How far will house prices fall [volume 4]

[Pork]

ScotHill said:

Was 2007-2009 a good time to move further up the ladder, assuming you still had a stable income, or did things just kind of stop, no buyers for your current property etc?

Knew someone who sold to move into rented in 2007 only to buy a do-uppable barn conversion in 2009, no idea if they planned it but it saved them a fortune!

I’m not sure you ‘plan’ something like that. They gambled and perhaps won the gamble.

[hyphen]

Balcony overlooking the A3 and Tolworth, what more could anyone want!
http://www.surreycomet.co.uk/news/16361693.work-to...

[stuckmojo]

anonymous said:

[redacted]

good post, and I agree on the final assumption, which is rather ambitious.

I do believe the Tories are toast for a few years, despite facing the worst Labour party in history.

That in itself would mean that they could let the housing market correct toward the end of the term in a significant enough way to shift the buyers profile for the next medium term.

I just don't think they're that clever.

[wisbech]

Tryke3 said:

Rovinghawk said:

To be fair, we're still paying over the odds for the PFI schools & hospitals.

How else would you have got hundreds of new hospitals and schools ?

The old fashioned way? Government builds them, increases debt via gilts. PFI added layer of cost to do an Enron of keeping debt off the official books

[ClaphamGT3]

anonymous said:

[redacted]

The main problem with that is that it has an immediate £300-400k refurb bill attached to it and that's before you start turning the stables into something you could actually keep horses in.

It also has a fundamentally compromised layout on the ground floor and it's not 1.8 acres because that land pretty much up to your threshold is common land, leaving you open to regular visitations from our travelling friends or some 'freeman on the land' crackpot who decides it's his inalienable and ancient right to graze Gertie the goat there

[fido]

ashleyman said:

Armageddon is already happening because of Trump & Brexit. It is in advertising anyway.

Yeah, it's terrible at the moment .. it took me a whole 3 weeks from viewing to exchange to sell a property last month. I'm still waiting for the doom and gloom to spread to the supply-side - the most realistic vendor I have come across so far is willing to sell me their place for only 5% over the surveyor valuation.

Edited by fido on Thursday 19th July 10:49

[dom9]

Didn't know you were looking round there, Tonks!

My sisters went to school at St Catherine's and we grew up in Munstead, Godalming!

[sammyb349]

We’re 3 months in and still no exchange date in sight.... vendors are downsizes and buying a flat near Guildford (converted mansion house). Their seller is a BTL landlord who has gone bust, including the mgmt company he set up to manage his properties. It’s a mess....

Nothing has really come to market since and many properties have now been removed for the summer period.

I just want to buy the place but equally i’m Tempted to knock another 5% off my bid as I am hopeful they can pass it on

[V6Alfisti]

Just back from a rather extended break, what have I missed?

Seems like there is:

1) A lot more stock hitting the market
2) typical mixed reporting of a stagnant market versus those seeing sizeable falls in certain areas
3) Reporting on 'down-valuing' where some argue that this is just reflecting the view that prices have dropped and the bank/assessor is protecting itself versus that same group seeing a high risk ahead and down valuing to reduce it's exposure - either way not a positive indicator.
4) Quite a few more bearish reports/articles on property
5) Confirmation that overseas investor details will now be disclosed to prevent money laundering
6) Home sales in June were 20% down nationally and 25% in London - compared to last year

I still think Henry Pryor has hit the nail on head "we are at the top of the cycle, there are affordability issues but bluntly many people are worried that what they buy today could be worth less tomorrow."

[anonymous-user]

V6Alfisti said:

I still think Henry Pryor has hit the nail on head "we are at the top of the cycle, there are affordability issues but bluntly many people are worried that what they buy today could be worth less tomorrow."

We looked halfheartedly at flats in Surbiton a few months ago and out of the blue I got a phone call from one of the agents asking if we were still looking. I totally agree with the comment above so I told the agent we are going to wait six months and see what the market is like then.

I think a lot of people are like us at the moment, I certainly don't think prices are going to go up any time soon and I think they are due a correction around here. Quite happy to sit it out for a while and make some lowball offers if we see anything we like to see who is desperate to sell.

[V6Alfisti]

Joey Deacon said:

We looked halfheartedly at flats in Surbiton a few months ago and out of the blue I got a phone call from one of the agents asking if we were still looking. I totally agree with the comment above so I told the agent we are going to wait six months and see what the market is like then.

I think a lot of people are like us at the moment, I certainly don't think prices are going to go up any time soon and I think they are due a correction around here. Quite happy to sit it out for a while and make some lowball offers if we see anything we like to see who is desperate to sell.

Can't disagree, certainly not going up in/around the large majority of north/west/south London !

Just need to get the other half to look at areas with me to see where we actually want to buy, lets just say the 100 sqm 3 bed flat 'somewhere nice' in tube proximity of London vs a 150+sqm house outside still lightly bubbles and comes up with a different answer/solution each week....let alone exactly where for each type. Joy of joy

I have at least 6 months of breathing room with the other half now that I have just started a new job in the city, and will no doubt need to provide suitable evidence to Mortgage companies (to access the full market) that I won't fall on my arse after a few months

Edited by V6Alfisti on Wednesday 25th July 16:23

EDIT:

Getting back to 2013 numbers now, I don't quite think we will see 1997 again !

53e, Randolph Avenue, London, Greater London W9 1BQ
£777,500 Flat, Leasehold, Residential 27 Apr 2018
£765,000 Flat, Leasehold, Residential 04 Dec 2013
£170,750 Flat, Leasehold, Residential 03 Jul 1997

Edited by V6Alfisti on Wednesday 25th July 17:26

[ashleyman]

Has anyone got any tips or places to follow to make sure we're kept up to date with house & flat building in our area?

[Tango13]

V6Alfisti said:

I still think Henry Pryor has hit the nail on head "we are at the top of the cycle, there are affordability issues but bluntly many people are worried that what they buy today could be worth less tomorrow."

I bought my flat in 2000 for £82k, the person completing on it on Friday needs a deposit of £80k before they even start paying the mortgage...

'Affordability issues' is an understatement of fairly biblical proportions imho.

[ooid]

Another house I have seen in East London, just got sold.

To be honest, it was really priced to sell! My only reservation was the potential road-noise but I guess it does not make any difference now!!

https://www.keatons.com/property-details/10820-vic...

[spikeyhead]

Forced sales of a few high end homes incoming

https://www.bbc.co.uk/news/world-44954587

[bobski1]

Currently buying in Oxfordshire & this is one thing which seems to worry me the most is what happens when prices fall.

I am paying fair value for the property & with some mods will increase the value but when the market drops I guess none of that will matter too much.

For me doesn't feel like a wait & see as we've looked for 3 months & nothing was really coming down. Had to bite the bullet & buy something as renting is just getting expensive

[skwdenyer]

With regards to those claiming 5x salary is insanity, here's a worked example based upon local conditions in the Yorkshire Dales where I now live some of the time.

2 bed house to rent £750 pcm
Similar house to buy c.£275k.
Assume 10% deposit, £247k to finance
Assume 2.28% mortgage (Barclays, 90% LTV) 5 year fix
Repayments (during fixed term) £1081 pcm

£292k at 5x income multiple implies salary of £58.4k. Affordability calculator says £58.4k is good for nearly £2k pcm rent.

Assume single earner, £58.4k = approx £3490 pcm take-home.

If rates rise to, say, 6%, monthly payment rises to approx £1590 pcm. If they rise to 10% then that's £2244 pcm.

£1590 pcm is easily sustainable with a sensible lifestyle. £2244 is more problematic.

So the 5x salary looks like a decent risk at rates up to 6% or so. If the 5x is on combined salaries (which would have take-home of combined approx £3872 pcm take-home assuming an even split) then that equation is simply a little more attractive.

So would I take a risk on 5x at 90% ltv in the current market with a 5-year fix? Yes, absolutely, and I don't see it as reckless in the current political climate - after all, the government has bet everything on keeping the property market alive.

[rovermorris999]

bobski1 said:

Currently buying in Oxfordshire & this is one thing which seems to worry me the most is what happens when prices fall.

I am paying fair value for the property & with some mods will increase the value but when the market drops I guess none of that will matter too much.

For me doesn't feel like a wait & see as we've looked for 3 months & nothing was really coming down. Had to bite the bullet & buy something as renting is just getting expensive

I wouldn't worry about it unless you expect to be selling again in the short term. If you think of it as a home first and financial asset second the worry goes away. If you have to move again, you'll be buying and selling so the rise or fall in the market will affect your sale and purchase and it'll even out.

The law of supply and demand always wins in the end. I can't see supply going up massively and demand will always be there with a growing and ageing population, with the proviso of temporary troughs as financial cycles come and go.

[stuckmojo]

skwdenyer said:

With regards to those claiming 5x salary is insanity, here's a worked example based upon local conditions in the Yorkshire Dales where I now live some of the time.

2 bed house to rent £750 pcm
Similar house to buy c.£275k.
Assume 10% deposit, £247k to finance
Assume 2.28% mortgage (Barclays, 90% LTV) 5 year fix
Repayments (during fixed term) £1081 pcm

£292k at 5x income multiple implies salary of £58.4k. Affordability calculator says £58.4k is good for nearly £2k pcm rent.

Assume single earner, £58.4k = approx £3490 pcm take-home.

If rates rise to, say, 6%, monthly payment rises to approx £1590 pcm. If they rise to 10% then that's £2244 pcm.

£1590 pcm is easily sustainable with a sensible lifestyle. £2244 is more problematic.

So the 5x salary looks like a decent risk at rates up to 6% or so. If the 5x is on combined salaries (which would have take-home of combined approx £3872 pcm take-home assuming an even split) then that equation is simply a little more attractive.

So would I take a risk on 5x at 90% ltv in the current market with a 5-year fix? Yes, absolutely, and I don't see it as reckless in the current political climate - after all, the government has bet everything on keeping the property market alive.

Yes but two things:

- on combined salaries, if one of you wants to look after children, take a break, do anything other than full time employment (willingly or not) - you're fked.
- on LTV, that works well if you never plan to move from that 2 bed house and expect selling prices not to reduce (which is unlikely in the short term).
- on Interest rates, hope they don't increase, so I guess you're safe there.

On balance, I wouldn't buy now. I'm in the North East and would be looking at 4 bedroom houses. I won't be moving into the market anytime soon

[V6Alfisti]

stuckmojo said:

Yes but two things:

- on combined salaries, if one of you wants to look after children, take a break, do anything other than full time employment (willingly or not) - you're fked.
- on LTV, that works well if you never plan to move from that 2 bed house and expect selling prices not to reduce (which is unlikely in the short term).
- on Interest rates, hope they don't increase, so I guess you're safe there.

On balance, I wouldn't buy now. I'm in the North East and would be looking at 4 bedroom houses. I won't be moving into the market anytime soon

Also I am not sure where the 5x came from, but I think the latest figures show the average is 5.5x in the cheapest area (North East) and 13x in South East.