Is Anybody Else Seeing A Two Tier Market?

[Timm]

OK, this is going over old ground a bit, but bear with me. We all know that

some regions are doing better than others, and the same goes for good / bad

areas and properties. But more than that, I am seeing a real divergence between

the core Oxford market and that just a few miles out. Good parts of Oxford are

back to peak or even above, but that is not at all the case out in the villages.

I'm seeing a lot of places that are struggling to sell with asking prices in the

2004 - 2006 range. One place in particular causght my eye. On at £150k for some

months now, its neighbour (probably in much better condition, but a similar

house / plot) sold for £165k in… 2002!!!

So why is this?

My best guess it that it is the wealthy parents of local students, looking at

the drab returns they can get on savings are snapping up a nice little 3 bed, 2

reception room semi and stuffing it full of their darling offspring and their

mates. At £85pppw, that's almost 9% return on a £250k house. This would fit with

a lot of the hotspots we are hearing about (Oxbridge, Edinburgh etc). Out of

interest, does anybody know a big Uni town that hasn't had a big bounce (or a

non-uni area that has)?

Thing is, all the students are now housed until next year, so I doubt Daddy

will be buying any more for now.

[Realistbear]

I am in upscale East Sussex about 5 mi East of what was the hottest property market City in the UK next to Londinium: Brighton.

I would say that prices are down 15% here since Spring. Lots of inventory and houses coming back on after being "sold." The SE is feeling the full fury of the crash despite the mantra "it won't happen here because people are too rich."

When the crash bites all suffer and the higher the houses rose the further they will fall.

[ralphmalph]

I am in upscale East Sussex about 5 mi East of what was the hottest property market City in the UK next to Londinium: Brighton.

I would say that prices are down 15% here since Spring. Lots of inventory and houses coming back on after being "sold." The SE is feeling the full fury of the crash despite the mantra "it won't happen here because people are too rich."

When the crash bites all suffer and the higher the houses rose the further they will fall.

Is that a 15% drop in asking prices or a 15% drop in sale price. What I am seeing in Cheltenham is wildly inflated asking prices I mean in some cases double 2007 sold prices that then get dropped. But I am also seeing actual sold prices slighlty ahead of 2007 prices, by 5% to 10%.

So is this an estate agent trick, put your house on at an inflated price and then let the buyer think they are getting a discount but actually paying more than peak prices.

[Timm]

Is that a 15% drop in asking prices or a 15% drop in sale price. What I am seeing in Cheltenham is wildly inflated asking prices I mean in some cases double 2007 sold prices that then get dropped. But I am also seeing actual sold prices slighlty ahead of 2007 prices, by 5% to 10%.

So is this an estate agent trick, put your house on at an inflated price and then let the buyer think they are getting a discount but actually paying more than peak prices.

What about 5 - 10 miles outside the town?

Oh, and do they have a college in Cheltenham where people with rich parents go to?

Edited October 4, 2010 by Timm

[Gigantic Purple Slug]

OK, this is going over old ground a bit, but bear with me. We all know that

some regions are doing better than others, and the same goes for good / bad

areas and properties. But more than that, I am seeing a real divergence between

the core Oxford market and that just a few miles out. Good parts of Oxford are

back to peak or even above, but that is not at all the case out in the villages.

I'm seeing a lot of places that are struggling to sell with asking prices in the

2004 - 2006 range. One place in particular causght my eye. On at £150k for some

months now, its neighbour (probably in much better condition, but a similar

house / plot) sold for £165k in… 2002!!!

So why is this?

My best guess it that it is the wealthy parents of local students, looking at

the drab returns they can get on savings are snapping up a nice little 3 bed, 2

reception room semi and stuffing it full of their darling offspring and their

mates. At £85pppw, that's almost 9% return on a £250k house. This would fit with

a lot of the hotspots we are hearing about (Oxbridge, Edinburgh etc). Out of

interest, does anybody know a big Uni town that hasn't had a big bounce (or a

non-uni area that has)?

Thing is, all the students are now housed until next year, so I doubt Daddy

will be buying any more for now.

Yeah this has been happening for years in Oxford. You'd have to be mental to bother competeing with the foreign money. Nice article in the ST yesterday about offshore tax money from amnesties making its way into prime london property. I think Oxford was one of the highest rising areas in the Nationwide report this month.

As for your take on the villages, I agree, although I haven't seen prices move significantly for 2 months. Then again, I haven't seen sales move significantly for 2 months either.

There's going to need to be another shock to induce another wave of price reductions. Probably the spending review will start it.

I'll get abuse, but it's different this time. So much more of property is in the hands of people who would LIKE to sell but don't HAVE to sell compared with other crashes.

[Si1]

I'll get abuse, but it's different this time. So much more of property is in the hands of people who would LIKE to sell but don't HAVE to sell compared with other crashes.

b*ll*cks - prices are set at the margin

[ralphmalph]

What about 5 - 10 miles outside the town?

Oh, and do they have a college in Cheltenham where people with rich parents go to?

5 - 10 miles outside town, just the same. Yes we have 3 colleges and 2 grammer schools that rich people send there kids too.

By the way I am not ramping this, I just can not understand why people are paying these prices.

[Kyoto]

I am definetly seeing a two tier market emerging.

I follow some diverse cities such as Leeds, Manchester, Birmingham and Leicester as they are places where I've lived before.

As you say, good areas and property are holding up, but with slight compromises on area and/or property, the discounts are there in cities such as above.

Appreciate these locations and houses are not everyones cup of tea, but average wage = average house is slowly entering the horizon in large parts of this country. Falls and inflation are slowly chipping away for us.

The student dollar has always been around. RE this idea of BTLing for sons and daughters at uni, this is well past it's sell by date. This must have a minimal effect vs how did much it did in the last decade.

Edit - BTW Leeds LS6 must be one of the biggest student rental areas on the country. Absolutely decimated due to private halls of residence opening and students moving into city centre flats. Check out these well built 5 and 6 bedrooom HMOs walkable to the university for < £110k. 15% yields if you can fill them.

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE^1550&insId=1&sortByPriceDescending=false&minBedrooms=5&radius=0.25

Edited October 4, 2010 by Kyoto

[ccc]

Edinburgh has not had a big bounce.

There are the classic student areas that seem to have little up for sale and very random prices. I imagine there are a fair few of the 'lets stick it in property can't go wrong' category.

However I don't think it is enough to make a huge difference.

[bendy]

4 tier if you add the house status too (2/4 bed, garden etc.)

i'm seeing big %age reductions in the non-btl range, less so in the others.

[Optobear]

But London is different, especially prime London, prices will never fall ease or soften there because of foreign money, bankers' bonuses etc

"Asking prices for prime London property fell by 2.4%

in September to £1,106,833 from August. This is

1.2% lower than in September 2009. This compares

to an overall average price in London of £430,656.

This is according to Primelocation. They must be mistaken as prices in London never fall.

If the policies of the coalition n government will cause an increase in the difference between richest and poorest (and won't they? they are Tories), then won't that reflect in house prices? So the median house could stay constant, cheap houses fall and expensive houses rise even more? Ditto with areas of the country.

Rising inequality equals rising house prices at the top end?

[Timm]

5 - 10 miles outside town, just the same.

Fair enough. How far away is Gloucester?

Yes we have 3 colleges and 2 grammer schools that rich people send there kids too...

Because they have money seeking a yield purpose?

[ReJoyce]

I agree on cenral Oxford but in the villages it really depends which Oxfordshire village and what type of property.

A half decent family (3 - 4 bed) detached in a decent village will sell at ~10% off peak very fast indeed.

Price it wrong and it won't be going anywhere.

eg.:

http://www.rightmove.co.uk/property-for-sale/property-26031208.html

regards

J

But more than that, I am seeing a real divergence between

the core Oxford market and that just a few miles out. Good parts of Oxford are

back to peak or even above, but that is not at all the case out in the villages.

I'm seeing a lot of places that are struggling to sell with asking prices in the

2004 - 2006 range. One place in particular causght my eye. On at £150k for some

months now, its neighbour (probably in much better condition, but a similar

house / plot) sold for £165k in… 2002!!!

[ralphmalph]

Fair enough. How far away is Gloucester?

Because they have money seeking a yield purpose?

I do not track Gloucester, so I do not know the market there.

I do not think it is investors looking for yield whilst there kids are at school, basically because the schools have student accomodation. I was thinking it was London money filtering down with people selling in London, buying a flat there and using the rest for a family house here. Having said that the stuff on the market for over a million takes a very long time to sell (if at all) whereas the stuff priced at between 600K and 900K can go sold sign and complete after only a few days on the market perhaps this is Londoners going mortgage free.

[Lone_Twin]

If the policies of the coalition n government will cause an increase in the difference between richest and poorest (and won't they? they are Tories), then won't that reflect in house prices? So the median house could stay constant, cheap houses fall and expensive houses rise even more? Ditto with areas of the country.

Rising inequality equals rising house prices at the top end?

Look I don't support the conservative party but why do people keep saying this?

The gap between rich and poor increased under labour.

[Caveat Mortgagor]

http://www.rightmove.co.uk/property-for-sale/property-26487421.html

This ones a 5 min walk from Warwick Uni, yet 5 price drops later it's 20% off original asking.

But you wouldnt want to house your kids there.

[lets get it right]

5 - 10 miles outside town, just the same. Yes we have 3 colleges and 2 grammer schools that rich people send there kids too.

By the way I am not ramping this, I just can not understand why people are paying these prices.

Ye gods, looks like the grammar schools are needed like never before.

[lets get it right]

b*ll*cks - prices are set at the margin

What does the fact that prices are set at the margin have to do with the observation that there are not as many forced sellers now compared to the last property correction?

[lets get it right]

Look I don't support the conservative party but why do people keep saying this?

The gap between rich and poor increased under labour.

Yes, but you'll never convince a Labour party supporter of that. They are the party of fairness and equal opportunity. They are the party that tax the rich and give to the poor.

The fact that they aren't is neither here nor there to a Labour party supporter. They are congenitally unable to face facts.

Like the fact that every Labour government to date has ended up in economic disaster.