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House Price Crash Forum


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About Deleriad

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  1. Those numbers chime with what seems to be the case to me. It does seem like an incredibly risky step to take but there is still a belief out there that property values will outstrip pretty much everything else. Completely anecdotally. My wife is setting up a new business and we had a chat with a potential builder for the shop-fit. Fairly unremarkable chap until we suddenly found out that he owned the best part of 10 properties. As soon as he mentioned them it was like watching an alcoholic taking a drink. His face flushed and he wanted to do nothing else but talk about them and how he wanted more; the love and attention he paid to them; the brilliance of having. Listening to him it was clear that he lived and breathed this stuff 24/7. He didn't have a life, he was addicted to his properties. I suspect a lot of talk on this board sometimes forgets that people are not rational income maximisers. I wouldn't mind betting that, like an addict, this builder ends up being consumed by his addiction but that there'll always be more addicts out there and enough finance from the pushers to keep them coming through the door. It was depressing and scary at the same time. Essentially what this person was doing was feeding his property habit by pushing every last penny of money he could make from (actually pretty good) construction skills. What's more he was massively undercutting the competition just to ensure he had money coming in. (For those interested, we didn't hire him. The property we were looking at wasn't right and when we finally found what we wanted a few months later we went with someone else.) It seems to me that a rational, hard-nosed approached to property investing is more the exception than the rule.
  2. £300 to £350 pcm tends to be the going rate for single rooms for student flats (4-6 bedroom) in the southside area. That's generally students going to Edinburgh University. You can get cheaper but there's usually a reason if it's less than £250. That flat is in prime student land.
  3. Unless I'm missing something, Stirling has appreciated against the dollar by more than 10% over the last year and slightly against the Euro. Assuming most of our imports are priced in or against those currencies or Chinese (which Stirling has also appreciated against) then I don't see how the devaluation effect can exist. That mechanism presumably dropped out 12 months after the major devaluation so unless there's some sort of lagging effect I would have thought that the slight appreciation of Stirling ought to have reduced imported inflation slightly (or more likely had a negligible effect).
  4. I think my brain just exploded. If someone buys that at anything like that price then I'm off to somewhere saner. Looks like that works out something like £3600 per sqm. On Peffermill Road! I suppose on the plus side you get to watch the occasional lorry crash into the railway bridge at Cameron Toll. Always good entertainment value in that.
  5. There seems to be a resurgence of activity on site there. An effing big hole in the ground now which, I take it, is where the new 'affordable' flats are going to be.
  6. Well I have one data point which is that my neighbour sold his house for slightly less than he paid for it in 2003. On the whole, sales in this particular East Midland village are somewhere around 2004 prices. That said, prices didn't go up by much after 2004 there. Peak prices in 2007 seem to be no more than 10-15% over 2004 prices. The mad period was 2001-2002 when prices seemed to go up by around 50%.
  7. That's roughly my experience. My saved list peaked at 75 and is down to around 60. Most weeks around 10-15% of the properties seem to sell so now fewer are selling but almost nothing coming onto it. My personal belief is that factoring out Edinburgh's crazy seasonal spikes that prices may stay within 5% of current for the next 2-3 years. That said, history implies that there will be another crisis of some sort in the next 2-3 years so I'm working on a fractal kind of randomness. Talking nominal values I would say there's a 50% chance of prices being within 5% the current price in Nov 2013, a 45% chance of some crisis that knocks 20% off and a 5% chance of some frankly unguessable +20% rise. What I don't think we'll see is any kind of gentle but sustained rise or fall.
  8. Rightmove's index doesn't measure that. People get awfully mixed up when they see price drops on the bee or propertysnake and wonder why it doesn't reflect the rightmove index. The Rightmove Index measures the prices that houses which are being newly marketed are offered at. Reductions in prices of houses that are already on sale aren't measured. So the index is a reasonable guide to sentiment though that sentiment is a mix of what owners believe they can get and what EAs feel they have to tell owners they can sell for in order to gain the instruction. So the index has got nothing to do with whether or not people with unsold property are dropping their prices. This does mean that you can get perverse cases where people are increasing the initial asking price because they believe that they'll have to take a 10% discount and this shows up on Rightmove as an increase in asking prices. You may also get EAs colluding with this in order to win instructions to sell: in a low volume market some EAs may decide to pile up their inventory in the hope of finding more buyers that way. So the drop on RM measures the difference in price between initial asking prices this month as compared to last month.
  9. That's the gamble. At the figures mentioned I would have considered fixing but I would also be thinking that I have something like 40% in equity so remortgaging to a fixed rate is always going to be an option when the time comes. What no one knows right now is whether we are in for a sustained period of low interest rates, a gradual climb or a spike. I personally would defend myself against a spike but would probably do it by taking the lowest available term tracker with no ERC and switch to a fix when needed. Of course it's all a moot point if he ended up buying the wrong house for him but that's a whole other issue.
  10. These figures look odd to me. He had 70k in the bank and bought a house for 166K with a mortgage of about 100k. The 100k is 5times his salary which is therefore 20k and on that 20k he is supporting a wife and 4 kids. Previously they were paying 600 per month to a rent a place now they are 2,890 per year in mortgage interest (about 240 per month). Even assuming another £60 per month in insurance and maintenance on average then his interest repayments are 1/2 what he was paying in rent. Once you figure in capital repayments his mortgage (100k over 25 years) repayments are about £470. So his monthly outgoings on the most basic level have gone down by about £100 per month. He may have had other new expenses but the shift from renting to paying a mortgage has seen him swap from paying £600 per month to a landlord to 240 per month to the bank. Obviously, house prices may fall significantly in which case he would have been better off waiting and he's lost the interest and/or any return on his shares. But on the figures in front of me, he seems to have smaller monthly outgoings now than he did while renting.
  11. Except of course that there's a population of what 7 million? in London and perhaps 100K of them working in finance. The other 6.9 million have to live and work on salaries not that much different from what you would earn in Edinburgh doing the same job. In Edinburgh it is still possible to be earning less than the higher rate of tax, live in a nice part of town and have enough disposable income to enjoy a good quality of life. It is almost impossible to buy anywhere in those areas because current owners are sitting on their properties but at least the rent is ok. In London, no deal.
  12. I did include Merchiston in my list of the three possibilities. For example parts of Chingford were remarkably upmarket. Bromley is pretty Oxgangs like from my memory. The likes of Prestonpans are not a bad comparison. Large swathes of South London in particular are small, run-down terraces. I know people who commute from Prestonpans etc to work in Edinburgh because they can't afford to bring up families in Edinburgh. London is a lot like that only magnified. I know Niddrie pretty well. It's not as bad as it was but as a student in the 80s I used to play football at the sports stadium there. Once a week I cycled from Cameron Toll where I lived into Niddrie. Once a week I cycled back and felt glad to be still alive. I like London but Greater London is essentially its own country. I would have to be earning 3 times my current wage to enjoy the same quality of life as I do in Edinburgh. Right now I rent a nice terrace with back garden and driveway for less than 800pcm. It takes me 20 minutes to walk to my work; 30 minutes to the city centre and I have numerous theatres, cinemas and restaurants within walking distance. Edinburgh is by no means cheap. You can't compare it directly to London because the scale is just so different but London is in a different league when it comes to house prices.
  13. I lived in Bromley once. I do my best to forget about it. The nearest equivalent to Bromley and so on in an Edinburgh context would be a village some 10 to 15 miles outside of Edinburgh. Maybe Prestonpans or some such. I worked in London for about 2 years (lived in a mix of Chingford, Walthamstow and Bromley) and it's a completely different world to Edinburgh. If you imagined an Edinburgh where no one but the hyper rich lived within 2 miles of the city centre and all the rest lived in places that consisted of copies of either Niddrie, Oxgangs or Merchiston scattered in random lumps within 10 miles of Edinburgh proper, then you've got London.
  14. Looking at the first flat compared to the first 3-bed semi one, the net internal area of the house seems to be around 55sq m (63 or so counting the attic) compared to around 90sq m for the flat, so we're talking about getting on for twice the area. The flat, (5/1) was ought off-plan in May 2003 for £200,000. Flat 1/2 which is likely to be broadly similar was bought for £211K in June 2003 and sold for £265K in Nov 2009. I would be surprised therefore if 5/1 sold for more than £270k. So the situation might not be as cut and dried as a simple room count would show.
  15. Well there are all the newish (2000-02) flats on Littlejohn Road in Greenbank. From looking at schedules there are quite a few which are the size of genuine 3-bedders in Merchiston if not bigger and they have garages. According to Our Property they seem to sell in the range of £330k. So that gives an idea of the premium that Merchiston attracts compared to Greenbank and the relative prices of bungalows vs flats.
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