How far will house prices fall [volume 4]

[z4RRSchris]

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]

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]

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everything I've been looking at over the last 12 months or so has either continued to sit on the market or been quietly withdrawn.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]

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]

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]

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]

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

[okgo]

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]

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]

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]

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]

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]

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]

there are 50 odd affordable and £6m in 106

[Burwood]

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]

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

[Hitch78]

okgo said:

Be interesting to see stats on that, there are not 'that' many folk on 6 figs

350,000 will be affected by the planned changes pension payment allowances for those paid £150,000+ according to something I read earlier. I couldn't believe it, thought it was less crowded up here...

[okgo]

Quite a few.

Working population of city of London about 300k I thought so doesn't sound too mental.

[jonny70]

Hitch78 said:

350,000 will be affected by the planned changes pension payment allowances for those paid £150,000+ according to something I read earlier. I couldn't believe it, thought it was less crowded up here...

that number incldes people who "employment package" goes over 150K . In other words one may earn 120k and have 40k of employer benefits, car etc So will be pulled into the bracket.It was in the Sunday times a few weeks go will try and find the article.

[jonny70]

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

That maybe the case but it begs the question how todays young or the next generation will buy these houses ? If the people who live in these houses today cant really afford to buy them now, its only because they have ridden the huge bubble and built up huge equity.

Then how the hell will their kids afford them ? with no big debt bubble /equity and todays young being worse off than their parents ; student loan repayments ,lose child benefit on over 50k, higher pension contributions (my wifes a primary school teacher and has to contribute way more than her mother who is also a school teacher for a less genreous pension ) etc