How far will house prices fall [volume 5]
Discussion
https://www.ft.com/content/6d1361c5-1001-4ef7-8f8f...
Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
Andy20vt said:
V6 you think you have saved £130k but how much rent have you spent in all that time you have been waiting for the perfect time to buy?
Your situation seems very different to most in that you would be a cash buyer, and you are focusing on London only, a very unique and somewhat insular market with it's own push/pull factors and much higher than average levels of leveraged property and foreign investment.
I would agree with you that London has for some time been over valued and was/is due a correction. The same can not be said for the rest of the country though, many areas of which have seen a fairly steady growth over the last few years. That said, there are plenty of places where homes are still quite affordable even for people on modest incomes.
I'm with you, I would be doubtful about buying in London with prices as they are, particularly one of the identikit high rise flats that have been thrown up all over. For most of the rest of the country things are different though. For example in Manchester where one of my sons recently purchased the much improved tram links and influx of media types from London (escaping London high prices plus relocation of BBC, ITV etc) has lead to a recent surge in prices. There is much of a buzz around the city at present and I would expect this to continue, particularly with all the big transport and infrastructure projects planned in the region (Northern Powerhouse, HS2, new Manchester Airport Terminal, etc). It's a similar story in Leeds and Liverpool. Bristol which we visit occasionally is very much on the up too.
Purchasing in rural areas might also increase in popularity. We live on the coast in Devon and lockdown with easy access to beaches and nature here has been absolute bliss compared to the stories we hear coming from more built up areas.
You see it is all location dependent and you cannot say that property will crash across the board. You may feel you are winning in London as prices have softened but equally in that more desirable area you'll one day want to move to, property values may be busy accelerating away.
I agree with much of this. If V6 was looking mainly at c £1m 2 bed flats in not particularly desirable areas then yes, he may have made a good decision not to buy. I don't think that means a 200k house in Manchester, or a 400k house in Kent, or a 500k house in Zone 3/4 are all going to follow the same trend as £1m new builds in SW London. There will always be demand for 'affordable' property in London for one, especially for freehold period properties. Your situation seems very different to most in that you would be a cash buyer, and you are focusing on London only, a very unique and somewhat insular market with it's own push/pull factors and much higher than average levels of leveraged property and foreign investment.
I would agree with you that London has for some time been over valued and was/is due a correction. The same can not be said for the rest of the country though, many areas of which have seen a fairly steady growth over the last few years. That said, there are plenty of places where homes are still quite affordable even for people on modest incomes.
I'm with you, I would be doubtful about buying in London with prices as they are, particularly one of the identikit high rise flats that have been thrown up all over. For most of the rest of the country things are different though. For example in Manchester where one of my sons recently purchased the much improved tram links and influx of media types from London (escaping London high prices plus relocation of BBC, ITV etc) has lead to a recent surge in prices. There is much of a buzz around the city at present and I would expect this to continue, particularly with all the big transport and infrastructure projects planned in the region (Northern Powerhouse, HS2, new Manchester Airport Terminal, etc). It's a similar story in Leeds and Liverpool. Bristol which we visit occasionally is very much on the up too.
Purchasing in rural areas might also increase in popularity. We live on the coast in Devon and lockdown with easy access to beaches and nature here has been absolute bliss compared to the stories we hear coming from more built up areas.
You see it is all location dependent and you cannot say that property will crash across the board. You may feel you are winning in London as prices have softened but equally in that more desirable area you'll one day want to move to, property values may be busy accelerating away.
(Note: may be biased - just bought c 500k 100+ year old home in Z4 ...).
PrinceRupert said:
the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B
Agreed on new build but I think the bracket above H2B (i.e. £1 mm 2-3 bed flats) is worse.Particularly anything in the Nine Elms / Battersea Power Station development or around Earl's Court.
Amazingly many of these properties are bought for students to live in, who knows what the numbers will be like in September.
PrinceRupert said:
https://www.ft.com/content/6d1361c5-1001-4ef7-8f8f...
Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
The biggest factor in allowing affordability is interest rates. Demand is simply a byproduct of this and that's where supply/demand thing comes in. Supply will be constrained for sure in the coming year with all the disruption to new build sites. There is a site of 20 or so houses near us in our village that were due to start being be finished this spring/summer. About half have been reserved. There have been no builders on-site for 4 weeks now and much of the equipment (diggers, forklift, dumpers, site cabin etc) have been removed from site. No idea when they will start work again, so I'd image it will be the Autumn now by the time they start completing. A big shortage of new build properties will be on the cards this year that's for sure.Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
Andy20vt said:
You see it is all location dependent and you cannot say that property will crash across the board. You may feel you are winning in London as prices have softened but equally in that more desirable area you'll one day want to move to, property values may be busy accelerating away.
I think we will certainly see a flattening / redistribution between London and the regions (accelerating what's been happening for a few years).20-30 years the average City professional fled to the suburbs as soon as they could because (among other reasons) schools in London were crap and fear of crime was much higher. These things improved in the 00's whilst at the same time commuting into Town by train or car got much worse, hence greater desire to stay in London.
The current enforced working from home will make a lot of people re-evaluate whether they need to be 30 mins from the office.
Lots and lots of moving parts.
If developers throttle back on builds and fall back on their land banks, could have an effect - certainly until they become forced sellers. Supply can prop up valuations. Not seen a report for 18mths or so, so this could be out of date.
Also BREXIT may have an affect at the upper end. Sterling is due to.increase in value vs Eur, so that could have a negative effect - but with a No Deal and collapse in relevance of the PD we could end up with a very different tax structure encouraging offshore money (Singapore on Thames scenario).
I wouldn't bet against the govt not doing absolutely everything possible to protect real estate valuations. It's about 10trillion in (mk to mkt) wealth. They have to keep people spending and perceived asset wealth does that....
Then there is concerns re affordability and unemployment; it's very very difficult to call. Whilst I suspect some of the froth and over-valued stuff comes off; I wouldn't want to be naked short.
If developers throttle back on builds and fall back on their land banks, could have an effect - certainly until they become forced sellers. Supply can prop up valuations. Not seen a report for 18mths or so, so this could be out of date.
Also BREXIT may have an affect at the upper end. Sterling is due to.increase in value vs Eur, so that could have a negative effect - but with a No Deal and collapse in relevance of the PD we could end up with a very different tax structure encouraging offshore money (Singapore on Thames scenario).
I wouldn't bet against the govt not doing absolutely everything possible to protect real estate valuations. It's about 10trillion in (mk to mkt) wealth. They have to keep people spending and perceived asset wealth does that....
Then there is concerns re affordability and unemployment; it's very very difficult to call. Whilst I suspect some of the froth and over-valued stuff comes off; I wouldn't want to be naked short.
NickCQ said:
It's a bit circular though, as so much of the wealth of the older generation is held in the form of housing already.
I do think we will see a moderate spike in probate properties for sale; the grandkids spending those proceeds will lag a few months (of course with HMRC's wedge taken out in the interim).
That's good if it gets to the grandkids but someone mentioned divorces earlier - I wonder how many divorces will be facilitated by inheritances?I do think we will see a moderate spike in probate properties for sale; the grandkids spending those proceeds will lag a few months (of course with HMRC's wedge taken out in the interim).
NickCQ said:
PrinceRupert said:
the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B
Agreed on new build but I think the bracket above H2B (i.e. £1 mm 2-3 bed flats) is worse.Particularly anything in the Nine Elms / Battersea Power Station development or around Earl's Court.
Amazingly many of these properties are bought for students to live in, who knows what the numbers will be like in September.
Will not houses in quieter areas be more in demand in the future, a future lockdown is always going to be in the back of peoples minds so a house down a quiet lane with a decent garden where you can maybe disappear across some fields for an hour or two will be desirable where as a 2 bed 2nd floor apartment in the city centre will be looked at as nothing more than a possible prison cell.
scottyp123 said:
Will not houses in quieter areas be more in demand in the future, a future lockdown is always going to be in the back of peoples minds so a house down a quiet lane with a decent garden where you can maybe disappear across some fields for an hour or two will be desirable where as a 2 bed 2nd floor apartment in the city centre will be looked at as nothing more than a possible prison cell.
IMHO you either want a quiet location, or the convenience of a city centre. Once the bars, restaurants & shops are back open, memories will fade surprisingly quickly.What is likely to be a permanent change though is people living in and around London (or other expensive locations) driven solely by commute time. A bigger house further out with room for that separate office, but still commutable for the day a week you do travel will suddenly look more attractive.
PrinceRupert said:
https://www.ft.com/content/6d1361c5-1001-4ef7-8f8f...
Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
You've changed your name again??Coronavirus threatens to halve London housebuilding - Private sector may only complete 10,000 new homes in London this year
What impact might the reduction in supply have on prices? I'm not so sure of a house price crash as some on here, but certainly the property I'd least like to own right now would be a new build flat the prices of which have been inflated by H2B - which I suspect a lot of these 'lost' new builds will be.
Carbon Sasquatch said:
IMHO you either want a quiet location, or the convenience of a city centre. Once the bars, restaurants & shops are back open, memories will fade surprisingly quickly.
What is likely to be a permanent change though is people living in and around London (or other expensive locations) driven solely by commute time. A bigger house further out with room for that separate office, but still commutable for the day a week you do travel will suddenly look more attractive.
This is pretty much 100% what I am thinking about.What is likely to be a permanent change though is people living in and around London (or other expensive locations) driven solely by commute time. A bigger house further out with room for that separate office, but still commutable for the day a week you do travel will suddenly look more attractive.
I don't live in the city centre, but in a suburb that has higher prices than most because its got a quick commute, quite a lot of amenities within walking distance whilst still being relatively green.
As such, I live in a much smaller place than I would do elsewhere. The commute is no use at all now, the pubs and restaurants and everything else are shut and the green space is overcrowded because a lot of people live in dense housing. I'm lucky enough to have a tiny garden, but nothing compared to what I would do 30 miles further out for the same money.
I've been looking to move locally for years, but the jump in price has made it unaffordable. By adding half an hour to my commute, I could get a better house than I am looking at around here for far less money. Of course, if it becomes a general trend, there might not be as much difference in price going forward anyway.
Edited by kingston12 on Monday 20th April 17:54
One thing that hasn't been lost on me (and I live a 40 Min cycle from my office) is that whilst I live in zone 3 (and not a million miles from zone 2) the amount of money I've saved through never having to commute to work by train or tube is insane. It's literally thousands and thousands of pounds and has been a major contributor towards clearing my mortgage in ten years.
I haven't completely ruled out moving out of London , particularly as kids grow older, but as things stand I am very happy sending any offspring of mine to any of the local schools. Obviously the boon to living in London , even if it was only for a few years, has been the massive equity kicker you move out with, and the potential to save on commuting costs. Moving to Brighton sounds nice doesn't it? But then look what it costs two professional people to get to work, even if it's only for 3 days a week. It's crippling and the cost never ever goes down.
I haven't completely ruled out moving out of London , particularly as kids grow older, but as things stand I am very happy sending any offspring of mine to any of the local schools. Obviously the boon to living in London , even if it was only for a few years, has been the massive equity kicker you move out with, and the potential to save on commuting costs. Moving to Brighton sounds nice doesn't it? But then look what it costs two professional people to get to work, even if it's only for 3 days a week. It's crippling and the cost never ever goes down.
Andy20vt said:
V6 you think you have saved £130k but how much rent have you spent in all that time you have been waiting for the perfect time to buy?
Your situation seems very different to most in that you would be a cash buyer, and you are focusing on London only, a very unique and somewhat insular market with it's own push/pull factors and much higher than average levels of leveraged property and foreign investment.
I would agree with you that London has for some time been over valued and was/is due a correction. The same can not be said for the rest of the country though, many areas of which have seen a fairly steady growth over the last few years. That said, there are plenty of places where homes are still quite affordable even for people on modest incomes.
I'm with you, I would be doubtful about buying in London with prices as they are, particularly one of the identikit high rise flats that have been thrown up all over. For most of the rest of the country things are different though. For example in Manchester where one of my sons recently purchased the much improved tram links and influx of media types from London (escaping London high prices plus relocation of BBC, ITV etc) has lead to a recent surge in prices. There is much of a buzz around the city at present and I would expect this to continue, particularly with all the big transport and infrastructure projects planned in the region (Northern Powerhouse, HS2, new Manchester Airport Terminal, etc). It's a similar story in Leeds and Liverpool. Bristol which we visit occasionally is very much on the up too.
Purchasing in rural areas might also increase in popularity. We live on the coast in Devon and lockdown with easy access to beaches and nature here has been absolute bliss compared to the stories we hear coming from more built up areas.
You see it is all location dependent and you cannot say that property will crash across the board. You may feel you are winning in London as prices have softened but equally in that more desirable area you'll one day want to move to, property values may be busy accelerating away.
Given I was probably looking about 3 years ago, that would be about £54k.Your situation seems very different to most in that you would be a cash buyer, and you are focusing on London only, a very unique and somewhat insular market with it's own push/pull factors and much higher than average levels of leveraged property and foreign investment.
I would agree with you that London has for some time been over valued and was/is due a correction. The same can not be said for the rest of the country though, many areas of which have seen a fairly steady growth over the last few years. That said, there are plenty of places where homes are still quite affordable even for people on modest incomes.
I'm with you, I would be doubtful about buying in London with prices as they are, particularly one of the identikit high rise flats that have been thrown up all over. For most of the rest of the country things are different though. For example in Manchester where one of my sons recently purchased the much improved tram links and influx of media types from London (escaping London high prices plus relocation of BBC, ITV etc) has lead to a recent surge in prices. There is much of a buzz around the city at present and I would expect this to continue, particularly with all the big transport and infrastructure projects planned in the region (Northern Powerhouse, HS2, new Manchester Airport Terminal, etc). It's a similar story in Leeds and Liverpool. Bristol which we visit occasionally is very much on the up too.
Purchasing in rural areas might also increase in popularity. We live on the coast in Devon and lockdown with easy access to beaches and nature here has been absolute bliss compared to the stories we hear coming from more built up areas.
You see it is all location dependent and you cannot say that property will crash across the board. You may feel you are winning in London as prices have softened but equally in that more desirable area you'll one day want to move to, property values may be busy accelerating away.
So + £76k vs the £130k and then I have also made more than £54k back in shares alone (alibiet probably not after tax) but equally not had to pay out on any house maintenance/white goods e.t.c, not hard to do the maths on that one....
I am referring to the area I want to buy in, yes, of course i.e London (as stated probably 100+ times in an almost parrot like fashion). I agree, London was very overpriced when I was looking to buy those 3 years (and areas of interest have certainly 'softened' since then but still can be hit again, now it's facing the covid 19 headswinds. I have always qualified this by talking about London (but you would have to be a fool to think it will be exclusive to London), I am not an expert on all areas and don't believe in the average figure across the country, it just wraps so much into it, but equally there are areas that haven't recovered since 2008. Which you equally don't mention.
Where did I ever say that property will crash across the board, I have literally been at pains to articulate most of my comments relates to London (but also further qualified by each street/area will have it's own behaviour). You really are putting words in my mouth here, or choosing a specific sentence where I have added the specific warning for those that can't mix sentences.
Although I do know something about Bristol, some areas such as the popular Clifton, Redland, Cotham have gone up by a fair chunk of change, in fact I have family in Cotham. Although I did see some reference to Bristol recently and apparently it had flat lined for the last few months, but before anyone jumps on this point. This is 0.00000000001% of my focus and thus who knows.
I can't forsee where I will be in 20 years time, but I have absolutely no control of that. Really not sure what you point here is "In 50 years, what you might want to buy has gone up more than where you currently live/want to buy, so you should do the following steps....oh well it doesn't matter as nothing will have a material impact on that". Sorry that one really has me stumped i.e harshly, it's a non point.
Edited by V6Alfisti on Monday 20th April 18:30
I made the move to the country 20+ years ago.
I used to own in Fulham and swapped it for a village in Cambridgeshire. I have a beautiful garden, enough rooms that we can all select our own workspace. My commute is 15mins longer than the commute I had when in Fulham. The schools are excellent.
However, I noticed that none of my younger colleagues have taken the same decision. Some are very much regretting it in the current lockdown(40yo with two kids under ten trying to work from home, no garden, no quiet space).
Will it change once the lockdown eases? Not sure. The attractions of London are strong. The pain (and cost) of commuting are high. People's investment in the London lifestyle (Michelin starred restaurants, chi-chi shops, the instagram life) is high and difficult to write off.
I couldn't ever go back to living in London. This is the view from my temporary office (one child has taken my normal space in one room, my wife is using her office, another child has taken another room and the only one not working has taken the media room):
I used to own in Fulham and swapped it for a village in Cambridgeshire. I have a beautiful garden, enough rooms that we can all select our own workspace. My commute is 15mins longer than the commute I had when in Fulham. The schools are excellent.
However, I noticed that none of my younger colleagues have taken the same decision. Some are very much regretting it in the current lockdown(40yo with two kids under ten trying to work from home, no garden, no quiet space).
Will it change once the lockdown eases? Not sure. The attractions of London are strong. The pain (and cost) of commuting are high. People's investment in the London lifestyle (Michelin starred restaurants, chi-chi shops, the instagram life) is high and difficult to write off.
I couldn't ever go back to living in London. This is the view from my temporary office (one child has taken my normal space in one room, my wife is using her office, another child has taken another room and the only one not working has taken the media room):
AstonZagato said:
I made the move to the country 20+ years ago.
I used to own in Fulham and swapped it for a village in Cambridgeshire. I have a beautiful garden, enough rooms that we can all select our own workspace. My commute is 15mins longer than the commute I had when in Fulham. The schools are excellent.
However, I noticed that none of my younger colleagues have taken the same decision. Some are very much regretting it in the current lockdown(40yo with two kids under ten trying to work from home, no garden, no quiet space).
Will it change once the lockdown eases? Not sure. The attractions of London are strong. The pain (and cost) of commuting are high. People's investment in the London lifestyle (Michelin starred restaurants, chi-chi shops, the instagram life) is high and difficult to write off.
I couldn't ever go back to living in London. This is the view from my temporary office (one child has taken my normal space in one room, my wife is using her office, another child has taken another room and the only one not working has taken the media room):
That's the kind of move we are looking at, albiet still within the M25. Looks great ! I used to own in Fulham and swapped it for a village in Cambridgeshire. I have a beautiful garden, enough rooms that we can all select our own workspace. My commute is 15mins longer than the commute I had when in Fulham. The schools are excellent.
However, I noticed that none of my younger colleagues have taken the same decision. Some are very much regretting it in the current lockdown(40yo with two kids under ten trying to work from home, no garden, no quiet space).
Will it change once the lockdown eases? Not sure. The attractions of London are strong. The pain (and cost) of commuting are high. People's investment in the London lifestyle (Michelin starred restaurants, chi-chi shops, the instagram life) is high and difficult to write off.
I couldn't ever go back to living in London. This is the view from my temporary office (one child has taken my normal space in one room, my wife is using her office, another child has taken another room and the only one not working has taken the media room):
princeperch said:
One thing that hasn't been lost on me (and I live a 40 Min cycle from my office) is that whilst I live in zone 3 (and not a million miles from zone 2) the amount of money I've saved through never having to commute to work by train or tube is insane. It's literally thousands and thousands of pounds and has been a major contributor towards clearing my mortgage in ten years.
I haven't completely ruled out moving out of London , particularly as kids grow older, but as things stand I am very happy sending any offspring of mine to any of the local schools. Obviously the boon to living in London , even if it was only for a few years, has been the massive equity kicker you move out with, and the potential to save on commuting costs. Moving to Brighton sounds nice doesn't it? But then look what it costs two professional people to get to work, even if it's only for 3 days a week. It's crippling and the cost never ever goes down.
That’s a big part of it.I haven't completely ruled out moving out of London , particularly as kids grow older, but as things stand I am very happy sending any offspring of mine to any of the local schools. Obviously the boon to living in London , even if it was only for a few years, has been the massive equity kicker you move out with, and the potential to save on commuting costs. Moving to Brighton sounds nice doesn't it? But then look what it costs two professional people to get to work, even if it's only for 3 days a week. It's crippling and the cost never ever goes down.
As you say, the cost never goes down, but if less people are commuting would the government further subsidise the transport system, or would the remaining commuters be expected to shoulder much bigger fare rises?
My local TOC (SWR) may lose its franchise because it is losing money even though it runs rush hour trains at probably 30-40% over capacity. What happens if passenger numbers come off significantly?
Season tickets are a problem as well. If you had two people commuting from Brighton three days a week, you may as well buy full season tickets as they’d be about the same cost as 3 peak returns.
That would have to change as well, and again, less revenue for the train companies.
It’s a structural change that would take decades to complete, and it will only start if the big employers do decide that widespread working from home IS the way they want to go.
NickCQ said:
AstonZagato said:
My commute is 15mins longer than the commute I had when in Fulham
Trying to figure this one out - drive to Royston, series of trains to Canary Wharf?Fulham's too close to St James / City for it to be only 15 mins.
I'm a few minutes drive from Royston and work in Mayfair - fast train to Kings Cross (40mins) and 15 min tube. If I catch it exactly right, it is an hour from my desk to my front door. Add 10-15 mins for a safety margin. There is also the option of the Liverpool Street line (an hour from Whittlesford into Liverpool Street) which works well if your office was next to the station (mine once was). But that is slower over all.
The downside's are several. There's the cost - £200 a week (if you want a seat you have to spring for first class). If it goes wrong (surprisingly seldom TBF), then it can easily take two hours. If you are having dinner in London, then you need to check the time constantly (I just book a hotel or resign myself to an uber home). If you are in Fulham, you can wander out of a nightclub at 3am and be home in 20mins. You can't do that if you live in the sticks. I wander out of nightclubs at 2am probably twice a year.
Edited by AstonZagato on Monday 20th April 19:22
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