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cautious buyer

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  1. According to Land Registry figures (as shown on houseprices.co.uk) only 6 properties in Kt 13 between 1 & 2m were sold in 2009 (up to 20 07 09). Newly built houses in Castle road have now languished for 3 years and so have done properties in Caenshill, the Mount, Cleveswood etc. Asking prices may not have changed much but, estate agents will not hesitate to say that most vendors will be happy to accept offers more than 10% and in some cases 20% below asking prices. The housing market in this area has fallen off a cliff. Its precipitous fall has been halted temporarily by the ultra low interest rates. This propping up cannot go on for ever. My own personal view is that the next 6 to 8 months will see a major change in the market with prices falling a further 20 to 30%. I have outlined the multiple reasons for this in an earlier post. Rachman, I must say I have been following KT12, KT13 more closely than KT10 and KT11 so I accept your take on these areas. I personally feel Cobham and Oxshot although have excellent private estates lack the cohesiveness and ambience that Weybridge has. This, perhaps, is a matter of personal taste and preference. Esher may suit rich couples but I never felt it is that family oriented. Some of the schools and housing estates in Cobham and Esher have a bad reputation.
  2. Rachman, The properties I was referring to are the ones in FL/ Fairbourne, Green Lane and also Fairmile Park Ave. I was also referring to the area of Weybridge/ Walton. The Octagon properties in Byrwood park and those on Queens Road/ Burwood Road. I agree this year, rather against my predictions, there was some activity but this is coming to an end. I believe if in the next few months the traditional influx of buyers from the City does not materialise, now for the second/ third year in a row, vendors may finally realise that a true shift in the local housing market has occurred and, at least for the next few years, things are going to be different. After that prices will adjust to reasonable levels. It is always difficult to define what a reasonable level is for house prices. One can only follow certain lines of analysis and assumptions. The prices rose in this area between 2002 and 2004 some 30%. They dropped around 10% in 2004/ 2005 and then rose between August 2005 & end of 2007 possibly by 40 or even 50%. . These sharp rises were not based on any change in the areas demography, geography, links to London or any other factor apart from the City’s supply of rich buyers with large bonuses, easy credit and the sentiment that accompanied that era and the belief that the property prices were going to rise indefinitely. All of these factors have been removed/ weakened or reversed to varying degrees. The prices have already dropped 10 to 20 % last 18 months. If one believes that things should then adjust to their original long term path (an annual increase of 5-10 % for property prices is probably a reasonable long term trend) then one can estimate the likely further drop in prices to be in the range of 20 to 30%.
  3. I have to disagree with this view. Asking prices are reluctantly coming down. In the range between 1 & 2m some of the properties (with very large gardens, standard room sizes and in very good locations) have now languished for many months and their asking prices are being reduced. In the range above 2m the market is almost at stand still and there is a glut of old and newly built properties which are not shifting. (In Cobham Fairmile area newly built properties initially marketed at above 2m are now quietly offered for 1.7m). Below 1m properties are coming initially with high price tags but only as part of the usual ploy of initially inflating prices as a cushion against low offers. I think the prices in this area are about to fall dramatically. They are still quite over-inflated and they are particularly vulnerable to what happens in the City and the financial sector. Many American tenants are leaving and multimillion properties are now on the market for rent. Potential sellers are holding back waiting for this year's City bonuses. These are unlikely to save the day as in previous years (lack of cash bonuses, reduced number, lack of confidence etc.). People are able to hold back only because of the very low interest rates. As their deals come to an end and as IR come up I expect a 25-30% drop. They have already dropped 15 to 20 % from their 2007 peak ( interestingly this drop happened literally over a matter of days last year). Another observation, which I feel is a major change to what I used to see, is that most estate agents are now unsympathetic to sellers who are asking inflated prices and complaining they are being inflexible and unrealistic. Unless one finds a dream house and a drop of 20% does not matter for them my advice is to wait. Don't get fooled by those who try to talk the market up. Think of the expected developments over the next 6 months: the IR have only one way to go, the policy of quantitative easing is about to end. Taxes are going up and public spending down. Unemployment is still on the rise and the City is not going back to the same level of activity and extravagance for sometime still. There are elections next year and this government with its desperate attempt to delay the fall in house prices either will be replaced or no longer will need to delay the inevitable. It is only a matter of time.
  4. You are right buyers of houses at >1m mark are unlikely to be first time buyers and many will be near the top of the ladder. My example of the high earning couple is meant to illustrate that £1.5m is not an easy sum of money to raise even for high earners. The City has changed and I believe will continue to shrink in terms of its size and its proportional significance to the UK economy. But most importantly its old way have gone and , hopefully, will not come back for sometime. The combination of all that means the wealth generated by the City will be reduced and the amount available for the big boys to grab will also diminish. This change alone means the sockbroker belt is being and will continue to be hit. The fact that prices have already come down by at least 10% -20% (as we all seem to agree) at a time when interest rates are at their lowest since records began is a clue of how hard this area is hit. The market above £2m is struggling badly and that below £1m is not doing that well; it will be surprising if the range £1-2m held for much longer.
  5. 1.5 m is a lot of money! For a while this sum of money did not seem too much or too hard to come by; this was the era of cheap money and easy credit and it is a bygone era. For a high earning, hard working couple on £80k each it will take probably 15 years to save the 900k needed on top of the 600k mortgage to put together such sum and this is a lot of human effort and time. I think times have changed but it will take time for this to sink in. The artificially low interest rates are masking the problem and is giving a respite to overleveraged house owners. From what I have heard, and from my observations of the household living in these private estates or owning the properties there and renting them out, there are many who are overstretched and will be forced to sell sooner or later. The clever ones are already prepared to take a hefty discount to exit before things get nasty.
  6. This is a record of the prices of sold properties in Ince Road: 15/07/2008 £1,550,000 Det. F No Map 3, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 28/09/2007 £2,225,000 Det. F No Map 19, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 30/04/2007 £1,725,000 Det. F No Map 46, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 4 16/03/2007 £1,425,000 Det. F No Map 33, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 5 09/02/2007 £1,418,000 Det. F No Map 7, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 6 20/10/2006 £1,312,500 Det. F No Map 22, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 7 13/06/2006 £1,130,000 Det. F No Map 6, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 8 24/03/2006 £980,000 Det. F No Map 8, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 9 22/12/2005 £1,157,000 Det. F No Map 19, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 10 26/11/2004 £925,000 Det. F No Map 3, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 14/10/2004 £912,500 Det. F Yes Map 10, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 12 23/07/2004 £979,000 Det. F No Map 50, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 13 30/06/2004 £940,000 Det. F No Map 46, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 14 02/04/2004 £990,000 Det. F No Map 20, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 15 25/02/2004 £900,000 Det. F No Map 25, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 16 12/06/2003 £932,000 Det. F No Map 1, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 17 15/11/2002 £940,000 Det. F No Map 28, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 18 25/07/2001 £830,000 Det. F No Map 20, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 19 29/06/2001 £975,000 Det. F No Map 19, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near KT12 5BJ 20 28/06/2001 £775,000 Det. F No Map 18, Ince Road, Hersham, Walton-on-thames, Surrey, KT12 5BJ Properties for sale near K Note: None sold last year. No 19 was bought at 1.2m or so , extended and renovated and then sold for above 2 m ( oversold in my opinion). Number 46 was sold at the peak around 1.7m. Prices have come down since supposedly by 20% nationally at least, while in this area which was overinflated most during the boom and should suffer most because of the City, the prices have probably come down by 25 to 30%. So why this property should sell for more than 1.5m?
  7. This is possibly one of the conclusions that can be made. Well done!
  8. I know this area well. The house is located on Ince Road but is on the side backing onto Seven Hills Road. This is a busy road and the noise in the garden is a problem despite the intervening distance from the main Road. Until 2005 no properties in Burwood Park sold for more than 2m and in Ince Road none above 1m. Then in 2005/2006 there was a sudden influx of buyers (from the City, developers, Overseas investment buyers) who started pouring into Burwood park. This even at the time seemed unusual and unprecedented boom and was almost all orchestrated by one estate agent. I know at least at the start they resorted to misleading and cunning practices (luring people to put in low offers then advertising the property "went under offer within 24 hours" and thus attracting offers near and above the asking price, arranging viewings for 2 or 3 buyers at the same time to create a feeling of increased interest etc) and manipulated the market in various other ways. This coincided with building the new shopping centre in Walton and the talk that this will lead to sharp increase in prices. Properties on the other side of Ince Road started going for above 1m in 2005 but the ones on the wrong side of the road ( with even numbers) still did not sell well. Only at the peak of the boom that a couple of properties on that side of Ince Road ever sold above 1.5 m. With the current state of the housing market (& despite the talk of a revival which is now clearly faltering) my feeling these owners will be lucky to achieve a sale for even 1.5m.
  9. II am not sure our experience is similar. We see prices definitely coming down but I agree much at a slower pace than one was hoping for. Newly put on the market properties are coming with lower price tags than a year ago. Many languish sometime before they are placed under offer and in the case of a couple of properties we were involved with the accepted offers were in the range of 15-20% off the original asking price. One good site which I found helpful in tracking what is happening in the market is home uk. They show a graph tracking the price of each property and the picture in the higher end of the market is that of progressive reductions in prices. The challenge for STRs will not be prices ticking up again: no matter what happens to the economy, the environment created by the easy credit, lax regulation and misled public which allowed the silly price rises can not be re-engineered again in the next few years and the worse thing that can happen is slow withdrawn drop in price. That is unless we go into a period of hyperinflation and the prices of every thing start shooting up Zimbabweans style
  10. These figures about registered buyers are being manipulated and exploited by estate agents to the limit and people must indicate they no longer can be deceived by them. The figure expoited most in a simple yet effective way is that of the number of buyers vs. number of properties in an area. If I want to buy a property in a certain town it is likely I will register with most of the Estate Agency offices there which easily, in a typical medium sized town in the uk, will mean 10 estate agents or more. If I want to sell a property in the same town, on the other hand, I am likely to go for "Sole Agency" or register with 2 at most 3 Estate Agency offices. Thus the statistic which will come out of this is that there are 3, 5 or even 10 buyers for 1 property. It is ridiculous. What makes me feel frustrated is that while on individual level we can see through all that; on the collective/ national level we allow this deception to create a false impression regarding the supply/demand balance which we then may, subconsciously, be inflenced by.
  11. It is all part of market manipulation & distorting the supply/demand balance in the following ways: Not advertising or reporting the true number of properties on sale in each price bracket. (not listing all properties on sale in their publications or on their websites, not erecting "For Sale" signs on the streets until an offer is made and then having it replaced by the "Sale Agreed" sign shortly afterward and leaving it for weeks on the streets and for months on their website). Claimimg a property is under offer (when in fact it has been taken off the sales list after languishing there for months) or that it has been sold when in fact after no sale could be achieved the owner is putting it for rent. The property is then returned to the market with a different picture (interior rather exterior) or with "unexpectedly reavailable" caption. If they manage to lure somebody to make a low offer (although they know this will not be accepted) shortly after a property came to the market they can create the illusion of high interest in the property and high activity in the market. By leaving the "under offer" properties advertised they in effect advertising the properties further by saying they have already attracted interest. I also doubt very much that the numbers of registered buyers are truthful. If I start looking to buy in a town I probably will register with most EA offices. Thus when data on this collected I suspect I will be counted multiple times possibly 10 or more. While if I want to sell a property I will use "sole agency" or at most 2 or 3 agents. Thus the statistic will come out that there are 3 or 5 or even 10 buyers for 1 property. By attracting people who they know are not going to buy a certain property to still view it and arrange for viewings to happen at the heel of each other they also create the false impression of high interest in the property and put pressure to offer a higher bid. And so on The way EA are allowed to "legally" manipulate the market is astonishing. These practices are not accepted from respectable salesmen in the high street if you go to buy a shirt. Why this is accepted when we are making the single most important purchase in our lives and for an essential commodity for our families and children is difficult to explain.
  12. No one buys a house because an EA forced him/ her to. But EAs can create an illusion of shortage of houses on the market, of multiple viewers, interest and bidders for a perticular property. They can claim a property is under offer when it is not or after purposfully luring some body to make a low offer etc. They can manipulate the market and put pressure on people to buy no matter what and offer at near the asking price. This together with the easy credit, media, government etc.. The culprits are known and people now can see through the scam. EA are not the only culprits but they are not innocent. If there are honest ones then as in any other profession they should have come out and blown the whistle. Whether when talking about EAs or the fraud which happened in the City there are now those who try to exonerate themselves from their share of responsibility. Have we been in a country where the concept of fairness is not distorted to always favour the wealthy & the stablishment, an inquiry in what happened and prosecution of those whose fraud resulted in this mess would have long been initiated.
  13. Although I don’t like to be drawn into a prolonged focused discussion, in this posting there are a number of statements which I feel represent certain trends in the discussions about the housing market and economy in general which need to be looked into with some thoughtfulness: First the accusation of envy of anybody who objects to the inequalities which have resulted from the past era of “easy credit or “financial scam“ or “age of irresponsibility” call it what you like. I admit I have a strong feeling of resentment to what has happened and to the economic and social consequences that followed but I don’t think this comes out of envy or the simple desire or wish that I become one of the beneficiaries of this era. Nor my resentment stems from the wish that those who benefited from this era lose their privileges simply because I don’t have them. I have many friends & colleagues who outperformed me and achieved better financial and/or professional status, whether within my profession or in any other walk of life. I sometimes wish I had done equally good and made the choices they have but I feel no resentment to their achievements. If such feeling is envy then fine I have it and it has motivated me along the years to do better. I want my children to also have it and I am sure this will provide them too with the drive to work harder. Society has to decide its priorities & the means acceptable to achieve them. There must be a standard to judge the distribution of wealth. To say let us put up with any means of creating wealth since such wealth will still trickle to other layers in society is a ridiculous argument. Lets then offer a safe haven to every drug Baron, crook, and dictator in the world; I am sure they too will spend money and benefit other layers in society (this will certainly result in a boom in sport cars, fine restaurants, nightclubs etc… the whole chain). However they too may want to invest in the property market and if this results in out pricing of other folk who have not been as clever and successful in accumulating wealth then there is a problem. I am certainly influenced by the media stories about all the fraud that has gone in the City and wonder why you aren’t. I must also say that many people suspected there was something dishonest and fraudulent going on long before all became evident to see. That there are some honest, hard working people in the City is of course very much true. I think, however, it is very unlikely they have done half as well as their “smarter” colleagues as they could not have stood a chance. How an honest gambler can win playing with those who cheat? The odds are near impossible. Now back to the behaviour of buyers in the Esher/Weybridge/ Cobham area in the period 2003-2007. People may do well in all walks of life, they get richer, the may come into inheritance and they may even win the lottery. Head teachers, doctors, lawyers, engineers, etc can accumulate wealth and strive to buy houses on large plots in nice commutable areas. However, their approach is broadly similar, may be a bit less, may be a bit more cautious but there is a tendency to want value for the money they possess, a tendency to try to avoid having to pay more than it is a fair price. I know this because I have many friends, neighbours and colleagues who bought or wanted to buy property in this area. The behaviour of buyers who poured suddenly into this area between 2003-2007, (the majority of whom were City workers, in their thirties and with small families buying to live in or older investors buying BTL) was quite unusual. This may have been because they were worried about inflation, or had the wisdom to see that prices were likely to continue to go up or did not want to sit on the money for long lest they spend it on some thing else, but the impression, I think I rightly have, they were in a hurry to buy: with a degree of haste and urgency coupled with inattention & disregard to any overpricing. This behaviour for me is unusual and there may be a number of ways it can be explained. I am sure one explanation does not apply to all & I am a bit surprised why in your replies you are becoming a bit abusive. I don't believe there are stupid people; I think there are people, howeve, who simply think they are smarter than they are.
  14. Although I accept it is silly to think of a conspiracy in the direct literal way and in many cases the purchases happened in the way you describe, the money laundering bit may still be broadly accurate in the indirect sense. My wife & I happen to work in very well paid professions and over the last five years we have increased the price bracket for our property search few times. However, we still find it difficult to part with our cash (and take the risk of a big mortgage) to get a house that we may like but we feel is grossly overpriced. Like, I suspect most people who worked for their cash, we will research & investigate a house, assess its asking price and put in an offer at a level we can afford and only when we are satisfied we are not being taken for a ride. In the boom period the behaviour of many buyers did not look to us to follow this pattern at all. The speed with which some of the properties were selling was dazzling, the volumes of sales were huge and the overpricing was ridiculous and obvious. To us some of the sales could not have been achieved if the buyer stopped for a second to look at the prices of sales in the same street, at the fact that the location was adjacent and not within a private estate or that the same property was on the market for 20% less for months and did not sell only for it to be taken of the market for a month or so and then be relaunched at the new price tag. I am not sure that the majority of sales here necessarily went to people selling in London and moving over. The timing of the activity in the property market here very much followed bonus pay outs and overall stock market rises. For a city worker who has just received 500k bonus for some "achievement" he/she knows is likely to be quite detrimental to the institution paying this bonus, I can imagine the money will feel some what "hot" & unreal. There may be a drive to get rid from it as early as possible. Furthermore various categories other than developers & City workers seem to have also taken a dip at the property market here including at one point many rich Russians and overseas buyers (as estate agents kept boasting about). Not all rich Russians and foreigners acquired their money illegally but, at least from what one hears in the media, quite few may have. I am not an economist but, from what lay people like us heard so far about this financial crisis, much of the activity of the financial world in the last few years seems to be one large money laundering scam.
  15. There are 3 or 4 properties for sale in the streets off Icklingham road (the Bartons & Burstead close). All with asking prices of 1.5 to 1.8 m and estate agents indicate their owners will accept offers well below that. They are more spacious and suitable to live in than this one and on bigger plots. This is a nice location but the prices went up quite unreasonably in the boom period and I think will have to come down quite a bit. The private estate(Faimile) in Cobham is being hit hard. Quite few of the Americans are leaving and this together with the problems in the City will take its toll. Also there is an unusally large number of new build properties being released at the same time: in one small Cul de sac there are at least 10 if not more newly built houses all with asking prices 1.7 to 2 m. With the very ilow nterest rates and the initiatives trumpeted to hasten recovery, it is not surprising people are still reluctant to accept they have to reduce prices. It seems this stand off will have to be long and only when it dawns on people that house prices will still have to come down even if /when economic recovery happens, that they will accept reality. The reason for the mad increase in prices was never related to economic growth but to the financial scam which we all now are aware of and these circumstances are unlikely to return soon; economic recovery or not. No where in the country the madness in house price increases was as pronouncecd as in this area and if the City is being regulated as we keep hearing things should dramatically change here. I have always also suspected that there is some sort of alliance between the City and some estate agents here who have been so successful in the last few years. I don't think it is my frustration and tendency to invent conspiracies but the way the City workers poured in to the area and paid whatever was asked was truly phenomenal. To me it looked like there was a grand operation of money laundering. I have a feeling that if the government or other agencies start pushing for enquiries and asking questions about what has gone on, a flight of the money from the housing market and other illiquid assets will happen and some people may want to move their money and possibly move themselves outside the country.
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