Friday, Dec 19, 2008
Who said rents would rise in a HPC?
Evening Standard: Rents falling faster than house prices as sellers turn landlord
RENTS have plummeted even faster than house prices in central London, a survey shows today.
Three- and four-bedroom homes - until recently seen as the safest bet in the market - have been hit particularly hard because of the glut of properties available, as thousands of would-be sellers become "forced landlords" because they cannot find buyers.
Houses that would have fetched £1,000 a week are now only making £750 to £800, according to agents.
Posted by little professor @ 10:30 AM (941 views) Add Comment
17 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. mark wadsworth said...
Glorious.
I bumped into my mate the letting agent (a very good one, as it happens) and he said that business was doing OK but it wasn't brilliant.
2. japanese uncle said...
May I repost this: If UK follows the trend in Japan, rents will be back to 1988 level.
-------------------------------------
To be honest, I think I may humbly mention that my predictions about the UK economy for the past 18 months or so proved right, in nearly every respect (size of HPC, oil price, number of repossession, GBP/JPY rate, etc.). This is simply because the UK is almost precisely following the same path as Japan did some 19 years ago, about which my memory is still vivid. On this basis, I must say that the rents in Japan has been stagnated to this day, ie rents in Tokyo today are generally cheaper than 20 years ago. Circa 2000, rents were considerably cheaper than the 1989 level, probably by 15% or 20%. I can easily predict the same thing in the UK, in view of the imminent recession in which we will see surge of unemployment, record-breaking business failures, etc, besides the tens of thousands of Polish workers who are likely to make reasonable decisions to go home, as remaining in UK is not economically viable. When the banks call the loans they have pushed to the consumers like mad dogs during the past two decades, which amounts to 1.4 trillion, while they will provide no new loans basically, unless they secure very good collateral (which will be non-existent in the very near future). What would happen. Prices would have to come down to the level affordable by the millions. Surely deflation will take over as money that people can use at their will disappear from the economy, except in the tiny segment of the market for the very well-offs. Hundreds of thousands of the young or low-income British workers will have to go back to the old familiar bed-sits, which is already happening in London, let alone flood of the hundreds of thousands of newly built urban ‘luxury’ flats in each and every major city, where supply will far outstrip (effective --, make no mistakes) demand.
3. David Smith's Sub Prime. . . said...
Greenbay, any chance of you giving us your analysis here?
4. David Smith's Sub Prime. . . said...
I would ask David Smith but he would charge too much and might get it wrong.
5. plato said...
If this could and did happen in a powerhouse economy like Japan it will happen here with relative certainty. The idea of increasing income through rising property values is basically flawed. A house is not a commodity,it is a necessity - a shelter. Using this to increase income instead of productively working is folly. There are some exceptions,there always have been,but these are a relative few professional business people expert in this particular field and they will continue.
If the value of property is false relative to productive earnings (and it is) it will crash (and it has) and all the things associated with it will follow and devalue to where they should be. This includes rents. How on earth could it not?
6. uncle tom said...
Locally (south of Cambridge) quoted rents are currently little altered, but there is significantly more property being offered for rent, so prospective tenants have scope to haggle.
Where will rents go? - My logic says that once the crash is over, the dust has settled, and some sanity returns to the property market, rents will probably settle at around 6 - 7% of the capital value of the property per annum, or put another way, a little more than a half percent of the capital value per month. A higher return would tempt in an excess of landlords, a lower return would fail to entice enough.
Locally, property that peaked at a capital value of £200k can be rented today for about £700pm. Post crash I expect the same property to have a capital value of about £110k, and rent for about £575pm
7. growler said...
I'm with you JU. But I remember people saying it would be a long, slow, grinding crash. I've always thought it would be quicker. People are much more savvy today - sites likes this, the interenet. The newspapers have little room for the rubbish generally written in the last crash. I remember all the talk of green shoots and not so severe a property crash.
8. jamonit said...
I wish bl**dy rents would drop around Stratford upon Avon. No sign yet.
9. shipbuilder said...
The scary thing is - why are 'would-be sellers' able to rent their house out? Did they buy another before selling this one. If so, that's a lot more people screwed when they find out that they'll never get the money they based their next purchase on.
10. japanese uncle said...
growler
Yes, I could not predict such a sudden death of UK economy/housing market, this abrupt end. In five years time, HP is likely to hit the bottom and then stagnate for some time, as compared to Japan where HP continued to drop for 14 years.
11. doom&gloom said...
jamonit - 2bed house, market street < £600pcm. what more could you want??
12. drewster said...
JU,
I agree with everything you wrote!
There are a few differences with Japan though: the main one is that our central bank is far more keen to print money than the BoJ was.
Growler,
I'm amazed at the speed with which it's all unfolding! Rapid change can't be good for companies.
13. Oxymoron said...
In North Oxfordshire the rents are only heading downwards. There was a brief spike over the summer where EAs attempted to recoup the money they were no longer seeing via sales, but then sooooo many properties appeared that rents had not choice but to drop. One house dropped from 725 to 595. New house on a new development. Not a bad place, bit cramped, as these new developements go, but still no one wanted it for 725! And who can blame them.
Average price is now 600 to 650, for a decent 2 bed, but this is dropping all the time... I would expect to see rent drops to the sub 600 pound area by the spring... Of course that's for new renters. Those extending their leace will probably see a 4% rise as detailed in most contrats these days!
14. Alex228 said...
a newish 3-bed in not too bad area of Wellingborough - 350 PCM + paid tenant fees. Made my day :)
15. This comment has been removed as it was found to be in breach of our Blog Policies.
16. This comment has been removed as it was found to be in breach of our Blog Policies.
17. This comment has been removed as it was found to be in breach of our Blog Policies.