How far will house prices fall [volume 4]

[crankedup]

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.
I had completely took my eye of the Prime London property market! My living in Suffolk somehow seems sensible now, not that I could afford prime London or particularly want to live there!

[AstonZagato]

But replacement cost isn't the only factor. If you look in the Property Prawn thread, there are plenty of large houses that one couldn't buy the land and build at that price. Hell, some almost look like you couldn't (even getting the shell for nothing) refurbish at the sale price.

There has been a demographic change though. More people, more single family dwellings, less shared occupancy. We have not built as much as we should - and that is near impossible in London. That will change the affordability, no question.

But that affordability eventually feeds into other things. If you are a junior doctor, you have the choice of working in London or Newcastle. One you live in a hovel, the other your money goes further. Where do you choose? Not all professions are equally mobile - and there is a gravitational pull to the largest concentration of talent/customers/decision-makers that is self-fulfilling and self-perpetuating. But housing cost is strong enough to break that cycle. Eventually. Is that at 10x average earning? 20x? 30x?

[z4RRSchris]

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

[JagLover]

Timmy40 said:

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.

Perhaps you and I have a different definition of the word "professional". Admin & clerical roles have been with us for centuries an executive paperclip assistant is no more a professional now than Gladys from the typing pool was back in the 1960s.

Yes as business services become more important to the economy there are now more professionals, but going to an university alone does not make you one, neither does merely working in an office. It is easy to forget, working in central London, that average earnings for even the fourth quintile of households is only £40K before adjusting for tax and benefits.

Timmy40 said:

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.

Well the LSE have calculated that removing planning constraints would lower the cost of new houses 35% (not necessarily sales price of course). Certainly there has been a meteoric rise since the 1930s in the proportion of the house cost that is land.

It has been claimed that nationally the land proportion of the value of a house is 70%.

[Mr Whippy]

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.

Calling it a 'safe haven' because billionaires park their money there is questionable.

It's a pyramid scheme plain and simple.

Some rich people hop in, pump prices, everyone else and their mum buys into the growth like it's a 'sure thing'

The last ones in get shafted. Probably the greedy sheep.

It makes you wonder how many multi-billionaire types have unloaded a lot of their high-end property in this last 12 months.

Dave

[turbobloke]

Mr Whippy 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.

Calling it a 'safe haven' because billionaires park their money there is questionable.

I called it a relatively safe haven in the present tense

[AstonZagato]

But if you are a Russian billionaire, you probably don't care anyway. Your risk is leaving the money in Russia, in which case Putin might decide to take it all. Put £100m into UK property and, even if it drops to £50m, you have enough money to live on for the rest of your life, whatever the vagaries of Russian politics.

Same for the middle eastern oil billions. If it all goes Assad on them, then a private plane to London and you are safe and still rich enough.

[turbobloke]

AstonZagato said:

But if you are a Russian billionaire, you probably don't care anyway. Your risk is leaving the money in Russia, in which case Putin might decide to take it all. Put £100m into UK property and, even if it drops to £50m, you have enough money to live on for the rest of your life, whatever the vagaries of Russian politics.

OK, a relatively safe haven for real money in the present and future tenses

[loafer123]

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

[Justayellowbadge]

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

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

[okgo]

Justayellowbadge said:

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

Uber chopper

[SilverSixer]

Justayellowbadge said:

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

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

Saudi Prince has many wives needing many bedrooms. None drive because women.

[Justayellowbadge]

okgo said:

Justayellowbadge said:

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

Uber chopper

Hang on.

Did you just call me a mammoth cock?

[okgo]

Justayellowbadge said:

Hang on.

Did you just call me a mammoth cock?

[turbobloke]

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.

[Mr Whippy]

AstonZagato said:

But if you are a Russian billionaire, you probably don't care anyway. Your risk is leaving the money in Russia, in which case Putin might decide to take it all. Put £100m into UK property and, even if it drops to £50m, you have enough money to live on for the rest of your life, whatever the vagaries of Russian politics.

Same for the middle eastern oil billions. If it all goes Assad on them, then a private plane to London and you are safe and still rich enough.

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.

[turbobloke]

Mr Whippy said:

AstonZagato said:

But if you are a Russian billionaire, you probably don't care anyway. Your risk is leaving the money in Russia, in which case Putin might decide to take it all. Put £100m into UK property and, even if it drops to £50m, you have enough money to live on for the rest of your life, whatever the vagaries of Russian politics.

Same for the middle eastern oil billions. If it all goes Assad on them, then a private plane to London and you are safe and still rich enough.

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.

Thank goodness the closest Corbyn will get to power is when he turns the lights on.

[alfaman]

Justayellowbadge said:

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

someone who wants to rent out rooms on an hourly basis to very high end clients ?

[AstonZagato]

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.

[z4RRSchris]

Justayellowbadge said:

The question that occurs to me is who exactly is the target for a 15m 12 bed flat in Battersea?

And would such a person, if they ever find one, conceivably only require a single parking space?

15m. 12 beds. 1 sodding parking space.

that's not an actual flat, it's a broker trying to sell the top two flats as one and take a cut