Really Want To But Can'r See A Crash In London

[Guest consa]

Laurejon.  This is very accurate.  Some of these people are truly 'away with the fairies' with their predictions of doom.  They just keep saying the same thing over & over & over.  This site has been promoting it since October 2003.

In fact, some people even flaunt their bitterness. Take Consa for example.  He openly advises everyone that he just hates "greedy bast***s".  How naive, how sad, how aimless.

<{POST_SNAPBACK}>

Maybe Jesus can give you some advice on greed and sins for your reference you sad fool.

[ubuntu]

I live in Kentish Town, yes parts of it are a dump but it is quite central and also is near Highgate and Hampstead and therefore acts as an overspill for those areas.

It is certainly more desirable than Highbury which really is a dump even though EAs try to brand it as part of Islington.

Anyway my point is that no way can you command a rent of £1000pcm for a 1 bed flat around here, more likely to be 650-800 and to achieve the top end the place would have to be immaculate.

[johnno]

Figures for Buy to Let in Highbury at £200,000:

This example was for 1st time buyers who could easily pay the mortgage with combined salaries.

As a BTL (i feel trendy now) the figure would work as follows

Dep £30,000

Mort £170,000

@ 5.75% int only £708.33 pcm

Rent £1000 pcm

Yield 6%

Not a great BTL by any means but a good example of a 1st time buyer purchase.

For those pf you who hope I go bust thanks, I'm sure my kids would be happy and the wife. Seems a bit harsh but so be it.

As for the lack of migration. I don't agree London has a huge maganatism for immigrants especially "in pats" Bankers, students, etc. London has a "buzz" that people want to experience. Would you work in New York ot Tokyo for a year given the chance? As a resident you become very cynical but the global work force outs London at the top if it's destination list.

<{POST_SNAPBACK}>

Hello,

I'm not going to insult you like some others, but I have a question.

Is 200K for a flat in not good area value for money ? myself and other half have income of £70-80K and £100K in the bank. We would NEVER consider spending 200K on a small flat - such poor value for money. For £300K you get something nice and move out of central london .... tonnes to choose from with easy commuting.

Secondly, the migrant workers : on < minimum wages doing dirty jobs - can they affor the rent ??

seems to be the pan is boiling, just waiting to spill over the side.

[Casual Observer]

Laurejon.  This is very accurate.  Some of these people are truly 'away with the fairies' with their predictions of doom. 

<{POST_SNAPBACK}>

Doom? Why doom? It's joy - prices are falling! Rejoice!

[oracle]

buytolet,

I certainly wont be resorting to personal slights.

some landlords are very financially astute,and good on them.

I agree that disposable cars are (nearly) the cheapest way of motoring.I keep my running costs down by buying at auction,running the motor for a while,and then selling for profit.....just as effective.

I'm glad we are having a rational debate but I disagree with your logic that rental yields are the only yardstick to judge your gains by.Yields are also going to be affected by unemployment and LL's getting nervous about having to resort to expensive court action against defaulters.

if you claim £700pcm on rent(gross),and your house has just lost £1200 in a month then that is a loss!!

A very large number of BTL these days are not seasoned investors but joe public,they bought in at the top,have less equity to play with and will be more prone to the decline...and through sheer weight of numbers will precipitate the decline as they become entranched in the decline/negative equity spiral.

The proper investors will mop up at some stage but not until the drop bases out properly(and if the charts of previous crashes run true this time that process takes several years)

[FDbuytoletinvestor]

You all seem to be assuming the Kentish Town / Highbury flat is a dump! Kentish Town and Highbury are nice places to live, near Islington and Hampstead repectiviely and on good tube links. I use them as an example because they are areas where FTB might start off before moving to Angel or Hampstead. NOT hell on earth you can buy 1 bed flats for £150,000 in such areas Hackney, Shadewll etc.

£200,000 will not just buy a dump but a nice one bedroom property close to tube etc.

Buy a house 3 bedroom house out of town for the money? Okay that's your decision but I think your struggle even 4 years ago. You might find a dreadful new build house with paper thin walls etc.

As for my stats:

They come from Westminster University. Furthermore I do buy property fairly regularly and prices just don't feel as if they have risen. Although Foxtons etc might tell you they are rising at £1000 per second. The very high end property trasactions (2 million plus) may have interfered with your figures?)

£650 pcm for a one bed in Kentish Town, I wish. Check www.findaproperty.co.uk the average 1 bed goes for £933 per month, I stand a little corrected. Anyway this example was not intended as a buy to let merely a 1st time buyer.

Immigrants not being able to pay rent! International students pay £400 per week for a two bed in London, they have more money than City bankers sometimes. We have 92,000 inpats “executive types†entering London every year to work. Not all immigrants are builders, most are so talented we had to recruit abroad as schools are producing such dross! Yet awarding the 3 A’s for good effort.

Anyway I think one thing that could bring the market down in Negative Sentiment. Especially having read the site. I feel people are so fed up with high prices we could enter a cycle where everyone refuses to pay asking price, or buy altogether. I feel people really want a price drop and property is only worth what someone will pay. Enough property backlash fuelled by the press could see a significant market drop. Maybe you could organise this?

[judas]

Maybe Jesus can give you some advice on greed and sins for your reference you sad fool.

<{POST_SNAPBACK}>

Mabye Consa. But don't you know about the new & well respected theory that Judas was selected by God to carry out his will.

No Judas = No Death Of Jesus For Our Sins = No Ressurection = No Christianity

Judas was part of the master plan.

Or do you still believe in Adam, Eve & Puppy Dog Tales (or even one tenth of shite in the bible!).

[judas]

Doom? Why doom? It's joy - prices are falling! Rejoice!

<{POST_SNAPBACK}>

Really ? Where is the joy in the young family who have worked their ******** off and the find themselves with negative equity ?

Do you honestly think that the "greedy ba****ds" (Consa term) who have made their millions in property will really be the ones who are affected. These guys made their mint yonks ago and have a financial portfoio the length of the Deep Sea Scrolls, spanning several sectors.

No, sorry. As usual it will be poor Joe Bloggs who suffers (well at least in the short term).

[dogbox]

Furthermore I do buy property fairly regularly and prices just don't feel as if they have risen.

I agree. Ive said for a while that Ive seen examples of London property 10 - 15% cheaper than a year ago.

Im now seeing these 'losses' reversed and E/As getting very busy with viewings.

The pension thing is also stoking up the fire nicely.

Affordability is good as I reckon 70% of FTBs now do interest only. Many of these are also fixed at rates around 4.99% (Northern Rock 5, 7 or 10 yr).

Also lots more single folk and people buying for kid & holiday home.

The market is at last in recovery mode

Whu hu hu ha ha ha haaa haaa haaaaaa haaaaaaaa haaaaaaaaaaaaaa

[Dicky]

The market is at last in recovery mode

<{POST_SNAPBACK}>

Nurse!! Nurse!! we have another one here, time for the medication, make this a strong one.

[OnlyMe]

I agree. Ive said for a while that Ive seen examples of London property 10 - 15% cheaper than a year ago.

Im now seeing these 'losses' reversed and E/As getting very busy with viewings.

The pension thing is also stoking up the fire nicely.

Affordability is good as I reckon 70% of FTBs now do interest only. Many of these are also fixed at rates around 4.99% (Northern Rock 5, 7 or 10 yr).

Also lots more single folk and people buying for kid & holiday home.

The market is at last in recovery mode

Whu hu hu ha ha ha haaa haaa haaaaaa haaaaaaaa haaaaaaaaaaaaaa

<{POST_SNAPBACK}>

If your stats are correct and 70% of FTB's are going to interst only this only makes the situation far worse than I think it already is. It means that 1) FTB's are stretching themsleves even further thatn I thought and that 2) FTB's are far more rate sensitive as all their borrowings are subject to interst and they can't peg back and miss the rapeayments for a while.

As soon as the poll of fools dries up we are in for one hell of a shakeout.

[HedgeFundAnalyst]

Hi.  Why would I, with the supposed 70k combined family income, buy a 1 bedroom flat and live with my lovebird wife when others with 70k combined income are living in nice 3 bed/2ba semi-detatched's they bought a few years earlier?

Because you missed the boat.

Have I missed the boat?

See above.

Is my only course of action to lower my standard of living even though my peers who are but a few years older didn't have to lower their's?

Fraid so.

Is it because it is "different" this time?  Is it because we are running out of space?

No, you missed the boat.

Did life provide me with the short-end of the stick?

No, you just missed the boat.

Oh yes, why would I pay 1,000 pounds per month to live in your sh!tty little flat, when I can rent a whole house for less than 1,200 per month

Thats because you missed the boat.

Thing is, the boats turning round and its on its way back to you, so stop your whining.

<{POST_SNAPBACK}>

Hi, it's called sarcasm. Now quit your whining.

[Michael]

You all seem to be assuming the Kentish Town / Highbury flat is a dump! Kentish Town and Highbury are nice places to live, near Islington and Hampstead repectiviely and on good tube links. I use them as an example because they are areas where FTB might start off before moving to Angel or Hampstead. NOT hell on earth you can buy 1 bed flats for £150,000 in such areas Hackney, Shadewll etc.

£200,000 will not just buy a dump but a nice one bedroom property close to tube etc.

Buy a house 3 bedroom house out of town for the money? Okay that's your decision but I think your struggle even 4 years ago. You might find a dreadful new build house with paper thin walls etc.

As for my stats:

They come from Westminster University. Furthermore I do buy property fairly regularly and prices just don't feel as if they have risen. Although Foxtons etc might tell you they are rising at £1000 per second. The very high end property trasactions (2 million plus) may have interfered with your figures?)

£650 pcm for a one bed in Kentish Town, I wish. Check www.findaproperty.co.uk the average 1 bed goes for £933 per month, I stand a little corrected. Anyway this example was not intended as a buy to let merely a 1st time buyer.

Immigrants not being able to pay rent! International students pay £400 per week for a two bed in London, they have more money than City bankers sometimes. We have 92,000 inpats “executive types†entering London every year to work. Not all immigrants are builders, most are so talented we had to recruit abroad as schools are producing such dross! Yet awarding the 3 A’s for good effort.

Anyway I think one thing that could bring the market down in Negative Sentiment. Especially having read the site. I feel people are so fed up with high prices we could enter a cycle where everyone refuses to pay asking price, or buy altogether. I feel people really want a price drop and property is only worth what someone will pay. Enough property backlash fuelled by the press could see a significant market drop. Maybe you could organise this?

<{POST_SNAPBACK}>

i lived in London for a YEAR IN THE 80S......and being in my early 20s liked the ''buzz''............however now I'm 40 i find it shabby and squalid and Highbury is my particular pet hate area......As grotty as the cheapest areas of london but not at all cheap.....Even poor suburbs of Leeds ,Manchester etc are far cleaner than the likes of Highbury...and most of Islington..........

Islington though shows how inner London is a different market to elsewhere......Many houses are £1 million in the same street as awful blocks of council flats....

[Casual Observer]

Really ? Where is the joy in the young family who have worked their ******** off and the find themselves with negative equity ?

Do you honestly think that the "greedy ba****ds" (Consa term) who have made their millions in property will really be the ones who are affected.  These guys made their mint yonks ago and have a financial portfoio the length of the Deep Sea Scrolls, spanning several sectors.

No, sorry. As usual it will be poor Joe Bloggs who suffers (well at least in the short term).

<{POST_SNAPBACK}>

Now you're being silly. Only people who buy as a financial investment lose when prices fall. Falling prices help existing OO's by shortening the rungs on the ladder. Negative equity in itself doesn't hurt, it's the size of the repayments that hurts.

Am I right, or am I right?

[oracle]

Now you're being silly. Only people who buy as a financial investment lose when prices fall. Falling prices help existing OO's by shortening the rungs on the ladder. Negative equity in itself doesn't hurt, it's the size of the repayments that hurts.

Am I right, or am I right?

<{POST_SNAPBACK}>

Nope you're wrong!!

When people are made redundant as a direct result of drops in consumer spending(and company profits) this will affect investors/ftb's/mortgage defaulters/credit card bingers.the list is endless.

families with spouses+kids do deserve sympathy in some instances(namely not the self-inflicted ones like mortgaged+credit cards all maxed out on new cars and holidays)

didn't they learn to put some by for a rainy day?

[Guest consa]

Really ? Where is the joy in the young family who have worked their ******** off and the find themselves with negative equity ?

Do you honestly think that the "greedy ba****ds" (Consa term) who have made their millions in property will really be the ones who are affected.  These guys made their mint yonks ago and have a financial portfoio the length of the Deep Sea Scrolls, spanning several sectors.

No, sorry. As usual it will be poor Joe Bloggs who suffers (well at least in the short term).

<{POST_SNAPBACK}>

The young family as you state didn't work at all for their property to increase, and i can't see a price crash affecting them if they aren't moving.

GREEDY EA's and speculators will be the worst affected

By the way there is a nice thread on Scottish HP's read and enjoy!!

Rejoice.......

[Casual Observer]

Nope you're wrong!!

When people are made redundant as a direct result of drops in consumer spending(and company profits) this will affect investors/ftb's/mortgage defaulters/credit card bingers.the list is endless.

families with spouses+kids do deserve sympathy in some instances(namely not the self-inflicted ones like mortgaged+credit cards all maxed out on new cars and holidays)

didn't they learn to put some by for a rainy day?

<{POST_SNAPBACK}>

No, I was right. Prices increasing out of people's reach (for anything they need, not just houses) is doom. Those same prices falling, so that they are back within reach is joy. The fact that some bought at the higher, pre-crash price is not a good reason for calling a correction "doom"

[oracle]

with due respect casual,

consumer discretionaries HAVE substantially fallen in price.until recently in-demand services like builders were increasing their fees,however even this has tailed off(I remember this happening last time too!)

as IR's and commodity prices have risen the retailers have been facing a profit squeeze.

and retail sales are crap!!!!

shareholders will want to maintain profit margins by merging/consolidation/aquisitions of other rivals....and that invariably leads to the culling of duplicate positions(job losses in lay-mans terms)

[Yonmon]

SNIP

£650 pcm for a one bed in Kentish Town, I wish. Check www.findaproperty.co.uk the average 1 bed goes for £933 per month.

<{POST_SNAPBACK}>

Forgive my scepticism, but a supposed BTL investor who wishes rents were £650 not £933, and doesn't know the facts re rents/price trends sounds a bit fishy to me...

[since the beginning]

Mort £170,000 @ 5.75% int only £708.33 pcm

Good Maths! Can see why your in BTL!!

30k Savings - Thats a £1000 a month for 2 and a half years. Oh forgot can just put it on the credit card.

Question how did you find this site?? Searched for HPC why?

4 Bedroom House, Good Condition Central Finchley £1600 a month rent. You can get 2 bedroom flats in Highbury for £800. Think your talking crap. And thats before I read your absurd quote about 12% house price rises in London in the last 4 years!!

God why am I argueing with another idiot

[Antsy]

The average is likely to be skewed due to the number of extremely high earners.

This would make it a bit of a budget stretch even for FTBers - (say 40k joint income = maybe 2600 a month coming in assuming no pension or other deductions, mortgage on 200k fixed until 2015 to take advantage of low rates now = nearly 1100 a month, almost half of income gone already before bills and tube season ticket) and that's assuming they have saved the 20k deposit which isn't going to be many people, especially recent graduates.

A couple of FTB on 60k probably could afford it, but would they want it?

Thus the number of people who would want to live in it is surely not high, and the number of people who actually could live in it is also not high. So the number of potential buyers is not that high, hence today's slow market.

<{POST_SNAPBACK}>

I think our situation is fairly typical of many London FTBs - not all are young professionals, and many professions don't pay that well now owing to the huge number of grads coming through (thanks, Tony et al). Both just turned 30, 1 kid, joint salary 35k... willing to pay 750pcm for mortgage which will buy about 120k. add this to the 10 - 12k deposit and you have a buying power of 130k. I don't want to live in Clapham, wandsworth or similar trendy place - quite happy with slightly grotty SE London, thanks, but getting a 2 bed place wouldn't be possible at the moment. I don't think we're asking too much - do you? (serious question). Luckily we will shortly qualify for a key worker loan but having to depend on the taxpayer rankles. (But not as much as the fact my tax pounds will be propping up someone's BTL pension from next year - what's all that about?). The market has serious problems and I despair. I really do...

[laurejon]

A joint salary of 35k is a bit rank to say the least.

Is it not the case that the term Key Worker is merely and excuse to pay someone a crap wage and make out you are running a charity.

Hospitals are now economic centres inspired by the Government PFI.

Are the boards of directors on hospital trusts and the management lines considered key workers I bloody well hope not.

The news for you however is very bright. You can borrow 180k at 5% fixed for ten years that the will cost you 750pcm.

I would change your mortgage broker as you are clearly missing out on the cheap interest rates and you need to get on the ladder and stop paying for your Landlords retirement.

[BufferBear Bitcoin Bull]

Antsy,

We are in a similar position to you and believe patience is the key. The sh*t (i.e ex-council) 2 bedroom properties are now coming onto the market at under 140k. You will be able to buy a decent 2 bedroom place in SE for less than 120k in a couple of years. I would only consider a keyworker loan (and I do qualify for this scheme amonst others) in a rising market, but only if I was certain that I could repay it within a year or two.

Only this morning I received confirmation that I could start looking for a property in relation to the Homebuy scheme. The last batch were snapped up in no time for 2004 and new grants should not be available until April 2005!!

Are the government/L.A taking desperate measure to prop up the market???

I for one, am not going to put myself in the running for the "Greater Fool" title!

[DTMark]

Typing the numbers into Halifax.co.uk on a fixed for five years comes back with at least £950 per month. And that's a big gamble, because after 5 years if it goes up (which given today's low rates, is more likely than it going down hence going for the fix in the first place) the repayments would rise still further. So it isn't affordable now and is even less likely to be affordable going forward. Added to that the real risk of negative equity and it is financial suicide.

I think that when calculating affordability the sum is quite simple: how much could you afford if base rates were 8 - 9%? People who don't do this simple math are gambling. It caught a lot of people out in the last crash.

I agree - a joint salary of 35k isn't good. For London. (It's pretty good in many areas of the Country)

But that's why we see for instance firefighters and other civil service workers going on strike over pay in recent years. Firefighters only wanted 30k and they had in the main broad public support, I'd suggest 40-50k is more appropriate for that role, I certainly wouln't do it for less than that given the unsociable hours and risk of death.

What this basically means is that as a Country we treat key workers with very little respect. To give Labour credit, they signed up the Social Chapter, which the Conservatives would not have done. However the minimum wage is still laughable, and you're on a lot more than that.

However - Antsy: do you think it's reasonable that as a taxpayer I should subsidise your home purchase (key worker scheme) which then helps fuel prices still further, pricing similarly or higher paid private workers out?

If your role is e.g. nursing, firefighter, teaching - etc - and you're providing a great service to your community, why stand for it - why not simply move to an area where prices are lower (I'm making an assumption that it would be possible for you to do so and the maths stack up) and enjoy a better quality of life than is surely possible in London?

If it's the case that you *want* to live in London then I think it's your choice, I don't see why it should be subsidised by anyone.

If this means London has no key workers, then so be it - strangely enough I recall an article about exactly that just recently.

That has to be dealt with - if we have to have some kind of key worker scheme we could perhaps do that by means of variable local taxation to replace the Council Tax, so London's local taxation would skyrocket thus meaning that high earners who live in London help to fund London's local key workers.

To address the issue of "getting on the ladder" - I'm not so sure it would be a ladder, as with the real risk of negative equity the next rung could be so much higher up for the forseeable future that it would be unattainable. The analogy is more like just about grabbing the bottom rung of the ladder before all the rungs above it are removed.

[BufferBear Bitcoin Bull]

If it's the case that you *want* to live in London then I think it's your choice, I don't see why it should be subsidised by anyone.

Well, I don't know about Antsy but I *want* to live in London, for now. I was born here, my family are here, as are my friends. Quite importantly, my job is also here. Why should I move out of London in order to be able to afford a home?

I've said this before and I will say it again "people usually 'get on their bikes' to gain employment not to put a basic roof over their head." This logic will return soon with a vengeance. There is nothing in this world to justify London's house prices or anywhere else for that matter. Six years ago, 3 bedroom houses on my road sold for 150kish. Now they are 450k. Hello.