How far will house prices fall [volume 4]

[okgo]

Don't think that is what he was getting at...but yes, for £550k it doesn't look terrible given its location (LV one).

[V6Alfisti]

Burwood said:

There is around 15 miles between those two post codes isn't there...NW2 vs W2. The W2 property looks nice for young couple. It has a nice building and a recent renovation.

I didn't say they were in the same postcode but a couple of standout properties from todays rightmove notifications, these are prices not seen in a long time. Like I said before, the areas I have been looking at stretches from little venice to kilburn area.

Even I am not of the opinion that I could get 58sqm for £400k in that part of Little Venice in the next few months !

Regardless £400k for that flat in that area, size, type of building and decoration hasn't been seen in a long while and certainly two sizeable reductions. It wasn't even originally listed at sky high prices compared to some other jokers!.

The £550k property is also something that would have been listed at £650k at the end of last year.

Edited by V6Alfisti on Wednesday 29th June 17:51

[V6Alfisti]

A major Singapore bank suspends London property loans http://www.bbc.co.uk/news/business-36670075

Not a huge surprise given a bank in Ireland (admittedly not the biggest player) pulled the plug on large loans for London mortgage way before the brexit decision, Chinese restrictions e.t.c

I wonder how many more will follow suit.

[Mr Whippy]

So more QE and lower interest rates ahead?

This bubble is about to be pumped a bit more I think.

3 months to go.

So will it be a window to let smart money hop out... or just a continuation of pump pump pump, lalala, this must go on forever mantra...?!

[V6Alfisti]

Mr Whippy said:

So more QE and lower interest rates ahead?

This bubble is about to be pumped a bit more I think.

3 months to go.

So will it be a window to let smart money hop out... or just a continuation of pump pump pump, lalala, this must go on forever mantra...?!

I may be naive about the impact and must admit I see it as a bit of a non event.How can it have that much or any influence on the current negative sentiment?

Dropping interest rates by what I guess will be 0.25/0.5%, will not affect salary multiples or peoples current negative sentiment about property, or the possibility of job losses, or China/Singapore reducing cash outflows e.t.c

Dropping the base from 5.75% to what has been 0.5% for a long time made money very cheap, but minor percentages? Surely people will just put their cash into gold, risk the stock markets or something else?

Money is already very cheap, but the risks to property hasn't changed and it doesn't really even affect many recent mortgage takers as I think I read the majority have taken fixed rates. And I think I saw somewhere that it could be the difference of £25 a month on a £6xx monthly mortgage, hardly a gamechanger.

Also part of the intent is obviously putting more money into the system, but banks have become more risk adverse with property in recent weeks. Logic to me would say that even if banks have the funds to loan they will balance that with the risk of default or the asset value dropping. Hence the announcement from the Singapore bank today stating they have suspended loans for London property.

Edited by V6Alfisti on Thursday 30th June 21:31

[mike74]

Mr Whippy said:

So more QE and lower interest rates ahead?

This bubble is about to be pumped a bit more I think.

3 months to go.

So will it be a window to let smart money hop out... or just a continuation of pump pump pump, lalala, this must go on forever mantra...?!

Absolutely unbelievable.

Carney is an utter fraud.. an arrogant, louche, incompetent buffoon.

Even he actually looks quite scared now though, as though he realizes he is way out of his depth, but still does the only thing he knows... to keep on kicking that can down the road with yet more QE and ZIRP.

[kurt535]

Mr Whippy said:

So more QE and lower interest rates ahead?

This bubble is about to be pumped a bit more I think.

3 months to go.

So will it be a window to let smart money hop out... or just a continuation of pump pump pump, lalala, this must go on forever mantra...?!

yep, im liquidating. estate agents around tomorrow. hopefully to bullish brexit buyers.

[princeperch]

Anecdotally from my bit of East London I noticed this property came on the market today. One bed, 2nd floor, mezzanine , exposed brickwork etc, on for £380, suspect they'll get that or slightly under.

http://www.rightmove.co.uk/property-for-sale/prope...


Almost 2 years ago to the day I agreed the sale of my basement level but only very slightly bigger one bed mezzanine flat in the same building for 435k.

:-)

[okgo]

Done well there then!

According to a local agent my flat in KT6 has gone up 43% in 3 years, Zoopla has a similar figure, I'm very tempted to get out of it now to be honest!

Considering its the suburbs, albeit a pleasant and well connected one, avg detached price of £1.25m and avg semi price of £700k is mad

[JagLover]

mike74 said:

Absolutely unbelievable.

Carney is an utter fraud.. an arrogant, louche, incompetent buffoon.

Even he actually looks quite scared now though, as though he realizes he is way out of his depth, but still does the only thing he knows... to keep on kicking that can down the road with yet more QE and ZIRP.

All he knows how to do is inflate property bubbles, both here and in Canada.

If you believe that prosperity depends on selling each other property, at ever higher values, Carney is your man.

[V6Alfisti]

Hmmm I was pesimistic about the future of house prices but this adds a new level.

http://www.standard.co.uk/news/london/london-house...

A few choice quotes but to be honest most of it is pretty damning. It does all sound a bit extreme, but the property market wasn't exactly healthy before brexit. It will probably end up somewhere between large price cuts and and smaller price cuts.

"One central London branch manager at one of the capital’s biggest firms said: ”The whole thing is a disaster. The uncertainty will cause the markets to crumble and who knows when that is going to get better. "

"Buying agent Henry Pryor said: ”This is a very, very different market to a week ago. I’m now trying to do deals 10 per cent below where they were a week ago and central London is already down 10 to 15 per cent from its peak. "

"One senior property figure said big price cuts on schemes that are going ahead were inevitable: ”The developers will come back at the end of the summer and look at their prices and they will say ‘if we were asking £450k for a studio pre-Brexit, let’s trim it down to £380."

"One banker I have spoken to suggests the fall could be as much as 40 per cent.”

"The rest of London will definitely be hit by a perfect storm of several factors hitting house prices which is great news for house-buyers but not for investors and homeowners."

Edited by V6Alfisti on Friday 1st July 14:24

[Hitch]

I was going to say I can't see 40% coming off but I guess that's just a couple of years reversal in London. Perhaps it could happen, though prices would still be ridiculous to most!

[loafer123]

Individual sub-markets will see greater falls than that in my view. I have spoken to a huge range of senior industry figures about this, from CEOs to government advisers and on to every level below.

To all I have asked the following question;

If Battersea Power Station flats were selling for £1,800 per square foot, what are they really worth?

The answer from 80% of them was £750 per square foot.

Of course this area was the epicentre of irrationality, so not all central London markets will see anything like this dramatic a fall, but the ripples will flow outwards.

Be careful out there.

[V6Alfisti]

Hitch said:

I was going to say I can't see 40% coming off but I guess that's just a couple of years reversal in London. Perhaps it could happen, though prices would still be ridiculous to most!

That's true, it would basically eradicate the gains over just a 3-4 year period.

[walm]

loafer123 said:

Individual sub-markets will see greater falls than that in my view. I have spoken to a huge range of senior industry figures about this, from CEOs to government advisers and on to every level below.

To all I have asked the following question;

If Battersea Power Station flats were selling for £1,800 per square foot, what are they really worth?

The answer from 80% of them was £750 per square foot.

Of course this area was the epicentre of irrationality, so not all central London markets will see anything like this dramatic a fall, but the ripples will flow outwards.

Be careful out there.

So call a "normal" 2-bed flat 800 sqft - that's £1.5m-ish at £1,800.
Say two incredibly successful professionals get together (before kids) and share it.
With £100k on stamp duty and around £300k of deposit (20%) that leaves them with a £1.2m mortgage.
On 4.75x multiplier that means £250k between them.

Seriously - what sort of people with those earnings and savings are thinking "yes 800 sqft without parking in a transport deadzone surrounded by other tiny boxes, which are mostly empty - now THAT is where I want to live..."????

[loafer123]

walm said:

loafer123 said:

Individual sub-markets will see greater falls than that in my view. I have spoken to a huge range of senior industry figures about this, from CEOs to government advisers and on to every level below.

To all I have asked the following question;

If Battersea Power Station flats were selling for £1,800 per square foot, what are they really worth?

The answer from 80% of them was £750 per square foot.

Of course this area was the epicentre of irrationality, so not all central London markets will see anything like this dramatic a fall, but the ripples will flow outwards.

Be careful out there.

So call a "normal" 2-bed flat 800 sqft - that's £1.5m-ish at £1,800.
Say two incredibly successful professionals get together (before kids) and share it.
With £100k on stamp duty and around £300k of deposit (20%) that leaves them with a £1.2m mortgage.
On 4.75x multiplier that means £250k between them.

Seriously - what sort of people with those earnings and savings are thinking "yes 800 sqft without parking in a transport deadzone surrounded by other tiny boxes, which are mostly empty - now THAT is where I want to live..."????

You have very quickly determined exactly why the value is £750 per square foot.

The buyer of a 2 bed flat there should be two professionals aged, say 32, earning £60k pa each and considering getting a dog because they want a baby and don't have the time. They can pay £120x4 in mortgage plus £80k from savings, inheritance and the Bank of Mum & Dad which should just about do it after paying fees, stamp and a visit to DFS.

What was happening was Mr Zho, who made alot of money making choking hazards in a city you have never heard of in deepest China was buying into the dream at a "seminar" hosted by Savills on a visit to Hong Kong and paying ludicrous amounts over true worth.

[walm]

loafer123 said:

The buyer of a 2 bed flat there should be two professionals aged, say 32, earning £60k pa each and considering getting a dog because they want a baby and don't have the time. They can pay £120x4 in mortgage plus £80k from savings, inheritance and the Bank of Mum & Dad which should just about do it after paying fees, stamp and a visit to DFS.

THAT IS EXACTLY RIGHT....!!!

(Except the dog - it's a cat... less maintenance, and it is still IKEA not DFS with perhaps a brief trip to John Lewis if mum & dad are helping with a house warming gift too...)

[battered]

You are forgetting that the vast majority of those buying are inheriting wealth from grannies dropping off the perch and liberating 3 bed semis in Norwood where they have lived since 1950 and paid for long ago. Yes, it gets spread round, but it's what's fuelling part of the boom.

Those of us who can't afford £1M and don't have to live in London have long since moved to Leeds, Manchester, Birmingham, etc.

[walm]

battered said:

You are forgetting that the vast majority of those buying are inheriting wealth from grannies dropping off the perch and liberating 3 bed semis in Norwood where they have lived since 1950 and paid for long ago. Yes, it gets spread round, but it's what's fuelling part of the boom.

Those of us who can't afford £1M and don't have to live in London have long since moved to Leeds, Manchester, Birmingham, etc.

I think you are wrong.
There aren't enough grannies sparking out.
They just keep plugging on!!

[Hitch]

loafer123 said:

Mr Zho, who made alot of money making choking hazards in a city you have never heard of in deepest China was buying into the dream at a "seminar" hosted by Savills .

Very nicely put.