Jump to content
House Price Crash Forum
cuddlybear

Rics New Buyer Enquiries Increases Slowing

Recommended Posts

Has anyone seen how dramatically the RICS survey shows the net balance for new buyer enquiries dropping over the last few months for London?

Mid +70s for Q4 last year to about +28 in January and +3 in February.

Is there any chance this means the tide is about to turn, we're running out of new buyers and the trend will reverse?

(Yes I know the +3 means buyer numbers are still [perceived to be] going up, it just means maybe we'll start seeing negative numbers from next month.)

Unfortunately in the past this survey has shown London prices to go up while buyer enquiries go down so maybe it won't help anyway.

Share this post


Link to post
Share on other sites

Has anyone seen how dramatically the RICS survey shows the net balance for new buyer enquiries dropping over the last few months for London?

Mid +70s for Q4 last year to about +28 in January and +3 in February.

Is there any chance this means the tide is about to turn, we're running out of new buyers and the trend will reverse?

(Yes I know the +3 means buyer numbers are still [perceived to be] going up, it just means maybe we'll start seeing negative numbers from next month.)

Unfortunately in the past this survey has shown London prices to go up while buyer enquiries go down so maybe it won't help anyway.

I hadn't seen this, thanks. A similar downturn in demand appears to be happening in the bigger US metro areas. Sentiment among the institutional buyers has changed dramatically since the start of the year. If that isn't evidence of the Taper in action then I don't know what is. Since it's long been my contention that London/SE prices are being driven (in part) by Wall Street QE speculators there ought to be a parallel impact over here. I'm sure you're right to urge caution but for now this looks like good news.

Share this post


Link to post
Share on other sites

'mania' demand always continues until all of the potential buyers has been exhausted.

Lets face it, there has been manic/mania type demand for one of the only investments that has been going up over the past 5 years.

Edited by Wurzel Of Highbridge

Share this post


Link to post
Share on other sites

I hadn't seen this, thanks. A similar downturn in demand appears to be happening in the bigger US metro areas. Sentiment among the institutional buyers has changed dramatically since the start of the year. If that isn't evidence of the Taper in action then I don't know what is. Since it's long been my contention that London/SE prices are being driven (in part) by Wall Street QE speculators there ought to be a parallel impact over here. I'm sure you're right to urge caution but for now this looks like good news.

The banks are all planning for the new Morgage Market Review regulations so they must have sent the EAs/Brokers/RICS members a list of what is expected for mortgages from now one. I think it begins in April. Below is what the FCA regulator is expecting. You can see liar loans are totally going to have to disappear via intermediaries (who were always incentivised to sell more rather than sell quality loans to banks). Banks take the onus of proving affordability - this is how it should always be. And I believe they will stress test this affordability to safeguard their mortgage assets.

What will the MMR mean for firms?

The majority of the MMR changes come into effect on 26 April 2014. Those that will be most relevant are:

For intermediaires

The removal of the requirement on intermediaries to assess affordability.

The removal of the non-advised sales process.

Most interactive sales (e.g. face to face or telephone) to be advised.

An 'execution only' sales process for non-interactive sales (internet and postal).

Every seller required to hold a relevant mortgage qualification.

It will no longer be compulsory to provide customers with an Initial Disclosure Document (but firms can continue to do this if they want to). Instead, certain key messages about a firm's service must be given to customers.

The Key Facts Illustration will not have to be given every time the firm provides the customer with information about a product that is specific to them. Instead, it will only be required where a firm recommends a product or products, where the customer asks for a KFI, or where the customer has indicated what product they want in an execution-only sale.

For lenders

Lenders will be fully responsible for assessing whether the customer can afford the loan, and they will have to verify the customer's income. They can still choose to use intermediaries in this process, but lenders will remain responsible.

Lenders will still be allowed to grant interest-only loans, but only where there is a credible strategy for repaying the capital.

There are transitional provisions in the MMR that allow lenders to provide a new mortgage or deal to customers with existing loans who may not meet the new MMR requirements for the loan. The borrowing will not be able to exceed the amount of their current loan, unless funding is required for essential repairs. The decision on whether or not to lend in these cases will remain with the lender

Share this post


Link to post
Share on other sites

Has anyone seen how dramatically the RICS survey shows the net balance for new buyer enquiries dropping over the last few months for London?

Mid +70s for Q4 last year to about +28 in January and +3 in February.

Is there any chance this means the tide is about to turn, we're running out of new buyers and the trend will reverse?

(Yes I know the +3 means buyer numbers are still [perceived to be] going up, it just means maybe we'll start seeing negative numbers from next month.)

Unfortunately in the past this survey has shown London prices to go up while buyer enquiries go down so maybe it won't help anyway.

I don't know if this means prices are simply stabilising or if there's a massive tide turn but much to the dismay of property investors, the prices are definitely cooling off.

In East London where I live, prices went absolutely mental in the past year (+12-13%) but that trend for sold prices is not managing to hold even though asking prices still seem to be increasing.

An average 2-bed that would go for the already-heavy price of 450k a year ago is now commanding asking prices of 600k

An average 1-bed that would go for 250-300k would now be on the market for 400k+

It looks like a last desperate attempt to squeeze out the last penny out of their investment. I'm seeing Hong Kong and Singapore investors who bought around 2006, 2007 suddenly offloading their investments in bulk with half of the flats in some buildings on the market at the same time.

More than half of the flats in buildings built in the last 2-3 years are unoccupied.

If the fundamentals for high prices are there (demand from domestic buyers or tenants/shortage of suitable homes) then prices should hold.

Where investors are now really getting worried is where they have bought an investment property in a new build with the hope of a promised rental yield provided by a theoretical tenant that never materialised. While they can sell off their property for 20% due to capital appreciation, they are relying on the next investor's ignorance i.e. "I bought this flat for 400k with the promise that there would be 100s of potential tenants willing to pay 2k a month but noone materialised. Please now buy my flat for 600k and you will eventually find out that no tenant is willing to pay 3k (or even 2k)".

Eventually investors will say "wait a minute. The promised rental yield is rubbish. I'm not interested".

Share this post


Link to post
Share on other sites

I don't know if this means prices are simply stabilising or if there's a massive tide turn but much to the dismay of property investors, the prices are definitely cooling off.

In East London where I live, prices went absolutely mental in the past year (+12-13%) but that trend for sold prices is not managing to hold even though asking prices still seem to be increasing.

An average 2-bed that would go for the already-heavy price of 450k a year ago is now commanding asking prices of 600k

An average 1-bed that would go for 250-300k would now be on the market for 400k+

It looks like a last desperate attempt to squeeze out the last penny out of their investment. I'm seeing Hong Kong and Singapore investors who bought around 2006, 2007 suddenly offloading their investments in bulk with half of the flats in some buildings on the market at the same time.

More than half of the flats in buildings built in the last 2-3 years are unoccupied.

If the fundamentals for high prices are there (demand from domestic buyers or tenants/shortage of suitable homes) then prices should hold.

Where investors are now really getting worried is where they have bought an investment property in a new build with the hope of a promised rental yield provided by a theoretical tenant that never materialised. While they can sell off their property for 20% due to capital appreciation, they are relying on the next investor's ignorance i.e. "I bought this flat for 400k with the promise that there would be 100s of potential tenants willing to pay 2k a month but noone materialised. Please now buy my flat for 600k and you will eventually find out that no tenant is willing to pay 3k (or even 2k)".

Eventually investors will say "wait a minute. The promised rental yield is rubbish. I'm not interested".

Sounds good

Any chance you could link to an example building where half the flats are on the market?

You know what they say... In a speculative market, if prices aren't rising then they are falling

Share this post


Link to post
Share on other sites

I don't know if this means prices are simply stabilising or if there's a massive tide turn but much to the dismay of property investors, the prices are definitely cooling off.

In East London where I live, prices went absolutely mental in the past year (+12-13%) but that trend for sold prices is not managing to hold even though asking prices still seem to be increasing.

An average 2-bed that would go for the already-heavy price of 450k a year ago is now commanding asking prices of 600k

An average 1-bed that would go for 250-300k would now be on the market for 400k+

It looks like a last desperate attempt to squeeze out the last penny out of their investment. I'm seeing Hong Kong and Singapore investors who bought around 2006, 2007 suddenly offloading their investments in bulk with half of the flats in some buildings on the market at the same time.

More than half of the flats in buildings built in the last 2-3 years are unoccupied.

If the fundamentals for high prices are there (demand from domestic buyers or tenants/shortage of suitable homes) then prices should hold.

Where investors are now really getting worried is where they have bought an investment property in a new build with the hope of a promised rental yield provided by a theoretical tenant that never materialised. While they can sell off their property for 20% due to capital appreciation, they are relying on the next investor's ignorance i.e. "I bought this flat for 400k with the promise that there would be 100s of potential tenants willing to pay 2k a month but noone materialised. Please now buy my flat for 600k and you will eventually find out that no tenant is willing to pay 3k (or even 2k)".

Eventually investors will say "wait a minute. The promised rental yield is rubbish. I'm not interested".

Any more you can give us on this would be fascinating

Which part of east London is this? E1?

How is it you are able to infer what the far east speculators are thinking?

Share this post


Link to post
Share on other sites

Any more you can give us on this would be fascinating

Which part of east London is this? E1?

How is it you are able to infer what the far east speculators are thinking?

E1, E3 and E14.

I'm not inferring anything. If I have been to viewings where an investor who owns 8 flats in a small development and is offloading 6 of them and I've seen this pattern multiple times.

Have a look at some of the Telford developments in Whitechapel, Limehouse or Bow or some of the smaller developments in those areas.

Share this post


Link to post
Share on other sites

E1, E3 and E14.

I'm not inferring anything. If I have been to viewings where an investor who owns 8 flats in a small development and is offloading 6 of them and I've seen this pattern multiple times.

Have a look at some of the Telford developments in Whitechapel, Limehouse or Bow or some of the smaller developments in those areas.

Nice thanks

Seems to tally with this: http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

Do let us know if there are further developments on the apartments you saw, would be very interesting to know what happens. You're saying "prices should hold", maybe a new breed of moneyed speculators will snap all the apartments up... or hopefully not.

Sorry to keep quizzing but I'm just dead curious as you can tell

Share this post


Link to post
Share on other sites

Nice thanks

Seems to tally with this: http://www.zerohedge.com/news/2014-03-19/music-just-ended-wealthy-chinese-are-liquidating-offshore-luxury-homes-scramble-cash

Do let us know if there are further developments on the apartments you saw, would be very interesting to know what happens. You're saying "prices should hold", maybe a new breed of moneyed speculators will snap all the apartments up... or hopefully not.

Sorry to keep quizzing but I'm just dead curious as you can tell

Of course, I am making assumptions on the extent of this: I am only one prospective buyer with one set of observations but having been checking the local market for a number of years (lack of ability to make a decision!) and having lived here for close to decade, I feel like I have a fair bit of local knowledge and like many on this forum, can immediately detect an EA who is talking out of their ****: to some of them I really want to say "Do you think I am a mug? Not everyone who views your flats are clueless about this area. I know this area much more than an EA who has just driven down from Croydon or wherever"

I think the next few months will be particularly interesting: in the area of East London, there are "runaway" asking prices yet in the past 3 months, prices for completed sales have "only" increased by 1%. This looks like the final realisation by property investors that the party is over...

I viewed two flats in a building in Limehouse and the owner has several other flats on sale. They are a...Hong-Kong based investor of course!

I'd suggest checking the Telford Homes developments around Whitechapel and Shadwell. A number of them suddenly appeared and until very recently, investors were managing to sell them with a nice big profit. Not any more and most of the buildings are pretty much entirely vacant.

Edited by samtheman

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   224 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

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.