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Lovely Lolly

Why Won't My Friends Listen?

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Hi all

One of my many New Year's resolutions was to finally pluck up the courage to post after a few months viewing this site. There have been many times when I have been made to feel close to despair by well meaning friends who are oo's and have sought solace (and a laugh) from this site as there really has been nowhere else to find counter arguements to all the bull****. Well, tonight I feel well and truly defeated as yet another friend has nearly bought (second in the last few months). She 'fell in love' with a tiny 1 bd flat in Stoke Newington - asking price £169,999 she offered £160K which was refused, as she wanted the flat so much made a second offer of £165K which has been accepted. She earns 16K per year basic and about another £10-15 K from irregular freelance work and her mortgage will be interest only!!! Another friend has just bought what I can only describe as a box, sorry tiny 1 bed (more like a studio) in a block near Baker Street he paid £190K and the asking was £210K, the service charge is a whopping £2400 a year. He is planning to spend abut 20K doing it up over the next year or so and thinks it will sell for £250K so he will make 30K profit. I have put forward all the arguments I can think of to him but he is convinced it will sell for a quarter of a million even with those high service charges and with prices dropping. These are not stupid people but we are all in our mid 30s and they seem to feel they can't wait any longer.

Sorry if this is of no interest to those outside London but I am just stunned that people are still shelling out huge sums.

Lovely Lolly

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Does your Baker Street friend plan on moving abroad.

Lets assume he is right and he makes 30 grand on it.

That means that the rungs of the ladder will have moved apart once again. Unless he sells up and rents, or moves abroad, that capital gain of 30 k will be useless because trading up will be even more difficult.

Only emigration or rampant wage inflation can save him now.

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Hi all

One of my many New Year's resolutions was to finally pluck up the courage to post after a few months viewing this site. There have been many times when I have been made to feel close to despair by well meaning friends who are oo's and have sought solace (and a laugh) from this site as there really has been nowhere else to find counter arguements to all the bull****. Well, tonight I feel well and truly defeated as yet another friend has nearly bought (second in the last few months). She 'fell in love' with a tiny 1 bd flat in Stoke Newington - asking price £169,999 she offered £160K which was refused, as she wanted the flat so much made a second offer of £165K which has been accepted. She earns 16K per year basic and about another £10-15 K from irregular freelance work and her mortgage will be interest only!!! Another friend has just bought what I can only describe as a box, sorry tiny 1 bed (more like a studio) in a block near Baker Street he paid £190K and the asking was £210K, the service charge is a whopping £2400 a year. He is planning to spend abut 20K doing it up over the next year or so and thinks it will sell for £250K so he will make 30K profit. I have put forward all the arguments I can think of to him but he is convinced it will sell for a quarter of a million even with those high service charges and with prices dropping. These are not stupid people but we are all in our mid 30s and they seem to feel they can't wait any longer.

Sorry if this is of no interest to those outside London but I am just stunned that people are still shelling out huge sums.

Lovely Lolly

Two of my friends have just bought two bed flats in London between £250k and £300k. I don't know their incomes but imagine both can afford it at a bit of a push. I am looking forward to see the places and its great that they are happy about it but I really find it hard to believe that these places are not going to go down in price.

Few of my other friends have bought at the moment. I am going to carry on renting, although that was initially because I thought HPC was coming its now just as much becase I want the flexibility of renting - after seeing the effort these two guys went through happy to put that on hold for a bit.

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Don't talk about it with friends, it only leads to arguments - you can't win either way. I spent most of new year biting my lip.

I do argue with work colleages tho, I have nothing better to do - they still argue even though their neighbours house sells far less than the peak - down with the ship, eh?

Just mention what's the hurry to buy... it doesn't look like they will go up any more...

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Hi

No he doesn't plan on moving abroad, people in London (this includes everyone I know) seem to think the housing market is immune to ebb and flow of the broader economy. I don't agree and I HATE seeing friends I've known for years saddle themselves with so much debt but I guess they are bored of listening to me. I am now the lone renter of our group but live in a lovely old flat in W2, which they tell me is money down the proverbial.

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Hi all

One of my many New Year's resolutions was to finally pluck up the courage to post after a few months viewing this site. There have been many times when I have been made to feel close to despair by well meaning friends who are oo's and have sought solace (and a laugh) from this site as there really has been nowhere else to find counter arguements to all the bull****. Well, tonight I feel well and truly defeated as yet another friend has nearly bought (second in the last few months). She 'fell in love' with a tiny 1 bd flat in Stoke Newington - asking price £169,999 she offered £160K which was refused, as she wanted the flat so much made a second offer of £165K which has been accepted. She earns 16K per year basic and about another £10-15 K from irregular freelance work and her mortgage will be interest only!!! Another friend has just bought what I can only describe as a box, sorry tiny 1 bed (more like a studio) in a block near Baker Street he paid £190K and the asking was £210K, the service charge is a whopping £2400 a year. He is planning to spend abut 20K doing it up over the next year or so and thinks it will sell for £250K so he will make 30K profit. I have put forward all the arguments I can think of to him but he is convinced it will sell for a quarter of a million even with those high service charges and with prices dropping. These are not stupid people but we are all in our mid 30s and they seem to feel they can't wait any longer.

Sorry if this is of no interest to those outside London but I am just stunned that people are still shelling out huge sums.

Lovely Lolly

Hi,

Yes, people will still leap lemming like into financial oblivion, it was the same in the last crash, even a few years into it. There is no doubt at all that London is way out of kilter with reality. We saw in the last crash that the drag downwards came from the outer lying suburbs. For me, the 7-8% falls in areas like Merton and Bromley last year could conceivably fit the profile of the downturn, the bellwethers, outlying districts. Add to that the similar falls in new builds, it's all looking very familiar. Some crazy prices will always be sustained around central London, given it's location and the role of the city, maybe. For most of the rest of London, I think it is looking far more overvalued than the seventies or late eightees. But each crash is different, there is alot more to playout yet, whatever it's final path downwards may be.

But what can you do apart from look out for yourself? I do not talk about the subject at all to most people I know, it is only really my daughters I try to provide my perspective to. It is an amazingly emotive and often irrational subject. The one thing that did surprise me today, after returning from the christmas vacations was an annecdotal. Fellow I know seemingly had the mother of all domestics over Christmas and has regrettably sought to end his marriage after several years of bickering. This is a chap who has done very nicely thank you very much on a London home and has always seemed to me very upbeat on the buying process, as far as I know, very bullish infact. And with good cause, having probably watched his house treble in value over the past 10 years. So when asking about his future plans, he said he was looking to rent for a couple of years. You would really have to know the chap to realise what a big sentiment change that represents for him. He even used the words 'biggest bubble in history, I've heard'. Sentiment is changing. Slowly, surely, many people who find themselves in a positon to buy and maybe gear up debt are starting to see what's going on with the miracle HPI economy. I could see the soft landing scenario if Gordon really pulls out the stops to prop it up but the consequences for the economy over the coming decade looks also unpalatable in that scenario. Japan or bust, difficult to say which way, either way the falls have started. And do well to ignore the Halliwide clowns as well. Spin will go into overdrive henceforward.

Boomer

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Plenty of my family are in property. Infact, a few of them are paper millionaires now. Same with a few of my friends. Its the psychology aspect of it. They can't admit that markets can go down as up. What the media tells us, they repeat. I'm not looking forward to the downturn because there's plenty in my family that will get screwed.

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Hi

No he doesn't plan on moving abroad, people in London (this includes everyone I know) seem to think the housing market is immune to ebb and flow of the broader economy. I don't agree and I HATE seeing friends I've known for years saddle themselves with so much debt but I guess they are bored of listening to me. I am now the lone renter of our group but live in a lovely old flat in W2, which they tell me is money down the proverbial.

When your friends tell you you're wasting money renting, point out to them that they are renting money from the bank.

You will most likely find that renting the property is cheaper than renting the money to buy the same place.

By doing this they've also taken a highly geared position at the peak of the biggest housing bubble in history. Did they mean to do that?

Chances are they haven't bothered to think any of this through.

Otherwise you could just keep quiet, and keep the friendship.

Edited by BandWagon

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"These are not stupid people"

Sorry, but they are stupid people. They are proving it by their very actions.You yourself are proving just how stupid they are by posting ,in abject despair about their actions, on this very website.

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Yes it is 'emotive stuff', but not for the right reasons. It should be bloody well emotive becasue it's the next 25 years of your life paying off a fortune, instead its emotive becasue people fear being 'left behind' by their peers. It's not about bricks but how we all feel about ourselves and as has been said before we a country blindly obssessed with the status of ownership. Still I haven't lost any friendships yet, as it's not worth it and I won't be gloating when things do go pear shaped - they are all on my list to bail out when I make my fortune! On that note, thanks for your replies - the first time is always a little strange....

Lolly

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"These are not stupid people"

Sorry, but they are stupid people. They are proving it by their very actions.You yourself are proving just how stupid they are by posting ,in abject despair about their actions, on this very website.

Perhaps greedy also?

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I am probably a bit older than a lot of users of this web site and have known what it is like when its not possible to sell a house for what you paid for it several years into a mortgage. Having lived through 3 ressesions where work is impossible to get and if you have a job it is impossible to find a better job has made me very cautious when it comes to big money outlays, especialy with borrowed money, The attitude of most people towards taking on debt depends a lot on when they appeared on the scene, for example most of the people I work with are younger than me in their late 20's and early 30's have never had to deal with a ressesion or unemployment and have never known other than 'house prices always go up' also from their point of view credit/ mortages have always been avaliable, whereas the opposite set of conditions applied to myself when I was their age, A big ressession just after I started work followed by another one several years later, high unemployment and to get a mortgage you needed a huge deposit saved with one bank. So when I tell these guys to be carefull when they are taking out a 100% interest only loan for 200K+ it is with experience and good reason, however the most courtious reply to my advice is that 'it is different this time' so recenly Ive come to the conclusion that it isnt worth telling anyone anything as its seen as negative and unhelpful, everyone I suppose has to learn for them selves.

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They are very, very stupid people because they seem unable to think for themselves.

I don't know anyone in this situation - being much older. People I do know of FTB age simply cannot afford to buy anything.

That person on 16k plus 15k commission (or whatever it was) - why don't you ask them how they are ever going to move up the ladder?

If the answer is 'well my 169k flat will be worth 200k in a years time (or whatever) - ask them how they will afford the even bigger mortgage for the next place up.

Ask them how another FTB could afford to pay even more for the flat than they are.

Ask they how they are ever going to be able to afford to move up to a 2 bed flat or even a small terraced house. If they 'buy in' to the idea that a 1 bed flat is 169k, they 'buy in' to a small 3 bed terrace being 250k. Will they be able to afford a 250k mortgage in 5 or 10 years time? We live in an age of globalization and downward pressures on wage inflation.

It strikes me this generation is going to live in 1 bed flats all their lives. Because, in a few years time, when they want to move up they won't be able to because they'll be in negative equity. There is no other possible outcome to this. That's why they are stupid. It is just logic at work here.

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My new neighbours have just paid 720k for a 5 bedroom house, having negotiated a reduction of 2.7027% (asking price 740k) :ph34r: . Paying silly money seems to make them feel important. They also have the obligatory 4 x 4 and a baby.

My old neigbours bought the place 4 years ago for 500k!

London will crash and burn, just like last time. I ain't ready to buy just yet and do not know if I ever will, despite recently receiving a significant pay rise. Each time I calculate the mortgage interest on different values over different periods, I am left feeling sick (read shafted). I don't think I can bring myself to accepting a mortgage term over 15 years.

Edited by Buffer Bear

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I am probably a bit older than a lot of users of this web site and have known what it is like when its not possible to sell a house for what you paid for it several years into a mortgage. Having lived through 3 ressesions where work is impossible to get and if you have a job it is impossible to find a better job has made me very cautious when it comes to big money outlays, especialy with borrowed money, The attitude of most people towards taking on debt depends a lot on when they appeared on the scene, for example most of the people I work with are younger than me in their late 20's and early 30's have never had to deal with a ressesion or unemployment and have never known other than 'house prices always go up' also from their point of view credit/ mortages have always been avaliable, whereas the opposite set of conditions applied to myself when I was their age, A big ressession just after I started work followed by another one several years later, high unemployment and to get a mortgage you needed a huge deposit saved with one bank. So when I tell these guys to be carefull when they are taking out a 100% interest only loan for 200K+ it is with experience and good reason, however the most courtious reply to my advice is that 'it is different this time' so recenly Ive come to the conclusion that it isnt worth telling anyone anything as its seen as negative and unhelpful, everyone I suppose has to learn for them selves.

Ditto.

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I know a girl who paid £215k for an attic in Whitechapel. She was a nanny, so not the most stable employment, and she was on about £20k. Put down £15k deposit, so about 10x salary mortgage. The EA convinced her she would be able to let the second bedroom/cupboard for £100 a week to a "city professional". This has turned out to be a lie so she now has virtual all her income going on her mortgage. But that's ok, because renting is "money down the drain."

It's funny how many people get suckered by this myth. I have another friend - a commodities broker who will soon have FSA qualifications. She has suddenly become desperate to buy because of the whole money down the drain thing - however much I tell her she will just be renting the money from the bank, she doesn't get it.

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Me too, I have saved about 35-40% of the price of what I want to spend, when I do get a mortgage it would be with if so that anything in your current account and and any savings will offset the value on the mortgage. This is great as you can have access to savings if needed (holiday, car, emergancy etc) but still not be paying more interest than necessary.

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Guest Winners and Losers

Hi LL

I posted a reply on another topic recently saying that a friend of mine bought a place in London for 110k and sold it, at full asking price of 190k (after spending 20k on it), in 48 hours! When I asked if they had noticed any change in the market the response was, no, prices never go down in London. Doh! Also, my ex is selling, or trying to, the studio flat we paid 55k for in SW16 in 2001 for 125k. You have got to be joking!! If it sells for that I will eat my hat. All he needs is a sucker, and it seems there are plenty about in London!

Hi

No he doesn't plan on moving abroad, people in London (this includes everyone I know) seem to think the housing market is immune to ebb and flow of the broader economy. I don't agree and I HATE seeing friends I've known for years saddle themselves with so much debt but I guess they are bored of listening to me. I am now the lone renter of our group but live in a lovely old flat in W2, which they tell me is money down the proverbial.

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Hi LL

I posted a reply on another topic recently saying that a friend of mine bought a place in London for 110k and sold it, at full asking price of 190k (after spending 20k on it), in 48 hours! When I asked if they had noticed any change in the market the response was, no, prices never go down in London. Doh! Also, my ex is selling, or trying to, the studio flat we paid 55k for in SW16 in 2001 for 125k. You have got to be joking!! If it sells for that I will eat my hat. All he needs is a sucker, and it seems there are plenty about in London!

How did they spend that much in 48 hours?

(Factitious)

Edited by bandylegs

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Guest Winners and Losers

Ha, ha. Yes, on re-reading it did sound like that! Sold within 48 hours of being on the market, 18mths after they bought it. If the market is going down, it seems like no-one in London is noticing!

How did they spend that much in 48 hours?

(Factitious)

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i think your freinds were dim anyway.

how a working man cant work out that:

if he can only just afford a flat, how is he going to sell it for a 30k profit ?

whos HE going to sell it to ?

oh yeah. a city professional.....

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i think your freinds were dim anyway.

how a working man cant work out that:

if he can only just afford a flat, how is he going to sell it for a 30k profit ?

whos HE going to sell it to ?

oh yeah. a city professional.....

Hi Rfd

Easy to say they're dim or stupid, I'd refute that; what they've done is panic and fail to look at the broader picture and as I said before people in London tend to think 'its different here' they won't be the first or the last! It takes a strong mind and will to stand out from the crowd, that's why I have found this community a Godsend.

I also think my male friend probebly won't sell but sitting there banking on a potential profit makes him feel better about his choice, my female friend just wants a home, a place of her own. I think the poster who has lived through three recessions summed it up very well. I have reminded my friends of the early 90's crash but to them it is a dim and distant memory; they graduated into a slow (housing) market which then just went up and up. They can't envisage it going the other way and they want what they perceive as security of a 'home'. My parents lost everything they had when I was 12 overnight our lives changed - the house along with everything else went. It taught me a lot, chiefly bricks and mortar can quickly disappear when times get hard and a home is much more than a house.

LL

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My parents lost everything they had when I was 12 overnight our lives changed - the house along with everything else went. It taught me a lot, chiefly bricks and mortar can quickly disappear when times get hard and a home is much more than a house.

LL

Ouch!

why did they lose it if I may ask? Redundancy? Interest rates? Debt?

Did the parents of your friends not warn them what may happen?

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Ouch!

why did they lose it if I may ask? Redundancy? Interest rates? Debt?

Did the parents of your friends not warn them what may happen?

Hi

Combination of factors, but mainly his business went under and he'd taken too many risks on the way down which he'd now freely admit to and so, in came the banks and creditors who were ruthless. But in time he built up a small business again and is doing OK. Tbh I think it made me super cautious about money and debt so I guess that's why my attitude to a 150K + IO mortage is different to that of my peers. I just wish some kind of financial eduction was on the national cirriculum as I can't see how this cycle will ever be broken. Is every generation doomed to learn by its own mistakes?

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  • 301 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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