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House Price Crash Forum


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About smilie

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  1. House madness I bought in HOP last May. Initially was looking in East Dulwich, but prices are crazy there. I think HOP and Forest Hill have a lot of potential. Its quiet and very residential, and bars & restaurants are slowly getting better. I think the overground in 2 years will give the area a big boost. So far I havent noticed any softening of prices, although properties are taking longer to sell. Anyhow, good luck!
  2. Well I've just withdrawn from the sale. I'm not sure how I feel right now.....i just hope it turns out to be the right decision.
  3. This house isnt your run of the mill ex local authority house - its a grade 2 listed georgian terrace. It never crossed my mind when I put the offer in that my neighbours would be council tenants...but it is a major concern about what any future tenants may be like. I dont mind the area - i live there now. Its very convenient. But prices are now getting close to much nicer areas like kennington which to me doesnt make sense. At the mo I'm very cash rich - i prob have enough money in the bank to have 2 years off if i wanted. I was thinking I could try a new direction career wise. Maybe thats more important about life rather than struggling to afford a nice house in a career that I hate...(although i'm 30 so thinking i could be too old for a career change now). I'm currently an accountant btw.
  4. Well....I am in the process of buying a house in Elephant & Castle area....its a lovely house but am really concerned now that I am overpaying for it. Here's the story... I am paying the full asking price. There were 2 other offers at full asking at the time, but i was in the best position so I got it. But I have learnt a few things which make me uneasy: Firstly the vendor only bought the house recently - he completed on 29 September 2006. I am guessing that he had his offer accepted in June. I now know what price he paid for it (its now on nethouseprices.com). He will have made a 10% gain if the house goes through at my offer! Thats a 10% gain in just 5months. The agent says that prices have risen sharply in the area. But by this much? Secondly I didnt know this when I put the offer in but the house is ex localauthority and both my neighbours would be council tenants. They may be fine now, but what if they change in the future? And thirdly my survey has revealed a few problems. Nothing too serious, but enough in my view to take off £5k off the price. Anyway, I sent all these concerns to the vendor via the estate agent, and surprise surprise the vendor is not willing to budge on the price (I suggested a 4% reduction), and believes that he will be able to get an even higher price if he puts it back on the market. He may well be right as houses seem to be flying off the shelves. So not sure what to do.... I'm starting to think that there is no discount any more in buying in elephant & castle ie all the prices already reflect the future regeneration plans. I really feel like I am overpaying for it. I'm also starting to question whether in fact I should tie myself down to such a big mortgage (4.4 times current income). I am half thinking of changing career. Buying this house could make this impossible.... I have also spent quite a lot on the survey, valuation, and other fees so this is going to be an expensive lesson if I walk away now. Perhaps I've been reading this forum too much! Its scary reading....
  5. For your information I have lived in Elephant & Castle for the past 4 and a half years and never had any problems. Yes some of the new housing will be to rehouse existing council tenants in the Heygate estate: "The council will be working with its housing association partners to build 1,000 new homes for Heygate tenants on 14 different sites grouped into four areas around Elephant and Castle." (from council website) Total plans include: 5,300 new homes 75,000 metres of new shopping space five new open spaces a series of landmark buildings a new civic square more than 4,000 new jobs improvements to transport links, including a new station, upgraded tube connections, new bus and cycle lanes and better facilities for pedestrians Therefore 4,300 of the new homes (ie the vast majority) will not be from existing residents. And there is a lot more changing as well as you can see. Why is my opinion "worthless" - ie why is your opinion any better than anyone else's? And my point about the Olympics is that London (more than most capital cities) will be in the world spot light, and will encourage more and more foreign investors to buy property in London. This is happening right now.
  6. Well I'm not convinced of a crash either, hence I'm in the process of buying right now. Am borrowing about 4.4 times salary. As I've said in a previous post, I am buying in Elephant & Castle in London. The market is very strong here. Houses are being snapped up because of the regeneration of the area. In the absence of an economic shock, prices rises are likely to slow down, or become flat for a while. Although in London prices could keep climbing as we near the 2012 Olympics. As David Smith says in today's Times: "PS: Two years ago, in the autumn of 2004, the Daily Express ran a front page with a warning from David Miles, Morgan Stanley’s chief economist, that house prices could fall by up to 25%. Last week, the Financial Times also led on Miles’s prediction of a housing bust, admittedly on the basis of some new research. I don’t know whether that says more about the Express or the FT. The debate about whether house prices will crash is older than the hills. I have long taken the view that the market will not implode unless there is a serious economic accident, defined by a loss of control of monetary policy by the Bank of England — a very sharp rise in interest rates — and a big rise in unemployment. The minutes last week of the Bank’s November meeting showed that even one of the deputy governors, Rachel Lomax, did not support the rise in Bank rate to 5%, suggesting no great pressure for big (or indeed any) hikes from here. Unemployment is up, but employment is also rising strongly, so it doesn’t really count. Miles, a noted technical economist, has assembled a model that suggests between a third and a half of the rise in house prices over the past decade is due to speculation. People, he argues, have been drawn in by the expectation that prices will rise by 10% a year. When such hopes are dashed, prices will tumble. Expectations are important. The problem is that we have no information about what housebuyers expect to happen to prices and never have done Experts differ. Another top-notch technical economist, Steve Nickell, formerly of the Bank’s monetary policy committee, took the same data and concluded that house prices were not overvalued. It is important to recognise too that Miles is predicting something that has never happened before in the UK — a housing-market crash driven by the reversal of speculative expectations. Every previous crash has been driven by real factors — unemployment, recession, higher interest rates and so on. My view is that this is still the case, with support for prices provided rising population and limited housing supply. Miles suggests that prices may well continue to rise for a year or two but “falling real house prices at some point are likely, but timing is very difficult to predict” and that prices could fall without damaging the economy much. I don’t dispute that prices could fall but it will require the economy to hit the buffers. We’ve never had a housing crash in the absence of a recession. I don’t think we’re about to break the habit. "
  7. Well actually I have some data from nethouseprices.com An identical house 2 doors along sold for 25% less than the price I am paying now about 5 years ago (or in other words, the price of that property 2 doors along has increased by 33% within the same time frame if its now the same value of the price I am now paying). Which means that I am overpaying by about 20% then! Only thing in my favour is that the house I'm buying has been refurbished to a reasonable standard which the other house may not have been.
  8. Hello Thanks for all your reponses....its been interesting reading what you had to say. I merely wanted to compare rental value to purchase price to get some indictation as to how much I may be overpaying. I think that the gross yield only comes in at about 4% which isnt very high I know. But maybe comparing rental isnt always the best comparison you can make. What I am buying is a quality 2 bed period property. I know for the same money I could buy an ex council 4 bed - this would give a much better yield, but that doesnt mean that the period property has further to fall does it? Or my question in another way - isnt it always better to buy quality in the best possible location (nowithstanding the fact that this is elephant & castle!) I am starting to get stressed out by it all. I think I will pay for the valuation and a full structural survey and see what that comes back with....if this says that it is overvalued, I may try and negogiate a lower price - although I know that is a forlorn hope....I was one of 3 buyers who offered the full asking price within a week of it going on the market - I was the stronger of the 3 so I got it.
  9. Hello all I have decided to take the plunge and am in the process of buying a small house in London. I know that most of you must think I'm mad buying at this time, but I am buying because I really like the property in question, and its also in a regeneration area (Elephant & Castle) so hope that I'm at least protected from any downturn in prices. Currently prices are going crazy in this area and most properties are not hanging around, so I decided to go for it even though I will be stretching myself a bit. I read somewhere on this forum that a good way to compare how much a price is overvalued is to compare the rental you could get versus the interest you would be paying on an interest only mortgage. If the mortgage (I am assuming an 85% normal BTL one) would be covered by the rental, doesnt this show that the price is fair? (I think in my case the mortgage paytments on this basis would just about equal any rental I could get).
  10. Well....going back to the start of this thread....I have just put an offer in at the full asking price (gulp!) Awaiting a response back from the estate agent's....
  11. Hello I never post on here because up until now I didn't really believe that a HPC was going to happen. But now I'm not so sure. I am looking to move from my current house which I own and have a fairly low mortgage amount to pay off. I viewed my dream house the other day, and couldn’t resist putting an offer in for it. I offered about 95% of the asking price. But of course 2 other parties went straight in at the asking price. I refused to go higher…..but now I’m starting to regret my decision as there are so few quality houses on the market in my area. It looks like the person who has got it is a buy to let investor. But I can’t for the life of me understand how he has managed to get a mortgage because at best the rental income will equal the interest on a typical BTL 85% interest only mortgage (from my calculations). How can this make financial sense? Thinking now that I should have gone over the asking price to get it (although it would have meant stretching myself a lot financially)….although my other plan is to wait for a year or too and start looking at auctions and maybe then picking up a repossessed property at a discounted price? That of course is dependent on some kind of crash taking place….
  12. I think Bulgaria still has lots of potential despite the boom it has had over the last couple of years. Opodo has just put Bulgaria top of its list of ‘Top 10’ up and coming travel destinations for 2007. BA is now flying all year round to Varna on the Black Sea, and is now selling return flights for £59 inc taxes. With other budget airlines predicted to start flying to Bulgaria, there are likely to be more and more independent travellers which will improve rental returns. EU membership is guaranteed which will continue to improve the infrastructure of the country. And I think that golf does have lots of potential - there can easily be a 9 month golf season on the coast. Why are 3 professional golf courses being built around Balchik north of Varna?
  13. I don't altogether agree that "Bulgaria is over". The Sunday Times article had a few home truths (weak rental demand and risk of oversupply), but it was very biased - it did not mention the positive impact EU membership is and will have, as well as when budget airlines start flying there (which is inevitable) - then independent travellers are more likely to visit which will help demand. And even if rental demand remains weak (France and Spain holiday homes are classic examples of how widespread this is), I think there is less of a risk of a crash in Bulgaria because prices are still low. I am quite happy to keep the beach apartment I have in Bulgaria as a holiday home for my own personal use. But if I owned the same apartment in Spain (and costing 3 or 4 times more), then I would have to try and get rentals as I'd probably have to get a mortgage to pay for it. In Morocco, prices are higher than Bulgaria, even though its people are poorer. It also does not have the certainty of inward investment like Bulgaria has. So for me the risks of buying in Morocco are far greater.
  14. Hi Dogbox Congratulations on making a huge paper profit. One point the programme made clear was that the French and Spanish have been buying in Morocco for years - its only us Brits that have recently started buying. As you know I have bought in Bulgaria. It was interesting to compare the programme last night to the one the same presenter did last week on a couple of British property developers in Bulgaria. All the same arguments you guys keep making about the prospects for Morocco can equally be said about Bulgaria (prospects for tourism, increased investment etc etc). Yep it has a shorter season, but Morocco has the terrorism threat and what would worry me most is that its not a democracy. What safeguards do you really have for the future?
  15. I thought the programme was hilarious! Did not put Morocco in a good light at all. The properties the presenter selected seemed really expensive to me for what they were. And yep it was very revealing that none of them had sold. And most of the coastal off plan developments seemed a long way from the coast so are bound to lose their views as more development takes over. The Playa Vista one was first line - but looked a huge development. The so called price increases of the off plan developments highlighted are just the developer increasing his prices as the development is sold off (ie not real increases). The developments also all seemed to be in the middle of no where. And the Marakesh development he decided to buy (3 bed villa), although it looked nice was miles away from the centre and was £165k! Hardly cheap for such a poor country! On what basis are prices going to increase dramatically above this? And how can locals afford these prices? With the King deciding that he wants all these millions of tourists to visit in years to come there are going to be thousands of apartments built by the sounds of it. The oversupply problems and difficulites in selling on to realise these wonderful paper profits (what has happened in Spain and now happening in Bulgaria - I should know as I have bought there!) seems inevitable.
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