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Observations On Ealing Rental & Sales Mkt- Family Houses

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In the last 2 years, I have been looking to buy and rent a house in prime Ealing near the Broadway Tube. I can make the following observations:

1. House prices have not risen at all despite all the media and agent frenzy about London house prices.

2. Gross yields for houses are around 4%. I made a number offers at 30% discount to asking rents with a number of landlords coming back at a 15% to 20% discount. An agent commented that yields have not recovered post 9-11 and the corporate market for family houses is still fragile.

My view is that Ealing is likely to continue to underperform the rest of London.

Reasons :

1. City money is unlikely to move into family houses in Ealing. There is a certain stigma about Ealing; whereas Fulham, Putney etc is deemed to be OK. It is City money that is driving the rest of London.

2. Ealing is too far out from the centre of London vs other areas like Chiswick, Hammersmith for example.

3. Ealing traffic is horrendous.

4. The borough is very diverse. Hanwell and Acton are unlikely to be the first choice amongts families; especially with the mental hospital on Uxbridge Road. A policeman friend tells me that patients from the hospital are often the causes of many incidents around the Broadway.

5. Rental yield is way too low for investors to get a return. One can get 4.5% in ING Direct, so why invest in houses in Ealing at 4% gross.

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I have been trying to keep the other ealing thread going as the only Ealing thread!! Bahh...

You are right about prices not going up in Ealing but they are also not going down either. There is a lot of aspirational pricing by sellers and EAs alike and in some areas, there are a few buyers are giving in to these demands. I would like to buy a house on Corringway or Audley Road but there is very little on the market and what there is on the market is pricing too high (for what it is).

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sorry about the Ealing thread....can the webmaster, move this into your Ealing thread ?

Interesting that affordability is getting worse and worse !!! The HBOS UK house price index topped in July 1989 before falling 15% in the next 3 years. Mortgage payments as a % of Avg Earnings was 35.2% at the end of Q2, 1989. What I find interesting is that afforability a the end of Q1 2006 was 32.5%. Given that interest rates have moved higher since Q1, 2006 (Eg. 2 year gilts have moved from aprox. 4.5% to 4.8%), I suspect that Q2 2006 affordability levels are now very close to those levels seen at peak house price in July 1989.

Add to that :

1. Global liqudity is falling Eg. Central banks raising interest rates and most importantly BOJ's change in direction

2. Equity mkts -10% from recent highs. Equity mkts are the best leading indicator for global growth.

3. Fred Harrison's 18 year cycle calling a top in 2006/7

4. Unprecedented avg house price to avg earnings

5. House price bears have been very quiet of late. In recent months, many stale bears have given up and bulls have claimed victory over the great housing debate.

We are very close to the top in my view.

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All your observations may/may not be valid however in the market generally but with Ealing (as with any area) you have to analyse things on a much more localised level. For example, I can imagine the houses in South Ealing, Hanwell and Acton borders suffering badly in the future (who wants to live there?) whilst the Haymills estate etc where there are some nice and desirable properties may remain more intact.

When you analyse things locally, the idea that a top has already been reached can more readily be identified - and it changes depending on the area. Down Corringway, there is one property which changed hands for the same price last year as it did back in, I think 2002.

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