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TheCountOfNowhere

London House prices are being battered !!!

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"There’s also evidence that the weakness in the capital is spreading -- most U.K. regions showed a drop in sales in October"

“We usually have buyers registering, keen to move before Christmas... so far we are registering 80% less than normal during October"

 

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“October saw buyers more prepared to make offers, many at levels that vendors (who are under no pressure) are not willing to accept, limiting the value of transactions,” 

...we only need a few who do decide to sell, to bring down extreme-peaky values for their neighbours, imo.  Although I can't get that excited when it's £2m+ owners taking lower prices.  Needs to really cascade on down from where we are now.

Anyway that article suggests instruction levels slowing (not good), but fewer would-be buyers registering, and some sellers accepting lower prices.  Then on and on it goes, including a mix of different views from EAs each with their own outlook.

Luckyone has not be very active on HPC, with only two posts made since 2015, but he still pops in.  Although I always got the impression of an international jet-setting finance guy (with home in USA and somewhere else) ... if that was the position, I could never decide how I felt about that, for he kept winning me around with some good 'HPC viewpoints' even if they didn't come to pass (yet).

It's that bubble thing.... 

Real Estate Bubbles:

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The manic phase of the boom lasts for several years. In the classic assets mania, markets outrun any rational valuation based on yield or cash return. Properties come to sell at absurd prices on the expectation they will appreciate to still more absurd prices. And they do. They defy gravity, moving from one lofty new high to another, month after month, year after year.... long enough to lure in otherwise prudent people to mortgaging their gains to reinvest in the inflated assets on margin.

Before the market can top, everyone who could conceivably be drawn in must have already become a buyer. And debt levels supporting the asset prices must be many times higher than any that could conceivably be serviced out of the cash flow yielded by the asset itself.

Then, just as everyone has come to count on the idea that the lofty asset valuations are permanent.................

 

I still hold LuckyOne is correct about London being a real focus point.

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LuckyOne

LAST VISITED
Friday at 06:57 PM

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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.

 

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10 minutes ago, Venger said:

...we only need a few who do decide to sell, to bring down extreme-peaky values for their neighbours, imo.  Although I can't get that excited when it's £2m+ owners taking lower prices.  Needs to really cascade on down from where we are now.

Anyway that article suggests instruction levels slowing (not good), but fewer would-be buyers registering, and some sellers accepting lower prices.  Then on and on it goes, including a mix of different views from EAs each with their own outlook.

Luckyone has not be very active on HPC, with only two posts made since 2015, but he still pops in.  Although I always got the impression of an international jet-setting finance guy (with home in USA and somewhere else) ... if that was the position, I could never decide how I felt about that, for he kept winning me around with some good 'HPC viewpoints' even if they didn't come to pass (yet).

It's that bubble thing.... 

Real Estate Bubbles:

I still hold LuckyOne is correct about London being a real focus point.

 

Good post for the uninitiated Venger, well done.

It's pretty obvious what is going on now to many.  I wonder how many will get out with a profit now.

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Someone on here just last week said something along the lines of, now we've had a rate increase how the MSM play it will tell us if the crash is on....

 

 

DOM7-esWAAAyP16.jpg

 

By that logic, I'd say it was game on.

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Anecdotal but heard about a small-scale central London property developer (friend of friend) who has not sold a house now for 2 years. They are teetering on the brink, as they have borrowed money against their own home, and are close to being forced to sell something, anything to repay principal. As time goes by the current stand-off between the majority of sellers (who allegedly are not under pressure) and buyers who can see plain as day that the market is going down is going to tip taking people like this down with it. That's when prices will really start to slide, and even MSM will acknowledge its a crash, not a "slowdown", or a "stall", or a "pause". Still hold to the view that when this is done PCL property will have been proven to be one of the all-time bubbles. 

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7 minutes ago, Chrippie said:

Anecdotal but heard about a small-scale central London property developer (friend of friend) who has not sold a house now for 2 years. They are teetering on the brink, as they have borrowed money against their own home, and are close to being forced to sell something, anything to repay principal. As time goes by the current stand-off between the majority of sellers (who allegedly are not under pressure) and buyers who can see plain as day that the market is going down is going to tip taking people like this down with it. That's when prices will really start to slide, and even MSM will acknowledge its a crash, not a "slowdown", or a "stall", or a "pause". Still hold to the view that when this is done PCL property will have been proven to be one of the all-time bubbles. 

I have a friend of a friend who went all in on North London development 18 months ago.

Last time I saw him he was telling us all about the millions that it was costing etc etc etc.  The plumber from Stafford who was there was just looking at him thinking he was mental.

I try and avoid people like this like the plague now.  I cant be bothered.  I'll talk to them when they are poor again.  When I find out he's gone bankrupt I'll let you all know.

Edited by TheCountOfNowhere

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6 minutes ago, zugzwang said:

So we didn't need a rate rise after all, or even S24. The whole sordid enterprise fell over of its own accord!

david-cameron-answers-questions-with-bus

Or it's being pushed deliberately in order to profit a minority.  Who knows.

 

I just have to go on right move and look at a few listings to know that all out collapse is a matter of weeks away.

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15 minutes ago, TheCountOfNowhere said:

I just have to go on right move and look at a few listings to know that all out collapse is a matter of weeks away.

I really hope so.

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1 hour ago, TheCountOfNowhere said:

Or it's being pushed deliberately in order to profit a minority.  Who knows.

 

I just have to go on right move and look at a few listings to know that all out collapse is a matter of weeks away.

We can but pray!

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I still pop in every now and again.  We left the UK in 2015 after renting and waiting for a decade for house prices to get to a reasonable level.

Our daughter still lives in London and we visit a couple of times a year.

My current thinking is that the PV of GBP 1,000 a month for 30 years at 0% is GBP 360,000.  The PV of GBP 1,000 a month for 30 years at 7.5% is GBP 143,018.  A monthly payment of GBP 2,517 a month at 7.5% has a PV of GBP 360,000.

Prices don't matter, cashflow does.  Rental yields have collapsed because people can't afford more rent.  People can pay current prices because interest rates are artificially low giving a low mortgage payment for a given price.  Rates will rise to a more normal RPI + 3% in the future and push prices lower.

A further distortion of cashflow is the tax haven status of the UK for non-doms.  This has to change at some point.

I look at buying a house as being similar to buying a 30 year bond with very high transaction costs.  It is not something that I am interested in doing in the UK at current rates.

I expect that my daughter will be able to buy a home in the UK at a more reasonable price in the next 5 years.  Her current home has a gross rental yield of 3% which is unsustainable.  At a yield of RPI + 3%, the price would drop by nearly 50%.  The house of cards will collapse at some point, probably when rates rise.

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1 hour ago, TheCountOfNowhere said:

Or it's being pushed deliberately in order to profit a minority.  Who knows.

:lol:  boom and bust that is the lie of the land. 

 

the boomed want to buy back in eventually , no point buying if there is no space to move up again.  

how many years you been posting ?

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Can't comment about Prime Z1 market - but Z2 and Z3 London has been struggling or the last year; I think there was a bit of a post-Brexit dead cat bounce in November 2016 but otherwise has very obviously been slowing and slowing before grinding to a full halt. (as most people buying into London are doing it for the gainz given the crazy prices, the moment it starts to fall, then no one wants in)

The weird thing is that media have done a number on most of the vendors in London so they actually believe their crazy valuations, and so very few will reduce their properties to actually sell the things - hence complete stand still.

In my experience, the clever money sold up and got the hell out of dodge at the end of 2015 as was fairly obvious what would happen; now there is a few people reducing like mad to get out, and the rest sat wondering why they have no interest.

It's a market that is largely lifeless.

I don't know if it will crash as people race to the exits - or it will just hang there as neither party gives way.

But in essence the London was stitched together by BTL, foreign buyers and FTBs who believed that the only way was up; all three seem to now be gone, and so not sure where it goes from here.

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Agree rents and the price of the rents are the catalyst......if the state won't pay them who will?.......regulation will be required to prevent slum landlords, over crowding, poor and inhabitable living conditions......;) 

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I remember the madness in 1987/88 when the market in London was flying .

There were three main opinions back then , those that said it would carry on for ever , those that said it would stop going up but never go down and those that said it would crash.

By the early 90's it had crashed.

There was one main opinion by then , people looked back and said something along the line of " What were people thinking paying those mad prices " 

My opinion now is that History is about to repeat itself. 

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2 hours ago, TheCountOfNowhere said:

Or it's being pushed deliberately in order to profit a minority.  Who knows.

 

I just have to go on right move and look at a few listings to know that all out collapse is a matter of weeks away.

It would require an enormous push in the Autumn Budget to reverse the direction of the market now.

Does Spreadsheet have it in him? You know what, I don't think he does. B)

 

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1 minute ago, zugzwang said:

It would require an enormous push in the Autumn Budget to reverse the direction of the market now.

Does Spreadsheet have it in him? You know what, I don't think he does. B)

Agree, I doubt he really wants the HPC massive camped outside number 11 demanding his head

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1 minute ago, Meerkat said:

Loved this, for Phil & Krusty:

“In E2, the difference between asking and sale price is a staggering 20 percent.”

 

Is that how much K&P are offering over to secure the place ?

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1 hour ago, Insane said:

I remember the madness in 1987/88 when the market in London was flying .

There were three main opinions back then , those that said it would carry on for ever , those that said it would stop going up but never go down and those that said it would crash.

By the early 90's it had crashed.

There was one main opinion by then , people looked back and said something along the line of " What were people thinking paying those mad prices " 

My opinion now is that History is about to repeat itself. 

I've told this story before on here but worth another airing - in 1990 I met a girl and went to live at her place,. Thought I would sell mine for 90K. Put it on at very top of marrket, nightmare, eventually sold it in 1992 for 55K. Not London but South-East commuter belt. I am NEVER doing that again.

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The crazy thing is it's easy to get caught up in all the madness. Despite been a lurker on hpc since 2005 and aware of bubbles,  debt deflation etc I bought in the summer of 2016 Oxford peak. I genuinely thought it had much further to run and money would be made worthless whiles assets went to the moon negative rates etc it appears I wa wrong the momentum has gone a stuff just not shifting some stuff already back to early 2015 prices. I did sell a flat so was spending some btl twats money in some respects. That alone made me more reckless with my purchase!

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  • 406 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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