I am in the in unfortunate of having to buy something soon. However I can’t seem to understand where house prices are. Rental yield as a proxy for how much value seems to suggest that it’s around 3% in NW London. A increase in the yield to around 4% would mean a drop of around 10-15% in the properties currently on sale. I can’t cant see people dropping prices by £80k.
Have I got my math wrong so is there indeed a large correction due?
In my opinion it is a mistake to take London as a whole as there are numerous local sub-markets. For example (and obviously not relevant to the area you're looking at) locations to east and west that will benefit from the Crossrail opening soon are already seeing price increases (and presumably rental increases).
It's simply supply and demand on the back of interest rate uncertainty.
There are a few wobbly plates on the outer sticks right now.
When you look long into an abyss, the abyss looks long into you.........
I think a lot of it about the price bracket and where you are looking. Where I am (SE19) 1-2 bed flats are n short supply and prices haven't gone down at all and anything reasonably priced and not silly money (for the area) will sell. The bigger million pound+ properties are the ones that have seen small falls or hanging around for longer, the stamp duty rates are a significant factor.
As for a large corrections? Who knows? They have been predicting that for 15years over at the housepricecrash website and all those holding off have been paying higher and higher rents while they wait to snap something up. The nationwide house price chart shows the highs and lows and the cycles of rising and falling to give you some idea of when/if/and by how much things rise/fall.
I think the answer is to not overstretch yourself and have a healthy deposit.
I am being sensible and if prices fell I could get something just that bit more nicer and slightly bigger.
I wouldn’t be shy about putting in a low offer. LB of Richmond and RB of Kingston, my area, apparently are two of the worst areas in U.K. at the moment for actual purchase price < original asking price. London market on an edge? Maybe not for affordable, first time buyer market. Next door recently went for >10% less than original asking price.Originally Posted by samswatch
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http://www.housepricecrash.co.uk/for...eads/&page=645
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If you’re buying to live in it you can ride out any falls. I’ve owned properties in London since my mid twenties to live in and as a landlord. I’ve seen two big downturns but still have made a very good long term return. Agree on the previous point about London having many micro-markets. The old rules still work though; buy near transport, go for the cheapest house in the most expensive road (location) and don’t be afraid to put in a cheeky offer.
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Last edited by tswatch66; 15th October 2017 at 22:09.
If prices drop there will be less people selling so less stock to choose from. It isn’t such a thing that you have the same stock to choose from at a discount.
Decide how long you’re locking in for and what a crash in the between would do to you.
I’m in my house for the next 5 years at least and I see a recovery before I sell even if there is a drop before I sell.
What’s concerning me more than anything is interest rates.
You would probably be smarter to buy now with a BOE base rate of 0.25% than for less at a higher base rate. Obviously “less” is subject to it not being an full out crash etc.
I've just moved from Hayes where a Cross Rail Station is due and prices have gone bloody barmy.
As has been mentioned above, get all your ducks in a line so you can move quickly then don't be afraid to stick in a cheeky offer.
In North Harrow properties seem to have "For Sale" signs that are very quickly followed by sold ones. However, a friend a mile away in Hatch End put his 2 bed apartment on the market at the price recommended by the agent, and has not had anyone round in 2 months.
Did your friend use Gibbs by any chance? Bit of a reputation locally of pricing stuff on the high side
1. Yes, your math is wrong, it would be a 25% fall in value.
2. No, that doesn't mean a correction is on the way.
Er yes, one of my friends worked for them for some years until she retired a couple of years ago. The guys that run that business are "characters"....
SW15, the flat above us sold 2 years ago for 540k. The one below us has been on the market for the last 4 months and no offers at 470k asking price. Comes with a garage as well. The other flat didn’t, so if you add say 20-30k for the garage thats 25% down.
I would be good for everybody if London house prices have a substantial correction.
With Brexit coming I think there is a substantial correction coming, which is good as houses should be bought as homes and not as investments to make money out of other people.
That's complete balls. In any event...Unwind with a pint or two in our own virtual pub. Friendly banter and clean jokes please and no politics or religion.
I do find it a little strange that prices are at best flat year on year and with the same expectations over the next few as we negotiate Brexit. Yet gross rental yields are still hanging around between 3-4%.
That was fine when the capital appreciation was all but assured previously but I don't know who'd be buying at current values rather than renting until the prices converge.
I don't think we'll see a major correction, just a continuation of the slowdown with people taking longer to sell at the price they want or having to drop if they need a quick sale. Wouldn't be surprised if we were going into 2020 with prices similar to now.
I live in near Kingston on the edge of Greater London and the market attracts those who move out from SW London (Clapham, Putney etc.)
Friends of ours have just negotiated the thick end of 20% off a new build (on its own the discount was a life changing amount of money when you realise how expensive the house are) and I’ve noticed the other new builds around me are just not selling. Any other time there would usually be bidding wars.
London house prices are fooked IMO because;
- impact of Brexit on confidence
- stamp duty changes has a massive impact given high London prices
- BTL tax changes
- fixed rate mortgages and savings rates are ticking up with the prospect if IR rises.
- tightening of lending criteria.
To those people who say you can easily ride this stuff out. A 25% drop in house prices will easily leave folk in negative equity, which means you can’t remortgage when your mortgage deal finishes, and you’ll be stuck on the expensive SVR. This is what fooks people up.
London had had a 22 year run of rampant HPI. Trees do not grow to the sky.
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Last edited by noTAGlove; 16th October 2017 at 20:15.
As someone looking to buy (not in London) I hope there is a massive correction because it’s not just in London where prices have gone silly
I would like to see the stamp duty paid by the sellers.
Plus something like 50% tax on the difference between what they paid and what they are selling for on any property that has not been owned for 20 years.
That's a myopic view.As someone looking to buy (not in London) I hope there is a massive correction because it’s not just in London where prices have gone silly
Just think about the factors that would force a massive correction, the impact of those will be far reaching and not just on property. Be careful what you wish for.
That's why those in power are trying to manage a soft correction of single digit falls/rises depending on where you are in the country and the value of the property. That's why they have tried to make BTL not the cash cow it once was.
Ignore list for failing to meet the threshold.
The doom-mongers have returned. I agree that prices may dip a bit, especially on new builds and encumbered sales, but over the long term (10 years plus) property is still a safer bet than other investments imho.
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Nah - I’m just old enough remember the over-exuberance of the mid/late 1980s, and the toll it took on house prices into the early/mid 1990s. A lot of folk lost their shirt on that one, and some never recovered.
Nothing doom mongering to day that historically house prices have always reverted to the mean. But this time it’s different hey.
Add to that list:
- Those who now want non sterling outcomes may be able to sell at 20-30% less than they bought and still come out clean thanks to the drop in the pound.
This applies to both foreign originator buyers repatriating currency, and those now running away intent on keeping it that way.
Watching with interest as I own a couple. It seems to me that while in some parts of London there's a definite cooling off of prices, as is entirely normal in very frothy markets, the failure by successive Governments to build enough stock of the required type and the active distortion of the market by holding rates too low for too long combined with the imo unlikely prospect of rates normalising to historical averages, means that in the medium term plus London property remains a safe bet. As always caveat emptor and do your sums would be my suggestions.
Although I should probably add that I was expecting a correction or at least a flatlining of prices about 7 years ago which never came so what do I know.
Last edited by Passenger; 17th October 2017 at 09:11.
This is very true GG have a reputation for this.
Hatch End is sought after as is most of the WNW Greater London area. If your friends flat is priced correctly I won't hang around long.
“The area with the highest number of homes being reduced is Kingston-upon-Thames.
The well-heeled town in South West London saw nearly half – 48.14 per cent – of homes currently listed have their price tag slashed, by an average of £78,625, according to Zoopla.”
Four of the top ten in the U.K. for slashing prices in the U.K. are local: Twickenham (Richmond), Kingston, Surbiton (Kingston) and just over the London line in to Surrey, Weybridge.
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Non sterling based investors will have lost out on the devaluation of the pound, not gained from it. £100k two years ago was worth €136k, it's now worth €113k.
http://www.bbc.co.uk/news/business-41582755
So evidently in real terms property prices have fallen outside the south east. And in some places have never recovered.
The way I see it in london is the super prime multi million stuff has been hit as has the traditional leafy commuter hot spots like Kingston/Wimbledon and the likes of Putney/earlsfield/Balham etc as the values were very strong and the prices high (half a million plus properties) these areas have already done their up and coming thing ages ago, it's the areas that are in this phase now that have seen the most growth.
For example in SE19 (Crystal Palace) I bought a flat for £207k 3 years ago, didn't think much about price rises until right in the middle of brexit week one downstairs sold for £320k to a buyer on 'location, location, location tv program. So my flat has seen huge growth in 3 years but that's because the area was undervalued compared to its neighbours and I am not foolish enough to think that level of growth will continue the area was just playing catch up to the likes of Streatham, Brockley Etc.
Since I have been living here it's changed massively with dog grooming parlours, nick-nack and cushion shops for bored housewives, artisan hand made chocolates and sourdough pizza.
If you can spot the next area like this then you are unlikely to take a hit if things go south.
I had no idea this was going to happen, I just got lucky on picking an area/street/property.
This.
I have a friend who bought a lovely Georgian house in Stoke Newington 25 years ago, when that area was a run down toilet, because it was the cheapest area within 15 minutes of the City. It's transformed out of all recognition in recent years
Think where Islington sits price wise on the Monopoly board. That was before it became fashionable with prime ministers, etc.
Likewise Notting Hill, which was shockingly run down until not many years ago.
I've put my money on the area between Woolwich and Shooters Hill, because it has great and improving transport links, and is actually very nice, green, leafy, but a fraction of the price of those places in SW London.
In short, any affordable slightly down-at-heel London postcode will become desirable if you give it long enough.
Also worth considering in my humble opinion are those areas that currently fall just outside Greater London, as sooner or later they will get absorbed as countless towns and villages in surrounding counties already have over the last 150 years. Dartford is a good bet in my book.
I live in Kingston and I think the pricing correction is because asking prices had gone absolutely ludicrous, particularly in the more desirable KT2 postcode. When someone is asking £1k+ per square foot in an area that's 30 minutes away by train from Central London then that's not sustainable.
That being said, it is IMHO the nicest part of London (Certainly that I have lived in – comparisons made with Streatham, Balham, Ealing, Chiswick and Acton) comparing amenities with green space and I’d say that now pricing is more realistic then it’s a good opportunity to buy again.
I'd add Epsom as a good bet as well
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To be honest I would like to live in Ruislip simply because it’s near the children. Prices are not great and have been high for awhile
for those that think that london house prices wont drop, and if they do it wont be by much, take a look at dublin
im not saying there will be a crash post brexit as i dont know enough about the market, but anything can happen
You can't compare London to Dublin, that's ridiculous. You need to be looking at a comparable market, New York maybe.for those that think that london house prices wont drop, and if they do it wont be by much, take a look at dublin
im not saying there will be a crash post brexit as i dont know enough about the market, but anything can happen
Northwood Hills isn’t too far away and is a (little) better priced. However good Harefiald looks price wise, just don’t.
Am I missing a trick, or was the stamp duty hike on second houses ramped up to take the heat out of the London/S.East property market?
In my area of West Yorkshire the property market was fine, but the increase in stamp duty etc has made it far less lucrative to buy a house for the rental income. Not sure whether prices have actually fallen, I don`t take enough notice, but there does seem to be a shortage of houses coming up for sale.
In my opinion a fall of 20-25% in London prices would be a good thing, the price of basic housing in London/S. East is crazy. I`m guessing that foreign investment money fuelled it a few years ago?
The uncertainty about interest rates and the Brexit effect could destabilise the market, who knows? If mortgages became more expensive a lot of buyers would get a harsh does of reality, I recall the days of high interest rates and it hurt, even though the house prices in real terms were significantly lower back in those days.
As with all these things, a crystal ball would be helpful.
Paul
The London population has risen from 6.6 million in the mid 1980’s to nearly 9 million today. That coupled with insufficient building is the main reason why we are where we are with house prices.
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Not really my point but let's see
Not really sure what your point is then as you said:
'for those that think that london house prices wont drop, and if they do it wont be by much, take a look at Dublin'
Is that not comparing London and Dublin??
I was making the point that property markets that people don't see falling can fall massively , I wasn't equating Dublin to London rather the similar attitudes expressed to the continued rise of a market
Pretty much the same points that came up in a discussion I had today at work. Plus a few more points came up connected with the commercial property market, quantitative easing, land banks, growing political pressure to build masses of homes etc. The conversation was with a fund manager who manages a UK property fund with a few £billion of assets.
Thanks, it's been a long day 🙄😴 I don't know much about sentiments in Dublin precrash but know Ireland generally took a battering post 2008/09, as did Northern Ireland.
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