London property prices to fall 30%....

HENRY78

Its interesting actually looking at the SOLD prices on the land registry website for SW Herts. Very little activity up to sept 15 for properties over £500k or the ridiculously priced properties. Yet around 8 months ago Estate Agents were advertising loads of family homes at ridiculous prices £550k+ for a bog standard 3 bed semi family home and were being sold (or so we were told)


For what ever reason the transactions are not going through very quickly for whatever reason, Mortgage issues, Large Chains etc.


The bottom line is you still need to be able to afford this type of bog standard family home. In the area the average household income is £50k. So you will have to have a huge deposit of around £350k for the average family OR you are a couple on a very good wage of around £100k+ between you. As we know this would be in to top 10% in the country, and wouldn't they be looking at a bigger nicer house anyway?


Something needs to happen. It is completely nuts. and quite clearly is bad for the people in the country.

Generali

HENRY78 wrote: »

Something needs to happen. It is completely nuts. and quite clearly is bad for the people in the country.

Build more houses in the SE where people want to live. It increases employment, stimulates the economy, generates tax revenues and improves quality of life.

ukcarper

Generali wrote: »

Build more houses in the SE where people want to live. It increases employment, stimulates the economy, generates tax revenues and improves quality of life.

Not as easy as that is it the infrastructure in South East straining at the moment with roads jammed and trains full.

chucknorris

Generali wrote: »

Build more houses in the SE where people want to live. It increases employment, stimulates the economy, generates tax revenues and improves quality of life.

Not in My Back Yard (unless it is MY self build home of course)

ukcarper

chucknorris wrote: »

Not in My Back Yard (unless it is MY self build home of course)

Most of my back yard has already been developed but a 3 bed Semi is still beyond the reach of people on average earnings.

Conrad

Crashy_Time wrote: »

The difference this time though is that it is BTL that people will be fleeing from, not homeownership. Cheap credit caused the price bubble and the BTL boom, and the lack of credit (and tax) will finish it.

You need to ask the question; and invest in what?


I'm probably a fairly typical LL, I already have ISA's etc, but having looked many times, I've mainly stuck with property.


I am putting in place plans to offset the tax rises and can't really see a case for selling up. Maybe one day when I'm considerably older.


Once you get to the point of having a reasonable portfolio, you find other opportunities present themselves such as turning a shop into flats, or converting a loft in a flat to another bedroom and so on. These other opportunities are part of the overall decision making process in terms of staying with property.

Conrad

ukcarper wrote: »

Most of my back yard has already been developed but a 3 bed Semi is still beyond the reach of people on average earnings.

I think this is quite a limited view.


You aren't factoring in the equity an average earning couple may have gained from their 2 bed flat thus making the jump to the 3 bed semi feasible.


Also do not underestimate the will and propensity for people to get a large mortgage 'whatever it takes'. The vast majority sustain a mortgage no problem.
Self cert was useful but regardless people always did and always will find a way.


The high n mighty highly moralisers amongst us always fume about these things but it's just Humanity.

Masomnia

Generali wrote: »

I can honestly think of no good reason for anyone to want to pay a million US dollars to live in West Norwood.

Plenty of reasons to buy there and have someone else pay for it though!

Conrad

Masomnia wrote: »

Plenty of reasons to buy there and have someone else pay for it though!

Over the last 20 years I've lost count of the times someone has said 'x' area is a bit of a hole and wont increase in value much more, only to be proven completely wrong. Then later in hindsight it becomes 'obvious that place was always going to rocket'.


I recall people saying places like Leytonstone would never really be worth investing in.

Now they say the same about cheaper places further out.

I reckon you will do well anywhere in the London area that is currently looking relatively good value.

cells

chucknorris wrote: »

I just can't see how prices can go much higher in real terms, someone has to be able (and want) to buy them.

that someone who has to be able and willing to buy them is the BTL brigade. few in the cottage industry think it though analyse as much as you.

to them its simple as...prices went up so lets MEW and buy another...prices went up so lets MEW and buy another...and repeat so the market is in a positive feedback loop.

right now the limiter is not even interest rates but rental cover. 5% rental cover needed by most the big BTL banks with 25% deposit gives a figure of 4.69%. So the BTL crew can bid up prices to ~4.7% gross yield

of course that 4.7% gross yield is on the lower end of the market (ex council flats) so anything above the lower end of the market sees a lower yield as buyers pay a premium for better property but renters don't typically pay much of a premium to rent better property.