fru-gal

What Would Cause A House Price Crash In London?

77 posts in this topic

[quote name='spyguy' timestamp='1327958810' post='3246552']
Oh your Granuiad reading type, latte swilling effete.

[/quote]

It's all a facade. I rent in London, so I can't afford a paper never mind a decaffe coffee frappacinno.

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[quote name='Si1' timestamp='1327962265' post='3246621']
I recall Liverpool prices tankiung after the Capital of culture malarkey wore off...
[/quote]

theres a shed load of flats coming onto the market hoping to grab a slice , and then there is the Olympic village , the euro will probably be on boil by then too

the games will be used to bury bad news , but it will all come up straight after , and the international news crews will be already onsite to witness it !

purpose built flats are already having a hard time in the east end .....1/2 bed

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[quote name='Starla' timestamp='1327958501' post='3246542']
True. London is many different towns almost under one banner. I wouldn't bank on Kensington, Chelsea, Pimlico, Queens Park et al dropping anytime soon. Head out to Stockwell, Brixton, Peckham etc and my EA mate reliably informs me they can't shift anything unless it's at a significant reduction.
[/quote]
Kensington, Chelsea, Pimlico seem to be the sort of areas that foreign buyers and city types are throwing money at. Property in Queen's Park, not so much. I have a feeling that prices there should be on a very different trajectory.

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[quote name='bobthebuilder' timestamp='1327965538' post='3246672']
one of my customers in blackheath told me today "the olympics are gonna push the prices up around here"
[/quote]
Prices of stables perhaps, since the horsey events are in Greenwich.

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It's mainly the inner London boroughs that are holding up. The rest...not so much. See here http://fromthemurkydepths.wordpress.com/2012/01/30/house-prices-across-london

Greenwich dropped 2.3% last month. Newham 2.5% over the past year. You can get one bed flats for 70k in Woolwich. A dump for sure, but one in zone 4 that shows that that prices don't start in the hundreds of thousands.

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[quote name='Killer Bunny' timestamp='1327962949' post='3246633']
Yes.

Nowhere is immune to the laws of economics.

C London is roughly flat in prices yet the lowest rates in history, falling jobs and a falling €. They're not selling nearly as many as they say they are. Obvious.

Price follows volumes. Everywhere
[/quote]

oh i am sure yes; it's just that occasionally the laws of economics take a wee holiday off somewhere only to come back with a horn

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Radio 4 about 3pm I think yesterday, Arab money buying in London, the lady kept saying "why not, why not?". Probably a good "investment" in her eyes, as well as buying Harrods.

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[quote name='MrTReturns' timestamp='1327991482' post='3246734']
Radio 4 about 3pm I think yesterday, Arab money buying in London, the lady kept saying "why not, why not?". Probably a good "investment" in her eyes, as well as buying Harrods.
[/quote]

Overseas cash buying in London relies on the "ripple effect" of residents to move further out to cheaper areas for it to impact on national prices. Once its all sold, that ripple effect will no longer happen. More then half of all Londoners rent already and the majority of new build flats and homes over £1 million are bought by overseas 'investors'.

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[quote name='TheCountOfNowhere' timestamp='1327998382' post='3246772']
Time.
[/quote]


[media]http://www.youtube.com/watch?v=Wb9By-lODgk[/media]

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[quote name='winkie' timestamp='1328005868' post='3246863']
[media]http://www.youtube.com/watch?v=Wb9By-lODgk[/media]
[/quote]
:lol:

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Hi Folks,

Here's an anecdote for you:

I was in my gym in a posh(ish) part of NW London around Christmas and overheard a conversation between an American banker and his in-Laws.

He said he was about the only American ex-pat out of all his friends left in London. Said people were gradually finding 'other opportunities' and leaving, and that London would 'be a very different place in a couple of years time'.

Driving around St John's wood which is American Banker Shangri-La there are a TON of To Let and For Sale signs going up, so I dare say the exodus is real.

I think this is likely to have a much greater effect on house and rent prices than all these mysterious foreign buyers.

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[quote name='TheCountOfNowhere' timestamp='1327998382' post='3246772']
Time.
[/quote]

Yes, something very strange is happening in North East London in areas around RM1- Romford and a mile and a half further out. Hardly anything has sold for nearly two years, prices are being reduced at around 15k at a time. You can now get a lovely refurbished 5 bed for between 250k and 300k and prices are still falling, yet it is only 30 minutes on the tube or train from Central London.

What has interested me more though is this; a year ago my brother was looking for a 4bed to rent in the area, he could hardly find any, at the moment the number of houses available for rent is absolutely astonishing and yet there are very few takers. Properties remain available for months on end. I pondered about the reasons for this, it seems to be multiple. Owners unable to afford the mortgage payments are putting up their properties to rent since they cannot sell them. The rental requested is so high that cash strapped renters cannot afford them, added to by the change in housing benefit rules. Plus, this area has large numbers of public sector workers and self- employed running small businesses. Both of these groups are under pressure in terms of employment and work available.

Here is a classic recipe for stagnation, prices will have to fall considerably in the rental and for sale sector for anything to move. Distressed sales are already appearing and will accelerate in due course. This seems to me to be the pattern of future price decline in London. 'Normal' Londoners do not live in the areas bordering the Thames unless they are in social housing or on housing benefit. Ordinary working people with families move out.

www.rightmove.co.uk/property-for-sale/property-21477444.html

Property above reduced by £17 000 yesterday. The corrective or crash will be slow and unobtrusive in various suburbs where ordinary Londers live and in which the overseas investors are not interested in.

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[quote name='Jem' timestamp='1328021876' post='3247179']
The corrective or crash will be slow and unobtrusive in various suburbs where ordinary Londoners live and in which the overseas investors are not interested in.
[/quote]

Agreed the conditions for the crash are there but there is no driving force to progress the crash. Increasing IR and unemployment would drive the inevitable faster. Wage increases failing to keep up with inflation will take even longer to have an effect.

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Sounds like an utterly fake market has been presented for london - lots of companies selling propoerty to the rich in unstable middle eastern countries and of course the olympics - where investors rush in and then out either before or after the opening ceremony.

Meanwhile those running companies in London will struggle to find or pay for staff and the staff themselves will struggle to make it pay too.

What a mess. Edited by OnlyMe

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[quote name='Jem' timestamp='1328021876' post='3247179']
Plus, this area has large numbers of public sector workers and self- employed running small businesses. Both of these groups are under pressure in terms of employment and work available.

[/quote]


This is a good point.....public service cuts also impact hard on private sector employment, there are many that rely on available public money, grants and consultancies for example. ;)

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[quote name='spyguy' timestamp='1327958810' post='3246552']
Oh your Granuiad reading type, latte swilling effete.

London has a couple of nice areas. A few nice but boring areas on the outer urbs.

The rest of it varies from scummy crap holes to Somalia by the Thames.

Still nicer than Reading and Bracknell.
[/quote]

A bit of a sweeping statement! Taking just the NW postcodes, I would say:

NW1 - A mixture of very nice (Regent's Park) and horrible (Camden)
NW2 - mostly horrible
NW3 - very nice
NW4 - ok but fairly dull suburbia
NW5 - mostly horrible
NW6 - equally divided into very nice and horrible, along the division of West End Lane.
NW7 - very nice, known as 'Londonshire' for its village feel
NW8 - very nice
NW9 - fairly dull and mildly grotty suburbia
NW10 - awful, here be dragons
NW11 - some very nice parts on the Hampstead borders and the garden suburb, the rest a bit bland unless you're Orthodox Jewish


So I don't think you can say London only has a 'couple of nice areas'!

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[quote name='Logan3' timestamp='1328012100' post='3246983']
Hi Folks,

Here's an anecdote for you:

I was in my gym in a posh(ish) part of NW London around Christmas and overheard a conversation between an American banker and his in-Laws.

He said he was about the only American ex-pat out of all his friends left in London. Said people were gradually finding 'other opportunities' and leaving, and that London would 'be a very different place in a couple of years time'.

Driving around St John's wood which is American Banker Shangri-La there are a TON of To Let and For Sale signs going up, so I dare say the exodus is real.

I think this is likely to have a much greater effect on house and rent prices than all these mysterious foreign buyers.
[/quote]


Did he also say an anonymous phone caller told him to stay away from the Twin Towers on 9/11? ;)

I'd like to believe him, but we were saying this about London 4 years ago; that the foreign money would be moving on; it still doesn't seem to have done so...

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[quote name='Starla' timestamp='1327958501' post='3246542']
True. London is many different towns almost under one banner. I wouldn't bank on Kensington, Chelsea, Pimlico, Queens Park et al dropping anytime soon. Head out to Stockwell, Brixton, Peckham etc and my EA mate reliably informs me they can't shift anything unless it's at a significant reduction.
[/quote]

I started a thread on these lines in the London prices forum - http://www.housepricecrash.co.uk/forum/index.php?showtopic=173993 .

In unfashionable areas and below average quality flats and houses there are real price falls in London already, I routinely see stuff [i]advertised[/i] at or below 2005 prices. So far nothing that I would want to buy and I wouldn't exactly call it a "crash" but the bottom end is on its way, and I remember this was what went down first and furthest in London back in the 90s. We are waiting for a catalyst for a proper crash and tbh I don't see one on the horizon (it was IRs back in the 90s) but we are already seeing a slow steady fall beginning and I don't see anything that's going to stop that developing further over the next 18-24 months. One factor that will come into play is popular sentiment which at the moment seems to still be bullish to me but will surely go bearish eventually?

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[quote name='Starla' timestamp='1327958501' post='3246542']
True. London is many different towns almost under one banner. I wouldn't bank on Kensington, Chelsea, Pimlico, Queens Park et al dropping anytime soon. Head out to Stockwell, Brixton, Peckham etc and my EA mate reliably informs me they can't shift anything unless it's at a significant reduction.
[/quote] Unfortunately your estate agent friend is an unreliable source. I sit next to a lady at work who has just sold her three bedroom house in one of the areas you mention for way more than she expected! She's looking to move to a more expensive area in Southwest London (also mentioned in your list). Although she has a £600,000 budget there is NOTHING for sale. There seems to be a long queue of people waiting for the same properties....any properties. She is not a banker nor a public sector worker. she may wish she was an international high net worth investor, but she isn't that either. Just a regular professional , wanting a regualr house in a regular area, of which there are many in London. My summation, like it or not, is that these circumstances signal the very opposite of a crash! My little pocket of North London (Holloway - and like many of the areas you mention is perceived by some who know nothing about modern day London to be unfashionable yet still seems to be highly desirable to a certain section of the population who can still afford the unfortunately very expensive price tags without the aid of 'liar loans') seems to be similar in that there are no properties on the market anywhere. Not that I'm looking to move of course ;) Your EA friend needs to stop moaning and convince people to sell their houses as there are plenty of buyers from what I can see.

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[quote name='Malkin' timestamp='1327955341' post='3246475']
A great big fire. Like in 1666.
[/quote]
:P

Mmm..... Not a bad idea... :( :o

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[quote name='Jem' timestamp='1328021876' post='3247179']
< snip >Yes, something very strange is happening in North East London in areas around RM1- Romford and a mile and a half further out. Hardly anything has sold for nearly two years, prices are being reduced at around 15k at a time. You can now get a lovely refurbished 5 bed for between 250k and 300k and prices are still falling, yet it is only 30 minutes on the tube or train from Central London. < snip >
[/quote]

Seriously? I've just searched for 5 bed houses in that price bracket within a three mile radius of my present address in Cardiff and there are precisely seven. One's in Splott, and I don't care how many people pronounce it "Splo", you don't want to live there. One's in Grangetown, another area you don't want to live, even if the house is on the river, or perhaps particularly because it's on the river. One's a purpose built student gaff. One's a poky modern house where the bedroom measurements are given as 10'6 x 9'9, 10'1 x 9'6 narrowing to 7'9, 11'8 x 7'6, 11'11 x 7'7 narrowing to 4'6 and, er, not given at all.

Leaving exactly three houses I might want to live in.

Is Romford a total dump, then, or is it just outside the magic bubble?

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[quote name='Snugglybear' timestamp='1328041456' post='3247511']
Seriously? I've just searched for 5 bed houses in that price bracket within a three mile radius of my present address in Cardiff and there are precisely seven. One's in Splott, and I don't care how many people pronounce it "Splo", you don't want to live there. One's in Grangetown, another area you don't want to live, even if the house is on the river, or perhaps particularly because it's on the river. One's a purpose built student gaff. One's a poky modern house where the bedroom measurements are given as 10'6 x 9'9, 10'1 x 9'6 narrowing to 7'9, 11'8 x 7'6, 11'11 x 7'7 narrowing to 4'6 and, er, not given at all.

Leaving exactly three houses I might want to live in.

Is Romford a total dump, then, or is it just outside the magic bubble?
[/quote]

It's not the first choice of the middle class gentry, but its far from a dump. Its schools are excellent so is access to shopping and loads of leisure facilities.

http://www.ft.com/cms/s/0/92c69ea2-091d-11de-b8b0-0000779fd2ac.html#axzz1l4XD13oG

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[quote name='islington_n7' timestamp='1328030677' post='3247311']
Unfortunately your estate agent friend is an unreliable source. I sit next to a lady at work who has just sold her three bedroom house in one of the areas you mention for way more than she expected! She's looking to move to a more expensive area in Southwest London (also mentioned in your list). Although she has a £600,000 budget there is NOTHING for sale. There seems to be a long queue of people waiting for the same properties....any properties. She is not a banker nor a public sector worker. she may wish she was an international high net worth investor, but she isn't that either. Just a regular professional , wanting a regualr house in a regular area, of which there are many in London. My summation, like it or not, is that these circumstances signal the very opposite of a crash! My little pocket of North London (Holloway - and like many of the areas you mention is perceived by some who know nothing about modern day London to be unfashionable yet still seems to be highly desirable to a certain section of the population who can still afford the unfortunately very expensive price tags without the aid of 'liar loans') seems to be similar in that there are no properties on the market anywhere. Not that I'm looking to move of course ;) Your EA friend needs to stop moaning and convince people to sell their houses as there are plenty of buyers from what I can see.
[/quote]

I'm not doubting what you say at all - I think the OP's list of good and bad areas misses some subtleties. Parts of Brixton and Stockwell are very des res indeed - I lived in Stockwell for years in a Georgian square with mansions round it and huge trees in the middle, all a rather pleasant 25 minute walk from Parliament. On the other hand there are estates 3 mins from there where you have to choose which staircases to use pretty carefully because there are dealers and users openly going about their business most of the day (or at least from about early to mid afternoon til late). Prices in the square? Millions. In the estate? I reckon I could get 3 beds for £150k now (down from £230k+ a few years ago).

London is a complicated market but I'd agree with the general point made; the bottom end is on its way down. It's just that I don't think you can generalise by 'good' and 'bad' areas quite as broadly as has been suggested.

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