How far will house prices fall [volume 4]

[GT03ROB]

Welshbeef said:

Xmas day on the beach.... Nope
Possibly 1 hour a day time slot you can call family.
Probably very likely your family will hardly ever visit you and vice versa

You've sold me on it Welsh....

....shame my sis already lives there & parents do half the year!

[98elise]

emicen said:

Nothing to add to the current debate other than I had a look on housepricecrash for the first time over the weekend.

WOW!

People who think some of PH's regulars are arrogant/opinionated/aggressive really need to check it out over there

Is really is a bitter and twisted place. I pop in there once in a while when NP&E is a bit quiet

[V6Alfisti]

98elise said:

Is really is a bitter and twisted place. I pop in there once in a while when NP&E is a bit quiet

There are a few extremists, but pick through that and there is actually some really relevant information that does appear to be supporting the fact that many parts of London (mostly the more developed north and west) are stagnant or dropping imo.

[anonymous-user]

Back to houses and yet another place has come up for sale in my area. I make that 8 or 9 now, I can never recall that ever happening. This place was built between the early to late 70's so quite a few are original owners (judging by décor and having actually spoken to quite a few owners). Looking at the latest one I can only assume they are trying the market to really cash in should it sell. The asking price is comical tbh, a good £50K more that I would have expected. If it sells I'll eat my hat.

[turbobloke]

anonymous said:

[redacted]

In which case it's possible that the houses that have been on the market a long time are different houses to the ones essayer is spotting that sell quickly. The differences could be in underlying condition, state of presentation, and also location as it's 8 miles from Hemel to Berk and 12 miles to Tring.

Locally (SW) we've had an EA mailshotting with claims of a recent 'jump' in house prices. A quick check (small sample size) comparing houses that I know sold around the turn of the year with a couple that sold this week subject to contract, with sale price info on the recent sales due to knowing the vendors, it could be true but as above the sample size is small being five in total. With that caveat, the 'jump' is at least 12% in four months as I had to use asking prices for the earlier disposals and they probably went for less (even if it wasn't much less).

It's likely that this is local-local so only of narrow interest, and that town-wide numbers may not reflect it, whatever it is. I suspect Bristol is or will be more jumpy due to the major rail improvements.

[V6Alfisti]

turbobloke said:

In which case it's possible that the houses that have been on the market a long time are different houses to the ones essayer is spotting that sell quickly. The differences could be in underlying condition, state of presentation, and also location as it's 8 miles from Hemel to Berk and 12 miles to Tring.

Locally (SW) we've had an EA mailshotting with claims of a recent 'jump' in house prices. A quick check (small sample size) comparing houses that I know sold around the turn of the year with a couple that sold this week subject to contract, with sale price info on the recent sales due to knowing the vendors, it could be true but as above the sample size is small being five in total. With that caveat, the 'jump' is at least 12% in four months as I had to use asking prices for the earlier disposals and they probably went for less (even if it wasn't much less).

It's likely that this is local-local so only of narrow interest, and that town-wide numbers may not reflect it, whatever it is. I suspect Bristol is or will be more jumpy due to the major rail improvements.

It certainly does appear to be based on area of London e.g. I had two estate agents flyers/books through the door stating that if I am a seller I should be realistic about values and values have been dropping in my area (Notting Hill), in the east there are reports that some people are getting notes through the door stating that they think house prices have peaked and its time to sell e.t.c

One thing is pretty obvious though, BTL'ers rushed to buy pre April 2016 which will no doubt be reflected in the next 1 or more monthly 'reports'. Things have been crawling around my way, with estate agents I haven't spoken to in months/year calling me daily.

Note however that the ONS corrected their Jan 2016 report, after getting the average house prices increases wrong and then reported a drop of 27k. It does seem rather odd timing, but at least fixed.

Edited by V6Alfisti on Monday 25th April 16:55

[turbobloke]

anonymous said:

[redacted]

It could well be so, though with one route to London being via Brizzle we may be riding on their uplift a tad, both now and in the medium term.

[turbobloke]

@V6Alfisti

My post had SW, that's SW 'oooarr gerrroorf moy laaarnd' rather than SW London.

I wish as I would almost certainly sell and move to tractor territory given the stage we're at.

[V6Alfisti]

turbobloke said:

@V6Alfisti

My post had SW, that's SW 'oooarr gerrroorf moy laaarnd' rather than SW London.

I wish

Oh ! Sorry..very London focused these days.

I am a Bristolian in any case, I have certainly seen some strong increases there!

[turbobloke]

V6Alfisti said:

turbobloke said:

@V6Alfisti

My post had SW, that's SW 'oooarr gerrroorf moy laaarnd' rather than SW London.

I wish

Oh ! Sorry..very London focused these days.

That's quite OK

V6Alfisti said:

I am a Bristolian in any case, I have certainly seen some strong increases there!

With more on the way, by all accounts.

[essayer]

anonymous said:

[redacted]

I guess that's a pretty large area with lots of property types and good and bad areas.

'Character' properties in Berkhamsted close to the station, for example, seem to sell really quickly, even three bed terraces with on street parking for north of £500k. Same with some areas of Tring. Go out into the villages though and it might be a different story.

[Mr Whippy]

NRS said:

Mr Whippy said:

So with your accounting principle is there any consideration made for the value of said item you borrow against becoming worth less over time?

Ie, borrow £200,000 and the item is worth £100,000 at the end?

Or do you just assume a static value?

What about the opposite? Which in the general picture for the long term is actually more likely given historic trends? Again not saying you should buy, but you are taking a risk either way.

Indeed.

But even the price going up doesn't equal value going up, due to the other variable of inflation.

It gets quite complicated.


Just as a side thought, I remember years ago where I worked, we were making a stochastic pension modeller. All very posh maths that ran into some huge database with a big London based company that did the risk on it all basically.
In idle discussion about the accuracy of the outcomes the guy doing the programming finally conceded that all big events that could make the statistics useless were ignored, but that these big events generally happened at a frequency where at least one or two would happen in any one persons working life (ie, through their retirement)

I think we've had it quite lucky in our lifetimes in the West because we've seen perpetual economic growth, no significant wars, diseases, natural disasters etc.
Pension providers were all DB, now they're all DC, and now we have ZIRP I wonder what DC can even do for most savers. The environment has turned from high perpetual growth, to no expectations of growth at all.


It's at least reasonable to *not* assume perpetual growth and increase in value of everything forever.

While annuity providers are projecting near zero growth from a point 30 years into the future to a point 55 years in the future, you do wonder why they don't get into property!

[V6Alfisti]

Some more views of the softening in more developed areas, this is exactly what I have been seeing in Queens Park, Warwick Avenue, Camden, Kentish e.t.c....

http://www.hamhigh.co.uk/property/is_the_property_...

[walm]

Foxtons reported today. Expecting a weak H2.
Stock down -3% today and now down -20% YTD.

[V6Alfisti]

Apparently Q1 2016 didn't increase nearly as much as expected and actually dropped even with all the Btl purchases. I wasn't expecting that.

http://www.telegraph.co.uk/property/commercial/hou...

[turbobloke]

V6Alfisti said:

Apparently Q1 2016 didn't increase nearly as much as expected and actually dropped even with all the Btl purchases. I wasn't expecting that.

http://www.telegraph.co.uk/property/commercial/hou...

Quite cool, as in, not that hot.

The regional chicken soup averages are still well-mixed as per the national chicken soup average. Further examination of the local situation but still with an inevitably small sample size (realistically, any bigger and it wouldn't be local enough) suggests that the EA blurb currently being peddled very locally to us is correct in speaking of a price jump, something of the order of 10% to 12% since January. That contrasts with the region's performance in Q1 as shown in the DT article (nearly -1%).

[Timmy40]

V6Alfisti said:

Apparently Q1 2016 didn't increase nearly as much as expected and actually dropped even with all the Btl purchases. I wasn't expecting that.

http://www.telegraph.co.uk/property/commercial/hou...

Very interesting article that. It would seem pretty obvious that unless interest rates fall further ( how can they ), or wages increase signifiacntly ( unlikely ), or lenders suddenly relax their criteria ( post MMR virutally banned ) house prices simply can't grow YOY by more than inflation.

I suppose if the report is correct and another 3m people move here over the next 14 years that might prop up the SE.

[V6Alfisti]

Timmy40 said:

Very interesting article that. It would seem pretty obvious that unless interest rates fall further ( how can they ), or wages increase signifiacntly ( unlikely ), or lenders suddenly relax their criteria ( post MMR virutally banned ) house prices simply can't grow YOY by more than inflation.

I suppose if the report is correct and another 3m people move here over the next 14 years that might prop up the SE.

Indeed but personally I think this is a sign of something a bit more than house prices npt growing YoY more than inflation.

Bear with me...

House prices have largely been supported from two key elements of demand:

BTL - Jan-March was supposed to be the month that BTL'ers went crazy and bought anything they could lay their hands on, despite this the figres show an overall drop of 0.5%? BTL'ers own representation states that quite a significant percentage of current owners realise that the numbers don't add up anymore what with the increased taxation on revenue and now also new property purchases. So demand here is shrinking, I read somewhere that inquiries have dropped 90% since April 2016

Foreign Investment - Largely the Russians and Chinese, the Russians have pulled away due to poor foreign exchange and the Chinese have also increasingly pulled out of London (seemingly heading towards Manchester now). Add in all the Nine Elms/Hammersmith stories....there would then also appear to be alot more supply (at the upper end).

Then you have people who want a property to live in, e.g. FTB and Upgraders, these have largely been priced out for a couple of years and overall I think the volumes of house sales are a 1/4 of what they were a few years ago.

Also we talk about a housing shortage, but do we really? The difference being that spare supply was taken up by FI and BTL, that tide is turning. Ultimately people that would be buyers are now renters ...and guess where they live...in a house.

Then many people are leaving London due to the current pricing, hence Bristol, Oxford, Reading, Luton e.t.c are shooting up in value.

I personally think that prices will continue to drop, but there is no doubt a balancing point wherere FTB'ers and other buyers can start to afford property again and the volumes will rise (assuming the supply logic works out). Basically we are talking about the classic property lifecycle, I think we may be balancing right on the top of one of those peaks right now. Hence why I suspect a lot of property in London is now being listed, get out whilst the prices are at record highs.

All IMO of course, and seriously reconsidering a new build plot I have reserved! It looked reasonable value a few months ago, now that gap is quickly falling away as more properties hit the market, with significant reductions compared to Q3/Q4 2015. Now to convince the girlfriend .. :/

Edited by V6Alfisti on Thursday 28th April 15:41

[Mr Whippy]

V6Alfisti said:

I personally think that prices will continue to drop, but there is no doubt a balancing point where FTB'ers and other buyers can start to afford property again and the volumes will rise (assumingly the supply logic works out). Basically we are talking about the classic property lifecycle, I think we may be balancing right on the top of one of those peaks right now. Hence why I suspect a lot of property in London is now being listed, get out whilst the prices are at record highs.

I think you're right, but the other mechanism is that people just won't sell/move, they'll stay put and extend etc.

If they don't move, they don't realise the 'loss', even though for a single home owner there is no such thing if the market makes generalised up/down movements.


I genuinely think properties are likely to just remain much of a muchness in price, and in some years salaries will begin to rise again and at that point property values won't... not until the equivalent value drop is realised which makes the market competitive enough for the FTB'ers to start buying, which allows the entire ladder of property ownership to get moving again.

[V6Alfisti]

Mr Whippy said:

I think you're right, but the other mechanism is that people just won't sell/move, they'll stay put and extend etc.

If they don't move, they don't realise the 'loss', even though for a single home owner there is no such thing if the market makes generalised up/down movements.


I genuinely think properties are likely to just remain much of a muchness in price, and in some years salaries will begin to rise again and at that point property values won't... not until the equivalent value drop is realised which makes the market competitive enough for the FTB'ers to start buying, which allows the entire ladder of property ownership to get moving again.

Agreed that many home owners will hold onto their properties, but where I think we will see selling up is BTL in London.

e.g. if they bought in 2012 at 300k and its now worth 450k (with say a 4% yield), then the property prices stay stagnant at the £450k mark but the yield has now dropped, then the BTL has a pitiful yield and no/little asset appreciation. But they then have the fear of drops, issues with tenants and medium to longer term interest increases.

Then you have the chinese investors which appear to be reneging on new build contracts, again more supply.

I am not sure if its BTL selling or home owners taking the huge increases in value (and moving away from London), but my saved searches are buzzing with new properties and price drops.

Still agrivated by HTB, imo all it's done is help increase property prices, land those in debt who can't afford the current prices and put them at massive risk whenever the interest rates increase.

Edited by V6Alfisti on Thursday 28th April 16:22