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Buffer Bear

Price Falls Of Average London Property

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Many posters who believe in the forthcoming correction still believe that London will not fall by much, although it did last time.

Any views on how far the average London property (300k) will fall by the end of the aftermath?

I reckon by a minimum of 30% in real terms over about 4-6 years. Afterall, this is only about -5% per year and - inflation over 4 years.

Edited by Buffer Bear

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Come on you Londoners!


I'd like to see houses currently selling for £500k on the market for £350k in 5 years.

30% down in nominal terms, and closer to 50% down in real terms.

In the last boom the house price /earnings ratio hit 8 times, then fell quickly to 4 times at the bottom of the slump.

The current house price to earnings ratio is about 10, it would be great to see it back at around 5.

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Please.................6 yrs away. If you're lucky, that may be the end of the slump.

East London=50%+ real falls.

FWIW, I think falls in London will be all over the place because I think the differentials are out. Last time falls in London varied widely, from zero in some areas to 30%+ elsewhere. There were two main deciding factors - one was how overpriced an area was - cheap, supposedly "up-and-coming" areas had become very overpriced as people bought any old rubbish to "get on the ladder". Secondly there had been a boom in studio flats and bad conversions (1/2-beds with tiny rooms etc), and no one wanted to buy these once property was falling, so they slumped.

This time round there are some similarities. Areas like Tottenham, or Hackney are way overpriced. Urban, trendy but inner-city areas (Hoxton borders...) are overpriced. Some of the traditional decent areas are less overpriced because they stopped rising sooner - they might be expensive, but they're not so overpriced because the demand for those areas is perennial, whereas the "up-and-coming" areas tend to collapse when prices fall. East London is hugely overpriced and still going up because of the Olympics - this might come out before or after the games, but in the end people are going to realise that West Ham is still a rubbish place to live, even with a sports stadium down the road. So areas will vary widely IMO.

Secondly, we don't have the studio flat boom this time, instead we have the new-build boom. These are already starting to fall, and even if nothing else falls they will come down a long way as people realise they have bought into the slums of the future. They're badly built, gardenless, and increasingly the flat next door is being flogged to housing associations so instead of the dream of "executive enclaves", they will end up like any old sixties tower block with noise, social problems and bad maintenance. I'd predict the worst falls for new-builds in dodgy areas, and falls for almost all of them.

Lastly, the average falls overall - personally I can imagine 30-50% falls in some parts of the country but I don't think that is likely to be the average fall in London. Last time the rises had been focused on London and the SE, thus the falls were concentrated here. That really is different this time. London stopped rising a few years ago (excluding new-builds and dodgy areas). Personally I think the first part of the rises in the 90s were rises from an underpriced position. London is traditionally a high-priced city, and it was at an unusual low before the rises started. Now it has overshot a bit, but not by as much as some think. I think the overpricing is concentrated in the sectors I mentioned above. I think most of the reasonable stock and good areas might continue to stagnate, or rise or fall by a very small amount, while the differentials are ironed out by overpriced areas and new-builds falling. Average falls of 10-15% overall? Maybe less as some areas might even keep going up.

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  • 302 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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