How far will house prices fall [volume 4]
Discussion
Derek Chevalier said:
edh said:
Houses would become more affordable, not less as land prices fell.
Land prices are driven by the value of the finished new build which in turn is determined by prices of existing stock. Seems an unusual statement......are you sure that prices aren't set by the market?
kfest for the "soak the rich", social justice brigade.98elise said:
How is LVT fair?
I buy a house to live in. Its value can go up or down and it makes no difference to me, it's still just my home. What it's notionally worth is pointless as I can't access anymore it unless I sell, and only then is there any "profit"
If I then move to a similar house then I'm still just living in a house only I have less money now.
It seems odd that some people would argue that we need more taxes to make thing "fair". LVT just seems to be a way of sucking more money out of people's pockets for no actual service or benefit.
Exactly my point. Property values are entirely arbitrary. They're based on other people's judgement, which is based on what they can borrow, what other people are paying, etc.I buy a house to live in. Its value can go up or down and it makes no difference to me, it's still just my home. What it's notionally worth is pointless as I can't access anymore it unless I sell, and only then is there any "profit"
If I then move to a similar house then I'm still just living in a house only I have less money now.
It seems odd that some people would argue that we need more taxes to make thing "fair". LVT just seems to be a way of sucking more money out of people's pockets for no actual service or benefit.
For me, sat in the same house, it keeps the rain off the same whether those people all decide it's worth £1 tomorrow or £1,000,000.
But if they all decide the latter (probably for no other reason than the banks have found another 'clever' way of giving everybody the ability to borrow far more), why should I be penalised for that?
It's nothing to do with me, completely out of my control or decision making process.
V6Alfisti said:
That house has been for sale forever and it's asking price isn't indicative of anything. Ari said:
Exactly my point. Property values are entirely arbitrary. They're based on other people's judgement, which is based on what they can borrow, what other people are paying, etc.
For me, sat in the same house, it keeps the rain off the same whether those people all decide it's worth £1 tomorrow or £1,000,000.
But if they all decide the latter (probably for no other reason than the banks have found another 'clever' way of giving everybody the ability to borrow far more), why should I be penalised for that?
It's nothing to do with me, completely out of my control or decision making process.
Woah....For me, sat in the same house, it keeps the rain off the same whether those people all decide it's worth £1 tomorrow or £1,000,000.
But if they all decide the latter (probably for no other reason than the banks have found another 'clever' way of giving everybody the ability to borrow far more), why should I be penalised for that?
It's nothing to do with me, completely out of my control or decision making process.
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.
p1stonhead said:
That house has been for sale forever and it's asking price isn't indicative of anything.
All the other figures of average price drops in this areas of £400k certainly are, and the nationwides profit warning showing a 1/3rd drop in demand due to BTL being put off by future taxation. Let alone the point about people choosing to rent on the basic premise of.. Why buy today when you think you can buy cheaper tomorrow.
Anyway we shall see, but interesting to see how the papers have turned in recent months to focus on the 'softening'.
V6Alfisti said:
p1stonhead said:
That house has been for sale forever and it's asking price isn't indicative of anything.
All the other figures of average price drops in this areas of £400k certainly are, and the nationwides profit warning showing a 1/3rd drop in demand due to BTL being put off by future taxation. Let alone the point about people choosing to rent on the basic premise of.. Why buy today when you think you can buy cheaper tomorrow.
Anyway we shall see, but interesting to see how the papers have turned in recent months to focus on the 'softening'.
p1stonhead said:
People have been saying that for the past 20 years in the south east and are still waiting.
This is the point you are missing, look at the land registry, look at separate analysis and you will see a number of areas are already down in the south east. Noone looks at undesirable property headlines with unrealistic asking prices being cut seriously.
However you seem to be suggesting that house prices are going up everywhere, which is the only way your challenge makes any sense. They are categorically not, and not just by my own assessment but by the governments own record of property sale.
V6Alfisti said:
p1stonhead said:
People have been saying that for the past 20 years in the south east and are still waiting.
This is the point you are missing, look at the land registry, look at separate analysis and you will see a number of areas are already down in the south east. Noone looks at undesirable property headlines with unrealistic asking prices being cut seriously.
However you seem to be suggesting that house prices are going up everywhere, which is the only way your challenge makes any sense. They are categorically not, and not just by my own assessment but by the governments own record of property sale.
As other people have said in the last few pages - if you want to buy just do it and get busy living for the next dacade not worrying one jot what prices are doing. I'm not sure that you will ever think they have dropped enough and it would genuinely be a shame if you do want to buy but never get round to it because of that.
This has been up for sale for 6-8 months...
http://www.rightmove.co.uk/property-for-sale/prope...
It was up for £600k before they reduced it at the start of June
http://www.rightmove.co.uk/property-for-sale/prope...
It was up for £600k before they reduced it at the start of June
Im seeing something weird in my local area I wonder if anyone can explain
Couple of houses came up for sale and didnt take long to shift. But at least two were on rightmove for "offers in excess of XXXX"
However, shortly after they were marked sold subject to contract, yet their "offers in excess of" asking prices appeared to be 40/50k lower than before
I do not believe they were reduced prior to being sold subject to contract and they shifted quickly so they appear to have been marked down after sale??
Pretty sure the difference could not be explained as an OAP discount as the difference is too small. What's that about I wonder
It does show the pitfalls of moving quickly though. Busy road with bad parking and house no1 off the street. Week lately house no2 comes on 30 yards up the road witht drive and garage. House no1 must have committed already and be kicking themselves.
Couple of houses came up for sale and didnt take long to shift. But at least two were on rightmove for "offers in excess of XXXX"
However, shortly after they were marked sold subject to contract, yet their "offers in excess of" asking prices appeared to be 40/50k lower than before
I do not believe they were reduced prior to being sold subject to contract and they shifted quickly so they appear to have been marked down after sale??
Pretty sure the difference could not be explained as an OAP discount as the difference is too small. What's that about I wonder
It does show the pitfalls of moving quickly though. Busy road with bad parking and house no1 off the street. Week lately house no2 comes on 30 yards up the road witht drive and garage. House no1 must have committed already and be kicking themselves.
edh said:
Derek Chevalier said:
edh said:
Houses would become more affordable, not less as land prices fell.
Land prices are driven by the value of the finished new build which in turn is determined by prices of existing stock. Seems an unusual statement......are you sure that prices aren't set by the market?
edh said:
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 -
What is different is the value of existing houses, and this is driven by what people are willing, and more importantly, able (this is what caused the housing bubble - lax lending) to paySaleen836 said:
This has been up for sale for 6-8 months...
http://www.rightmove.co.uk/property-for-sale/prope...
It was up for £600k before they reduced it at the start of June
Nice car port. Loving the rear outlook. http://www.rightmove.co.uk/property-for-sale/prope...
It was up for £600k before they reduced it at the start of June
Where do I sign? Oh.....
p1stonhead said:
Never said they are going up everywhere, but if you think you will be able to nab a nice place in a good area at a double digit percentage drop from where they are now, I think you may be waiting for a while.
As other people have said in the last few pages - if you want to buy just do it and get busy living for the next dacade not worrying one jot what prices are doing. I'm not sure that you will ever think they have dropped enough and it would genuinely be a shame if you do want to buy but never get round to it because of that.
With the question being asked of this thread, how far will house prices fall. My reply would be "based on facts/information the answer is, prices have fallen from their peaks with some prime areas such as Kensington showing high single/double digit annual falls, a number of areas outside of prime have again fallen to the north and west of London, with greater resilience in the east and south. Evidence also point to price drops outside of London in the SE, but these are not yet at the level seen within central London. How far they will fall/continue to fall is unknown but recent evidence, declining transactions and month on month drops for certain areas does not bode well for the market."As other people have said in the last few pages - if you want to buy just do it and get busy living for the next dacade not worrying one jot what prices are doing. I'm not sure that you will ever think they have dropped enough and it would genuinely be a shame if you do want to buy but never get round to it because of that.
You said "People have been saying that for the past 20 years in the south east and are still waiting." but with the additional context, it is less misleading.
However, the point being that the statement is still wrong, as large swathes of the SE that have seen material falls and continue to drop.
Some of these areas should not be a surprise and include Westminster (inc Maida Vale/Little Venice), Fulham, Greenwich, Hammersmith, Hampstead and of course the Nine Elms areas. The majority are nice areas, if not very nice areas.
Areas outside of London have already started their declines, but they are at a lower % and some areas like Woking remain very resilient.
To further quash the claims, lets look at what the agents that sell these properties say from the latest RICS report.
48% of agents stated they had seen price falls in London and there are reports including those in the Times that show this is now spreading outside of London.
Now lets look at the claim that double digit drops in nice areas are not going to happen. Sorry they already have and continue to fall !
City AM has a good picture
http://www.cityam.com/258504/far-house-prices-have...
What you also need to understand is that a small % drop can signicantly impact a buyers decision, people were rushing to buy as they saw large annual increases in prices, this is no longer the case e.g.
A couple looking at a £700k property, if this even fell the average 0.5% per month (i.e £3.5k) then if that couple is renting at £1.5-2k they are 'saving' £1.5-2k and also gaining interest/allowing investment on their deposit, and also avoiding the risk of negative equity and also paying what is a low IR but on a very large sum for the next 25 years (if not 25+/intergenerational as many seem to now). Also probably having the ability to stay in a more central/better location.
E.g if I was to move to Surrey to a large house, garage e.t.c vs rent of say £1500*12 = £18k. As a couple we will pay £6k extra in transport let alone the extra commute, so that is £12k but then I also need to pay interest on a mortgage, I lose the benefit of ROI which is not 0-4 digits !
Thus I still believe the statement of "why buy today, when you think it will be cheaper tomorrow" especially when prices continue to drop and transaction levels are falling so heavily. From what I can see, the market agrees or simply cannot reach the requested numbers.
edh said:
98elise said:
How is LVT fair?
I buy a house to live in. Its value can go up or down and it makes no difference to me, it's still just my home. What it's notionally worth is pointless as I can't access anymore it unless I sell, and only then is there any "profit"
If I then move to a similar house then I'm still just living in a house only I have less money now.
It seems odd that some people would argue that we need more taxes to make thing "fair". LVT just seems to be a way of sucking more money out of people's pockets for no actual service or benefit.
LVT is intended to shift taxation away from income and consumption onto land - it's not an extra tax it's a replacement. Unless you accept that, it's pointless to discuss.I buy a house to live in. Its value can go up or down and it makes no difference to me, it's still just my home. What it's notionally worth is pointless as I can't access anymore it unless I sell, and only then is there any "profit"
If I then move to a similar house then I'm still just living in a house only I have less money now.
It seems odd that some people would argue that we need more taxes to make thing "fair". LVT just seems to be a way of sucking more money out of people's pockets for no actual service or benefit.
Edited by 98elise on Thursday 10th August 16:35
Benefit? What gives value to the property holdings of the Grosvenors in Mayfair? It's the entire activity and infrastructure of London - they didn't build that... (an extreme example, but a good one)
Read what Churchill said
http://www.landvaluetax.org/current-affairs-commen...
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.
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?
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?
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
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