How far will house prices fall [volume 4]
Discussion
kingston12 said:
During the boom times in the London market in the past few years, doing virtually nothing seemed like the right thing to do. If someone spent £500k on a house, £100k renovating it and sold it for £750k that set the new standard price for the road and unmodernised houses would start to fetch almost the same sum in a lot of cases.
I bet that there are quite a lot of people who spent big money on renovating/extending houses and would probably have walked away with a very similar level of profit without the spend and hassle.
Whether that will keep happening in a tighter market going forward remains to be seen.
The norm nowadays in London seems to be to buy with a mortgage, and then borrow more straightaway for home renovations on a home in good condition. You would think that they would move in and settle for a few years or even borrow more for a better property, but an immediate loft conversion/living room wall knock through and extension with grey bi-folds seem to be seen as essential minimum level of living rather than a luxury that can be done later down the line.I bet that there are quite a lot of people who spent big money on renovating/extending houses and would probably have walked away with a very similar level of profit without the spend and hassle.
Whether that will keep happening in a tighter market going forward remains to be seen.
A while to go, but eventually all these houses will be loft converted to a minimum of 4 rooms, so the price goes even higher and out of reach for the FTB who just wants to buy a 3 bed.
anonymous said:
[redacted]
I see a lot of these up for sale where I used to live in South Bucks.I assume homewise do this through some form of reversion / financial product .. they end up with 100% of a house in 15 - 20+ years for 40% of its value now. [so even if they borrow at 2-3% on the 40% ... the return is very good ]
but I just dont get it from the buyers perspective
1/ tie up and invest (say) 400k for a 600k+ house ... and get NOTHING back
2/ gambling on life expectancy
3/ what happens if you want to move ?
rent on 600k might be 20 - 24k / annum ?
surely better to invest the 400k and just rent ....
Jimboka said:
When this thread was started in 2012, next doors house (same as mine) sold for £340000
They have just moved, sold for £575000.
So much for the crash!
Being near London cross rail (arriving in a few years) helps ..
So so true. They have just moved, sold for £575000.
So much for the crash!
Being near London cross rail (arriving in a few years) helps ..
Then roll back to volume 1 - the posters convinced people to sell and go into rented ready to pounce ... however taking that advice has cost those naive folk tend to hundreds of thousands.
Houses simply have not gone down in value period.
mike74 said:
And unless you're planning on massively downsizing (to a tent perhaps?) and/or moving to an entirely different part of the country where prices are much lower, then that 'uplift' is of no benefit to you what so ever and has possibly resulted in you being worse off if you're looking to buy a bigger property in the same location.
Emigrating to The Algarve in Portugal in July where we already have a home that's nearly mortgage-free. The equity from the UK home pays that off and gives us a sizeable sum to invest in other properties. The Portugal property was a repo we bought from the Bank, new build, 80% complete. Finished it over the course of the last year - ploughed every spare penny into it. Now it is worth nearly twice what we have paid for it already from last month's valuation - property prices over there are picking up again.
Welshbeef said:
So so true.
Then roll back to volume 1 - the posters convinced people to sell and go into rented ready to pounce ... however taking that advice has cost those naive folk tend to hundreds of thousands
That is a very dangerous game to play now.Then roll back to volume 1 - the posters convinced people to sell and go into rented ready to pounce ... however taking that advice has cost those naive folk tend to hundreds of thousands
In the past, it was probably quite a good idea if you knew what you were doing, make money in the boom period, protect it during the bust.
These days the Government just seem to find another way to prop the market up when it threatens to fall.
I still think that prices can't keep going up forever, but whether that means there will be a crash or just long term stagnation is difficult to predict, certainly too difficult to bet the house on! It also might be many years before either happen.
Edited by kingston12 on Monday 29th May 10:19
hyphen said:
kingston12 said:
During the boom times in the London market in the past few years, doing virtually nothing seemed like the right thing to do. If someone spent £500k on a house, £100k renovating it and sold it for £750k that set the new standard price for the road and unmodernised houses would start to fetch almost the same sum in a lot of cases.
I bet that there are quite a lot of people who spent big money on renovating/extending houses and would probably have walked away with a very similar level of profit without the spend and hassle.
Whether that will keep happening in a tighter market going forward remains to be seen.
The norm nowadays in London seems to be to buy with a mortgage, and then borrow more straightaway for home renovations on a home in good condition. You would think that they would move in and settle for a few years or even borrow more for a better property, but an immediate loft conversion/living room wall knock through and extension with grey bi-folds seem to be seen as essential minimum level of living rather than a luxury that can be done later down the line.I bet that there are quite a lot of people who spent big money on renovating/extending houses and would probably have walked away with a very similar level of profit without the spend and hassle.
Whether that will keep happening in a tighter market going forward remains to be seen.
A while to go, but eventually all these houses will be loft converted to a minimum of 4 rooms, so the price goes even higher and out of reach for the FTB who just wants to buy a 3 bed.
Welshbeef said:
Jimboka said:
When this thread was started in 2012, next doors house (same as mine) sold for £340000
They have just moved, sold for £575000.
So much for the crash!
Being near London cross rail (arriving in a few years) helps ..
So so true. They have just moved, sold for £575000.
So much for the crash!
Being near London cross rail (arriving in a few years) helps ..
Then roll back to volume 1 - the posters convinced people to sell and go into rented ready to pounce ... however taking that advice has cost those naive folk tend to hundreds of thousands.
Houses simply have not gone down in value period.
alfaman said:
anonymous said:
[redacted]
I see a lot of these up for sale where I used to live in South Bucks.I assume homewise do this through some form of reversion / financial product .. they end up with 100% of a house in 15 - 20+ years for 40% of its value now. [so even if they borrow at 2-3% on the 40% ... the return is very good ]
but I just dont get it from the buyers perspective
1/ tie up and invest (say) 400k for a 600k+ house ... and get NOTHING back
2/ gambling on life expectancy
3/ what happens if you want to move ?
rent on 600k might be 20 - 24k / annum ?
surely better to invest the 400k and just rent ....
Said with someone who has not looked into it, but from what I can understand those would be reasons to do it.
Derek Chevalier said:
Why do you term them naïve?
Very fair point. The great bull market in property should not convince most of us that we are shrewd geniuses. I thought it would have ended a decade ago. In the SE in particular it became detatched from reality an awful long time ago. Crazy markets.
Next door sold in 2007 for £250k. They tried to sell for £250k in 2014, but had to settle for £237k. Neighbour, with identical but mirrored house has just sold his for £375k...!
This is on the Bedfordshire/Bucks border. We're looking to buy within 12-18 months time and we've been priced out of where we live quite considerably.
This is on the Bedfordshire/Bucks border. We're looking to buy within 12-18 months time and we've been priced out of where we live quite considerably.
limpsfield said:
Very fair point. The great bull market in property should not convince most of us that we are shrewd geniuses.
I thought it would have ended a decade ago. In the SE in particular it became detatched from reality an awful long time ago. Crazy markets.
The only reason it has been such a bull market for the last decade is thanks to MASSIVE and previously unprecedented levels of govt and BoE intervention in what is laughably supposed to be a ''free market''I thought it would have ended a decade ago. In the SE in particular it became detatched from reality an awful long time ago. Crazy markets.
The property market would look very different right now (and a lot healthier for the wider economy and society in general) if it wasn't for all the state intervention.
mike74 said:
The only reason it has been such a bull market for the last decade is thanks to MASSIVE and previously unprecedented levels of govt and BoE intervention in what is laughably supposed to be a ''free market''
The property market would look very different right now (and a lot healthier for the wider economy and society in general) if it wasn't for all the state intervention.
But what can you do?The property market would look very different right now (and a lot healthier for the wider economy and society in general) if it wasn't for all the state intervention.
We are a tiny island
We have a very high person per square Km
Ironically it's multitudes worse due to people wanting to live in certain areas
We have had mass immigration taking on a city the size of Newcastle year in year out
We are in a current baby boom
We are not building anywhere near enough houses to get close to meeting. Urgent Year on year demand let alone the historic backlog
Where do we build a new city the size of Newcastle each year?
Where are the funds for the needed new schools and hospitals + where will they actually be built?
Where are the new by passes the new motorways the new railway lines to cope with this additional capacity?
Nowhere and worse still they are not even being thought of let alone debated.
A way I guess is to remove principle primary property from the excluded list of capital gains tax. But I don't think that would work - people would simply not bother to move due to a masssive tax liability so would cause stagnation.
This intervention you talk about has slowed the market if anything. And it's political suicide to tax ones main home. They already tax everything else that moves. Where I grew up in NZ you want to see house price appreciation. Try 3 fold in 6 years. Nz has no capital gains tax in effect. The uk market is benign relatively speaking.
Councils need to stop pissing about with planning and get things moving. Simple.
Councils need to stop pissing about with planning and get things moving. Simple.
Burwood said:
This intervention you talk about has slowed the market if anything. And it's political suicide to tax ones main home. They already tax everything else that moves. Where I grew up in NZ you want to see house price appreciation. Try 3 fold in 6 years. Nz has no capital gains tax in effect. The uk market is benign relatively speaking.
Councils need to stop pissing about with planning and get things moving. Simple.
But again where are the new hospitals the new primary schools the new secondary schools the new road networks to support the new population. The new motorways (current ones are full to he max -M25/M4/M3/M1/M11/M40)Councils need to stop pissing about with planning and get things moving. Simple.
Welshbeef said:
Burwood said:
This intervention you talk about has slowed the market if anything. And it's political suicide to tax ones main home. They already tax everything else that moves. Where I grew up in NZ you want to see house price appreciation. Try 3 fold in 6 years. Nz has no capital gains tax in effect. The uk market is benign relatively speaking.
Councils need to stop pissing about with planning and get things moving. Simple.
But again where are the new hospitals the new primary schools the new secondary schools the new road networks to support the new population. The new motorways (current ones are full to he max -M25/M4/M3/M1/M11/M40)Councils need to stop pissing about with planning and get things moving. Simple.
mike74 said:
The only reason the intervention I speak of (QE, ZIRP, FLS HTB etc etc) has slowed the market is because it has pushed prices up to such high (un)affordability levels
Mike, prices are up but look at many other countries. No different. It's cheap money and immigration. Labours Shadow Chancellor said as much. Borrowing to buy an asset is not borrowing. They cancel each other out 
turbobloke said:
Agreed regarding hospitals and major roads, but in terms of schools there will very likely be S106 arrangements in place.
True but they never spend it on schools. Take where I live we have 1 secondary school which is full so it has to send pupils to other secondary schools (closest is 4 bus rides away).
Below that there are 4 primary schools - the one we luckily got into had 60 places yet 260 applied for places that's replicated to the others.
There is nowhere to build a new school or schools (a review has taken place and currently 2 new primary schools and one additional secondary school is needed). They could compulsory purchase many houses to demolish and build a school.
It's been shockingly thought out for ages.
Anyway the issue is now they want to build new houses which they have tried to get planning for however the developers glossy brochure states the schools which they could attend - but they cannot due to no spaces. The plans have been rejected and likewise so would any other until that issue is dealt with.
We need more houses but have no / full capacity already for doctors schools hospitals so until they build new ones everything will be rejected.
Unless of course the schools break the law about number of kids in a class
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