How far will house prices fall [volume 4]

[Burwood]

And as prices fall, first time buyers will wait, and wait, and wait. Then ride it all the way up again. I’ve seen it so many times.

[alfaman]

kingston12 said:

It is similar to the new build situation. Plenty of tiny one bed flats are being built near me for near-£600k, but most potential owner-occupiers can't afford them and BTL don't want them because the yield and potential for capital growth is far too small.
.

Are those 1 bedders actually selling for that ? Or at what price?

Or remain unsold until the developer has dropped price ... or developer sitting on them hoping for a miracle recovery.

I haven’t lived in the UK for 7+ years ... but the prices in the south east now look insane compared to 2010. And incomes haven’t gone up much.

Puts me off returning to the UK to retire or work.

(Currently live in a 1600 -1700 ft2 full serviced condo in a prime location ..with huge gym and medium size pool (in the gulf) ... which would sell for 200k GBP... 2m- 3m for that in prime london? Probably 800k or more in prime areas commutable to London? !)

I don’t know what the solution is for the UK ...

[edh]

Rovinghawk said:

edh said:

Unfortunately not, as by your own definition you are a landlord.

Buying a wreck, buying tools and materials, occasionally hiring contractors and mostly doing the refurbishment myself is work.

Doing the LL admin and repairs is work.

Whilst some marxists believe that LLs just sit back oppressing the masses whilst artificially inflating house prices beyond the reach of 'proper' people there is an awful lot of work involved & a certain amount of societal benefit. I earn my money by providing a needed service.

House prices will not magically come crashing down within the reach of the proletariat if we punish the bourgeois capitalists, comrade.

I also like the way you admit to believing in taxing others than yourself.

I have no issue with you getting paid for your work. It would be reasonably easy to cost this and then you could see your "landlord"s premium".

You mistake rentier'ism for capitalism.

I believe in taxing myself (homeowner who has benifited from years of unearned gains)

[alfaman]

To add : in both Singapore and Bahrain massive additional supply of accommodation ... and fewer expats has reduced rents and capital values over the past 5-7 years.

Plus in Singapore the market was cooled by an additional 5% stamp duty for non citizens and big CGT increases for non citizens if they sell within certain time frame and a tax on empty units ( why the fk didn’t the UK do all that about 6 years ago? )

And here in the gulf .. massive amounts of supply keeps prices flat / declining and mortgage rates at 4-6%? Keeps yields up at 7-8% and hence relatively cheap to buy.

I can’t quite figure out why UK didn’t make it very expensive for non citizens to purchase trophy assets in London ...could have dampened down speculation / London being used as a cash store for wealthy foreigners with ill gotten gains

Too late now though.... and the bubble has grown so big...

[kingston12]

alfaman said:

Are those 1 bedders actually selling for that ? Or at what price?

Or remain unsold until the developer has dropped price ... or developer sitting on them hoping for a miracle recovery.

I don't think they are selling at that price. They seem to want £1,000 per sqft, which is completely out of step with where the area was, let alone where it is now for flats.

The other problem is that any reasonable sized flat is then above the limit for Help to Buy which is the only way I can see these selling at anything like what they want for them.

The prices have started to come down, but still currently sitting around the level of far more fashionable and central areas of town.

alfaman said:

I haven’t lived in the UK for 7+ years ... but the prices in the south east now look insane compared to 2010. And incomes haven’t gone up much.

Puts me off returning to the UK to retire or work.

(Currently live in a 1600 -1700 ft2 full serviced condo in a prime location ..with huge gym and medium size pool (in the gulf) ... which would sell for 200k GBP... 2m- 3m for that in prime london? Probably 800k or more in prime areas commutable to London? !)

The problem that you'd find in the London/SE area is that a lot of the developments don't include apartments that big.

I've just checked the development I was talking about and the biggest apartment is 975 sqft and they are asking £850k for that. If you saw the location, I doubt you'd like it very much!

There are bigger apartments in the new developments in town but, as you say, multiple millions required for those.

[alfaman]

It’s somewhat a self fulfilling prophecy in the SE then ... as price per sq foot has risen to daft levels ... most new devs are really pokey with probabaly fairly low spec fit out.?

It’s a real eye opener being away from the UK .... which looks increasing unappealing ( crazy property prices , petrol 3x what I pay , and 40%+ income tax ... though it’s a bit greener )

[vonuber]

We're trying to sell one of our flats currently (looking to get rid of both and get a house) and we have already dropped it by 25k within a month from what the estate agent suggested - which we thought was bonkers, but would have been the upper value say 2 years ago.
We are fully expecting it go for 100k less than what they suggested.

[kingston12]

alfaman said:

It’s somewhat a self fulfilling prophecy in the SE then ... as price per sq foot has risen to daft levels ... most new devs are really pokey with probabaly fairly low spec fit out.?

It’s a real eye opener being away from the UK .... which looks increasing unappealing ( crazy property prices , petrol 3x what I pay , and 40%+ income tax ... though it’s a bit greener )

The price per sqft in the new developments is completely divorced from what is going on elsewhere. The example I gave was a development where they were asking £1,000 per sqft and is now more like £800-£850.

That is in an area where you can pick up non-new build flats (in arguably better locations) for £500 per sqft. I know that there is a new build premium, but that is a fairly hefty one, especially when you consider that the ongoing service charges are going to be much higher.

[alfaman]

kingston12 said:

The price per sqft in the new developments is completely divorced from what is going on elsewhere. The example I gave was a development where they were asking £1,000 per sqft and is now more like £800-£850.

That is in an area where you can pick up non-new build flats (in arguably better locations) for £500 per sqft. I know that there is a new build premium, but that is a fairly hefty one, especially when you consider that the ongoing service charges are going to be much higher.

interesting - is this in KIngston / Surbiton area ?

and service charges on new stuff often seems to be just a revenue stream for the developer (which can be sold on for a high price? ) .. rather than paying for any genuine service / facilities / maintenance work ?

[Rovinghawk]

edh said:

I believe in taxing myself

We are in broad agreement, then. I definitely think that you should go & tax yourself.

[NickCQ]

andy43 said:

Dunno what the answer is, but restricting the rental market too much will see people sleeping on the streets and has the potential to cause another recession.

Whilst the houses previously owned by BTL-ers stand empty?
I reckon the market is a little more efficient than that. There is probably a lot of pent-up FTB demand that will start to come into the market as prices moderate.

[NickCQ]

Rovinghawk said:

We are in broad agreement, then. I definitely think that you should go & tax yourself.

You don't really believe in this whole 'society' thing, do you?

The housing market in the UK has produced an enormous and random transfer of wealth from one group of people to another and it doesn't bother you in the slightest as a beneficiary? I can tell you as someone in the same position that it bothers me.

[V6Alfisti]

Halifax numbers have finally caught up with the RICS warnings, down 3.1% in one month.

Would not be surprised if this is driven by large falls in London/surrounding, and the average pushed up by the north/south west.

[stuckmojo]

NickCQ said:

You don't really believe in this whole 'society' thing, do you?

The housing market in the UK has produced an enormous and random transfer of wealth from one group of people to another and it doesn't bother you in the slightest as a beneficiary? I can tell you as someone in the same position that it bothers me.

Good post. Even if the principle isn't troubling many lucky landlords (not Rovinghawk,of course), it's the whole system to be at risk of failure when the House of cards becomes too big

[kingston12]

alfaman said:

interesting - is this in KIngston / Surbiton area ?

Yes, but there are examples of this all around the London area, with Vauxhall/Nine Elms being the biggest.

alfaman said:

and service charges on new stuff often seems to be just a revenue stream for the developer (which can be sold on for a high price? ) .. rather than paying for any genuine service / facilities / maintenance work ?

A bit of both, I think. If you buy in one of these developments, you are often signing up to the maintenance of a gym, swimming pool, home cinema etc that you wouldn't get in older developments. The problem is that you have to keep paying for them even if you don't want to use them and you can't control how much is paid out on them.

[tannhauser]

V6Alfisti said:

Halifax numbers have finally caught up with the RICS warnings, down 3.1% in one month.

Would not be surprised if this is driven by large falls in London/surrounding, and the average pushed up by the north/south west.

Good. About fking time, but probably a false dawn.

[JagLover]

V6Alfisti said:

Halifax numbers have finally caught up with the RICS warnings, down 3.1% in one month.

Would not be surprised if this is driven by large falls in London/surrounding, and the average pushed up by the north/south west.

and back on topic

http://www.bbc.co.uk/news/business-44037087

[Rovinghawk]

NickCQ said:

You don't really believe in this whole 'society' thing, do you?

Combative, aren't you? I'm quite happy to believe in it, but not if it chooses to shaft me in the process.

NickCQ said:

The housing market in the UK has produced an enormous and random transfer of wealth from one group of people to another and it doesn't bother you in the slightest as a beneficiary?

You might think of it as an enormous transfer but I'd describe it as a a large number of small transfers. I also wouldn't call it random- in my experience it's gone to those who worked for it. I'm also pretty sure that society has benefitted massively from the tax I've paid for the fruits of my work.

NickCQ said:

I can tell you as someone in the same position that it bothers me.

You have the right to do something about it- transfer the 'enormous' wealth you've acquired to those whom you feel deserve it, hope the Cosmos apportions you some appropriate karma and get a warm fuzzy feeling. You can do this to whatever extent you wish & I will do it to the extent I wish.

[NickCQ]

Rovinghawk said:

You have the right to do something about it- transfer the 'enormous' wealth you've acquired to those whom you feel deserve it, hope the Cosmos apportions you some appropriate karma and get a warm fuzzy feeling. You can do this to whatever extent you wish & I will do it to the extent I wish.

This attitude is why I made my 'combative' comment about not understanding or agreeing with the concept of a society and a social contract.
It's not about karma or warm fuzzy feelings or any of that crap, it's about making the wealth distribution more equal, which in my view would make this country a much nicer place to live for all of us.

[hyphen]

NickCQ said:

This attitude is why I made my 'combative' comment about not understanding or agreeing with the concept of a society and a social contract.
It's not about karma or warm fuzzy feelings or any of that crap, it's about making the wealth distribution more equal, which in my view would make this country a much nicer place to live for all of us.

+1 If done well, which is a bit if.