How far will house prices fall [volume 4]

[turbobloke]

Welshbeef said:

turbobloke said:

An article I read last year claimed that just under two-thirds of households were mortgage-free. The numbers may well have changed since then.

So a third are mortgaged - anywhere between a day to go on the mortgage to just starting off a 25/30/35 year mortgage. Do we have any info on the weighted average remaining age/length of the total UK mortgage book.

A bit more digging shows that the median mortgage outstanding is £75k and the total debt (both recent but not this year) is £847,911,798,000 if that helps! Fag packet arithmetic suggests it hangs together (ish) if we take about 11.3 million households @ £75k with ~55% - rather than just over 60% - of households mortgage-free. It's late, median, mean etc (disclaimer!).

[turbobloke]

There are probably numerous sources with different housekeeping methods which give different results. Must get back to work...

[WCZ]

just bought a flat in Manchester city center, would be nice if prices were stable/rose there

[Welshbeef]

turbobloke said:

A bit more digging shows that the median mortgage outstanding is £75k and the total debt (both recent but not this year) is £847,911,798,000 if that helps! Fag packet arithmetic suggests it hangs together (ish) if we take about 11.3 million households @ £75k with ~55% - rather than just over 60% - of households mortgage-free. It's late, median, mean etc (disclaimer!).

So roughly 3x average UK salary, clearly that high level masks thousands who are struggling and will default/on the mortgage while others its nothing (and I dare say anyone living in the SE UK if you said you had a mortgage of £75k remaining most would consider it a negligible debt especially as 3/5 series cars can get close to that sort of money).

Anyway see below certain areas are clearly going to have a boost due to dramatic changes in journey time to London meaning those who wouldn't look outside London suddenly have a real contender so more real demand. HS2 no doubt will do the same.
http://www.getreading.co.uk/news/local-news/crossr...

[Sheepshanks]

Welshbeef said:

Out of total housing stock what % is mortgage free?


Part of the reason for me raising this is during. 2014 I know two people in their early 30's who have lost relatives and have found themselves in the position of inheriting money to the point they are or will be mortgage and debt free both in houses which they will not be upgrading from (they had stretched to the forever home).
What both are doing is now buying buy to let's both 2 each with the idea that these are paid off by rental income over the next 25 years - one already has one child and planning a second the other not yet got any kids but would love to have two. So you can see the idea here to give the houses to then in 25 years time debt free so they are set up for a great start in life.

I know a fair number of people who have bought a couple of BTLs when their kids were small, with the theory being the houses would more or less pay for themselves and they'd have somewhere for their kids to live in when they were older. Also, although I don't know anyone who has done this for a few years now, people bought houses in the cities their kid(s) went to uni in, and then kept it as a BTL - I guess I haven't seen that happening for a while as student BTL is quite an uncertain investment now.

OTOH, there's a bunch of early to mid-40's people in our office in the SE who took on hefty IO mortgages 15 yrs ago thinking that the capital sum would be a trivial amount after 25yrs and they're now starting to get very nervous as they've made no alternative provision and relatives show no signs of doing the decent thing.

[Magog]

Sheepshanks said:

Magog said:

ClaphamGT3 said:

Finally, we continue to see the rise of PRS as an industrialised model (Tottenham, for example) as well as an increasing number of funds looking to buy and operate existing stock. We should not underestimate the extent to which this will create a new paradigm in the value of residential stock in certain areas.

I'm very cynical about institutional PRS, and the way it has emerged out of RSLs with the support of sovereign wealth funds. Not to disagree with you that it will probably be a far larger part of Britain's housing mix, but it's definitely another nail in the coffin for the idea of the 'property owning democracy'.

I don't think it's been mentioned here but I saw it reported the other day that 20% of homes in the UK are now owned by private landlords and the Government forecasts that to increase to 33%.

Sounds like this article;

http://www.telegraph.co.uk/finance/personalfinance...

Based on this report; http://www.paragon-group.co.uk/file_source/Files/M...

Typical press release to try and get the Company/CEO's name in the papers, but it does make reasonably interesting reading.

I wonder how long it will be before the government moves against private landlords with smaller portfolios in terms of heavier regulation/taxes. We can't have the proles engaging in rentier capitalism seems to be the sentiment of both sides.

[burwoodman]

There is a distinct difference between the new build development market and normal used housing stock. there is a 15%(?) premium for new and I wouldn't be suprised if some developers get taken down due to sheer greed. Im not surprised Z above has his views but London indices are not driven by 5M properties. It's the middle that is growing stromgly

The point with general house prices crashing is that there needs to be a catalyst.What is that then? The economy is growing and banks are lending more sensibly. I predict a slow but 30% falls. No way. The index will be higher this time next year

[Magog]

More about the increase in the numbers who are going to be renting here;

http://www.theguardian.com/money/2014/oct/30/gener...

[burwoodman]

Magog said:

More about the increase in the numbers who are going to be renting here;

http://www.theguardian.com/money/2014/oct/30/gener...

In countries like Germany and Finland it's 65% renters. The uk will get there. I realise I'll be buying my kids houses and planning now when they are under 5

[z4RRSchris99]

Battersea power station phase 3 launches today. Another 500 flats to Asian investors thinking they will cash in

[burwoodman]

z4RRSchris99 said:

Battersea power station phase 3 launches today. Another 500 flats to Asian investors thinking they will cash in

What's the price/ft and actual range of sizes on offer?

My understanding is that a lot of money is coming out of HK where property is still 3X that of London. I'm not so sure they think they will cash in. Better protection from a bubble ala Hong Kong. If it was my money i'd be post code creaping and acquiring properties in need of tlc. simple. No guarantees but the age old proven method. Take a 20 year time line and all should work out fine coupled with a 60% ltv min

[z4RRSchris99]

£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.

[jdw1234]

burwoodman said:

z4RRSchris99 said:

Battersea power station phase 3 launches today. Another 500 flats to Asian investors thinking they will cash in

What's the price/ft and actual range of sizes on offer?

My understanding is that a lot of money is coming out of HK where property is still 3X that of London. I'm not so sure they think they will cash in. Better protection from a bubble ala Hong Kong. If it was my money i'd be post code creaping and acquiring properties in need of tlc. simple. No guarantees but the age old proven method. Take a 20 year time line and all should work out fine coupled with a 60% ltv min

I was under the impression a lot are buying off plan (put down deposit) with the hope of flipping before completion.

[burwoodman]

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

[jdw1234]

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.

[burwoodman]

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

[princeperch]

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

the service charges in most buildings in london will make your eyes water - one of the reasons i'm selling my flat and buying a house.

Id imagine that its going to be at least 2 grand for the service charge on a studio in that development, if not more.

[burwoodman]

princeperch 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

the service charges in most buildings in london will make your eyes water - one of the reasons i'm selling my flat and buying a house.

Id imagine that its going to be at least 2 grand for the service charge on a studio in that development, if not more.

Yep, it's circa £4 per ft so 1,600 to 2k.

You have to wonder why it's £4/ft when my old flat on the River which had a gym, 24 hr porter is under £1.50/ft. Pools are expensive plus I suspect the Freeholder is charging a huge whack in ground rent.

With 7.9M sq feet, the Battersea property is budgeting annual expenses of 30M+. Hard to believe

[z4RRSchris99]

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.

[z4RRSchris99]

jdw1234 said:

I was under the impression a lot are buying off plan (put down deposit) with the hope of flipping before completion.

a lot = all of them. 99%