How far will house prices fall [volume 4]

How far will house prices fall [volume 4]

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BoRED S2upid

19,643 posts

239 months

Thursday 11th February 2016
quotequote all
loafer123 said:
How I explain the current market to sceptical people who don't believe it is falling is to say;

1 pour large whisky
2 sit at your computer
3 visit rightmove
4 enter Nine Elms as the location
5 scroll through pages and pages of ludicrously priced identical apartments
6 calculate rental yield on said apartments
7 drink whisky
Great game. I also like reading the desperate descriptions as to why you should spend upwards of £2mill on a terraced house. And the pictures of IKEA furniture 😄

crankedup

25,764 posts

242 months

Thursday 11th February 2016
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z4RRSchris said:
crankedup said:
City prices crashed? I see you are professionally part of the property market so I guess you should know. Can you advise when the market crashed please, you say long ago!
I ask because it isn't chiming with what I was hearing just a few weeks ago. You are sure it's the city market that has collasped!, I f so then a lot of speculators and developers are going to get their fingers burnt.
The developments of high rise along the Thames is rampant. Some people have sunk multi millions or billions into these projects which are under construction and late stage planing.
I agree that turnover of property has dropped significantly and the lower end property of upto two million may be struggling due to the stamp duties changes 2014 but I don't see the mega wealhy affected by this and I am with the side that is with the City being a safe haven for property investment. Perhaps we have a pause for breath. I am genuinely interested in your take on the top end of the city market.


Edited by crankedup on Wednesday 10th February 19:38
the prime I think has fallen by 10/15% in the last few months.
the sub prime I think you can safely say has gone 20%+

mega wealthy have been hit. oil prices, currency, capital controls, stamp, IHT, ATED,

the only people buying are those who want to live in it, not investors,


Edited by z4RRSchris on Thursday 11th February 13:00
Thanks , I did a little reading up on this after you advised me of current situation. Maybe I should have read up before posting!
Anyhow, thankfully I am not directly affected by the downturn, yet!


poocherama

396 posts

208 months

Thursday 11th February 2016
quotequote all
Would I be rushing to buy in PCL now? Probably not. Infact everything I've been looking at over the last 12 months or so has either continued to sit on the market or been quietly withdrawn. The London market in particular is now so fragmented that you could conceivably have prices in one sector tanking whilst another merrily marches on upwards. I mean there's a huge difference between a £5m + new build flat on the river and a period terraced house or lateral flat in a mansion block. These just aren't being made anymore.

Additionally, having now lived in London for 20 years I look back at places I used to live and visit and cannot believe the transformation that has taken place. It is quite literally a different city. Inevitably there will be bumps in the road but I'm quietly optimistic over the medium to long term.

crankedup

25,764 posts

242 months

Thursday 11th February 2016
quotequote all
turbobloke said:
crankedup said:
turbobloke said:
Mr Whippy said:
crankedup said:
I am with the side that is with the City being a safe haven for property investment.
Is there such a thing as a safe haven in property?
Not in absolute terms but surely in relative terms quite a lot of foreign money thinks London prime is it.
My understanding that this was the case, that was until z4rrschris put me straight! Then I caught up with my own reading and the foreign property money has indeed dried up leaving property developers holding plenty of unsold fancy apartments.
As an expert on the spot z4rrschris is very likely to be right but the past is writ, new developments unsold merely show where the line is drawn in space and time - those already 'in' prime London will cope as AstonZagato pointed out.
Absolutely, the problem will be in the laps of the developers and their money sources, still they will be well versed in dealing with the up's/downs of the property market.

z4RRSchris

11,221 posts

178 months

Thursday 11th February 2016
quotequote all
the problem lies with us developers when;

someone's "pre sales" don't complete and they can't pay back debt, and the bank take it
someone doesn't hit pre sale targets and the bank won't release debt to build the thing
a listed developer doesn't hit sales targets to build

thankfully neither will happen to us, but a few out there must be stting themselves.

Mr Whippy

28,944 posts

240 months

Thursday 11th February 2016
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AstonZagato said:
Mr Whippy said:
And the UK government might not decide to take it all either?
Pay huge taxes under Corbyn if you're a foreign owner, or forfeit the property!?
If it's not occupied, even higher taxes?
Before you know it then they won't be good assets to own because they'll be losing money and costing you to keep them.
I don't think the UK govt would ever appropriate property, even under Corbyn. The middle class would revolt.

However, some form of non-dom property tax could well get political traction (much less controversial than the "mansion tax"). If they are non-doms, they can't vote. Occupation would be hard to police - much easier to do it by property, making the property tax increasingly expensive on second, third, fourth properties.

But this type of taxation could crater the very top end.
It seems unlikely given recent history.

But since when did recent history reflect history as a whole?

If anything we're due some serious SHTF and big changes.

Mr Moley

527 posts

189 months

Thursday 11th February 2016
quotequote all
poocherama said:
Would I be rushing to buy in PCL now? Probably not. Infact everything I've been looking at over the last 12 months or so has either continued to sit on the market or been quietly withdrawn. The London market in particular is now so fragmented that you could conceivably have prices in one sector tanking whilst another merrily marches on upwards. I mean there's a huge difference between a £5m + new build flat on the river and a period terraced house or lateral flat in a mansion block. These just aren't being made anymore.

Additionally, having now lived in London for 20 years I look back at places I used to live and visit and cannot believe the transformation that has taken place. It is quite literally a different city. Inevitably there will be bumps in the road but I'm quietly optimistic over the medium to long term.
This

There are a lot huge generalisations on this thread!

The reality is that London is not a property market, it is many discrete sub markets driven by different factors.

I have no doubt that mid/ high end new build in areas where masses of supply is coming on line at the same time is a tricky place to be and some flippers will be getting their fingers burned. As mentioned, nine elms is a good example of this. My former employer owns Fitzroy Sq and the only flat they haven't sold is the £14m penthouse. The completions are currently going through at present and as far as I'm aware there's only one out of 75 odd where there's a problem. For context these are c £2k psf apartments.

In my recent experience good property that is priced well in Zones 1-4 is flying. Anything shoite and/ or overpriced will sit there indefinitely.

As for what's going to happen over the next 12-24 months, hang on whilst I dust off my crystal ball...

Derek Chevalier

3,942 posts

172 months

Thursday 11th February 2016
quotequote all
turbobloke said:
Derek Chevalier said:
turbobloke said:
Derek Chevalier said:
jonah35 said:
Regardless is what the average ph director thinks, £100k -125k pa is still a good income in London but if you're paying multiples of that for a flat eventually people will take £90k and a job in Leeds/Manchester and I think that is happening amongst the people I know.
I would guess the average in the city is now >100k - is there really that much on offer at the 90k mark in Leeds/Manchester?
That prompted a look online, without much success as the various analyses tend to look at inner London or London rather than the City. One notable figure was that at the end of 2015 the highest earning area in Britain was the London Borough of Kensington and Chelsea, where the average (mean) salary stood at £94,416.
This from 2006

http://www.theguardian.com/business/2006/dec/05/ex...

"Male median pay in the City is now £104,622, according to ASHE"

I think they are confusing mean with median - pay has dropped over last decade according to the latest 2015 ASHE numbers
That prompted a search for ASHE 2015 which appears to be here:

Web page
http://www.ons.gov.uk/ons/publications/re-referenc...

XLS file
http://www.ons.gov.uk/ons/rel/ashe/annual-survey-o...

Table 13 puts the 2015 median pay for the City of London by place of work at £47,907 which will be across all roles and include both genders. If only they gave the mean as well...

The link below suggests slightly more but the same ballpark.
http://www.cityam.com/206242/where-can-you-earn-mo...
From 2014 numbers

http://www.ons.gov.uk/ons/publications/re-referenc...

Table 7 - place of work by local authority
PROV - Work Geography Table 7.7a Annual pay - Gross 2014.xls
Male full time tab - Row 230

Mean of 95k - that is my best guess where the above came from....




Derek Chevalier

3,942 posts

172 months

Thursday 11th February 2016
quotequote all
RYH64E said:
Derek Chevalier said:
I would guess the average in the city is now >100k - is there really that much on offer at the 90k mark in Leeds/Manchester?
£100k/annum nets down to less than £5.5k/month, I don't understand how people afford >£1m houses on that kind of money.
They've ridden the biggest bubble of all time, so have plenty of equity, and in my experience those that are buying the £1m homes are on a fair bit more than 100k

Derek Chevalier

3,942 posts

172 months

Thursday 11th February 2016
quotequote all
Timmy40 said:
JagLover said:
That doesn't mean that the market is working as it should when professionals in their thirties are struggling to buy houses built for factory workers.
JL, sorry to burst your bubble but now that almost all young people go to university then end up in an open plan office, "professionals in their 30's" are the factory workers of today.

As for affordability. Houses aren't cheap to build. A 4 bed house will cost about £200k to put up in the SE. The building plot it goes on will cost about the same, add in a small profit and you get the price around £450-500k.

In more central areas the price of the plot just goes up.

Ok, if you abolish planning permission maybe plot prices would fall, but that's not going to happen.

Nationally are houses really that over priced? As I say it costs between £150-300k to build them, depedning on size then you have to add on the cost of the plot.

If blocks were still 10p each rather than 60p maybe prices would be lower, but I don't see the cost of materials and labour returning to levels of 20 years ago anymore than I expect to be able to get a can of coke for 10p because that's what it cost when I was at school.
Land and labour rates (and to a certain extent materials) are driven by the house prices, not the other way round in my experience.

turbobloke

103,742 posts

259 months

Thursday 11th February 2016
quotequote all
Derek Chevalier said:
From 2014 numbers

http://www.ons.gov.uk/ons/publications/re-referenc...

Table 7 - place of work by local authority
PROV - Work Geography Table 7.7a Annual pay - Gross 2014.xls
Male full time tab - Row 230

Mean of 95k - that is my best guess where the above came from....
Thanks for unearthing that stat smile

okgo

37,859 posts

197 months

Thursday 11th February 2016
quotequote all
Derek Chevalier said:
They've ridden the biggest bubble of all time, so have plenty of equity, and in my experience those that are buying the £1m homes are on a fair bit more than 100k
Be interesting to see stats on that, there are not 'that' many folk on 6 figs but nearly every bloody house worth living in now seems to be up there towards or above a million. Suppose household income is the new thing and you'd be not in a great spot if you were not towards or above that combined.

z4RRSchris

11,221 posts

178 months

Thursday 11th February 2016
quotequote all
Mr Moley said:
This

There are a lot huge generalisations on this thread!

The reality is that London is not a property market, it is many discrete sub markets driven by different factors.

I have no doubt that mid/ high end new build in areas where masses of supply is coming on line at the same time is a tricky place to be and some flippers will be getting their fingers burned. As mentioned, nine elms is a good example of this. My former employer owns Fitzroy Sq and the only flat they haven't sold is the £14m penthouse. The completions are currently going through at present and as far as I'm aware there's only one out of 75 odd where there's a problem. For context these are c £2k psf apartments.

In my recent experience good property that is priced well in Zones 1-4 is flying. Anything shoite and/ or overpriced will sit there indefinitely.

As for what's going to happen over the next 12-24 months, hang on whilst I dust off my crystal ball...
Fitzroy was a good vintage. Dan v G sold it at something like 1400 average (not 2000). there are a few left not just one, think it's 3. 9pm movie night is pretty cool in the cinema but has no pool.

would you rather 1400 in W1 or 1700 in nine elms?



Mr Moley

527 posts

189 months

Friday 12th February 2016
quotequote all
z4RRSchris said:
Fitzroy was a good vintage. Dan v G sold it at something like 1400 average (not 2000). there are a few left not just one, think it's 3. 9pm movie night is pretty cool in the cinema but has no pool.

would you rather 1400 in W1 or 1700 in nine elms?
It was a JV between DvG and my former employer [who funded it] - I'm only repeating what the Fund Manager told me when I had lunch with him last week, but I'd be very surprised to say the least if they've sold anything at £1400 psf given we're pushing £1k psf where I am in second hand by Battersea Park now.

The stuff I've seen at Nine Elms is more like fifteen hundred quid a foot, which I agree is nonsensical, hence why people can't shift them.

z4RRSchris

11,221 posts

178 months

Friday 12th February 2016
quotequote all
Fitzroy average was about 1400/1500 (started selling in 2012), the resales are higher but are not shifting. it's a lovely scheme I had a wander round the other day.


nine elms is circa 1700 now on some schemes, the Wanda one has sold at nearly £3k. Eco world who bought a stack at battersea and embassy will struggle as you can buy resale a at lower than the later phases

gibbon

2,182 posts

206 months

Friday 12th February 2016
quotequote all
I have a flat and a house in east london zone 2, they have just released a school conversion right by me, its arguably the nicest little pocket in that area, but they are pricing all it seems off £1k sq ft. Seems toppy to me, will see if it sells. Nice period stuff does seem to be selling for around that price though, but then i have long been a fan of Georgian terraces and Edwardian warehouses etc over stack em high new builds.

Burwood

18,709 posts

245 months

Friday 12th February 2016
quotequote all
z4RRSchris said:
Fitzroy average was about 1400/1500 (started selling in 2012), the resales are higher but are not shifting. it's a lovely scheme I had a wander round the other day.


nine elms is circa 1700 now on some schemes, the Wanda one has sold at nearly £3k. Eco world who bought a stack at battersea and embassy will struggle as you can buy resale a at lower than the later phases
Chris, I assume these prices come with 'social housing' unless the developer paid to avoid it? Do you know

z4RRSchris

11,221 posts

178 months

Friday 12th February 2016
quotequote all
there are 50 odd affordable and £6m in 106

Burwood

18,709 posts

245 months

Friday 12th February 2016
quotequote all
It beggars belief the wealthy are expected to live with council tenants. Zone 2 east lonfon for 1k a foot. Is that e14.
Back in the day when I worked at Canary W, my place on river, e14, 3 bed 150 sq metres so pretty large was 275 a ft. I realise that was 2003 but was top dollar then. Last of the no social housing, 24 hour porter, undercover parking space.

I also had a place on narrow street, 2 bed with a 1200 sf roof terrace. Cost 210 k in 98.

In 2003 I was offered a 1500 ft lovely converted warehouse direct river front in butlers wharf. Too much at the time but I get that's 2.5 now.

gibbon

2,182 posts

206 months

Friday 12th February 2016
quotequote all
Burwood said:
It beggars belief the wealthy are expected to live with council tenants. Zone 2 east lonfon for 1k a foot. Is that e14.
Back in the day when I worked at Canary W, my place on river, e14, 3 bed 150 sq metres so pretty large was 275 a ft. I realise that was 2003 but was top dollar then. Last of the no social housing, 24 hour porter, undercover parking space.

I also had a place on narrow street, 2 bed with a 1200 sf roof terrace. Cost 210 k in 98.

In 2003 I was offered a 1500 ft lovely converted warehouse direct river front in butlers wharf. Too much at the time but I get that's 2.5 now.
No, around Victoria Park, Tredegar Square etc.

A flat i own was sold in 1999 for about £95k i think, i bought in 2010 for £300k ish, apparently worth £650-700 ish now, would put your narrow street flat well over a million now. Crazy.

Edited by gibbon on Saturday 13th February 00:26

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