How far will house prices fall [volume 4]

[Burwood]

dom9 said:

I've spent years looking for bolt holes/ crash pads in London that were 'small' (perhaps not that small) and reasonably-ish priced.

Great if you need to work up there on a semi-regular basis or just on a night out. There were a few ~3yrs ago but nothing for a long time now.

If you could get something 'nice' in Z1 (or good Z2) of ~25sq.m for say <£250k - I think a lot would be interested.

Sadly, I suspect they'll be wanting £350k or more... This would suggest so (note the area, though a little bigger):

https://www.galliardhomes.com/studio/available/tri...

Back in the day 2001 you could buy 25sm studios at new developments in Canary Wharf for £125K which was bloody expensive at the time. 3 months later they were back on the block for £200k+

[dom9]

kingston12 said:

33sqm is quite a lot bigger, that is a proper-sized studio flat that would be quite comfortable as a weekday-only home. It wouldn't suit many people in Hounslow, though, which is probably why they are marketing it directly at Heathrow workers.

I don't know the area, but presumably £7.3k per sqm is quite a lot higher than the average house or flat around there.

You caught me before my (quick) edit, while I was mulling the numbers over.

I'd guess my first flat in Putney, on the Upper Richmond road, was <400sq.ft and I think I paid £130k (maybe less - see edit) around 2002?

It wasn't comfortable but it was liveable. I am used to hotel rooms so can easily do <300sq.ft 4 or 5 days a week sans family.

I'm not paying £1k/sq.ft though, which I guess they will exceed as demand will outstrip supply.

Burwood said:

Back in the day 2001 you could buy 25sm studios at new developments in Canary Wharf for £125K which was bloody expensive at the time. 3 months later they were back on the block for £200k+

Those were the days... and most of us thought the Wharf was at the edge of the world

Edited to add: http://www.rightmove.co.uk/property-for-sale/prope...

That looks like one in my first block and ~300sq.ft

Edited by dom9 on Monday 11th September 17:06

[TheLordJohn]

Rovinghawk said:

It's apparently ok because London is so good.

The West Midlands for example is obviously crappy because for the same price range you can get a nice house. Naturally people will choose the delights of a dog kennel over a house because of how much better London is.

Hear hear.

[kingston12]

dom9 said:

I'm not paying £1k/sq.ft though, which I guess they will exceed as demand will outstrip supply.

I'd have thought even more.

Where I am in Surbiton, normal sized flats in the better roads are between £700 and £750 per sqft. When these micro flats come up, they tend to be more like £900 per sqft.

It is a bit different, because there aren't many of them because they don't build whole blocks of these tiny flats, it is just where people have squeezed two flats into the roofspace of an old house rather than one. People see a 'studio flat' in a reasonable location for £230k and get interested because it is much cheaper than anything else, but when they go to view it they find it is only 250sqft!

If these small flats are actually achieving that type of price out in zone 6, then I'd have thought they'd be astronomical in central London.

Edited by kingston12 on Monday 11th September 17:43

[dom9]

My thoughts exactly... I laughed at an EA trying to sell me a new, small bungalow here (Oxshott) for >£1k/sq.ft the other week.

However, I think you're right and they will be that sort of money (or even more) in a good location in London.

The interesting bit may be that they are not (or not very) mortgageable though as most banks want somewhere greater than 300sq.ft.

Might be wrong about that (haven't looked for a while) but these flats are presumably for key workers and alike and the size suggests they're for a cash buyer.

Perhaps the answer is in the article, which I only skimmed this morning.

[okgo]

Can find bargain rentals though. A mate of mine just rented a place (large studio, separate kitchen and bathroom) in Montagu Sq for barely any more than the same thing would cost in zone 6.

[kingston12]

dom9 said:

Perhaps the answer is in the article, which I only skimmed this morning.

The developer featured in the article is planning to keep the flats to rent out. Perhaps one of the reasons for this is working out how they get around potential financing problems from the banks.

If this does become more mainstream, the developers will be rubbing their hands together if the premium compared to normal-sized flats is 20% or more.

[kingston12]

okgo said:

Can find bargain rentals though. A mate of mine just rented a place (large studio, separate kitchen and bathroom) in Montagu Sq for barely any more than the same thing would cost in zone 6.

I have seen quite a few examples of this recently, although not in quite such exclusive environs as Montagu Square!

I guess there must be a strata of landlords investing for capital growth so they are happy just getting some income from the flat rather than chasing the very best return.

[dom9]

kingston12 said:

The developer featured in the article is planning to keep the flats to rent out. Perhaps one of the reasons for this is working out how they get around potential financing problems from the banks.

Sorry - I did notice that! I imagine the financing is one of the major issues, were they to be sold. Well, for those who need mortgages. These honestly would appeal to me though, as a cash purchase. I've often wondered why big hotels that shut up shop don't just get turned into residential places at say £100k a room. I am sure there many, many reasons that I haven't considered!

[kingston12]

dom9 said:

I've often wondered why big hotels that shut up shop don't just get turned into residential places at say £100k a room. I am sure there many, many reasons that I haven't considered!

Even better if the hotel hasn't shut up shop! It might sound a bit strange but if you could buy a small room in a central London hotel, living in that type of space would be less of a problem if you had onsite restaurant/room service for food, maid to clean daily and provide new towels, laundry service etc.

I suspect that the problem is that the rooms would be worth much more than £100k to the hotel!

[hyphen]

kingston12 said:

The worrying part is the precedent that it might set. I live right on the edge of zone 6 and our council are approving developments of tiny student flatlets as fast as they can, in the face of falling demand for a low ranking university that seems to rely on admissions of European students that will presumably go down further post-Brexit.

I've been keeping an eye on the student flats near to the Homebase on Kingston Road, from what I remember they were to be completed July or early August, so late as only just taken off the hoardings. Rooms yet to be decorated too as you can see the materials lying in them as you drive past.

Any students moving into them next week (assuming they have advertised them with on mocked photo's) will not be best pleased if the finish is rushed and left a bit rough around the edges.

Edited by hyphen on Monday 11th September 18:06

[kingston12]

hyphen said:

I've been keeping an eye on the student flats near to the Homebase on Kingston Road, from what I remember they were to be completed July or early August, so late as only just taken off the hoardings. Rooms yet to be decorated too as you can see the materials lying in them as you drive past.

Any students moving into them next week (assuming they have advertised them with on mocked photo's) will not be best pleased if the finish is rushed and left a bit rough around the edges.

Edited by hyphen on Monday 11th September 18:06

Indeed. Last night, I walked past a really ugly block of them that they have put up near where the 'fallen' telephone boxes are.

I wondered why it was such a hive of activity with a lot of workers on-site on a Sunday evening - of course it was because term is about to start and they have run way behind schedule.

For the money that they charge for these, I'd want an excellent finish and much better locations!

[Sa Calobra]

I wonder how much they are charging per week/month?

[Burwood]

dom9 said:

kingston12 said:

33sqm is quite a lot bigger, that is a proper-sized studio flat that would be quite comfortable as a weekday-only home. It wouldn't suit many people in Hounslow, though, which is probably why they are marketing it directly at Heathrow workers.

I don't know the area, but presumably £7.3k per sqm is quite a lot higher than the average house or flat around there.

You caught me before my (quick) edit, while I was mulling the numbers over.

I'd guess my first flat in Putney, on the Upper Richmond road, was <400sq.ft and I think I paid £130k (maybe less - see edit) around 2002?

It wasn't comfortable but it was liveable. I am used to hotel rooms so can easily do <300sq.ft 4 or 5 days a week sans family.

I'm not paying £1k/sq.ft though, which I guess they will exceed as demand will outstrip supply.

Burwood said:

Back in the day 2001 you could buy 25sm studios at new developments in Canary Wharf for £125K which was bloody expensive at the time. 3 months later they were back on the block for £200k+

Those were the days... and most of us thought the Wharf was at the edge of the world

Edited to add: http://www.rightmove.co.uk/property-for-sale/prope...

That looks like one in my first block and ~300sq.ft

Edited by dom9 on Monday 11th September 17:06

haha, yep. Everyone I knew would laugh at me buying out there. But I worked there and it was a no brainer for me. Myself and two friends all lived in the same block. In 1998, river frontage west ferry road, with covered parking 1300sq feet 260k. No social housing. Those were the days

I really wanted to live on Narrow street but couldn't afford it. If you were really loaded it was St Katherines dock or Tower Bridge. They were 400 notes a ft back then

[menousername]

Seems like rearranging the deckchairs on the titanic

Nobody buying the 1,2,3 bedroom box flats in Peckham and Catford for whatever inflated price they were trying to ahieve

Now its shrinkflation time - small units for "less money" which is actually more money when the actual squre footage is considered

Which i guess they hope will improve market sentiment for the box flats in Catford at the same time

Or tap into the student population - because they have unlimited funds of course. When they wake up and realize that they are being taken for mugs and that there are no jobs left here then that might just dry up too

I dont think developers should be able to dictate living conditions and price like this even if their influence is only partial.With somethint as vital as housing and shelter, I can only see social unrest and therefore increased regulation

[Burwood]

menousername said:

Seems like rearranging the deckchairs on the titanic

Nobody buying the 1,2,3 bedroom box flats in Peckham and Catford for whatever inflated price they were trying to ahieve

Now its shrinkflation time - small units for "less money" which is actually more money when the actual squre footage is considered

Which i guess they hope will improve market sentiment for the box flats in Catford at the same time

Or tap into the student population - because they have unlimited funds of course. When they wake up and realize that they are being taken for mugs and that there are no jobs left here then that might just dry up too

I dont think developers should be able to dictate living conditions and price like this even if their influence is only partial.With somethint as vital as housing and shelter, I can only see social unrest and therefore increased regulation

Social unrest? Developers don't dictate st. They, by definition speculate on what may sell for a profit. Dirty word, I know.if no one wants to buy, who loses?

[hyphen]

Article in paper about student housing, interesting read: https://www.theguardian.com/artanddesign/2017/sep/...

Guardian said:

The developers can get away with such things, because student housing doesn’t officially classify as housing. It falls into the murky category of “sui generis” (Latin for “of its own kind”). As it falls outside a specific use class, it doesn’t have to adhere to the usual standards associated with dwellings (class C3). Local authorities differ in the their approaches, but student accommodation is usually either treated as a hotel (C1) or residential institution (C2), the same category as care homes, hospitals and boarding schools. Due to their limited occupation, these building types are immune from many of the codes that govern residential dwellings – from space standards to daylight and acoustics. At the same time, crucially, the developer is exempt from providing any contribution towards affordable housing.

So it’s not hard to see why PBSA is such a booming industry: you can build tiny bedrooms with minuscule windows, use cheaper materials, and cram many more units on to a site, with no need to provide parking or private amenity space.

...The growth is also being fuelled by some of the most powerful backers in the world. Since the slowdown in the high-end residential market, the kinds of overseas investors who were originally pumping their hot cash into the super-prime apartment bubble are now funnelling it all into student flats. It may seem unlikely, but these grim tankers of rabbit-hutch digs are where the sovereign wealth funds and ultra high-net-worth individuals are now choosing to park their capital.

[kingston12]

hyphen said:

Article in paper about student housing, interesting read: https://www.theguardian.com/artanddesign/2017/sep/...

That is interesting, and certainly helps to explain why ultra-greedy Kingston Council are so quick to approve these everywhere.

The poor build standards are very evident from the outside of a lot of these blocks, so it must be even worse once you get in there. My view was that they were doing this in order to re-classify them as regular housing further down the line, using phrases like 'housing crisis' and 'affordability' to justify something that would have been unthinkable a few years ago.

I wonder if the greed of the initial investors/developers will make it more difficult to do this due to poor build standards? They will probably pass a law to make it possible, just like they made it possible to convert old houses into flats whilst ignoring the requirements that applied to new builds for years.

[fido]

kingston12 said:

That is interesting, and certainly helps to explain why ultra-greedy Kingston Council are so quick to approve these everywhere.

Had to write to the MP (Zac) twice when developers tried to build student accommodation in the village where my parents live - can't remember the initial size of the development but it was something ridiculous like 1000 students, then they tried a second time with a smaller number like 400. The site used to be a petrol station so it would have been quite ridiculous, not to mention out-of-character for the area. It's now an old folks home which makes more sense.

[spreadsheet monkey]

Interesting. Echoes a lot of recent comments on this thread.

ft said:

Property sellers beware. If you open the door to a buying agent — someone who acts on behalf of a potential buyer to find their dream house, then secure it at the lowest price — they will not only be considering the number of en-suites or the state of the topiary.

Henry Pryor, an independent buying agent, will peer into the master bathroom to see if a lonely single toothbrush stands on the sink, or open cupboards to see if a partner’s clothes are noticeable by their absence. In other words, he looks for the clues that might reveal the seller’s underlying motivation — such as divorce, and the need for a quick sale. “I want to know where the pressure points are,” he says.

The shift in sentiment — and house price growth — over the past year has been most pronounced in London, which had seen the biggest gains over the previous decade. Many sellers are still pitching their homes at prices that hark back to the glory days of 2014, when annualised growth in London was running at over 20 per cent. Now that it has fallen to below 2 per cent — or gone into reverse at the top end — a dwindling band of buyers are demanding heavy discounts to asking prices. Sellers who insist on digging in their heels are experiencing predictable results, in the view of Lucian Cook, head of research at agent Savills. “The temptation is to go high and see what happens. A little bit later, reality kicks in and sellers are a million miles off where buyers are.” This has produced a surge in cuts to asking prices: research by TwentyCI found there were about 5,600 cuts to asking prices in the market for £1m-plus homes in the first six months of 2016. That rose to more than 10,000 cuts in the first half of this year.

https://www.ft.com/content/ade07d88-988f-11e7-a652...