How far will house prices fall [volume 4]
Discussion
Justayellowbadge said:
A poor family can afford to buy in Mitcham?
If you'd gone for a green badge instead of just a yellow, as your name says, like I did around 40 years ago, you might now be able to walk 75 metres from your front door, as I can, lean on the Thames wall, look across at Wapping, or look left and see Tower Bridge some 900 metres away.Conversely, you would probably have been able to buy in Mitcham.
These things are all relative though, my house may be worth 1.5 mill, but if I sell it, and want to stay in civilisation, I've either got to buy a doll's house, or a much smaller flat, if I wanted to bank some walking around money from the equity of the bigger house.
The only way I come out in front is if I move out to the boonies, which I have to reluctantly say, I'm toying with now.
p1stonhead said:
Property IS an investment around the world whether you like it or not. It will always be tied to people wanting returns on it. There is nothing complicated about this it's just a fact.
It's no different to any other investable item. In the UK we happen to have a limited amount of it and a hugely growing population combined with an influx of people wanting to live here from other countries.
As long as the western world remains capitalist and people are freely allowed to sell property for a higher price then they purchased it for, it will always be an investment to people.
Ain't nothing ''capitalist'' about a government and a (supposedly independent) central bank creating billions of pounds of printed money and dropping interest rates to near zero ''emergency'' levels, all to prop up and then further inflate what is laughably supposed to be a ''free'' property market.... this the only reason people are currently ''free to sell property for a higher price than they purchased it for''It's no different to any other investable item. In the UK we happen to have a limited amount of it and a hugely growing population combined with an influx of people wanting to live here from other countries.
As long as the western world remains capitalist and people are freely allowed to sell property for a higher price then they purchased it for, it will always be an investment to people.
Edited by p1stonhead on Saturday 12th August 13:19
edh said:
Woah....
While it may not be an entirely rational market, prices are absolutely not random. Tens of thousands of buyers and sellers in the market forming a collective view on price.
A house price has 2 elements, the price of the structure, and the price of the land. Check out the rebuilding cost on your property insurance..
Take identical structures, one in the NE, one in London, their prices will be wildly different. All that difference is the additional value of land - location, location, location
That location value is provided through many external factors, and people are prepared to pay for these benefits. That's what LVT captures really.
LVT is levied on the unimproved value of land, so in low demand (low price) areas, the tax could be low or zero (or perhaps -ve), encouraging the use of marginal areas. Note this would apply to commercial land use also, perhaps meaning that businesses could prosper in deprived areas as their costs would be lower, encouraging wider regeneration.
Anyway, London house prices are going to fall... Good.
So, let's illustrate with a real example. While it may not be an entirely rational market, prices are absolutely not random. Tens of thousands of buyers and sellers in the market forming a collective view on price.
A house price has 2 elements, the price of the structure, and the price of the land. Check out the rebuilding cost on your property insurance..
Take identical structures, one in the NE, one in London, their prices will be wildly different. All that difference is the additional value of land - location, location, location
That location value is provided through many external factors, and people are prepared to pay for these benefits. That's what LVT captures really.LVT is levied on the unimproved value of land, so in low demand (low price) areas, the tax could be low or zero (or perhaps -ve), encouraging the use of marginal areas. Note this would apply to commercial land use also, perhaps meaning that businesses could prosper in deprived areas as their costs would be lower, encouraging wider regeneration.
Anyway, London house prices are going to fall... Good.
In 1995 I bought a house in Central London for 195k. Lived there, worked there. All good. If LVT had been in force then, I would be paying 5% of 195k a year or whatever they set it at.
Roll on 20 years. Same house, arguably a s
ttier area, is now worth 2.1 million. Nothing has changed, other than most of the interesting restrauants have been taken over for housing and parking is harder. Now I would pay 5% of 2.1 million. As others have said, the fact that the house is worth 2.1 million makes no difference to me. I still need a house, and if I wanted to move somewhere bigger .... it would cost a lot more.
Now as it happens, if you abolished income tax and replaced it with LVT, I would be a hands down winner, unless LVT was insanely high. But the unpredictability of LVT makes planning impossible. You move into an area, and then you get hammered because prices go up. IMO it seems to be the soundest instrument of social cleansing anyone has thought of: as soon as prices go up, all the scrotes have to sell up and leave.
mike74 said:
Ain't nothing ''capitalist'' about a government and a (supposedly independent) central bank creating billions of pounds of printed money and dropping interest rates to near zero ''emergency'' levels, all to prop up and then further inflate what is laughably supposed to be a ''free'' property market.... this the only reason people are currently ''free to sell property for a higher price than they purchased it for''
Indeed. I often see the supply and demand argument forwarded as the reason for the bubble in prices, but apart from foreign investment, it is really just about interest rates and the easy availability of credit. It is all very well people 'demanding' a £1m flat, but if you take away their ability to pay that much, the same flat is 'worth' much less.At the same time, the current prices can only be seen as a bubble if we believe that these interest rates are short term. If 0.25% base is the new normal then these prices are also the new normal. Not sure how they keep them going up though...
kingston12 said:
mike74 said:
Ain't nothing ''capitalist'' about a government and a (supposedly independent) central bank creating billions of pounds of printed money and dropping interest rates to near zero ''emergency'' levels, all to prop up and then further inflate what is laughably supposed to be a ''free'' property market.... this the only reason people are currently ''free to sell property for a higher price than they purchased it for''
Indeed. I often see the supply and demand argument forwarded as the reason for the bubble in prices, but apart from foreign investment, it is really just about interest rates and the easy availability of credit. It is all very well people 'demanding' a £1m flat, but if you take away their ability to pay that much, the same flat is 'worth' much less.At the same time, the current prices can only be seen as a bubble if we believe that these interest rates are short term. If 0.25% base is the new normal then these prices are also the new normal. Not sure how they keep them going up though...
Doesn't look like interest rates is the catalyst for the current softening in the market. Let's see how Brexit and the like turns out and what it does to the markets.
V6Alfisti said:
What's the story here?...Marco Fugaccia, sales director at Clerkenwell agents Hurford Salvi Carr, who sold the then unmodernised red brick building to Mr Massow for £1.2 million in 2009, said the price had “slowly dropped and dropped and dropped” as market conditions had deteriorated...
...Land Registry documents show the 4,620 sq ft property, which has four bedrooms, three receptions rooms, a terrace and underground parking, was sold by Mr Massow for £5.066 million after he spent £500,000 on conversion and refurbishment....
Nice mark up. So someone else came in and thought to up the price from 5 bar to 8 bar? And for what?
hornetrider said:
V6Alfisti said:
What's the story here?...Marco Fugaccia, sales director at Clerkenwell agents Hurford Salvi Carr, who sold the then unmodernised red brick building to Mr Massow for £1.2 million in 2009, said the price had “slowly dropped and dropped and dropped” as market conditions had deteriorated...
...Land Registry documents show the 4,620 sq ft property, which has four bedrooms, three receptions rooms, a terrace and underground parking, was sold by Mr Massow for £5.066 million after he spent £500,000 on conversion and refurbishment....
Nice mark up. So someone else came in and thought to up the price from 5 bar to 8 bar? And for what?
p1stonhead said:
kingston12 said:
mike74 said:
Ain't nothing ''capitalist'' about a government and a (supposedly independent) central bank creating billions of pounds of printed money and dropping interest rates to near zero ''emergency'' levels, all to prop up and then further inflate what is laughably supposed to be a ''free'' property market.... this the only reason people are currently ''free to sell property for a higher price than they purchased it for''
Indeed. I often see the supply and demand argument forwarded as the reason for the bubble in prices, but apart from foreign investment, it is really just about interest rates and the easy availability of credit. It is all very well people 'demanding' a £1m flat, but if you take away their ability to pay that much, the same flat is 'worth' much less.At the same time, the current prices can only be seen as a bubble if we believe that these interest rates are short term. If 0.25% base is the new normal then these prices are also the new normal. Not sure how they keep them going up though...
Doesn't look like interest rates is the catalyst for the current softening in the market. Let's see how Brexit and the like turns out and what it does to the markets.
The £550k mortgage that you mention is quite scary, but the interest is under £1,000 a month assuming the rate is around 2%. That is a bargain as you can't rent a £700k house (or even a £550k one) for anything like that amount.
If the rate went up to an old fashioned 6% and made the interest nearly £3k a month that would be really frightening, especially if that coincides with any employment or negative equity issues.
I agree about people not caring about the level of debt they are taking on, and it is understandable given that we have seen 20 years of almost constantly growing prices apart from what turned out to be a relatively small reverse in 2007-8.
If this current period of little to no growth continues for too long it might make people think a bit differently, but I think it would take something massive to really change sentiment this time. I was looking in an estate agents window last week and a couple next to me were talking about a house advertised there, saying 'why is that so cheap then?' about a £750k 2 bed terraced house in zone 6!
Edited by kingston12 on Saturday 12th August 16:27
Edited by kingston12 on Saturday 12th August 16:28
Justayellowbadge said:
hornetrider said:
V6Alfisti said:
What's the story here?...Marco Fugaccia, sales director at Clerkenwell agents Hurford Salvi Carr, who sold the then unmodernised red brick building to Mr Massow for £1.2 million in 2009, said the price had “slowly dropped and dropped and dropped” as market conditions had deteriorated...
...Land Registry documents show the 4,620 sq ft property, which has four bedrooms, three receptions rooms, a terrace and underground parking, was sold by Mr Massow for £5.066 million after he spent £500,000 on conversion and refurbishment....
Nice mark up. So someone else came in and thought to up the price from 5 bar to 8 bar? And for what?
edh said:
Our nation is hamstrung by its obsession with property "investment". It skews investment decisions and prevents money being used productively
The only inflation that appears to be regarded as "good" is property price inflation. Why is this "good"? Wouldn't it be better if houses are places to live, not investments.
High house prices just transfer more money to banks and the older generations. Who wants to be indentured to the banks (or landlords) for ever?
Very good, completely agreeThe only inflation that appears to be regarded as "good" is property price inflation. Why is this "good"? Wouldn't it be better if houses are places to live, not investments.
High house prices just transfer more money to banks and the older generations. Who wants to be indentured to the banks (or landlords) for ever?
I keep an eye on all my old haunts, just out of interest- nothing more. I noted today that flats in one bit of East London I used to live in (dalton) have taken a bit of a pasting in recent months.
I used to live in this block a few years ago. They were worth about 250-275 6-7 years ago, and bounced up to 450ish a year or so ago. Now they are come back on the market at well under 400k.
http://www.rightmove.co.uk/property-for-sale/prope...
I used to live in this block a few years ago. They were worth about 250-275 6-7 years ago, and bounced up to 450ish a year or so ago. Now they are come back on the market at well under 400k.
http://www.rightmove.co.uk/property-for-sale/prope...
Edited by princeperch on Sunday 13th August 10:13
98elise said:
What political party has said it will be an alternative tax?
Labour were looking to introduce it immediately on Private rentals, then longer term onto owner occupiers. I might be wrong but they didn't say it would be instead of other taxes.
Labour manifesto p86 said:Labour were looking to introduce it immediately on Private rentals, then longer term onto owner occupiers. I might be wrong but they didn't say it would be instead of other taxes.
"“We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.”
So no commitment to introduction, just a vague promise to consider it as a new option to replace/reform council tax & business rates. You wouldn't have both LVT and CT/BR, it would make no sense.
Shame they didn't commit to it replacing SDLT
http://www.independent.co.uk/voices/comment/the-sm...
There is a pressure group within Labour that supports LVT but it is very small, not mainstream.
http://www.labourland.org/
The Lib Dems have historically been keen, but this had been marginalised under Clegg
https://libdemsalter.org.uk/en/
rxe said:
So, let's illustrate with a real example.
In 1995 I bought a house in Central London for 195k. Lived there, worked there. All good. If LVT had been in force then, I would be paying 5% of 195k a year or whatever they set it at.
Roll on 20 years. Same house, arguably a sttier area, is now worth 2.1 million. Nothing has changed, other than most of the interesting restrauants have been taken over for housing and parking is harder. Now I would pay 5% of 2.1 million.
As others have said, the fact that the house is worth 2.1 million makes no difference to me. I still need a house, and if I wanted to move somewhere bigger .... it would cost a lot more.
Now as it happens, if you abolished income tax and replaced it with LVT, I would be a hands down winner, unless LVT was insanely high. But the unpredictability of LVT makes planning impossible. You move into an area, and then you get hammered because prices go up. IMO it seems to be the soundest instrument of social cleansing anyone has thought of: as soon as prices go up, all the scrotes have to sell up and leave.
Your example is in a world without LVT where there has been an insane housing bubble. Without the bubble, land pricing is fairly predictable (and is in many other countries)In 1995 I bought a house in Central London for 195k. Lived there, worked there. All good. If LVT had been in force then, I would be paying 5% of 195k a year or whatever they set it at.
Roll on 20 years. Same house, arguably a s
ttier area, is now worth 2.1 million. Nothing has changed, other than most of the interesting restrauants have been taken over for housing and parking is harder. Now I would pay 5% of 2.1 million. As others have said, the fact that the house is worth 2.1 million makes no difference to me. I still need a house, and if I wanted to move somewhere bigger .... it would cost a lot more.
Now as it happens, if you abolished income tax and replaced it with LVT, I would be a hands down winner, unless LVT was insanely high. But the unpredictability of LVT makes planning impossible. You move into an area, and then you get hammered because prices go up. IMO it seems to be the soundest instrument of social cleansing anyone has thought of: as soon as prices go up, all the scrotes have to sell up and leave.
But even so you think it would make you better off if applied in certain ways - i.e. reductions in other taxes.
You also have the option to sell your very expensive asset and move somewhere cheaper - presumably a good option if you don't like the area you currently live in
edh said:
Justayellowbadge said:
edh said:
Anyway, London house prices are going to fall... Good.
Why?The only inflation that appears to be regarded as "good" is property price inflation. Why is this "good"? Wouldn't it be better if houses are places to live, not investments.
High house prices just transfer more money to banks and the older generations. Who wants to be indentured to the banks (or landlords) for ever?
turbobloke said:
Support the London housing bubble now, says Jacob Rees-Mogg..turbobloke said:
What does the article actually say beyond the headline? (Assuming your one of the handful who pay for Telegraph premium/bother to sign up.).edh said:
Support the London housing bubble now, says Jacob Rees-Mogg..
You can't run UK stamp duty policy just to suit London and besides, the FDI in prime city-centre real estate is not unique to London but a symptom of global appetite (mostly from emerging markets like China) for safe havens for capital.hyphen said:
turbobloke said:
What does the article actually say beyond the headline? (Assuming your one of the handful who pay for Telegraph premium/bother to sign up.).The article sets out a much wider Rees-Mogg platform for conservatism, beyond stamp duty - it's already been branded the Moggifesto even though he explicitly stated that he wants to remain a servant of the Conservative Party not its master.
On the matter of stamp duty, JRM says it must be cut as a matter of urgency as part of what he sees as a return to true Tory values and that the government must go with the grain of what the people want.
The Definitely Not A Candidate For The Tory Leadership Jacob Rees-Mogg said:
The recent cuts in corporation tax, one of George Osborne’s most successful policies, has more than doubled the tax received by the government.
This has helped businesses afford to invest and employ people leading to a stronger economy and allowing the Government more easily to finance its expenditure. This example ought to be applied to income tax and, as a matter of urgency, to stamp duty.
This has helped businesses afford to invest and employ people leading to a stronger economy and allowing the Government more easily to finance its expenditure. This example ought to be applied to income tax and, as a matter of urgency, to stamp duty.
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