How far will house prices fall [volume 4]

[z4RRSchris99]

Maxf said:

okgo said:

Be interested to know how gt3 doesn't think this is already and has been for a while the case in London...

I think the difference now is that some of the major players, who previously wouldnt have touched the PRS with a bargepole are now actively investing. I'm talking about major pension funds buying xxxx units, rather than BTL investors. This is certainly new.

true story. PRS is hot at the moment as yeilds everywhere else are shot,

[AstonZagato]

Digga said:

The black swan event for London high-end domestic property (and New York for that matter) would be the need for the BRICS property owners to liquidate their assets. We all know many places have been bought not even for status and occasional use, but merely as safe havens for chunks of capital. The question is how many distressed sales might it take to cause a change and what spill-down would there be to lower levels of the property ladder.

The seeds are being sown: tax on mansions, tax on empty property, increasing talk of non-dom taxes, huge oversupply of expensive flats that aren't really super-prime at all. Whether those seeds take root or not...

[z4RRSchris99]

AstonZagato said:

The seeds are being sown: tax on mansions, tax on empty property, increasing talk of non-dom taxes, huge oversupply of expensive flats that aren't really super-prime at all. Whether those seeds take root or not...

tax on mansion: increased stamp over £1m, talk of mansion tax
non dom taxes: coming in april 18-285 on capital gains
huge oversupply: already happened, march/May the completions start down in vauxhall, the amount of resales ive been offered by people who dont want to complete is unreal. If people dont complete, banks dont get paid back. simples.

[Sheepshanks]

okgo said:

Be interested to know how gt3 doesn't think this is already and has been for a while the case in London...

Around here (NW) and, from what I can gather, in London too, at higher property values BTL doesn't make sense as rents haven't kept pace with property price.

For his scenario to be valid, that implies something has to change.

[gibbon]

z4RRSchris99 said:

tax on mansion: increased stamp over £1m, talk of mansion tax
non dom taxes: coming in april 18-285 on capital gains
huge oversupply: already happened, march/May the completions start down in vauxhall, the amount of resales ive been offered by people who dont want to complete is unreal. If people dont complete, banks dont get paid back. simples.

You work in prime / super prime no?

Vauxhall? Really?

[gibbon]

Sheepshanks said:

Around here (NW) and, from what I can gather, in London too, at higher property values BTL doesn't make sense as rents haven't kept pace with property price.

For his scenario to be valid, that implies something has to change.

The problem is, people are looking at rental yields with a view of the past, they expect 8%. Right now, and for what may be the foreseeable future you are looking at negative real cash returns and negative deposit rates. There is a lot of money out there, that has to be put somewhere and everyone is looking for some kind of yield.

[Digga]

z4RRSchris99 said:

AstonZagato said:

The seeds are being sown: tax on mansions, tax on empty property, increasing talk of non-dom taxes, huge oversupply of expensive flats that aren't really super-prime at all. Whether those seeds take root or not...

tax on mansion: increased stamp over £1m, talk of mansion tax
non dom taxes: coming in april 18-285 on capital gains
huge oversupply: already happened, march/May the completions start down in vauxhall, the amount of resales ive been offered by people who dont want to complete is unreal. If people dont complete, banks dont get paid back. simples.

These are all what you could call "push" factors - from the UK side of the equation.

From the other side of the equation, "pull" factors within the BRICS might include capital controls, falling currency, declining economy, foreign asset amnesties.

[Sheepshanks]

gibbon said:

The problem is, people are looking at rental yields with a view of the past, they expect 8%. Right now, and for what may be the foreseeable future you are looking at negative real cash returns and negative deposit rates. There is a lot of money out there, that has to be put somewhere and everyone is looking for some kind of yield.

The £150K houses that rent for £750/mth make some sense at the moment, although iffy on a truly commercial basis. It's 6% gross.

What doesn't make sense is the £1M places that rent for £2K/mth.

[walm]

Sheepshanks said:

What doesn't make sense is the £1M places that rent for £2K/mth.

Indeed - unless you believe in permanent and predictable house price inflation - which it appears everybody does!!
Now where did I put those damn tulips?

[NomduJour]

Sheepshanks said:

The £150K houses that rent for £750/mth make some sense at the moment, although iffy on a truly commercial basis. It's 6% gross

Would only take a quick and simple Labour tax change to sort that.

[vescaegg]

gibbon said:

z4RRSchris99 said:

tax on mansion: increased stamp over £1m, talk of mansion tax
non dom taxes: coming in april 18-285 on capital gains
huge oversupply: already happened, march/May the completions start down in vauxhall, the amount of resales ive been offered by people who dont want to complete is unreal. If people dont complete, banks dont get paid back. simples.

You work in prime / super prime no?

Vauxhall? Really?

Vauxhall is Central London. End of story really.

[z4RRSchris99]

vescaegg said:

gibbon said:

z4RRSchris99 said:

tax on mansion: increased stamp over £1m, talk of mansion tax
non dom taxes: coming in april 18-285 on capital gains
huge oversupply: already happened, march/May the completions start down in vauxhall, the amount of resales ive been offered by people who dont want to complete is unreal. If people dont complete, banks dont get paid back. simples.

You work in prime / super prime no?

Vauxhall? Really?

Vauxhall is Central London. End of story really.

build prime/super prime yes (well not me personally!)

dont do anything in vauxhall anymore - 16,000 new 'prime' homes? bit saturated

[gibbon]

Sheepshanks said:

The £150K houses that rent for £750/mth make some sense at the moment, although iffy on a truly commercial basis. It's 6% gross.

What doesn't make sense is the £1M places that rent for £2K/mth.

£1m properties don't often rent for £2k a month.

I have a 500k ish property that rents for £2k in zone 2 London.

My point is the average persons perception of required return for investment does not match the global fund investors expectations of returns anymore. Which you have just demonstrated.

The market participants are changing and their expectations are not the same as the average BTL landlord.

Edited by gibbon on Thursday 19th February 12:58

[ClaphamGT3]

Sheepshanks said:

okgo said:

Be interested to know how gt3 doesn't think this is already and has been for a while the case in London...

Around here (NW) and, from what I can gather, in London too, at higher property values BTL doesn't make sense as rents haven't kept pace with property price.

For his scenario to be valid, that implies something has to change.

You gather incorrectly; this is happening right now. We are currently advising funds on a slew of PRS acquisitions, with many tens already completed. There is a quite large investor profile which is massively attracted to an asset-backed investment with very predictable returns

Equally, we are acting developer side for a number of developers bringing forward product tailored for institutional PRS and for 5 LAs who have, outside their traditional HRA account, moved into PRS provision.

[z4RRSchris99]

ClaphamGT3 said:

Sheepshanks said:

okgo said:

Be interested to know how gt3 doesn't think this is already and has been for a while the case in London...

Around here (NW) and, from what I can gather, in London too, at higher property values BTL doesn't make sense as rents haven't kept pace with property price.

For his scenario to be valid, that implies something has to change.

You gather incorrectly; this is happening right now. We are currently advising funds on a slew of PRS acquisitions, with many tens already completed. There is a quite large investor profile which is massively attracted to an asset-backed investment with very predictable returns

Equally, we are acting developer side for a number of developers bringing forward product tailored for institutional PRS and for 5 LAs who have, outside their traditional HRA account, moved into PRS provision.

nods head in agreement

[Sheepshanks]

ClaphamGT3 said:

Equally, we are acting developer side for a number of developers bringing forward product tailored for institutional PRS and for 5 LAs who have, outside their traditional HRA account, moved into PRS provision.

I can well imagine developing from scratch can make sense as it can be tailored as appropriate. As an example, look at the way Uni's are throwing up property all over the country.

[Magog]

This Makes new build 1 beds at Battersea Power station/Nine Elms look like a bargain.

[spikeyhead]

£500k for a flat in Luton? Advertised to the gullible as central London.

http://www.dailymail.co.uk/news/article-2959887/Lu...

[spikeyhead]

anonymous said:

[redacted]

It's daft. They could easily get decent money for them from young city workers that don't want to live in Dalston, It's only 30 mins to get from there to London Bridge, a few minutes less for Kings X or Blackfriars and the place is only five minutes walk to the station. The trains run every 15 minutes with a few more in the rush hour. It's easy to get to the airport and the M1. Sure Luton's a bit of a sthole but it's a far better sthole than many other places I've lived in. But half a bar? their obviously trying to con the hard of thinking that urgently need to wash some foreign currency and don't mind quite how it's done.

[valiant]

Yes but pound to a penny it's aimed at foreign buyers who havn't a clue where Luton really is and believe all the sales blurb and take the brochure as gospel.

Plus the belief that anything in close proximity to London is a guaranteed winner.