How far will house prices fall [volume 4]
Discussion
fido said:
Not £300k but I've seen a few properties in my locale sold at £150k+ off their asking price last year (Zone 4, SW London). They had also spent a fair chunk on loft extension etc. since purchasing. When I spoke to the agent, they were reluctant to state the reason but I got the impression (and I could be wrong) that they had overstretched their finances and had to sell due to job/life situation. That could explain why they would prefer to sell than rent.
Again, what financial situation would force someone to sell for £150k less than they purchased a few years ago? In what way could they possibly ever end up better off through doing so? Thats like throwing away 3 whole years of a £90k salary take home.p1stonhead said:
Thats like throwing away 3 whole years of a £90k salary take home.
Pretty sure PH'ers blow similar amounts on depreciation cars! Okay let's say the happy [in 2013] couple bought the terrace property near Surburbia Park station for £750k and spent £100k on extension and general refurb - that's £400k equity from the sale of their flat with a £525k mortgage (3.5 x joint £150k income). That would be an eye-watering £5k per month on a 15 year mortgage (feel free to test your own figures). They tried to sell last year (for whatever reason) but now the market is off £150k (blame the agents for telling them it was worth nearly a million). I don't know - maybe one of them quit their job, or they split up, or decide to go travelling .. circumstances do change and people get caught in a bear market.p1stonhead said:
fido said:
Not £300k but I've seen a few properties in my locale sold at £150k+ off their asking price last year (Zone 4, SW London). They had also spent a fair chunk on loft extension etc. since purchasing. When I spoke to the agent, they were reluctant to state the reason but I got the impression (and I could be wrong) that they had overstretched their finances and had to sell due to job/life situation. That could explain why they would prefer to sell than rent.
Again, what financial situation would force someone to sell for £150k less than they purchased a few years ago? In what way could they possibly ever end up better off through doing so? Thats like throwing away 3 whole years of a £90k salary take home.As for the £500k kensington small two bed, im tempted to bid them £400k and try my luck if all the doom is to be believed, that would rent well.
In summary, we still havnt had proof of a sale in 2014 and then one recently at 30% off.
Edited by gibbon on Tuesday 8th August 12:57
fido said:
p1stonhead said:
Thats like throwing away 3 whole years of a £90k salary take home.
Pretty sure PH'ers blow similar amounts on depreciation cars. Okay let's say the happy [in 2013] couple bought the terrace property near Surburbia Park station for £750k and spent £100k on extension and general refurb - that's £400k equity from the sale of their flat with a £525k mortgage (3.5 x joint £150k income). That would be an eye-watering £5k per month on a 15 year mortgage (feel free to test your own figures). They tried to sell last year (for whatever reason) but now the market is off £100k. I don't know - maybe one of them quit their job, or they split up, or decide to go travelling ..A 25 year mortgage on that basis is only £2k a month which with an £8.5k income (say £75k each for ease) is more than affordable.
It just doesnt make any sense - people taking home £8.5k a month dont need to sell which is my point - to any normal measure these are extremely wealthy people. £2k a month isnt going to kill them so as I said before, unless they had a gun to their head (bailiffs for something else say) then they just wouldnt move.
gibbon said:
p1stonhead said:
fido said:
Not £300k but I've seen a few properties in my locale sold at £150k+ off their asking price last year (Zone 4, SW London). They had also spent a fair chunk on loft extension etc. since purchasing. When I spoke to the agent, they were reluctant to state the reason but I got the impression (and I could be wrong) that they had overstretched their finances and had to sell due to job/life situation. That could explain why they would prefer to sell than rent.
Again, what financial situation would force someone to sell for £150k less than they purchased a few years ago? In what way could they possibly ever end up better off through doing so? Thats like throwing away 3 whole years of a £90k salary take home.As for the £500k kensington small two bed, im tempted to bid them £400k and try my luck if all the doom is to be believed, that would rent well.
But asking price doesnt mean anything. I know of one which has just exchanged at £3m under asking price. It doesnt mean anything though all that matters is actual concrete sold prices compared to historical sales of the same properties - there seems to be scant evidence of such drops on actual sales.
Edited by p1stonhead on Tuesday 8th August 12:59
gibbon said:
Thats not whats stated/quoted, '£150k+ off their asking price'. I can well believe that, the market is softer, and asking prices can be what you like.
As for the £500k kensington small two bed, im tempted to bid them £400k and try my luck if all the doom is to be believed, that would rent well.
Prime example as to why I am reluctant to share links! As for the £500k kensington small two bed, im tempted to bid them £400k and try my luck if all the doom is to be believed, that would rent well.
V6Alfisti said:
V6Alfisti said:
Sorry yep, the 2014 one is the one I have in my back pocket.
Yep, nothing is confirmed until it goes through. Wouldn't surprise me if even that fell/falls through, seeing an increased number of failed sales/chains on property I was interested in.
Another quick example of one that hasn't gone minus but hasn't gone up in 3 years (West Kensington)Yep, nothing is confirmed until it goes through. Wouldn't surprise me if even that fell/falls through, seeing an increased number of failed sales/chains on property I was interested in.
Sold in 2014 for £501k, now on the market at £540k having just been refurbed.
That will be surely £510k after even basic negotiation, then the cost of the refurb/stamp duty and inflation factored in. That is a material loss.
http://www.rightmove.co.uk/property-for-sale/prope...
Found after literally 5 minutes on rightmove, much juicier examples can be found skulking around rightmove (with time). Of course there are also many examples where prices are up!.
Perhaps 3 or 4 bedsits were bought for £501k and turned into two flats only one of which is now for sale? Could be a half million profit coming up for all we know.
As said, its far from clear on most of the properties seen so far.
Edited by p1stonhead on Tuesday 8th August 13:12
p1stonhead said:
Im not sure its actually the same flat that sold for £501k. The photos of the previous sold certainly only appear to be of a single room bedsit but that doesnt seem to make sense either.
As said, its far from clear on most of the properties seen so far.
Thats a good point, its a different flat.As said, its far from clear on most of the properties seen so far.
Still, for circa £500k that two bed in kensington looks v good. I'd be double checking the length of the lease.
gibbon said:
p1stonhead said:
Im not sure its actually the same flat that sold for £501k. The photos of the previous sold certainly only appear to be of a single room bedsit but that doesnt seem to make sense either.
As said, its far from clear on most of the properties seen so far.
Thats a good point, its a different flat.As said, its far from clear on most of the properties seen so far.
Still, for circa £500k that two bed in kensington looks v good. I'd be double checking the length of the lease.
gibbon - do you mind me asking what the motivation (without giving any personal info away obvs) is for selling up? as an asides, a friend of mine has just tried to refinance his flat in the building I used to live in (the name of which you know) and he got knocked, pretty badly, by the surveyor on the valuation there, and I don't think my friend was way off the mark from the figure he put on the form.
princeperch said:
gibbon - do you mind me asking what the motivation (without giving any personal info away obvs) is for selling up? as an asides, a friend of mine has just tried to refinance his flat in the building I used to live in (the name of which you know) and he got knocked, pretty badly, by the surveyor on the valuation there, and I don't think my friend was way off the mark from the figure he put on the form.
Im not selling up, per se, im just moving to a larger house, or at least trying to. I'll report experiences if it all completes, i count on nothing until its all signed and done.okgo said:
Looks more like £1750 land from a quick search.
So lets play the BTL game on this one, as it seems like the only way people knew/know how to make money.Lets say that property could be had for £510k, and rent seems to be around £1600-1700 asking (reality being £1500/1550 after usual negotiation).
Plug these into one of the basic calcs (I am not sure if this includes voids - I suspect not).
£1550, the below calcs assumed costs and I believe/assume it will include the taxation under future rules.
That is a yield of 0.13% (although that doesn't seem to be reflecting the mortgage cost as it shows £0, but lets assume it includes it), at a time of increased uncertainty you would have to be banking on the long term asset value and accept that you would be running a negative yield for quite a while.
https://www.mortgageadvicebureau.com/buy-to-let-yi...
gibbon said:
princeperch said:
gibbon - do you mind me asking what the motivation (without giving any personal info away obvs) is for selling up? as an asides, a friend of mine has just tried to refinance his flat in the building I used to live in (the name of which you know) and he got knocked, pretty badly, by the surveyor on the valuation there, and I don't think my friend was way off the mark from the figure he put on the form.
Im not selling up, per se, im just moving to a larger house, or at least trying to. I'll report experiences if it all completes, i count on nothing until its all signed and done.hope it goes well for you.
V6Alfisti said:
So lets play the BTL game on this one, as it seems like the only way people knew/know how to make money.
Lets say that property could be had for £510k, and rent seems to be around £1600-1700 asking (reality being £1500/1550 after usual negotiation).
Plug these into one of the basic calcs (I am not sure if this includes voids - I suspect not).
£1550, the below calcs assumed costs and I believe/assume it will include the taxation under future rules.
That is a yield of 0.13% (although that doesn't seem to be reflecting the mortgage cost as it shows £0, but lets assume it includes it), at a time of increased uncertainty you would have to be banking on the long term asset value and accept that you would be running a negative yield for quite a while.
https://www.mortgageadvicebureau.com/buy-to-let-yi...
Im not going to go through the figures, but you either have imputed something wrong, or dont understand buy to let, and i dont mean that as an insult, but the yield will not be 0.13%.Lets say that property could be had for £510k, and rent seems to be around £1600-1700 asking (reality being £1500/1550 after usual negotiation).
Plug these into one of the basic calcs (I am not sure if this includes voids - I suspect not).
£1550, the below calcs assumed costs and I believe/assume it will include the taxation under future rules.
That is a yield of 0.13% (although that doesn't seem to be reflecting the mortgage cost as it shows £0, but lets assume it includes it), at a time of increased uncertainty you would have to be banking on the long term asset value and accept that you would be running a negative yield for quite a while.
https://www.mortgageadvicebureau.com/buy-to-let-yi...
V6Alfisti said:
okgo said:
Looks more like £1750 land from a quick search.
So lets play the BTL game on this one, as it seems like the only way people knew/know how to make money.Lets say that property could be had for £510k, and rent seems to be around £1600-1700 asking (reality being £1500/1550 after usual negotiation).
Plug these into one of the basic calcs (I am not sure if this includes voids - I suspect not).
£1550, the below calcs assumed costs and I believe/assume it will include the taxation under future rules.
That is a yield of 0.13% (although that doesn't seem to be reflecting the mortgage cost as it shows £0, but lets assume it includes it), at a time of increased uncertainty you would have to be banking on the long term asset value and accept that you would be running a negative yield for quite a while.
https://www.mortgageadvicebureau.com/buy-to-let-yi...
Its 3.65% actually. Still not great but not unusual these days.
princeperch said:
good luck with it. if it does go through, I'd advise having plenty of comparables for the surveyor to look at, even if you have to spend a couple of hours researching them personally and giving them to him when he visits. the surveyor my friend got hadn't been in the area very often and I don't think he did took much legwork to verify the remortgage value.
hope it goes well for you.
Thanks, that shouldnt be an issue for various reasons, but theres plenty of other things that can go wrong!hope it goes well for you.
p1stonhead said:
Apologies you did, i cut it from someone else quoting you.
Would be genuinely interested to see examples of primes falling from £900k to £600k. Seems like they might be extreme outliers to me possibly. I cant imagine them not being snapped up if they were ever genuinely bought at near a million and are 'lingering' around £600k which could mean a deal done at £500-600k? Thats a huge drop of which i havent heard anything of the like to be honest.
It all rather depends on the definition of "prime". If we're talking about £25 million apartments, these are all driven by sentinment, and they could easily go up/down 30% in a matter of months. Would be genuinely interested to see examples of primes falling from £900k to £600k. Seems like they might be extreme outliers to me possibly. I cant imagine them not being snapped up if they were ever genuinely bought at near a million and are 'lingering' around £600k which could mean a deal done at £500-600k? Thats a huge drop of which i havent heard anything of the like to be honest.
In what I'd call "normal prime", I don't see any softening at all. E.g. 1850s flat fronted semis in N1 - I remember when the cross the million barrier about 8 years ago, everyone laughed, but they sold. Next door went for 1.7 a few months ago, and sold in 7 weeks, now there is one on at 1.9, so it is testing the 2m barrier. It's absolutely barmy, but they seem to sell in days.
It's actually ruining the area, the kebab shop has been sold off for housing which is a massive blow.
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