How far will house prices fall [volume 4]
Discussion
z4RRSchris99 said:
I obviously dont have a crystal ball,
Time scales - I reckon end of 16 early 17
areas of london, ill give an example scheme of each. I deal in new build but the same applies for old stock just not in the same severioty.
non core - cityscape in aldgate east. £1000psf mental i reckon 25% drop
sub prime non core - riverlight, embassy gardens, anything in nine elms 35-50%
prime - Alpha Place, the chelsea stuff, fitzroy, 25% drop
prime non core - big stuff at NEO, st georges tower, 50%
super prime - stable - OHP
On what do you base your expectations on this very large correction of the market ?Time scales - I reckon end of 16 early 17
areas of london, ill give an example scheme of each. I deal in new build but the same applies for old stock just not in the same severioty.
non core - cityscape in aldgate east. £1000psf mental i reckon 25% drop
sub prime non core - riverlight, embassy gardens, anything in nine elms 35-50%
prime - Alpha Place, the chelsea stuff, fitzroy, 25% drop
prime non core - big stuff at NEO, st georges tower, 50%
super prime - stable - OHP
I presume interest rate rises will cause a shake out both in the private a BTLETS market.
Yields are hard to sustain in London owing to the double digit increases.
Also I suspect mortgage companies will be more cautious when valuing properties.
ridiculous amount of new stock priced too high that will be completing 2016-2020, sold to a) investors expecting to flip and now having to complete on flats they cant afford to or b) BTL investors being promised yields that they wont get, now having to pay mortgage and service charge.
the past 24/36 months of purchasers achieving their dream of owning a new home in london, paying huge mortgages on H2B or otherwise, now finding interest rates at 2-3% and not being able to afford their 90% mortgage on a house they overpaid for in the first place.
example a friend just got a 1 bed in Clapham for 550k 85% mortgage backed by her parents, shes paying 1500pm mortgage at our great base of 0.5% - any rate increase she wont be able to afford it. I have numerous examples of my idiot friends doing the same.
dont get me wrong, i'm long London over say 20 years, but i think we are in for a bumpy ride over the next 10 years.
the past 24/36 months of purchasers achieving their dream of owning a new home in london, paying huge mortgages on H2B or otherwise, now finding interest rates at 2-3% and not being able to afford their 90% mortgage on a house they overpaid for in the first place.
example a friend just got a 1 bed in Clapham for 550k 85% mortgage backed by her parents, shes paying 1500pm mortgage at our great base of 0.5% - any rate increase she wont be able to afford it. I have numerous examples of my idiot friends doing the same.
dont get me wrong, i'm long London over say 20 years, but i think we are in for a bumpy ride over the next 10 years.
Edited by z4RRSchris99 on Thursday 28th August 18:42
z4RRSchris99 said:
dont get me wrong, i'm long London over say 20 years, but i think we are in for a bumpy ride over the next 10 years.
This captures my thoughts very well. Broadly the trend doesn't suit me: At 24 I'm likely to be a net buyer for the next ~20 years, so the ideal situation would be nominal flat and real drop. The long-run fundamentals are in place: Lots of people wanting to move to London and not much evidence that supply can (or will ever) keep up.
But I see the same behaviours that you do, and piles of potential exogenous shocks that make 'not getting caught out' pretty difficult over the next decade.
Hmm, new builds.
I seem to remember some east end riverside blocks that were essentially worthless 6-7 years ago, the blocks were half empty, with unsavoury tenants in the remainder. They were being advertised at something like 80% off the original asking.
The rest of the market wasn't affected in the same way, remotely.
I seem to remember some east end riverside blocks that were essentially worthless 6-7 years ago, the blocks were half empty, with unsavoury tenants in the remainder. They were being advertised at something like 80% off the original asking.
The rest of the market wasn't affected in the same way, remotely.
brickwall said:
This captures my thoughts very well. Broadly the trend doesn't suit me: At 24 I'm likely to be a net buyer for the next ~20 years, so the ideal situation would be nominal flat and real drop.
The long-run fundamentals are in place: Lots of people wanting to move to London and not much evidence that supply can (or will ever) keep up.
But I see the same behaviours that you do, and piles of potential exogenous shocks that make 'not getting caught out' pretty difficult over the next decade.
So you wait for a dip? Or a 'correction'? I guess that is what you are saying. How many others are waiting for the same? Thus currently is it possible to happen?The long-run fundamentals are in place: Lots of people wanting to move to London and not much evidence that supply can (or will ever) keep up.
But I see the same behaviours that you do, and piles of potential exogenous shocks that make 'not getting caught out' pretty difficult over the next decade.
The other factor to consider is what are you doing in the mean time? Paying rent and playing the stressful and transient waiting game I would guess.
Dont get me wrong, home ownership is not the be all and end all, but if you aspire to it, and can afford it, then I still think at current levels its still foolish not to take the jump.
At every point you could buy at, there will be s question mark, but we can say the long term trend is upwards, and standing still costs you money (rent). In that context, over the long term, if you can buy, and you want to buy, what are you waiting for?
Justayellowbadge said:
Hmm, new builds.
I seem to remember some east end riverside blocks that were essentially worthless 6-7 years ago, the blocks were half empty, with unsavoury tenants in the remainder. They were being advertised at something like 80% off the original asking.
The rest of the market wasn't affected in the same way, remotely.
Hmm. I'm not sure that's right. In fact, I'm absolutely certain that it's wrong. 80% off asking? Not sure that has happens since 91.I seem to remember some east end riverside blocks that were essentially worthless 6-7 years ago, the blocks were half empty, with unsavoury tenants in the remainder. They were being advertised at something like 80% off the original asking.
The rest of the market wasn't affected in the same way, remotely.
I'm pretty sure I already know the answer, but can you back this up with some examples please?
LucreLout said:
Hmm. I'm not sure that's right. In fact, I'm absolutely certain that it's wrong. 80% off asking? Not sure that has happens since 91.
I'm pretty sure I already know the answer, but can you back this up with some examples please?
JAYB is definitely wrong with his figures but the spirit of his post is correct. Prices were rising in London while these new build places were ghettofying and plummeting in value. However, a lot of that was due to their overpricing in the first place if I remember correctly. I think the developers were gambling on grotty areas becoming desirable and it didnt really happen. I'm pretty sure I already know the answer, but can you back this up with some examples please?
gibbon said:
A degree of perspective on this topic is required.I live in London where there has definitely been a bubble.
As a retailer I am acquainted with the bubbles in commercial property and what is almost always the case is that the saying location,location,location stands correct.
The most desirable property in the best areas will always define the market.
I am not including the very top end,that is being purchased by wealthy foreigners for other reasons,this has a life of its own.
The secondary position areas have increased because of the unaffordability of the prime market and this has also been the case with the sub prime.
When the drop comes the secondary and sub prime will be hit hardest.
Outside of London ,generally,I believe prices have been less volatile and are increasing slowly from the lows of the recent recession.
Undoubtably increases in interest rates and other factors will cause a shake out and I expect that prices will fall by between 10 to 30% ,depending on location, over the next 5 years.
What will also affect the lower end of the market,in London,is if stamp duty at 1% was raised to say £300k as I believe that many first time buyers have been put off,with a half decent one bed costing now £300K.
LucreLout said:
Hmm. I'm not sure that's right. In fact, I'm absolutely certain that it's wrong. 80% off asking? Not sure that has happens since 91.
I'm pretty sure I already know the answer, but can you back this up with some examples please?
not 80% but more like 25%.. back in 2007/8 you could exchange on a flat with no deposit completing in 10/11 so desperate were developers to get stock off their books and please the banks. I'm pretty sure I already know the answer, but can you back this up with some examples please?
buy in 08 with no money, bounce back, sell in 09. massive profit.
LucreLout said:
I don't see prices crashing, given what we've just been through.
The biggest knowable risk is another labour government next year. If that doesn't happen then the economy should be set for 4 or 5 more years of growth.
anybody else this optimistic of 4/5 years of growth?The biggest knowable risk is another labour government next year. If that doesn't happen then the economy should be set for 4 or 5 more years of growth.
Euro area still in turmoil, Germany nudging toward recession, wage pressures in the UK, ECB running out of options, UK Govt has kicked the can down the road and after the next GE we need to be expecting more cuts, tax increases, etc etc
Fotic said:
JAYB is definitely wrong with his figures but the spirit of his post is correct. Prices were rising in London while these new build places were ghettofying and plummeting in value. However, a lot of that was due to their overpricing in the first place if I remember correctly. I think the developers were gambling on grotty areas becoming desirable and it didnt really happen.
This was either one or two specific developments, iirc they were something like 60k for for a one bed, against an original asking of 240 or so. Those that were occupied were with very dodgy tenants, the rest were below spec or unfinished/ vandalised.
There were stories in the paper, something on the beeb too.
They weren't quite pristine flats the developer was shifting, more like a receiver fire sale, but I do remember it happening, just can't recall the name of the development.
For a few months they were the cheapest properties on right move or it's equivalent back then, but nobody seemed to want to move there.
Wish I could recall the name now.
Justayellowbadge said:
This was either one or two specific developments, iirc they were something like 60k for for a one bed, against an original asking of 240 or so.
Those that were occupied were with very dodgy tenants, the rest were below spec or unfinished/ vandalised.
There were stories in the paper, something on the beeb too.
They weren't quite pristine flats the developer was shifting, more like a receiver fire sale, but I do remember it happening, just can't recall the name of the development.
For a few months they were the cheapest properties on right move or it's equivalent back then, but nobody seemed to want to move there.
Wish I could recall the name now.
Hill House Thamesmead?Those that were occupied were with very dodgy tenants, the rest were below spec or unfinished/ vandalised.
There were stories in the paper, something on the beeb too.
They weren't quite pristine flats the developer was shifting, more like a receiver fire sale, but I do remember it happening, just can't recall the name of the development.
For a few months they were the cheapest properties on right move or it's equivalent back then, but nobody seemed to want to move there.
Wish I could recall the name now.
http://www.bbc.co.uk/london/content/articles/2008/...
Magog said:
That's the one 
Justayellowbadge said:
Magog said:
That's the one £105k from £250k was back in 2008 - regardless of askng price in ads, you have to wonder what they actually sell for today.
anonymous said:
[redacted]
Just googled. Sierra Leone. Yep bent estate agent bought the lot from Persimmon, somehow convinced their sales staff to continue marketing them as if they still owned them, bumped the value up and offered the difference as a 'deposit contribution' so none of his buyers had to pay anything, accountant made up financial histories.
He f
ked off with 3.5 mil. turbobloke said:
Jeez.
£105k from £250k was back in 2008 - regardless of askng price in ads, you have to wonder what they actually sell for today.
http://www.rightmove.co.uk/property-for-sale/property-30625065.html£105k from £250k was back in 2008 - regardless of askng price in ads, you have to wonder what they actually sell for today.
I don't know what they sell for and the article says "One sold for £105,000 " but this is In the same development.
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