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Rics Survey Getting More Bearish On London

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Morning all - been a while but I'm back for the second leg of HPC.

RICS monthly report out today shows things getting underway in London:

- new buyer enquiries down, new vendor instructions up

- tenant demand down, rent expectations down

And there was this gem among the comments from surveyors:

"Landlords sitting on vacant, over-valued flats are looking to independent agents for advice. We anticipate an interesting year ahead."

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You bring good news, for the real HPC, instead of pretend/stopped HPC money printing to HPI-Bubble 2.0.

Suggestion of tenant demand slipping, or rental values sliding, is interesting.

HPC Real. This time, no excuses, no forgiveness. Rocketing HPI has been our negative equity and my family wasn't born to protect the HPI of those who outbid us.

Iln: There is no forgiveness.

(Matter - Iain M Banks)

My wife and I were looking to rent or buy in the Sevenoaks area but the quantity and quality of available houses seems to be really low at present.

Following a couple of months spent viewing houses we have made an offer on a rental place which is currently proceeding. The quality of rental places we saw was shocking and nice places in this part of the world seem to be snapped up very quickly. If you are interested in renting you need to check the market frequently and be prepared to move very quickly. Similar to the London market in that respect.

In relation to houses for sale, people in this area seem to be in complete denial and houses are typically on the market at 2007 peak prices or higher. Some of the valuations are absolutely laughable.

Where does it go from here? Not sure, but I decided that I'm out of the game for the time being. If houses come down in price I will consider buying in this area. If not, I'm perfectly happy to rent the house we have found for the next 10-15 years. I always expected to leave the UK and buy a place overseas at some point. Had expected to own a place in the UK first, but I'm getting used to the idea of skipping that step and never owning a house in the UK. C'est la vie.

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London rental prices were pretty reasonable until about 2010. Then rents suddenly shot up. Not sure if that was because the Tories being elected and affecting sentiment or because of EA/LL pushing the market up to compensate for lack of sales? I don't think there was suddenly more demand. Our rent has not gone up in years and is low for the area but when I look in EA windows I am shocked by how much rents seemingly went up in just 5 years.

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Kicking around the internet to keep an eye on real estate trends and connections, I took a note of this last month, for South California (SoCal).

Just the "Landlords sitting on vacant, over-valued flats are looking to independent agents for advice" line made me think of it again.

November 17, 2015

Something interesting is that this is also coinciding with a downturn in SFH rental demand in Venice, Mar Vista, Culver City, and Westchester. A plethora of SFH (Single Family Homes) rentals continue to languish on market for the past few to several months with price reductions in lockstep. Up until early this summer, these types of rentals wouldn’t last on the market for more than a few weeks, so something has clearly shifted. There are also examples of asking rents below what are indicated to be previous rent contract prices from ’12-’14.

What I’m also observing is that some these landlords are having trouble getting tenants through self listing channels, so they’ve shifted to listing through brokers with a resultant increase in price. No doubt those brokers are cluelessly representing to the landlord that even in a sea of waning demand, they can pull in a tenant at a higher price due to having special marketing powers.

The significance of this can’t be explained away as “make me move” pricing or “asking prices don’t matter” since vacancies top the list of a landlord’s cash flow killers. It also can’t be simply a seasonal distortion as there are a lot of these rentals which have been on market since summer and the past few fall/winter seasons have seen strong demand.

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London rental prices were pretty reasonable until about 2010. Then rents suddenly shot up. Not sure if that was because the Tories being elected and affecting sentiment or because of EA/LL pushing the market up to compensate for lack of sales? I don't think there was suddenly more demand. Our rent has not gone up in years and is low for the area but when I look in EA windows I am shocked by how much rents seemingly went up in just 5 years.

It's moving that seems to be the killer for the renter. Our last place was well below the average rent for the area (asking prices anyway, I don't know how successful others are at negotiating them down) and in the two and a half years we were there, all month to month after the first year, there wasn't a sniff of a raise from the landlord. Having had to move to a larger place we didn't find anything that wasn't a hovel in the same relative price range.

Hoping to negotiate down and cut the agent out of the picture at the end of the first year but we'll see.

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Music to my ears.

Due to the void gaps in 1,000,000 BTL probably houses 800,000 people /families. The supply of houses will actually increase you switch back to owner occupiers because they don't get moved around so much.

London is a good place to start! Bring it on.

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Completely anecdotal but my phone has started ringing again over the past week or so with agents looking to take offers 'quite far below asking' on a few properties. I'm not buying, I wish they'd stop calling me, but food for thought nonetheless.

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