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Is Prime London Crashing? - Merged Threads


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Depends on the under 40's Im 34 and im only one out of my group to not own a house

Blimey....34 and they've all paid off their mortgage !!!

Or do you mean.... Im 34 and im only one out of my group to not own a mortgage ?

I suspect there are plenty under 35's on IO BTL mortgages thinking they will cash in when THEIR house price shoots up......

Edited by TheCountOfNowhere
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Hello, long time lurker here. I live and grew up in London and, like all of you got fed up of the ridiculous house prices in London (and much of the UK), and found myself on here.  Anyway, enough

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I've been a long time lurker to these forums, and I'm interested in seeing a correction in London house prices mainly as I would be interested in buying a nice family home to live in. I work as an IT contractor in banking and even though I am going to be 30 this year I can probably count on one hand the number of my friends who have bought in London, or even who have moved out of the family home. I'm not really interested in buying at current prices even though I could afford to with my own savings, and I am lucky enough that although my parents are not wealthy my wife's family have done well in business and could help us if we wanted it.

My father in law built up a successful convenience store/off-licence business in South London over a 25 year period and used some of the profits to buy residential and commercial properties including the freeholds to his shops. Due to the rise in supermarket stores such as Sainsburys Local and Tesco Express him and his friends in the convenience store business saw their shop turnover fall but the values of their properties soar which meant they could borrow against them. Sainsburys and other supermarkets pay handsomely to take over busy sites near transport links and so him and the others thought they would let the shops to these supermarkets and focus on property instead. They began redeveloping commercial properties into residential flats, mainly for long term rental income but occasionally to flip.

As a result of this I have seen and heard about loads of property developments and lots of stories from those involved. I have seen one property in London in front of my eyes being built for less than £100k, being sold for £400k and then within the space of a few months being flipped again for £475k

I have seen one property developer lose £1 million on a property deal that didn't work out. He bought the site, demolished the existing building but couldn't raise additional finance to build it. I know one businessman that owns over 100 units (6 flats here, 20 flats there etc) that receives over £1 million a year in rental income alone (his LTV is pretty low and he still has some convenience stores)

Much of this is success down to luck and good fortune, property prices went up so they could borrow to build more properties which went up in value and it repeats. I have also seen fortunes been lost. Around 2007/2008 a lot of small businesses were sold interest rate swap hedging products which ended up ruining a lot of them. Their businesses and properties were repossessed unfairly (although you could argue that some of them were over leveraged and couldn't absorb the shock) and some had to resort to bridging loans at 20% interest in order to salvage what they could.

Anyway so what is the purpose of this post. Well one development site of which I know the owner of was listed to the Allsops auction in London a few days ago. It's a commercial/residential development with planning permission for 6 flats. The reason for the sale is that money is needed to fund another project. I was told by the owner that although the auction was full of people, nobody was buying. A couple of properties sold around £400k-£500k but nothing over £700k was shifting. His property failed to meet the reserve. Other developers have told me that due to the cost of acquiring a good site and building there isn't a lot of profit to be made any more either.

This to me represents a massive shift in sentiment, not long ago development sites were being snapped up without being seen. A developer told me his has been trying to sell a site in South Norwood for over 6 months, with one other party umming and aa-ing about the deal but that is the only lead he has and he needs to get his money out. One told me that went he went to refinance, the high street banks weren't interested in lending to him so he had to go a challenger bank who are a charging him a higher interest rate. He is barely breaking even on this latest development.

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Link: http://www.bloomberg.com/news/articles/2016-02-26/london-luxury-home-prices-reduced-at-highest-rate-since-2013

London Luxury-Home Prices Reduced at Highest Rate Since 2013

I hope the crash in volume accelerates and rresults in price crash very soon. It all seems to be going in the right direction but when will it happen. Many are loosing patience.

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Link: http://www.bloomberg.com/news/articles/2016-02-26/london-luxury-home-prices-reduced-at-highest-rate-since-2013

London Luxury-Home Prices Reduced at Highest Rate Since 2013

I hope the crash in volume accelerates and rresults in price crash very soon. It all seems to be going in the right direction but when will it happen. Many are loosing patience.

You DO NOT want the volume to increase. That would suggest capitulation. Let it trend down and down on small volumes. They can capitulate much much further down.

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You DO NOT want the volume to increase. That would suggest capitulation. Let it trend down and down on small volumes. They can capitulate much much further down.

Indeed, the more mortgage holders stubbornly hold on against a falling market, the more losses they incur and the deeper the trough, I would surmise

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This to me represents a massive shift in sentiment, not long ago development sites were being snapped up without being seen. A developer told me his has been trying to sell a site in South Norwood for over 6 months, with one other party umming and aa-ing about the deal but that is the only lead he has and he needs to get his money out. One told me that went he went to refinance, the high street banks weren't interested in lending to him so he had to go a challenger bank who are a charging him a higher interest rate. He is barely breaking even on this latest development.

Interesting. Thanks for posting and welcome to the forum. Great display name BTW, (I can't stand opportunist arsonists).

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I see these every now and then, but why do people by and then sell for similar money a few months later?

E.g. they bought this in Oct 2015 at £505k (+£15k stamp duty, +£1.5k legal) then lets say 2% estate agent fees? thats £10k. Total = £531k, now they are trying to sell at £530k. Presumably to cover their costs?

Genuine circumstances?

Buy to let gone wrong?

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Also it seems HMRC are waking up and going after BTL'ers, a friend of my girlfriend called a few days ago saying that her parents received a letter about undisclosed rental income and are now chasing up the missing tax.

I wonder if the HMRC investigations are increasingly recently? As it does seem that the Government are clamping down on BTL given recent changes to taxation/stamp duty e.t.c.

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No, it's worse than that. It's evolution, gone wrong.

But the Buy-To-Letter Entrepreneurs have kept it "Real," productive. Unfortunatey, Keeping it "Real," for BTL's, can mean it goes horribly wrong. Like this:

Like the BTL doing court action and having HMRC. BoE and the treasury all after them just because they can't accept things have changed the same way things changed that allowed them to be "Real" in the first place.

Best prepare for their ass-whoopin over the next few years.

Edited by Tapori
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Personally I have expected more. It looks like it will need another year or so ...

http://www.wharf.co.uk/news/property/central-london-house-prices-fell-10956957

Property data company LonRes found that prices had fallen by 1.3% per square foot in certain central London locations and that the amount of property transactions for these areas had decreased by 22% over 2015
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But the Buy-To-Letter Entrepreneurs have kept it "Real," productive. Unfortunatey, Keeping it "Real," for BTL's, can mean it goes horribly wrong. Like this:

Like the BTL doing court action and having HMRC. BoE and the treasury all after them just because they can't accept things have changed the same way things changed that allowed them to be "Real" in the first place.

Best prepare for their ass-whoopin over the next few years.

I loved Dave Chappelle, he was great.

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Personally I have expected more. It looks like it will need another year or so ...

http://www.wharf.co.uk/news/property/central-london-house-prices-fell-10956957

Property data company LonRes found that prices had fallen by 1.3% per square foot in certain central London locations and that the amount of property transactions for these areas had decreased by 22% over 2015

1.3% per square foot? Surely they just mean 1.3%. ? Edited by Si1
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Did a quick trawl around West London/North West London.

Yikes!!!

2 bedroom flat for sale, Faulkner House, Fulham Reach, Hammersmith, W6

-48.8%

29/01/2016, 14:08:46

Price changed: £2,199,950 £1,100,000
18/09/2015, 11:18:10
Price changed: £2,149,950 £2,199,950
14/06/2015, 14:18:18
Price found: £2,149,950
-38%
28/02/2016, 14:11:58
Price changed: £775,000 £480,000
26/12/2015, 10:13:06
Price found: £775,000
-33.4% "Off-Plan resale"
28/02/2016, 14:30:15
Status changed: New home Available
13/03/2015, 10:00:31
Price changed: From £1,749,950 £1,165,000
Subtitle changed: 3 2 bedroom apartment
10/03/2015, 10:10:59
Price found: From £1,749,950
-30.1% "SENSIBLE OFFERS CONSIDERED"
28/02/2016, 13:39:32
Price changed: From £895,000 Offers in Region of £625,000
14/12/2015, 21:43:55
Price found: From £895,000
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Thanks for all the love guys! I re-read my previous post and it's littered with spelling and grammar mistakes. I guess I need to proof read better.

I've never owned or bought a property but I think at auction it's 10% upfront and then the rest of the completion is between the two parties. The auction house takes a fee of a couple of percent.

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Did a quick trawl around West London/North West London.

Yikes!!!

2 bedroom flat for sale, Faulkner House, Fulham Reach, Hammersmith, W6

-48.8%

29/01/2016, 14:08:46

Price changed: £2,199,950 £1,100,000
18/09/2015, 11:18:10
Price changed: £2,149,950 £2,199,950
14/06/2015, 14:18:18
Price found: £2,149,950
-38%
28/02/2016, 14:11:58
Price changed: £775,000 £480,000
26/12/2015, 10:13:06
Price found: £775,000
-33.4% "Off-Plan resale"
28/02/2016, 14:30:15
Status changed: New home Available
13/03/2015, 10:00:31
Price changed: From £1,749,950 £1,165,000
Subtitle changed: 3 2 bedroom apartment
10/03/2015, 10:10:59
Price found: From £1,749,950
-30.1% "SENSIBLE OFFERS CONSIDERED"
28/02/2016, 13:39:32
Price changed: From £895,000 Offers in Region of £625,000
14/12/2015, 21:43:55
Price found: From £895,000

Even with the insane drops...the prices are still insane!!!

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  • 433 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%



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