Jump to content
House Price Crash Forum
Bagehot

Sunday Times: London House Prices Rising!

Recommended Posts

EAs will be calling the bottom every month until the bottom is reached just like last time and very reflective of uber-bears calling the top for the last 2 years (although they did get it right eventually). You can recognise the bottom of a housing market by the very fact that most EAs will be saying: "Its all over. House prices could be sliding for years. We're all doomed!"

Share this post


Link to post
Share on other sites
Guest Time 2 raise Interest Rates
Open Letter to Mr. Norwood, the writer

QUOTE

WE are watching you, Mr. Graham Norwood.

To call a bottom now, based on the spin from a few Estate Agents is very reckless. The London property market peaked in 2004, when most EA's said it was going higher.  At worst, they said, we would see a brief "soft landing".  They were wrong then, and they will be wrong now.

By most sensible measures, property prices are still wildly over valued.  And public sentiment, the "crowd", is only beginning to wise up to see that they have been induced by EA hype and media spin to overpay.  The most vulnerable are those neophyte BTL investors who bought offplan, paying way over the odds for new flats they planned to flip or rent at levels that are now plainly unachievable.  They paid prices which meant that they were locking in yields below 5%, or even below 4% after expenses.  And now they facing cash drains as far as the eye can see.

Repossessions are soaring, and prices are sliding.  Buying will not make sense for the average person until prices are truly affordable, and that will be when it is cheaper to buy than to rent.  You must consider the returns one forgoes on a equity deposit.  So an appropriate comparison might be the monthly cost of renting, compared with a theoretical 100%-financed, interest-only mortgage.  On this basis, there is no repayment of principal, and there is not "sudsidy" from the deposit.  You add on, to the owning side of the ledger,  the extra expenses (replacing carpets, appliances, and so forth), which are borne by the landlord, and not a comparison.  With this fair comparison, as a tenant, I am paying 40% less to rent, than if I was an owner of my house.

Maybe you should be listening to those that got it right.  I mean those who Sold-to-Rent a year or two ago.  They are now renting cheaply, with their money invested outside property, earning a safe return while hosue prices are falling.  Is it popular that these folks, who went against crowd wisdom as sold in a overheated market, might just understand the market better than those whose salaries are paid by Estate Agents?  Those with vested interests, seem to come up with very predictable forecasts.  After a price fall, which they failed to predict, they will always tell you it is time to buy again.

The STRers that I mentioned are prepared to buy again.  but that will likely be after a much bigger fall, when the costs of owning will once again be the same or lower than renting.

Don't throw away your credibility as a journalist by quoting Estate agents.  If you want to know what others think of your article, please follow this link:

xxx

Dr.Bubb

UNQUOTE

Excellent post, DrBubb. The VIs just won't lay down and I don't expect them too. I couldn't help noticing last week how the financial media try and spin all articles regarding the housing market. For example, when CarpetRight reported its sales down 7%, the headlines regarding this were 'CarpetRight sales plummet 7%' but then when reporting mortgage lending down 18% yoy this was a sign that the housing market was recovering. What's all that about.

Share this post


Link to post
Share on other sites
“We’d spent a year looking around the Didcot area and it became apparent how different reality is from perception. We really couldn’t afford any home we wanted there and in the end Streatham offered much better value,” he says.

Maybe they should have word with Streatham based journalist Pete Sawyer who has also contibuted to the Times, Mail, the Eye etc. Pete and I spent some time filming around Streatham. We have some nice shots of kids playing with condoms and spent needles. Nobody comes out of Streatham without some tale of woe.

Edited by RRP

Share this post


Link to post
Share on other sites

This has to stand as the most hilarious, desperate wrong call ever! This really is nosebleed territory - Norwood seems to be living in an alternative reality somewhere...

For future reference, and so we can rub his nose in it in about 2 or 3 months, here is the fabulous opening prediction from the 'expert'...

The Sunday Times

August 21, 2005

London’s the city for capital gains

The London property market is back, having been outperformed by price rises in the commuter belt for the past two years, discovers GRAHAM NORWOOD.

Share this post


Link to post
Share on other sites

When he says "London" he probably means "Kensington".

Areas such as Kensingston and Fulham kept on increasing even during the last crash, but to extrapolate it and say "London" is just bald-faced lying.

I live in London and can tell you that prices have gone down 2% in my neck of the woods but the city's a big place and I'm sure it has dropped more and less in other areas.

Share this post


Link to post
Share on other sites

the idocy of extrapolating from the fact that houses are dearer in leafy tunbridge wells (with its excellent commuter trains) compared to shabby south london to the conclusion that london house prices are undervalued is beyond belief and surely can only discredit his argument

Share this post


Link to post
Share on other sites
Maybe they should have word with Streatham based journalist Pete Sawyer who has also contibuted to the Times, Mail, the Eye etc.  Pete and I spent some time filming around Streatham. We have some nice shots of kids playing with condoms and spent needles. Nobody come out of Streatham without some tale of woe.

Didcot's not particularly nice either. (unless you like power stations). It doesn't have the war zone qualities of Streatham but it was recently voted the most boring place in the country by its own residents.

The stupid thing is that you can rent a nice house in nicer places than Streatham and Didcot for less money than buying in these areas.

FTBers would be well advised to rent somewhere nice, stick their savings into other investments (or even the bank) and enjoy life, rather than wasting their youth and money on a shoebox in a rough/ boring area.

Graham Norwood has no credibility anyway. He is just a mouth piece for the property business. His piece is not a balanced comment on the proerty market, it's just pure spin. Irrelevant.

Share this post


Link to post
Share on other sites
00g8hu.gif

Graham Norwood

that's grant mitchell from eastenders!!!!

He is a spin merchant.

I like the way his website subtitle is "quality writing to suit your needs" implying he will just spin whatever way it takes in each individual case for him to get his pay cheque.

See also http://www.housepricecrash.co.uk/forum/ind...24&t=14186&st=0

Edited by penbat1

Share this post


Link to post
Share on other sites
the idocy of extrapolating from the fact that houses are dearer in leafy tunbridge wells (with its excellent commuter trains) compared to shabby south london to the conclusion that london house prices are undervalued is beyond belief and surely can only discredit his argument

Perhaps it shows that houses in Tunbridge Wells are MORE overpriced than houses in sarf London.

Share this post


Link to post
Share on other sites
Perhaps it shows that houses in Tunbridge Wells are MORE overpriced than houses in sarf London.

I think he and his mates are trying offload their property portfolios. Its amazing there's all this talk of the FTB buyers need to come in to prop the market up. In effect to prop the existing market up we need the same amount of BTL buyers. From 1996-1999 it was the FTB boom, from 2001-2004 it was the BTL boom who borowed from the equity from their homes thus the increased equity is in accordance with the increased value of their home. If property drops 30 %, it has dropped 15 % quite easily in some parts of London just on the fear factor alone. In effect they have a dowble whammy 30 % on their home as well as their BTL property. If they have 2 BTLs, sounds interesting.

Remember there is a new breed of BTL follow the 80:20 ruke 20 per cent know what they are doing, 80 per cent follow the herd. Well it will be interesting to see how this BTL hold their nerve when they see drops in their portfolio. Remember its this 80 per cent that buy high sell low and the 20 per cent pick up the bargains. It happens in the Share Market, it happens in property.

It takes alot to turn round public confidence a few years.

If there is no panic now how come there are For Sale signs everywhere.

Like Shares a property is worth only what someone will pay for it. It keeps coming down until someone is willing to pay that price. The usual signs are the buying off the plan market and the top end of the market. Buy off the plans peopel have already lost 150K on 700K periced properties before they have moved in or handed over the keys. Now that is a bitter pill to swallow.

Sadly I see alot more heartache ahead. A soft landing I am afraid not. With interest rates so low and with low unemployment and we are seeing drops of 15 %.

This years christmas retail factors will be shocking. 2006 will be an interesting year.

Share this post


Link to post
Share on other sites
Open Letter to Mr. Norwood, the writer

QUOTE

WE are watching you, Mr. Graham Norwood.

We have just read: http://www.timesonline.co.uk/newspaper/0,,...1739333,00.html

To call a bottom now, based on the spin from a few Estate Agents is very reckless. The London property market peaked in 2004, when most EA's said it was going higher.  At worst, they said, we would see a brief "soft landing".  They were wrong then, and they will be wrong now.

By most sensible measures, property prices are still wildly over valued.  And public sentiment, the "crowd", is only beginning to wise up and see that they have been induced by EA hype and media spin to overpay.  The most vulnerable are the neophyte BTL investors who bought offplan, paying way over the odds for new flats they planned to flip or rent at levels that are now plainly unachievable.  They paid prices which meant that they were locking in yields below 5%, or even below 4% after expenses.  And now they facing cash drains as far as the eye can see.

Repossessions are soaring, and prices are sliding.  Buying will not make sense for the average person until prices are truly affordable, and that will be when it is cheaper to buy than to rent.  In calculating, you must consider the returns one forgoes on a equity deposit.  So an appropriate comparison might be the monthly cost of renting, compared with a theoretical 100%-financed, interest-only mortgage.  On this basis, there is no repayment of principal, and there is no "sudsidy" from the deposit.  I add on, to the owning side of the ledger,  the extra expenses (replacing carpets, appliances, and so forth), which are borne by the landlord, and not a rent-paying tenant.  With this fair comparison, as a tenant, I am paying about 40% less to rent, than I would pay as an owner of the house that I live in.

Maybe you should be listening to those that got it right.  I mean those who Sold-to-Rent a year or two ago.  They are now renting cheaply, with their money invested outside property, earning a safe return while London house prices are falling.  Is it possible that these brave folks, who went against crowd wisdom and sold in a overheated market, might just understand the market better than those whose salaries are paid by Estate Agents?  Those with vested interests, seem to come up with very predictable forecasts.  After a price fall, which they failed to predict, they will always tell you that it is now time to buy again.

The STRers that I mentioned are prepared to buy again.  But that will likely be after a much bigger fall, when the costs of owning will once again be the same or lower than renting.

Don't throw away your credibility as a journalist by quoting Estate agents.  If you want to know what others think of your article, please follow this link:

http://www.housepricecrash.co.uk/forum/ind...ST&f=22&t=14181

Dr.Bubb

UNQUOTE

Excellent Letter Dr. Bubb. 'be interested to know if and when you get a reply.

VP

Share this post


Link to post
Share on other sites
Excellent Letter Dr. Bubb. 'be interested to know if and when you get a reply.

VP

I thought the only thing wrong was the title. The rest of the Times article seems reasonably balanced. The bullish comments are quotes, and these are balanced by bearish quotes.

The main point is valid. The massive gap between London and non-London house prices has narrowed sharply. In most of central London, house prices have been stable for three or four years while the rest of the UK has boomed. This partly reflects that the boom started in London in 94 or 95 but also that central London was hit by the bear market in equities and massive cuts at investment banks during 2001 to 2003.

I do not think that London will see much in the way of house price increases and some suburbs will see decent falls, but with the City in better health than at any time over the last four years, I cannot see a lot of downside in the prime areas of central London.

Share this post


Link to post
Share on other sites

I read some time back about investigative reporter Jon Paul Morgan's foray into the SE London housing market.

In 2003, Morgan put in an offer on a property that he later discovered had been overvalued by the estate agent and surveyor who were in cahoots. The East Dulwich estate agency claimed that the property had been priced 'reasonably'. When Morgan had the property valued the surveyor backed up the estate agent claiming that he knew of a property 'next door' that had sold for a comparable price.

Morgan investigated the claim. He discovered that the last property sold in the street was in fact the one he was buying. He asked the surveyor for other comparables. This time the surveyor offered his own 'former' property as an example! Unfortunately, he didn't bargain on Morgan's doggedness. He mounted an investigation into the claim.

The surveyor was in fact still living at the property he claimed he had sold. When confronted he responded 'Yes, well, I could have got that price... if I'd wanted to.' (?)

Morgan confronted the estate agent with his findings. The estate agent had 'told' the surveyor what the offer price had been. Coincidentally, the valuation came in at the offer price. Morgan asked for a reduction of £10k. The estate agent was furious. He claimed that it was a fair price. So Morgan withdrew from the purchase.

But he did not let matters end there.

Morgan commenced investigating further, and concluded that the East Dulwich property market was not only being 'talked up' by several estate agents (no surprise there!) but was also being manipluated. The agent in question had not sold the properties claimed. Neither had he sold at the price claimed when he did in fact sell. Only one out of the seven agents visited by Morgan had their claims borne out by the facts! The conclusion Morgan came to when he spread his investigation wider was that the property bubble had burst in 'some London housing markets' (sic) in and around summer 2003!

Morgan attempted to get his findings published but was turned down. It was posted on the net, then quickly removed. (Perhaps because he named the estate agency and surveyor. He had taped a conversation with the head of the estate agency group saying 'What can I say, you've got us!' And the surveying company revised its estimate on the property downvaluing by £10,000. Morgan then had in his possession two estimates varying by thousands - for the same property - and supplied by a member of the Royal Insitute of Chartered Surveyors! Naturally, Morgan pulled out of the sale to the sound of the estate agent screaming 'You've lead my client down the garden path!' Eventually the property sold for £45k less than the asking price, so it became quite clear who was doing the leading!)

All in all it was a pretty remarkable piece of journalism, something we see very litttle of these days.

Anybody out there hear of it?

Share this post


Link to post
Share on other sites

I thought the only thing wrong was the title. The rest of the Times article seems reasonably balanced. The bullish comments are quotes, and these are balanced by bearish quotes.

The main point is valid. The massive gap between London and non-London house prices has narrowed sharply. In most of central London, house prices have been stable for three or four years while the rest of the UK has boomed. This partly reflects that the boom started in London in 94 or 95 but also that central London was hit by the bear market in equities and massive cuts at investment banks during 2001 to 2003.

I do not think that London will see much in the way of house price increases and some suburbs will see decent falls, but with the City in better health than at any time over the last four years, I cannot see a lot of downside in the prime areas of central London.

Central London is a micro economy - you never see a downside in the prime areas of central London unless city bonuses disappear. Even then there are generally enough loaded foreigners, celebrities etc to keep Chelsea and Kensington exclusive.

So who cares what happens to house prices in central London - they have no relationship to the rest of London or anywhere else.

Share this post


Link to post
Share on other sites

This article was spot on. I was horrified at the prices on the commuter belt, you really do not much more for your money unless you want to live out in the sticks and even then there are no real bargins. I'm often told by commuters they live in the country and turns out its one doll house overlooked by loads more.For two people commuting into london with at least a 3K rail fare each a year then its probably better to pay the extra 6K into a central london property than to British rail and buy a bike or walk to work.

Share this post


Link to post
Share on other sites

In fairness, he does include this quote:

"Savills’ Donnell also urges buyers and sellers to be wary, saying that while London prices offer “fair value” now, there is no big boom on the horizon. “Going up a few percent per year is as good as it’s going to get, in London or anywhere else,” he reckons."

Maybe you're going a bit overboard on account of the frothy title? He probably didn't decide what the title would be, and no doubt his original work may have been spiced up a bit by the subs.

It would be interesting to get a reply from him on this site.

Share this post


Link to post
Share on other sites

Graham Norwood's article is based purely on speculation, and a lot of exageration of the trend in prices. There is no factual economic basis to his preditions, ie unemployment, IR, GDP, debt etc.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.