charges against Richard A. Maize, 53, of Beverly Hills. Maize, a co-founder of Americorp Funding, a mortgage banking company with offices in West Los Angeles and Pasadena, was charged with one count of conspiracy to commit bank fraud and loan fraud, three counts of bank fraud and one count of making a false statement on a federal tax return.

In a plea agreement also filed today, Maize agreed to plead guilty to the five felony counts and to cooperate in the government’s ongoing probe of the scheme.

Americorp originated, brokered, funded and sold mortgage loans. Maize was Americorp’s top-producing mortgage banker, closing more than $192 million in loans in 2001 and more than $245 million in loans in 2002. Maize owned 45 percent of Americorp until about December 2000, when he and his partners sold Americorp to Prism Mortgage Company (later known as RBC Mortgage Company). At that time, Maize became the president of the Americorp division of a Prism/RBC subsidiary.

According to court documents, Maize and five others previously charged in the case were involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the conspirators obtained inflated mortgage loans on expensive homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills and Malibu.

Five people have previously been charged in the scam. They are:
Charles Elliott Fitzgerald, 47, of Newbury Park
Mark Alan Abrams, 45, of Long Beach
Nicole LaViolette, 37, of Palm Springs
Jamieson Matykowski, 33, of Laguna Niguel
Timothy Holland, 35, of Santa Ana.

Fitzgerald, who is in custody, is scheduled to go on trial on July 31 on a host of federal charges related to the alleged scheme. The other four previously charged have pleaded guilty to charges related to the fraud scheme and are pending sentencing.

According to court documents, in late 1999 or early 2000, Fitzgerald and Abrams started a mortgage brokering company called Desert Pacific Financial, Inc. (DPF). The company sent mortgage loan applications to lenders for review and funding, and received commissions from those lenders when the loans closed. In late 2001, Fitzgerald and Abrams renamed the company Beverly Hills Estates Funding, Inc. (BHEF).

Fitzgerald and Abrams purchased homes at their real market values. Abrams and his associates then recruited “straw borrowers” to obtain the inflated loans that were used to purchase homes from Fitzgerald and Abrams. The straw borrowers allowed the conspirators to use their names and credit to obtain mortgages as part of this “property-flipping” process. Armed with inflated appraisals and other false documentation, the conspirators submitted false and inflated loan application packages. As president of Americorp, Maize had contacts and business relationships with the victim lenders, which he exploited to deceive the victim lenders into approving and funding the inflated loans. He also abused his position as president and defrauded his employer, Prism/RBC, by deceiving the company into funding the inflated loans.

As one example, the case against Maize details the purchase by Fitzgerald and Abrams of a Bel Air home for $735,000. When they flipped the property, they “sold” the residence to a straw borrower for $2.37 million. A bogus loan application package went to Lehman Brothers Bank, and the bank unwittingly funded a loan of more than $1.4 million on the property – nearly double the true $735,000 purchase price – almost all of which ended up in one of the in-house escrow companies controlled by Fitzgerald and Abrams. According to the Maize charges, Lehman Brothers Bank alone was deceived into funding about 40 such inflated loans from March 2000 through July 2002. These 40 loans were for more than $28 million over the true prices of the homes. According to court documents, Maize received hundreds of thousands of dollars in kickbacks for his assistance in getting the loans approved. In 2001, he failed to report more than $175,000 of these kickbacks on his federal tax return.

Maize faces a maximum possible sentence of 98 years in federal prison. In his plea agreement, Maize has agreed to pay $2.75 million in restitution prior to his sentencing, although he may be ordered to pay more at sentencing. The charges against Maize and the others are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation Division.

Anonymous said...

KEITH YOU GOTTA WATCH THIS.. HAHAHAHA, "DUDE ITS NOT FAIR" whhaa

http://tinyurl.com/37f8xh

Anonymous said...

If “lack of supply” was the problem and “free markets” the solution, these empty properties would come onto the market – but they don’t.

The reason they don't come onto the market isn't because of a lack of a free market -- it's because of the high cost regulated nature of Britain.

To sell a house can take 6+ months there, due to regulations.

Stamp taxes exceeding 10% of sale price have done a lot to drive up costs.

And finally, lots of those "empty properties" you're talking about aren't actual owned properties, but
"leaseholds" -- 100+ year leases that one gets a mortgage out on. When the lease ends, the house reverts to the owner.

Much of Britain's problem is due to the socialist tendencies of the government mixed with the aristocratic heritage of the country. HUGE swathes of the country are owned by families (such as Belgravia in London) who were bestowed the land and own it, tax free, since the medieval period. Pretty nice if you can get it eh?

Better still, affordable housing in the UK is virtually illegal. London has less than 1/5th the density of New York City, since the local and national governments pass laws against high rise, high density housing which is so desperately needed.

Lots of low-rise, medium-density housing, plus lots of jobs in the region = housing bubble.

If the free market was really able to work, people could buy a 70th story apartment building in central London for two years' wages and live well.

However, taxes, regulation, bans on tall buildings, and endless zoning requirements have choked off those options. As a result, things in London will get ugly.

The Project Manager said...

My husband and I would like to relocate to Rome at some point -- you'd think with a median salary for residents of that city of E25,000 that the apartments would be affordable. Nope. Median apartment prices of E6,000 sq mt. Entire families are 'chipping in' to help their kids buy these overpriced places -- like E300,000 for a 300 sq ft place. I'm not sure how that market is going to correct since Italians aren't a really mobile nation, but I sure as hell hope it does soon.