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swissy_fit

Nice/grotty Price Divide Is Widening

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I monitor the market via Globrix and Rightmove in a few UK towns, they're towns I know, either well or at least a bit.

What I see/have seen is this :-

The prices in the nice towns dropped initially by about 15% , then rose again to about 10% below their peak, but have not dropped further and are not currently dropping further.

The prices in the sh1t town (I only monitor this one because a mate lives there) are down overall by about 35% and still dropping slowly.

My conclusion is this - there has already been an HPC if you live or want to live somewhere sh1t, if not then so far there has been no crash at all and at the moment there is no sign of one happening.

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I monitor the market via Globrix and Rightmove in a few UK towns, they're towns I know, either well or at least a bit.

What I see/have seen is this :-

The prices in the nice towns dropped initially by about 15% , then rose again to about 10% below their peak, but have not dropped further and are not currently dropping further.

The prices in the sh1t town (I only monitor this one because a mate lives there) are down overall by about 35% and still dropping slowly.

My conclusion is this - there has already been an HPC if you live or want to live somewhere sh1t, if not then so far there has been no crash at all and at the moment there is no sign of one happening.

I monitor a couple of similar markets (crap – Bradford, escaped NE there in 2007, nice – Harrogate)

You are spot on with regard to nice places crashing and bouncing back. But even in early 2010 in Harrogate we were still 5-10% down. The second half of the year saw a return to volume and I would say back end of last year upto 400k houses were another 5% down. So far in January I have seen a lot of price drops (nice places that would be snapped up at £250k down to £210k, even had a 25% £100k drop in a nice part of town.

In bradford the market has carried on falling and shows no sign off stopping – if we hadn’t of dropped 15% in 2007 and sold we would now be in 15k NE.

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Interesting. I monitor my old manor and can confirm much the same. The FTB stock in the crappy parts of town is dropping fast but in the good areas the prices went down and then back up again - I'm seeing stuff now listed at 2007 prices (lunacy). The larger family homes above £250k seem to be steadily dropping month after month though. I really thought the @rse would have totally dropped out of the FTB end by now but it hasn't.

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I was talking to an investor friend of mine. He has a brand new build detached two bed bungalow with off street parking for 3 cars in Croydon up for sale with offers at around £290k if it falls through he will rent it for £1000 per month to £1100

A miserable two bed flat above a shop in Thornton Heath will rent for £750 per month

So for around £300 per month more ie £10 per day (the price of a small round of drinks) you have the advantage of a brand new home veruses a miserable converted flat above a shop. Parking and in a more civilised area.

The reality is that people on OK ish sort of incomes in the South East ie £35k to £45k per annum cannot afford what is patently a better deal because the day to day living costs reduce that seemingly reasonable income to almost nothing

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I was talking to an investor friend of mine. He has a brand new build detached two bed bungalow with off street parking for 3 cars in Croydon up for sale with offers at around £290k if it falls through he will rent it for £1000 per month to £1100

A miserable two bed flat above a shop in Thornton Heath will rent for £750 per month

So for around £300 per month more ie £10 per day (the price of a small round of drinks) you have the advantage of a brand new home veruses a miserable converted flat above a shop. Parking and in a more civilised area.

The reality is that people on OK ish sort of incomes in the South East ie £35k to £45k per annum cannot afford what is patently a better deal because the day to day living costs reduce that seemingly reasonable income to almost nothing

£1000 to £1100 rent per month seems a lot.....must be on a fair whack if they can afford that and also afford to run three cars. ;)

Edited by winkie

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I've made this point before, but I think this is as much as you can want for from a HPC.

If a normal man on the street can buy a house commutable to Leeds, Birmingham, Manchester, Leicester, Belfast, Bournemouth etc for 3 times wage then that isn't half bad.

Indeed, in these areas we aren't far away from the return of the 75k terrace or 1 bedroom flat. And when we get there, much of the madness is over as far as I can see!

There will always be high earners and dual wage-earning households who will keep the best houses out of reach of the masses. If you are lusting after nice house, nice area, commutable to London, you're going to have a longer wait and a thinner argument in my opinion.

All I can say is that having the option of putting a roof over my head without taking on vast piles of debt is just filling me with joy each time I check Rightmove.

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Same here [s wales] bottom end dropping quite quickly to rapid in the not so nice area`s with the number of repos increasing ,but the middle to top end is still in la la land and trading between themselves in very low numbers now ,with most on the market for months on end with 2-3% drops

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Inevitable in a market with so few buyers and so little credit.

Falling bottom end first, a bit like sand down a dune. As the support underneath goes, the layer on above starts to collapse. Only in the hpc case the support is for how long can sellers hold on?

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I know.....if everyone started to buy the cheap houses in the not so nice areas they could collectively turn them into nice areas.......if it could happen in London, it could happen anywhere. ;)

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Very sticky round here - Shropshire. Since we're all breeding with relatives, I guess there's even less incentive to sell up and move.

Nah! Houses are sticky sticky on the market. They are not selling at those prices. I expect Shopshire to be hit very badly this year as there is nothing propping up the market there with low wages and one attraction (Ironbridge yawn yawn).

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While I maybe fortunate enough to live in a fairly nice enough area, vendors of grotty houses (landgrabbed gardens, near railway lines etc.) are still asking a premium. Basts.

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I know.....if everyone started to buy the cheap houses in the not so nice areas they could collectively turn them into nice areas.......if it could happen in London, it could happen anywhere. ;)

Remember going to a pub in Stole Newington N16 late 70s early 80s and it was ruff very ruff. First time I saw someone jacking up in toilets.

Big houses and initially cheap. SN is now populated by yummu mummies.The houses are no longer cheap.

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Remember going to a pub in Stole Newington N16 late 70s early 80s and it was ruff very ruff. First time I saw someone jacking up in toilets.

Big houses and initially cheap. SN is now populated by yummu mummies.The houses are no longer cheap.

Tell me about it......you couldn't give them away. ;)

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Tell me about it......you couldn't give them away. ;)

Had a friend who bought in Stoke Newington 93ish. Left a very low offer on the table for a 3 bed conversion and the EA got back to him 9 months later to accept as there had been no other interest!!

Parts of London had no buyers at all and when/if we get to that stage thats the time to buy. Houses cheap, interest rates high era.

Quite agree that the divide is getting wider, as it is in society in general, between nice/grotty, rich/poor.

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On the road to Damascus?

Bob Hope? :blink:

His little known Islamic rant? :lol:

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I think the range of price movement over the cycle is higher in poor areas as it is more privy to speculation.

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I think the range of price movement over the cycle is higher in poor areas as it is more privy to speculation.

Yeah I agree. Poorer areas with lower priced properties to begin with, targeted by BTL speculators who, faced with little equity are now looking to unload.

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Yeah I agree. Poorer areas with lower priced properties to begin with, targeted by BTL speculators who, faced with little equity are now looking to unload.

People do not want to live in an area with a high turnover of neighbours...people like to build relationships, they like stability....areas where the BTL brigade move in fall faster..... ;)

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I think that this is something that is very significant and needs to be understood by HPCers.

There was a report from Aberdeen looking at how different areas of the city reacted to the boom and bust of the oil industry and the general economy.

I don't have a link but it is essential reading for anyone who wants to understand how the markets work.

It basically said that some areas are resistant to rises and falls in the economy. These are particularly areas where people have steady jobs - doctors, teachers, lawyers.

In a boom, these people, living in the leafy suburbs don't see much benefit from the economy.

In the bad parts of town, the busts are bad - lots of houses are derelict, uncared for and empty.

When the good times come, manual labourers start getting more hours - wage inflation means that they can command higher wages (think of how much a plumber reportedly cost a few years ago).

In Aberdeen, a lot of people got work offshore.

Anyway - prices there rise faster than more established areas.

When the crash comes - they fall much more.

Simple as that.

It's no suprise that the main property porn show of the last decade was called "Location, Location, Location"

Getting a good house in a good neighbourhood is what most people aspire to in life. Close to schools, roads, parks and far away from poor people in general.

However, as HPI raged, the show went from people getting their dream home in Poshville for £130k - to people getting a decent flat in Poshville for £180k - then a young family getting a starter home in Upandcomingtown for £250k and finally a young couple buying a rabbit hutch in Plansforregeneration Ghetto for £200k (the most they could lie to buy).

In the crash - the real bargains will be found in the shittest parts of town - the places that will develop crime, drug, anti-social problems.

Buy them for your BTL portfolio :) . (Of course, buy having a BTL you are contributing to the problem.)

If you want to buy for yourself - a house - somewhere to live - you should look at the places that are in between the Posh and Dump areas. These will fall a lot as the buyers will be less established in careers - have jobs which are cyclical and will have a higher rate of turnover of houses.

The richest areas have the fewest number of houses for sale in my experience. My dream street in Aberdeen has only had 3 houses for sale out of about 40 in the last 5 years.

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I think that this is something that is very significant and needs to be understood by HPCers.

There was a report from Aberdeen looking at how different areas of the city reacted to the boom and bust of the oil industry and the general economy.

I don't have a link but it is essential reading for anyone who wants to understand how the markets work.

It basically said that some areas are resistant to rises and falls in the economy. These are particularly areas where people have steady jobs - doctors, teachers, lawyers.

In a boom, these people, living in the leafy suburbs don't see much benefit from the economy.

In the bad parts of town, the busts are bad - lots of houses are derelict, uncared for and empty.

When the good times come, manual labourers start getting more hours - wage inflation means that they can command higher wages (think of how much a plumber reportedly cost a few years ago).

In Aberdeen, a lot of people got work offshore.

Anyway - prices there rise faster than more established areas.

When the crash comes - they fall much more.

Simple as that.

It's no suprise that the main property porn show of the last decade was called "Location, Location, Location"

Getting a good house in a good neighbourhood is what most people aspire to in life. Close to schools, roads, parks and far away from poor people in general.

However, as HPI raged, the show went from people getting their dream home in Poshville for £130k - to people getting a decent flat in Poshville for £180k - then a young family getting a starter home in Upandcomingtown for £250k and finally a young couple buying a rabbit hutch in Plansforregeneration Ghetto for £200k (the most they could lie to buy).

In the crash - the real bargains will be found in the shittest parts of town - the places that will develop crime, drug, anti-social problems.

Buy them for your BTL portfolio :) . (Of course, buy having a BTL you are contributing to the problem.)

If you want to buy for yourself - a house - somewhere to live - you should look at the places that are in between the Posh and Dump areas. These will fall a lot as the buyers will be less established in careers - have jobs which are cyclical and will have a higher rate of turnover of houses.

The richest areas have the fewest number of houses for sale in my experience. My dream street in Aberdeen has only had 3 houses for sale out of about 40 in the last 5 years.

I think that you are right. Not all houses participated in the bubble equally.

In percentage terms, reasonable homes in reasonable areas are up about 200% since 1997.

Lousy homes in lousy areas as well as "commutable" homes in and around London are up 400% plus since 1997.

Wage and/or inflation growth since 1997 have averaged something like 4% to 5% which means that 2011 prices should be about 160% of 1997 prices.

Reasonable homes in reasonable areas that didn't participate in the bubble might drop 20% in the next few years. The two extremes of the market that fully participated in the bubble are at risk of falls in the 60% range.

Moves weren't symmetrical on the way up and they will be assymetrical on the way down.

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I hate to say it but it's true!

A place very near to us I expected to go for £220k it went for £240k! :o Both I and the EA who we bought ours through couldn't believe it, there has been no price crash in our road, sorry.

The nice areas I know, people do not tend to move if they want to continue to live there.

Death....the kin take over.

Divorce....revert to interest only, give up spending, get a lodger.

Debt......as above with the protection of SMI.

Only higher mortgage rates and withdrawal of financial assistance will force people to sell when they will do everything in their power to keep what they have and resist any move. ;)

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Moves weren't symmetrical on the way up and they will be assymetrical on the way down.

Exactly.

And sadly, the people who will be worse affected are the aspiring "young professional" types.

People who risked a lot on the value of their house going up and giving their kids a good future.

Anyway - I found the link to the report - have a read. It's very good and also a bit funky looking for what is a scientific study. :)

PERMANENT AND TRANSITORY COMPONENTS IN LOCAL HOUSING MARKET DYNAMICS

If that doesn't work try this:

Google link to Aberdeen report.

Edited by maxdiver

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  • 311 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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