How far will house prices fall [volume 4]

[LdnShtr]

z4RRSchris99 said:

the service is more like £6-8 psf.

so your 400sqft studio your paying £2400pa service, £400 ground rent, council tax, rates, utilities etc.

you cant let it as short term holiday lets as its against the lease.

anyone who thinks buying in a new build is a great rental investment is crazy.

I thought you were being overly negative on the London property market but if those are the numbers for the flats whose prices you mentioned earlier then I agree that surely that particular market can't go on forever!

For the "investors" who are buying from abroad do you know how they are financing their purchases? They can't all be cash buyers can they?

[jdw1234]

burwoodman said:

jdw1234 said:

burwoodman said:

z4RRSchris99 said:

£385,000 studio - usually around 380/400 sqft.
£590,000 for a one-bedroom - usually around 600 sqft.
£1.2 million for a two-bedroom - usually around 900 sqft plus.
£1.9 million for a three-bed - usually around 1250 sqft plus.
£3.2 million for a four-bed - usually around 2000 sqft plus.

Ive found studio units even at that price to be a good investment. Sod all service charges and you get to use the facilities, which i assume are impressive

Edited to say Foxtons have studio's for resale at 1150k!. Not so good an investment.

Edited by burwoodman on Friday 31st October 09:52

I thought that historically, in a downturn studios/1 beds are impossible to shift.

At £400K I would wager you could rent them out week to week as tourist digs, 1k a week no problem. I'm talking about the studio

Lease wont let you.

[z4RRSchris99]

LdnShtr said:

I thought you were being overly negative on the London property market but if those are the numbers for the flats whose prices you mentioned earlier then I agree that surely that particular market can't go on forever!

For the "investors" who are buying from abroad do you know how they are financing their purchases? They can't all be cash buyers can they?

those studios are cheap, its more like £700-£1m normally for 400 sqft.

they are 'cash' buyers, but this means they have debt in an overseas country. You now CANNOT get finance on resales without a bridge loan. which means all these people wanting to flip flats have to find proper cash buyers.

How many people are there out there who can spend £1m CASH on a 1 bed flat?

[jdw1234]

z4RRSchris99 said:

LdnShtr said:

I thought you were being overly negative on the London property market but if those are the numbers for the flats whose prices you mentioned earlier then I agree that surely that particular market can't go on forever!

For the "investors" who are buying from abroad do you know how they are financing their purchases? They can't all be cash buyers can they?

those studios are cheap, its more like £700-£1m normally for 400 sqft.

they are 'cash' buyers, but this means they have debt in an overseas country. You now CANNOT get finance on resales without a bridge loan. which means all these people wanting to flip flats have to find proper cash buyers.

How many people are there out there who can spend £1m CASH on a 1 bed flat?

Can you explain to me (I have no connection to the industry) why you cant get a mortgage for a resale? Do you mena before it is built?

[z4RRSchris99]

banks won't lend on Resales, only some will on the resale price, very very few

X buys for 1m puts down 100k
X sells to Y for 1.5m, makes 500k from 100k
Y can only get finance on the 1m. not the 1.5m

edit : this is after it's built. basically you need to buy a resale in cash

Edited by z4RRSchris99 on Friday 31st October 18:35

[fido]

z4RRSchris99 said:

banks won't lend on Resales, only some will on the resale price, very very few

I'm confused as well .. surely buying off-plan (before it's built) is more risky than the resale (after it has been built and an accurate value can be determined)?!

[burwoodman]

fido said:

z4RRSchris99 said:

banks won't lend on Resales, only some will on the resale price, very very few

I'm confused as well .. surely buying off-plan (before it's built) is more risky than the resale (after it has been built and an accurate value can be determined)?!

Maybe Chris can chime in. Here are my thoughts. I may be wrong but back in 2000 I purchased resales and had no problems.

1. Completion is times for when the building is finished-or the flat is finished more correctly. A bank wont advance all the cash on a work in progress.
2. Small studios, below 30sq M are a problem-banks just dont lend. The Battersea studios do not appear to be caught by this.
3. In a rising market I think banks will lend on the new increased speculative asking, if it is reasonable. maybe chris means that they wont when it's double the original price.

[Magog]

Some estate agents property investment professionals, have worked out how to edit a spreadsheet, and they have managed to get the Guardian to publish their conclusions. Presumably in order that the Pope has something to wipe with next time he goes for a walk in the woods.

http://www.theguardian.com/money/2014/nov/03/londo...

[z4RRSchris99]

fido said:

z4RRSchris99 said:

banks won't lend on Resales, only some will on the resale price, very very few

I'm confused as well .. surely buying off-plan (before it's built) is more risky than the resale (after it has been built and an accurate value can be determined)?!

sorry. this is ALL before it's built. a lot of flats are sold a few times before they are completed.

the banks will only lend on the value buyer 1 paid the developer, not what 2 paid 1 or 3 paid 2 etc. A lot won't lend at all if your not buying off the developer

so buyer 1 thinks he's clever by putting down 10-30% and trying to flip but buyer 2 now has to be a cash buyer

Edited by z4RRSchris99 on Monday 3rd November 20:21

[GlenMH]

Torygraph reporting on the London market distortions v the rest of the UK here:
http://www.telegraph.co.uk/finance/economics/11205...

[XJ40]

GlenMH said:

Torygraph reporting on the London market distortions v the rest of the UK here:
http://www.telegraph.co.uk/finance/economics/11205...

Some sensible views there IMO. London is the big distortion in the market, and you can see the knock-on effects as money spills out to the surrounding areas. But in many other parts, I'd say that houses are looking relatively cheap, just consider inflation since '07-'08 as mentioned, and how the real value of money has been diminished by increased supply, QE.

[Derek Chevalier]

XJ40 said:

GlenMH said:

Torygraph reporting on the London market distortions v the rest of the UK here:
http://www.telegraph.co.uk/finance/economics/11205...

Some sensible views there IMO. London is the big distortion in the market, and you can see the knock-on effects as money spills out to the surrounding areas. But in many other parts, I'd say that houses are looking relatively cheap, just consider inflation since '07-'08 as mentioned, and how the real value of money has been diminished by increased supply, QE.

I was unable to find a sensible view in there, it was a load of garbage

[XJ40]

Derek Chevalier said:

I was unable to find a sensible view in there, it was a load of garbage

Okay, well perhaps you'd like to inform us as to why? Are you saying the figures given by the Land Registry are wrong?

If you accept the figures then the journalist is saying that, if London is excluded, property is 16% down from '07 in absolute terms and 35% down when factoring in inflation. That doesn't look much like a bubble to me either.

[Derek Chevalier]

XJ40 said:

Derek Chevalier said:

I was unable to find a sensible view in there, it was a load of garbage

Okay, well perhaps you'd like to inform us as to why? Are you saying the figures given by the Land Registry are wrong?

If you accept the figures then the journalist is saying that, if London is excluded, property is 16% down from '07 in absolute terms and 35% down when factoring in inflation. That doesn't look much like a bubble to me either.

Have earning kept track with inflation?

[JagLover]

XJ40 said:

GlenMH said:

Torygraph reporting on the London market distortions v the rest of the UK here:
http://www.telegraph.co.uk/finance/economics/11205...

Some sensible views there IMO. London is the big distortion in the market, and you can see the knock-on effects as money spills out to the surrounding areas. But in many other parts, I'd say that houses are looking relatively cheap, just consider inflation since '07-'08 as mentioned, and how the real value of money has been diminished by increased supply, QE.

Talking about real terms prices may be misleading the comparison for house prices should always be with earnings or rents.

Secondly all of London is in a bubble as far as I can see so just talking about super-rich foreigners swapping houses is a bit misleading and London often leads the bubble in house prices.

It sounds like more special pleading for a sector that wants the government to permanently inflate a bubble and ignore the impact on most people's standard of living as a result.

[Esseesse]

XJ40 said:

Derek Chevalier said:

I was unable to find a sensible view in there, it was a load of garbage

Okay, well perhaps you'd like to inform us as to why? Are you saying the figures given by the Land Registry are wrong?

If you accept the figures then the journalist is saying that, if London is excluded, property is 16% down from '07 in absolute terms and 35% down when factoring in inflation. That doesn't look much like a bubble to me either.

Well just before the crash in 07, OH bought a house for £230k (and IMO she paid over the odds). We have recently sold for £250k, completing in the next month or so. So in absolute terms up nearly 10%, this is in Bedford so not very close to London.

[alfaman]

Esseesse said:

Well just before the crash in 07, OH bought a house for £230k (and IMO she paid over the odds). We have recently sold for £250k, completing in the next month or so. So in absolute terms up nearly 10%, this is in Bedford so not very close to London.

Bedford is commutable to London ..

The +10% sounds about right . Prices in South Beds (20-30 min train to London ) are approx 5% -10% ish above 2007 peak.

I reckon South Bucks also up 10%+ or more... And would guess good areas even nearer in or on the met line up a bit more.
Maybe it's just the non-commutable to London areas which are flat or slightly down on 2007 peak?

[Sheepshanks]

alfaman said:

Maybe it's just the non-commutable to London areas which are flat or slightly down on 2007 peak?

I live on the outskirts of a Cheshire village and the house next door to me sold in 2006 for £260K. Absolutely no way it would sell for that now - a similar one went for £195K earlier this year.

[burwoodman]

Sheepshanks said:

alfaman said:

Maybe it's just the non-commutable to London areas which are flat or slightly down on 2007 peak?

I live on the outskirts of a Cheshire village and the house next door to me sold in 2006 for £260K. Absolutely no way it would sell for that now - a similar one went for £195K earlier this year.

I think it's post code specific. Surrey (GU8) is +15% on 2007. My old place in Canary Wharf is about even. Zoopla has quite good post code specific %age changes.

In NZ the mentality is 'im doing well' if ones house goes up-many owners then remortgage to buy that boat or holiday (really stupid thing to do) unless you have a really solid income. I realise it's cheap funding but just like with interest only, it creeps up and bites you! A friend over there has been wringing his hands at his on paper gains. I said, errm, but if you sell what are you going to do. Live in a tent?

[burwoodman]

An Auckland based article. Chinese cash is driving it up http://www.nzherald.co.nz/nz/news/article.cfm?c_id...