Good evening all.

Have a good laugh I'm a buy to let investor in London

I'm sorry but I just can't see a long term proeprty crash in London. Since 1999 prices have only risen 12% in real terms so we have had a soft landing already really. I buy all the time and have not noticed prices rise for a good few years now. Certianly no more than 5% since Jan 2003.

Furthermore proeprty is not that expensive, a property in Kentish Town or Highbury is only about £200,000 for a one bed. Average London salary £30k. Two love birds can borrow combined salary £60k x 3 (Yes N Rock) 180K and put down 20K easy. Okay Kentish Town and Highbury are not great but this is a first time buy after all. Wages are going up 5% per year much faster than proeprty prices in London. I think peole think they should be able to buy in Mayfair striaght away aged 22 these days as we live in a very instant credit society. When I was a lad my first property was in Palmers green N13 (nearly Wood Green) which cost £100k. It broke me to buy it but I saved hard and got on the ladder. Belive me you could buy a one bed flat in London for 150K if you were prepared to comprimise.

Finally I just can't see demand for property subsiding. Indeed London's population is due to grow by 1 million by 2020. Immigrants and migrnants will always come here to work. The economy is strong, don't worry abou the retailers they always moan about Christmas, its banking, media, and advertising that drive the London economy and they are all looking good. Ofcourse supply is limited by planning etc.


As a buy to let chap I would love prices to drop. I could buy more more more property and have good old 12% yields agian. I want to belive but I just can't.

Aside good site and I hope your all proved right.

So if you buy a 1 bed flat in Highbury for only 200k on a BTL mortgage - how do the figures work?

"I want to believe but I just can't".....well sod off then you jerk.

Yeah, sod off.

The crew of the Titanic never saw the iceberg.
Dotcom merchants never saw the slump.
Tulip bulb lovers never saw the collapse.

The more things change the more they stay the same. I'm going to enjoy watching you and others like you lose their shirts and a whole lot more.

with respect buytolet,

immigrants will not always want to come here en masse.when work is plentiful it is possible.

rising unemployment due to HP falls will affect the domestic economy quite badly(although in GDP terms what we will experience is a re-balancing of the constituents of UK plc.)

domestically however,this will force immigrants to return to their homelands in fairy large numbers(for most of the eu immigrants anyway),due to lack of work.
some that stay will no doubt be on the receiving end of vitreolic comment from the chav's who claim their jobs were stolen from them(even though most of these really had no intention of working anyway).

Keano and, erm yellow Van.

Jealousy is a terrible thing.

Yu can't have been a lad too long ago if your FTB property was a £100k flat in Palmers Green!

You will have to forgive these people as they see only one thing. Property Crash, the problem they have is that they have been thinking it for over five years and now have no chance of getting anything unless the country goes into a recession and a volcano erupts in the centre of london.

I have heard them speak of a 50% drop this year thats how out of touch they are.

A recession very likely.
Volcano erupting in London? geologically very unlikely.

Sure is Judas (a lovely biblical name I may add)...I'm just about to indulge in my 3rd session tonight in self flagellation

Figures for Buy to Let in Highbury at £200,000:

This example was for 1st time buyers who could easily pay the mortgage with combined salaries.

As a BTL (i feel trendy now) the figure would work as follows

Dep £30,000
Mort £170,000
@ 5.75% int only £708.33 pcm
Rent £1000 pcm
Yield 6%
Not a great BTL by any means but a good example of a 1st time buyer purchase.


For those pf you who hope I go bust thanks, I'm sure my kids would be happy and the wife. Seems a bit harsh but so be it.

As for the lack of migration. I don't agree London has a huge maganatism for immigrants especially "in pats" Bankers, students, etc. London has a "buzz" that people want to experience. Would you work in New York ot Tokyo for a year given the chance? As a resident you become very cynical but the global work force outs London at the top if it's destination list.

LonerJon.......please forgive me...I thought this website was called " HousePrice Crash".....I didn't know it was called "HousePrice Will Always Go UP"...how silly of me....

I think you have just given the answer to your own question buytolet.

most immigrants see it as a temporary(and lucrative)measure to better their financial positions and then return to a their lower cost economy homelands with a small fortune in their money.

Yes I do have experience of the situation.I worked in the states a couple of years ago but returned to UK.

Keano

I refer you to the websites link FAQS

"Will there be a house price crash?
At the end of the day no-one has a crystal ball so the honest answer has to be 'who knows'? However, having said this we can look in depth at all of the underlying economic factors that are behind the housing boom. It is then up to you to make a decision for yourself. "

How boring it would be if we all had the same opinions with nothing to debate not unlike the current situation in politics.

If I was to start a website called Tony Blair admiration society with the please post your comments I am sure it would be populated with something other than polite remarks.

I understand what you are saying BUT would it be inconceivable of you, then to start your own website called "HousePriceOnTheUpandUp" then? You may then feel the need to populate your own website more than you do this beloved website. This website is called HousePriceCrash...and strangely enough, yes I would LIKE a house price crash....I take it from you that YOU don't...so pray tell this forum why you are here?

"For those pf you who hope I go bust thanks, I'm sure my kids would be happy and the wife. Seems a bit harsh but so be it"

And you think future ftb's have no wife and kids? I'm sure they'd be happy as well but so be it.....

I have noticed something else quite amusing about this site.

There seems to be a huge movement for not living beyond ones means by living off your equity, buying Audi TT's, plasma screens, etc. Indeed members seem very keen on lecturing how not to spend money on credit as it costs far more in the long run.

At the same time the same people heap criticism on landlords and pray they go bankrupt.

Don’t they realise experienced landlords are the tightest buggers on the planet! Most of the landlords I know with decent experience would rather bite off their own arm than pay an Estate Agent to find a tenant even for just 5%. Repairs what repairs? By a new washing machine no no get it fixed. I must say as a landlord who “hangs out” with others we would not dream of buying a TT. I know a landlord with 50 properties who drives a Talbot (remember those?) Reckons its cheaper to buy a car for £250 and run it into the ground then dump it, than pay monthly payments for something flash, insurance payments are pretty tasty too.

The credit society does worry me but I think it’s a part of life these days. There will be casualties no doubt. However are people really so stupid? Isn’t the 1 trillion of household debt manly in housing? And isn’t most of the rest on some sort of 0% balance transfer rate?

Oracle

Very true. Your market analysis will keep the rental market boyant hence prices stable as buy to let investors pile in.

I don't want to argue with you so don't get nasty.

Don't want to argue with you also.....just thought I'd let you know that other people have wives and children also....

I'm guessing Kentish Town is one of the cheapest/cheaper areas of London (is that the place that's like the Leytonstone of West London? I think I've driven through it before, but can imagine)

I think the average salary has been discussed before. Someone doing what I do with decent experience (Internet/database development) would expect to earn maybe 35k in Central London maybe 50k+ in the City but a lot of positions even in that field with less experience are say 18 to 25k.

I still get a weekly jobs summary for London which I keep meaning to turn off and I'm amazed by the number of skilled IT jobs offering miserable salaries like 16k which just don't support any mortgage, presumably someone is prepared to do them for that money and live in a house share or with parents. The average is likely to be skewed due to the number of extremely high earners.

This would make it a bit of a budget stretch even for FTBers - (say 40k joint income = maybe 2600 a month coming in assuming no pension or other deductions, mortgage on 200k fixed until 2015 to take advantage of low rates now = nearly 1100 a month, almost half of income gone already before bills and tube season ticket) and that's assuming they have saved the 20k deposit which isn't going to be many people, especially recent graduates.

A couple of FTB on 60k probably could afford it, but would they want it?

Thus the number of people who would want to live in it is surely not high, and the number of people who actually could live in it is also not high. So the number of potential buyers is not that high, hence today's slow market.

It might however be enough, someone might want it, and it could sell for the 200k.

But I don't see how the 'get in quick or be left behind' argument works, ergo "it is sensible or even desirable to buy now". Taking a bullish stance and assuming property rises faster than wage inflation in 2005, the gap grows ever larger and the buyers in the market ever smaller.

This bullish argument means that regardless of this, which would cause the % of FTB to continue to fall, the market would still turn over/chains would still complete and prices would still increase with inflation (which doesn't really make them good investments for FTB at that yield with a much smaller propect of capital gain than has been the case in the last few years).

I just don't see how this can work and this explains why the market hasn't just stalled, but is falling - amazingly quickly in some parts of Central London.

I can however see that if the couple took an interest only mortage it might be affordable. But with prices falling, it would be far safer and cheaper to rent. Hence at present some landlords are doing well especially those who bought a few years back. It doesn't mean that a flood of potential BTL investors would snap it up *now* though.

On the other hand if it stays on the market for 6 months and you put in an offer of say 150k for it and settle on 160k then the deal might be done and you could be in a better position to ride out a crash - after all nobody *has* to buy. As a FTB you're in a unique position and only in that position once - why risk it especially if the property is not desirable?

On the other hand, the seller might or might not *have* to sell. If he/she doesn't they can hold out for 200 assuming the market doesn't collapse. Otherwise they will have to cut the price more significantly/chase the market down.

Oversimplifying it a bit, but that's a 20% price "correction" which is what many people here forsee. I can see how that can come about, but I can't see how further rises of anything like the scale we have seen, can come about. Hence it's just safer to wait - and that seems to be what's happening. What do you think?

No. It is debt drawn against notional housing values, which is not the same thing as "housing".

VacantPossession

Hi. Why would I, with the supposed 70k combined family income, buy a 1 bedroom flat and live with my lovebird wife when others with 70k combined income are living in nice 3 bed/2ba semi-detatched's they bought a few years earlier? Have I missed the boat? Is too late for me forever? Is my only course of action to lower my standard of living even though my peers who are but a few years older didn't have to lower their's? Is it because it is "different" this time? Is it because we are running out of space? Did life provide me with the short-end of the stick? Ah yes, it must be. Just like when people were saying you would miss the boat on the next new technology or that "technology is here to stay, so you must invest in it".

Oh yes, why would I pay 1,000 pounds per month to live in your sh!tty little flat, when I can rent a whole house for less than 1,200 per month - maintenance, worry free, etc, etc.? You have better chances at the racetrack then renting a multiple number of 200,000 pound flats in Kentish Town for 1000 pounds, I'll tell you that.

Hi. Why would I, with the supposed 70k combined family income, buy a 1 bedroom flat and live with my lovebird wife when others with 70k combined income are living in nice 3 bed/2ba semi-detatched's they bought a few years earlier?

Because you missed the boat.

Have I missed the boat?

See above.

Is my only course of action to lower my standard of living even though my peers who are but a few years older didn't have to lower their's?

Fraid so.

Is it because it is "different" this time? Is it because we are running out of space?

No, you missed the boat.

Did life provide me with the short-end of the stick?

No, you just missed the boat.

Oh yes, why would I pay 1,000 pounds per month to live in your sh!tty little flat, when I can rent a whole house for less than 1,200 per month

Thats because you missed the boat.

Thing is, the boats turning round and its on its way back to you, so stop your whining.

Why has noone pointed out the incorrectness of his original statement that house prices have only gone up by 12% in real terms since 1999 in London.
The HBOS figures for Greater London show a 70% increase between Q4 99 and Q4 04 and a 110% increase between Q1 99 and Q4 04.
Even assuming that he meant the former, does anyone really believe that inflation/wage increases or whatever metric he is using accounts for the other 58%?

Laurejon. This is very accurate. Some of these people are truly 'away with the fairies' with their predictions of doom. They just keep saying the same thing over & over & over. This site has been promoting it since October 2003.

In fact, some people even flaunt their bitterness. Take Consa for example. He openly advises everyone that he just hates "greedy bast***s". How naive, how sad, how aimless.

Maybe Jesus can give you some advice on greed and sins for your reference you sad fool.

I live in Kentish Town, yes parts of it are a dump but it is quite central and also is near Highgate and Hampstead and therefore acts as an overspill for those areas.
It is certainly more desirable than Highbury which really is a dump even though EAs try to brand it as part of Islington.

Anyway my point is that no way can you command a rent of £1000pcm for a 1 bed flat around here, more likely to be 650-800 and to achieve the top end the place would have to be immaculate.

Hello,
I'm not going to insult you like some others, but I have a question.

Is 200K for a flat in not good area value for money ? myself and other half have income of £70-80K and £100K in the bank. We would NEVER consider spending 200K on a small flat - such poor value for money. For £300K you get something nice and move out of central london .... tonnes to choose from with easy commuting.

Secondly, the migrant workers : on < minimum wages doing dirty jobs - can they affor the rent ??

seems to be the pan is boiling, just waiting to spill over the side.

Doom? Why doom? It's joy - prices are falling! Rejoice!

buytolet,

I certainly wont be resorting to personal slights.

some landlords are very financially astute,and good on them.

I agree that disposable cars are (nearly) the cheapest way of motoring.I keep my running costs down by buying at auction,running the motor for a while,and then selling for profit.....just as effective.

I'm glad we are having a rational debate but I disagree with your logic that rental yields are the only yardstick to judge your gains by.Yields are also going to be affected by unemployment and LL's getting nervous about having to resort to expensive court action against defaulters.

if you claim £700pcm on rent(gross),and your house has just lost £1200 in a month then that is a loss!!

A very large number of BTL these days are not seasoned investors but joe public,they bought in at the top,have less equity to play with and will be more prone to the decline...and through sheer weight of numbers will precipitate the decline as they become entranched in the decline/negative equity spiral.


The proper investors will mop up at some stage but not until the drop bases out properly(and if the charts of previous crashes run true this time that process takes several years)

You all seem to be assuming the Kentish Town / Highbury flat is a dump! Kentish Town and Highbury are nice places to live, near Islington and Hampstead repectiviely and on good tube links. I use them as an example because they are areas where FTB might start off before moving to Angel or Hampstead. NOT hell on earth you can buy 1 bed flats for £150,000 in such areas Hackney, Shadewll etc.

£200,000 will not just buy a dump but a nice one bedroom property close to tube etc.

Buy a house 3 bedroom house out of town for the money? Okay that's your decision but I think your struggle even 4 years ago. You might find a dreadful new build house with paper thin walls etc.

As for my stats:
They come from Westminster University. Furthermore I do buy property fairly regularly and prices just don't feel as if they have risen. Although Foxtons etc might tell you they are rising at £1000 per second. The very high end property trasactions (2 million plus) may have interfered with your figures?)

£650 pcm for a one bed in Kentish Town, I wish. Check www.findaproperty.co.uk the average 1 bed goes for £933 per month, I stand a little corrected. Anyway this example was not intended as a buy to let merely a 1st time buyer.

Immigrants not being able to pay rent! International students pay £400 per week for a two bed in London, they have more money than City bankers sometimes. We have 92,000 inpats “executive types” entering London every year to work. Not all immigrants are builders, most are so talented we had to recruit abroad as schools are producing such dross! Yet awarding the 3 A’s for good effort.

Anyway I think one thing that could bring the market down in Negative Sentiment. Especially having read the site. I feel people are so fed up with high prices we could enter a cycle where everyone refuses to pay asking price, or buy altogether. I feel people really want a price drop and property is only worth what someone will pay. Enough property backlash fuelled by the press could see a significant market drop. Maybe you could organise this?

Mabye Consa. But don't you know about the new & well respected theory that Judas was selected by God to carry out his will.

No Judas = No Death Of Jesus For Our Sins = No Ressurection = No Christianity

Judas was part of the master plan.

Or do you still believe in Adam, Eve & Puppy Dog Tales (or even one tenth of shite in the bible!).

Really ? Where is the joy in the young family who have worked their ******** off and the find themselves with negative equity ?

Do you honestly think that the "greedy ba****ds" (Consa term) who have made their millions in property will really be the ones who are affected. These guys made their mint yonks ago and have a financial portfoio the length of the Deep Sea Scrolls, spanning several sectors.

No, sorry. As usual it will be poor Joe Bloggs who suffers (well at least in the short term).

I agree. Ive said for a while that Ive seen examples of London property 10 - 15% cheaper than a year ago.

Im now seeing these 'losses' reversed and E/As getting very busy with viewings.
The pension thing is also stoking up the fire nicely.
Affordability is good as I reckon 70% of FTBs now do interest only. Many of these are also fixed at rates around 4.99% (Northern Rock 5, 7 or 10 yr).
Also lots more single folk and people buying for kid & holiday home.

The market is at last in recovery mode

Whu hu hu ha ha ha haaa haaa haaaaaa haaaaaaaa haaaaaaaaaaaaaa

Nurse!! Nurse!! we have another one here, time for the medication, make this a strong one.

If your stats are correct and 70% of FTB's are going to interst only this only makes the situation far worse than I think it already is. It means that 1) FTB's are stretching themsleves even further thatn I thought and that 2) FTB's are far more rate sensitive as all their borrowings are subject to interst and they can't peg back and miss the rapeayments for a while.

As soon as the poll of fools dries up we are in for one hell of a shakeout.

Hi, it's called sarcasm. Now quit your whining.

i lived in London for a YEAR IN THE 80S......and being in my early 20s liked the ''buzz''............however now I'm 40 i find it shabby and squalid and Highbury is my particular pet hate area......As grotty as the cheapest areas of london but not at all cheap.....Even poor suburbs of Leeds ,Manchester etc are far cleaner than the likes of Highbury...and most of Islington..........
Islington though shows how inner London is a different market to elsewhere......Many houses are £1 million in the same street as awful blocks of council flats....

Now you're being silly. Only people who buy as a financial investment lose when prices fall. Falling prices help existing OO's by shortening the rungs on the ladder. Negative equity in itself doesn't hurt, it's the size of the repayments that hurts.

Am I right, or am I right?

Nope you're wrong!!

When people are made redundant as a direct result of drops in consumer spending(and company profits) this will affect investors/ftb's/mortgage defaulters/credit card bingers.the list is endless.

families with spouses+kids do deserve sympathy in some instances(namely not the self-inflicted ones like mortgaged+credit cards all maxed out on new cars and holidays)

didn't they learn to put some by for a rainy day?

The young family as you state didn't work at all for their property to increase, and i can't see a price crash affecting them if they aren't moving.
GREEDY EA's and speculators will be the worst affected

By the way there is a nice thread on Scottish HP's read and enjoy!!

Rejoice.......

No, I was right. Prices increasing out of people's reach (for anything they need, not just houses) is doom. Those same prices falling, so that they are back within reach is joy. The fact that some bought at the higher, pre-crash price is not a good reason for calling a correction "doom"

with due respect casual,

consumer discretionaries HAVE substantially fallen in price.until recently in-demand services like builders were increasing their fees,however even this has tailed off(I remember this happening last time too!)

as IR's and commodity prices have risen the retailers have been facing a profit squeeze.

and retail sales are crap!!!!

shareholders will want to maintain profit margins by merging/consolidation/aquisitions of other rivals....and that invariably leads to the culling of duplicate positions(job losses in lay-mans terms)

Forgive my scepticism, but a supposed BTL investor who wishes rents were £650 not £933, and doesn't know the facts re rents/price trends sounds a bit fishy to me...

Good Maths! Can see why your in BTL!!

30k Savings - Thats a £1000 a month for 2 and a half years. Oh forgot can just put it on the credit card.

Question how did you find this site?? Searched for HPC why?

4 Bedroom House, Good Condition Central Finchley £1600 a month rent. You can get 2 bedroom flats in Highbury for £800. Think your talking crap. And thats before I read your absurd quote about 12% house price rises in London in the last 4 years!!

God why am I argueing with another idiot

I think our situation is fairly typical of many London FTBs - not all are young professionals, and many professions don't pay that well now owing to the huge number of grads coming through (thanks, Tony et al). Both just turned 30, 1 kid, joint salary 35k... willing to pay 750pcm for mortgage which will buy about 120k. add this to the 10 - 12k deposit and you have a buying power of 130k. I don't want to live in Clapham, wandsworth or similar trendy place - quite happy with slightly grotty SE London, thanks, but getting a 2 bed place wouldn't be possible at the moment. I don't think we're asking too much - do you? (serious question). Luckily we will shortly qualify for a key worker loan but having to depend on the taxpayer rankles. (But not as much as the fact my tax pounds will be propping up someone's BTL pension from next year - what's all that about?). The market has serious problems and I despair. I really do...

A joint salary of 35k is a bit rank to say the least.

Is it not the case that the term Key Worker is merely and excuse to pay someone a crap wage and make out you are running a charity.

Hospitals are now economic centres inspired by the Government PFI.

Are the boards of directors on hospital trusts and the management lines considered key workers I bloody well hope not.

The news for you however is very bright. You can borrow 180k at 5% fixed for ten years that the will cost you 750pcm.

I would change your mortgage broker as you are clearly missing out on the cheap interest rates and you need to get on the ladder and stop paying for your Landlords retirement.

Antsy,

We are in a similar position to you and believe patience is the key. The sh*t (i.e ex-council) 2 bedroom properties are now coming onto the market at under 140k. You will be able to buy a decent 2 bedroom place in SE for less than 120k in a couple of years. I would only consider a keyworker loan (and I do qualify for this scheme amonst others) in a rising market, but only if I was certain that I could repay it within a year or two.

Only this morning I received confirmation that I could start looking for a property in relation to the Homebuy scheme. The last batch were snapped up in no time for 2004 and new grants should not be available until April 2005!!

Are the government/L.A taking desperate measure to prop up the market???

I for one, am not going to put myself in the running for the "Greater Fool" title!

Typing the numbers into Halifax.co.uk on a fixed for five years comes back with at least £950 per month. And that's a big gamble, because after 5 years if it goes up (which given today's low rates, is more likely than it going down hence going for the fix in the first place) the repayments would rise still further. So it isn't affordable now and is even less likely to be affordable going forward. Added to that the real risk of negative equity and it is financial suicide.

I think that when calculating affordability the sum is quite simple: how much could you afford if base rates were 8 - 9%? People who don't do this simple math are gambling. It caught a lot of people out in the last crash.

I agree - a joint salary of 35k isn't good. For London. (It's pretty good in many areas of the Country)

But that's why we see for instance firefighters and other civil service workers going on strike over pay in recent years. Firefighters only wanted 30k and they had in the main broad public support, I'd suggest 40-50k is more appropriate for that role, I certainly wouln't do it for less than that given the unsociable hours and risk of death.

What this basically means is that as a Country we treat key workers with very little respect. To give Labour credit, they signed up the Social Chapter, which the Conservatives would not have done. However the minimum wage is still laughable, and you're on a lot more than that.

However - Antsy: do you think it's reasonable that as a taxpayer I should subsidise your home purchase (key worker scheme) which then helps fuel prices still further, pricing similarly or higher paid private workers out?

If your role is e.g. nursing, firefighter, teaching - etc - and you're providing a great service to your community, why stand for it - why not simply move to an area where prices are lower (I'm making an assumption that it would be possible for you to do so and the maths stack up) and enjoy a better quality of life than is surely possible in London?

If it's the case that you *want* to live in London then I think it's your choice, I don't see why it should be subsidised by anyone.

If this means London has no key workers, then so be it - strangely enough I recall an article about exactly that just recently.

That has to be dealt with - if we have to have some kind of key worker scheme we could perhaps do that by means of variable local taxation to replace the Council Tax, so London's local taxation would skyrocket thus meaning that high earners who live in London help to fund London's local key workers.

To address the issue of "getting on the ladder" - I'm not so sure it would be a ladder, as with the real risk of negative equity the next rung could be so much higher up for the forseeable future that it would be unattainable. The analogy is more like just about grabbing the bottom rung of the ladder before all the rungs above it are removed.

If it's the case that you *want* to live in London then I think it's your choice, I don't see why it should be subsidised by anyone.

Well, I don't know about Antsy but I *want* to live in London, for now. I was born here, my family are here, as are my friends. Quite importantly, my job is also here. Why should I move out of London in order to be able to afford a home?

I've said this before and I will say it again "people usually 'get on their bikes' to gain employment not to put a basic roof over their head." This logic will return soon with a vengeance. There is nothing in this world to justify London's house prices or anywhere else for that matter. Six years ago, 3 bedroom houses on my road sold for 150kish. Now they are 450k. Hello.