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TheCountOfNowhere

Has The London Collapse In Prices Finally Arrived

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Crash implies rate of change to me... We could have a 90% reduction, but of it happens over the course of a century for example, is it still a crash?

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TPTB want/need a correction/crash now so that they can point to there brilliance in restoring 'growth' before next election.

Therefore the reports in the MSM are put up jobs to cause massive change in sentiment. They are even going for the foreign sentiment by telling them the fall in the pound doesn't matter as the prices will continue to drop thereby negating any gain from weak sterling.

http://www.cnbc.com/2016/07/18/brexit-why-sterlings-plunge-hasnt-made-uk-property-a-bargain.html

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TPTB want/need a correction/crash now so that they can point to there brilliance in restoring 'growth' before next election.

Therefore the reports in the MSM are put up jobs to cause massive change in sentiment. They are even going for the foreign sentiment by telling them the fall in the pound doesn't matter as the prices will continue to drop thereby negating any gain from weak sterling.

http://www.cnbc.com/2016/07/18/brexit-why-sterlings-plunge-hasnt-made-uk-property-a-bargain.html

I like the wording in that article ... if I might quote the article verbatim.

But it added, "if London's property market 'safe haven' status is challenged, London's commercial real estate prices could fall by as much as 32 percent

Thank god it's not 32.5% ... was getting worried for a second there.

Isn't it amazing that we know what will happen at exactly an indeterminate time in the future. Thank god I spent all that time studying maths .. or I'd be completely unprepared for that.

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It's now the silly season for MSM. There will be an 'Elvis Ate My Hamster because of Brexit' story next week. Rumours of the London price crash are exaggerated.

EFA.

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Well, at last the stage is here where a significant drop in prices is largely expected, but it is still too soon to know for sure if we will get those drops.

It is still possible for some to say "Nah, it's basic supply and demand, prices won't fall". Until they're shut up...

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and 20% per annum increases are sustainable growth and nothing to worry about, a 10% would only take away the last six months growth ..... and there are years of 'growth' left to chip away at to get back to some sort of normality where property prices are linked to wages. Currently the average property earns more than the average worker and for some reason successive governments do not see this as a problem.

I don't disagree. I'm just saying that I wouldn't consider anything less than ten per cent a year a crash. In 2008-09, nominal house prices fell at their fastest ever in this country, and I think the national average hit down 16.5% YoY at one point. We need a sustained period of double digit declines, but I will surprised if the 50% falls that are needed take place over a matter of months. The crash in the late '80s played out over years and was mostly real rather than nominal - falls only hit 10%+ plus YoY for one month or so I believe.

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I`m hearing of a few that have lost jobs on the construction side mostly trades ,they say theres loads more in the pipeline all working on London projects housing/flats they are being told it`s due to Brexit ...but i think we know differently ...but there again Brexit could be the straw that broke the camels back

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Don't know, they can rise by 25% in a year so I guess thay can fall by 20% to take them back to the prices of a year ago. A 20% fall would cause panic amongst many but the 25% rise creates a smug smile .... and in reality 99% of these people are totally unaffected by either the rise or fall in 'value'. What a strange world where all of life seems to revolve around the price of a pile of bricks.

There's the regional effect here too. In '08-'09, Norn Iron prices were falling much faster than the national average, while the declines in London were much less. We could well see the reverse of that soon. Edited by rantnrave

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I think prime central London is already crashing and could lose >30% in a matter of months, not years. But that's a super low volume fantasy land where volatility is extreme. Non PCL is on the precipice in my opinion and if all keeps going as it appears to be headed, then I think 20% yoy is not unreasonable given the insane rises over the past few years, followed by sustained but smaller drops. There's the froth that should be blown off quite quickly, then the chipping away will begin.

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Have a mate that purchased a 1500 sq ft twickenham zone 5 house for 600k last week. Can't help but think it seems a bargain compared to what else is on offer!

....like many, knows the price of everything but the value of nothing..... ;)

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The missus and me have done a few post-Brexit viewings to see if there was any (air quotes needed here!) 'bargains' to be had..

And my thinking is that no, the crash has not arrived yet - prices are still very high by any sane standards.

New listings are definitely avoiding the previous kite-flying prices, and keen sellers are dropping previous sky high prices down to more realistic prices - but no crash.

I think this is down to two reasons:

1. All the bad news on the economy is still news for the time being, it has no hit home on real people yet.

2. A good number of FTB like myself have come out of the woodwork to see if there is a chance. This gives the Agents/Vendors some hope that things are alright. (I think BTL in London is deader than a dead thing at the moment?)

However, I think the bad news will start really hitting people in August/September; and many of the FTB'ers will come to nothing as affordability is still buggered in London.

In my opinion, this will lead to a very slow market in London from September until somepoint next year - which means winter could be brutal for the residential market. (short of the government reversing the now famous Section 24 to relight BTL demand)

My prediction - if you want to buy in London in the near-term, then November is your time.

Medium-term, I think prices might be sliding down or staying still for the next 2 years (maybe three?) as the BTL Market sells up and Brexit takes place. After that, will it go piling back up - is anyone's guess.. but I wouldn't bank on it..

London = buy somewhere to live, not to invest. It has a rocky (or at least unpredictable) few years ahead of it.

(usual disclaimer about confirmation bias here, as am FTB in London and would like to buy myself a nice place for me and the missus)

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Have a mate that purchased a 1500 sq ft twickenham zone 5 house for 600k last week. Can't help but think it seems a bargain compared to what else is on offer!

Market.

I've had more than 7+ years of 'superiors' telling me the buyers are victims, and year after year of HPI+++++++, and BTLer double-down, in all areas I track.

Any renter-saver refunds coming? No. And no claims that we should have been sofa-surfers to save on rent, or enabling the BTLers. Simply not realistic.

Own choices. Not everyone is on £30K a year, but £100K+, got Bomad money, using equity to upsize, etc ect so own choices. Market. He's outbid someone else in the market at £600K.

I remember those BTLer identical twins in Bubble 1.0 around Richmond and Twickenham.

2006: 'If prices dip, there are so many people looking to buy property and wanting to get onto the property laddery, than prices can't dip far, because bouncing back.'

'The future is one where there are people who own a house and a BTL portfolio, and those who don't and rent.'

QE/0.5% to the rescue 2009, BTLer double down, investors looking to park their riches.... but possibly double-bloated now.

Luckyone: My expectation is that this market segment will behave in the same fashion as any other market which has topped out. Supply will increase, volume will decrease for quite a while before prices begin to crumble.

Many of us think that the entire market pricing structure is driven by the high priced segment, as all other properties are priced based on compromises versus the ideal (location, size, commuting etc). When the top end crumbles, everything else will follow.

There have been a lot of discussions on this site related to the fact that the poor market fundamentals will require a catalyst before prices resume their logical downward path.

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I'm surprised so many say no. The fact it has lasted the past 20 months is nothing short of a miracle. This is it ladies and gentlemen, the game is up.

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I'm in Bracknell and can't believe the amount of commercial property which is either empty (and staying that way) or frantically being converted into flats. Even the "occupied" commercial property is often empty for example a mate just told me that the huge HP office only has about 100 people in it.

If the offices are empty where are the jobs to sustain FTB? Not to mention the coming rental glut.

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I'm surprised so many say no. The fact it has lasted the past 20 months is nothing short of a miracle. This is it ladies and gentlemen, the game is up.

I'm not so sure. Yes there may be a correction of 10-15% but that will still leave crazy prices...

People will continue to pay crazy prices as they figure they can pay for it via airbnb rent outs. And if the pound remains low, they may be right.

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I'm in Bracknell and can't believe the amount of commercial property which is either empty (and staying that way) or frantically being converted into flats. Even the "occupied" commercial property is often empty for example a mate just told me that the huge HP office only has about 100 people in it.

If the offices are empty where are the jobs to sustain FTB? Not to mention the coming rental glut.

To be fair there is an over-supply in Bracknell, and with net effective rents for those offices at £10psf, so say £100-£150 capitalised, plus massive holding costs; it does make sense to use permitted development. It's a pretty successful policy of the Govt to rid the South East of a commercial over-supply. Meanwhile in many other parts houses are worth less than replacement value.

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I can definitely see some movement in North London. My Rightmove search for 2-beds under 400k yields 15 results at the moment, compared to just 7 in June. In the 400-500k range there are also some recent reductions of 25k to 35k. Still early days, but I like the direction of travel I'm seeing.

There're also 2 new developments in the area, a good 300+ apartments in 500k-800k range due to completion in 2017, and they are already reducing as well.

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