How far will house prices fall [volume 4]
Discussion
anonymous said:
[redacted]
Curious - what’s the generic issue with buying a mansion flat ... too small a buyers market and high service charges? So not a very liquid investment... can understand the retirement home issues as many are sold new from the developer at a ridiculous cost psf and massive service costs ... have heard some horror stories at probate / resale
dai1983 said:
Recently sold our house in a SE commuter town for a full asking price of £345k after only being on the market over a weekend. Another house sold for £350k four months prior but had a nice new bathroom and nicer garden. It had also been for sale quite a while too.
The estate agent says that if he were to market it now he’d recommend a starting price £25k less which would have been a bit rubbish for us moving on. Im really sceptical and thought it could be EA bulls
t to make us feel good but similar houses have been reduced £20-40k.
We live in a village just outside a SE commuter town. Anything that comes on that is near saleable goes for good money. Local EA is a nice chap but is also a great EA - gets two parties interested and then let’s them go to town! I’d sell through him but would prefer not to buy from him! The estate agent says that if he were to market it now he’d recommend a starting price £25k less which would have been a bit rubbish for us moving on. Im really sceptical and thought it could be EA bulls
t to make us feel good but similar houses have been reduced £20-40k. Prices not showing any sign of slowing or even spluttering here, people blinded by the vision of idyllic village life.
alfaman said:
Curious - what’s the generic issue with buying a mansion flat ... too small a buyers market and high service charges? So not a very liquid investment
I think that people sometimes underestimate the difference in value between flats and houses, especially in areas like that. A 2,500 sqft property in the Surrey commuter belt sounds like pretty good value in this market, but most people looking for something of that size will have a family in tow and will want a house with a private garden etc.That leaves you with the retirees that want to stay in the area rather than moving further out and that is probably a dwindling number as releasing more equity when downsizing becomes increasingly necessary.
I'm stunned that someone would buy this type of property as a BTL
kingston12 said:
I'm stunned that someone would buy this type of property as a BTL
... that place would suit me perfectly if/ when I returned to UK. ( no family and would want a place near countryside where I don’t do the maintenance) ... having lived in large condos in the Gulf and Singapore.If rental yields are so low on those type of places (2 - 2.5% ?) .. would make sense just to rent one for more flexibility and reduced risk and put cash into something else.
.. I’ve not lived in my own place for years...
Wonder what the monthly rent on that sort of place would be (?)
Edited by alfaman on Monday 2nd July 12:56
My first job was as an estate agent in Surbiton. Started just before 9/11, which wasn't the best timing but it didn't stop people buying. Sobering to look at the prices now, especially as we didn't manage to buy anything at the time. I remember people coming in with budgets of £180k, which would have got you one of the nice 2 bed coversion flats, but decided to wait until the market dropped. 18 months later they'd be looking at a 1 bed but still didn't pull the trigger...
We are now potentially moving back to London at somewhere commutable to Paddington, so I guess Wimbledon, Richmond etc, or maybe even out to Slough and Reading. Will rent initially, but will have to put a lot of thought into when to buy.
We are now potentially moving back to London at somewhere commutable to Paddington, so I guess Wimbledon, Richmond etc, or maybe even out to Slough and Reading. Will rent initially, but will have to put a lot of thought into when to buy.
alfaman said:
... that place would suit me perfectly if/ when I returned to UK. ( no family and would want a place near countryside where I don’t do the maintenance) ... having lived in large condos in the Gulf and Singapore.
If rental yields are so low on those type of places (2 - 2.5% ?) .. would make sense just to rent one for more flexibility and reduced risk and put cash into something else.
.. I’ve not lived in my own place for years...
Wonder what the monthly rent on that sort of place would be (?)
It was more the yield I was referring to after paying £1.05m and perhaps more refurbing.If rental yields are so low on those type of places (2 - 2.5% ?) .. would make sense just to rent one for more flexibility and reduced risk and put cash into something else.
.. I’ve not lived in my own place for years...
Wonder what the monthly rent on that sort of place would be (?)
Edited by alfaman on Monday 2nd July 12:56
There is definitely a market for renting this type of place, but I guess it might be quite small.
Yep - understood that .. was just thinking that if the yields are low ... it’s better to rent.
( a couple of years ago I was renting a place in Singapore (large old freehold condo in a super-prime location) ...where the yield was 1.8% and if I were to buy it .. just the stamp duty would have paid for 12 years rent (!)) - in a flat/ declining market
... an example where it would have been bonkers to buy...
( a couple of years ago I was renting a place in Singapore (large old freehold condo in a super-prime location) ...where the yield was 1.8% and if I were to buy it .. just the stamp duty would have paid for 12 years rent (!)) - in a flat/ declining market
... an example where it would have been bonkers to buy...
anonymous said:
[redacted]
So did the landlord buy this specifically to rent out or did he live there first and then rent it when he moved out himself?It seems crazy if it is the former as he must have known the likely yield. I suppose in 2015 he might have assumed the underlying was going to keep going up by 10% a year, so he didn't care too much about the yield. Or, as you mentioned in an earlier post, he might just be so well off he doesn't care either way.
kingston12 said:
So did the landlord buy this specifically to rent out or did he live there first and then rent it when he moved out himself?
It seems crazy if it is the former as he must have known the likely yield. I suppose in 2015 he might have assumed the underlying was going to keep going up by 10% a year, so he didn't care too much about the yield. Or, as you mentioned in an earlier post, he might just be so well off he doesn't care either way.
Or maybe simply a case of cutting his losses. A small loss is better than a big loss after all.It seems crazy if it is the former as he must have known the likely yield. I suppose in 2015 he might have assumed the underlying was going to keep going up by 10% a year, so he didn't care too much about the yield. Or, as you mentioned in an earlier post, he might just be so well off he doesn't care either way.
If landlord is Chinese or maybe Indo may be willing to take a 20% ‘cost’ to just get the cash out of PRC and into some thing relatively safe, secure and away from prying eyes.
Quite common in Asia where billions of <ahem> hard ‘earned’ cash in China or Indonesia ends up in bricks and mortar in Sing and maybe Malaysia.
Quite common in Asia where billions of <ahem> hard ‘earned’ cash in China or Indonesia ends up in bricks and mortar in Sing and maybe Malaysia.
alfaman said:
Yep - understood that .. was just thinking that if the yields are low ... it’s better to rent.
It's definitely better to rent from the tenant's perspective, but it isn't a very attractive investment for a landlord to buy into unless the underlying value is shooting up enough to offset the cash loss.alfaman said:
( a couple of years ago I was renting a place in Singapore (large old freehold condo in a super-prime location) ...where the yield was 1.8% and if I were to buy it .. just the stamp duty would have paid for 12 years rent (!)) - in a flat/ declining market
... an example where it would have been bonkers to buy...
That is nuts!... an example where it would have been bonkers to buy...
It would be interesting to see how the UK population's general fervour to own rather than rent is changed if these falls in prices become bigger and more sustained.
I'd rather own than rent, and there are definitely advantages to doing so, but one of the big ones in the past 20 years has been pretty much consistent house price growth. If people start getting into the position where they have to pay more for the privilege of owning rather than renting in the medium to long term then presumably a lot more people would move to renting as a preference.
Burwood said:
And Singers is not the lowest yields
Most places here in Singapore seem to have a yield of around 2.5 -3% ...mainly leaseholds .... if FH like the place I was referring to ... the cost of the FH is significant as there aren’t the owner rights to extend the lease ... but FH rents are same as LH. So yield tanks - but you can pass on your hard earned / ill gotten gains to the next generation
I’ve recently been living in Al Juffair (Bahrain) - yields are as high as 8%+ ... and property is great value to buy ... but oversupply is driving flat / declining property values.
Amazing value though ... I could have bought my rented apartment ( nearly new, fully furnished , very high spec 1800 ft2 2 bedder for only 200k GBP or so. And that’s in the ‘expensive / prime’ area. Condos in Bahrain are (compared to London) - at least double the size / 2x the fit out quality / and 1/10 the price psf
Burwood said:
Interesting about passing on dodgy gains. To a degree that is what happened in Auckland when they opened the flood gates to the Chinese. They bought up a st load of property.
And Vancouver apparently.t load of property. Has completely trashed the market for locals.
Chinese are obsessed with putting money into property / away from Govt or PRC tax authority.
Has arguably damaged property market in Oz, NZ, Canada, Singapore and London ... and some upward pressure now in Manchester apparently.
alfaman said:
Burwood said:
Interesting about passing on dodgy gains. To a degree that is what happened in Auckland when they opened the flood gates to the Chinese. They bought up a st load of property.
and some upward pressure now in Manchester apparently.t load of property. I live in Chester currently and property appears to be on the up especially in my area (Hoole).
Currently rent a 3 bed terraced which sold for £180k in 2012 and the house next door which isn’t as nice is now up for £240k. I suspect we would need to pay £245k to get ours which is a good return for the landlord. We are paying £900pm and properties are flying around here at those prices.
A decent 3 bed semi is now about £350-£400k which is pretty bad for up North!
Currently rent a 3 bed terraced which sold for £180k in 2012 and the house next door which isn’t as nice is now up for £240k. I suspect we would need to pay £245k to get ours which is a good return for the landlord. We are paying £900pm and properties are flying around here at those prices.
A decent 3 bed semi is now about £350-£400k which is pretty bad for up North!
Thankyou4calling said:
trowelhead said:
Yup, all the city centre new build stuff is sold to chinese investors...
I can assure you it most certainly isn't and as for money laundering via property in London.................It's virtually impossible. In Asia markets where cars are super expensive ... not unknown for rich Chinese to buy $1m Ferrari in HK or SG on loan.
Loan / credit paid off from PRC account.
Car then sold ... proceeds into SG account
Then clean and ready for condo deposit
Money already in the country
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