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Telometer

Prices Can Rise More Quickly Than Ever They Can Fall

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We have seen, over the past 12-18 months, the most extraordinary HPI in central London. 100% is not abnormal.

Could prices fall 50% over such a short period of time (i.e. the same amount) - not even the beariest of bears on here suggests that.

Moreover, if they do fall 50%, then they're back to Winter 2006 levels - which are supposed to be unsustainably high.

Are we looking at 80% or 90% falls over this period?

I recall that in 1989ish, at the absolute peak, 2/3-bed Victorian terraces in Bow, in the East End were 250k apiece. By 1991ish they were 75k and didn't move until 1997. 500-600k now. (1987ish = 60,000; 1986ish = 6,000).

[i might be the odd year plus/minus with these last numbers, but you get the idea.]

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The beariest of bears say that on average, the falls will probably be less than 50%, just as they were in the last crash. However, where properties have been rising at ridiculous rates, such as 100% in a year (on average, London HPI is much lower than that), then I think that prices could easily fall by a lot more.

New build flats and the Belfast market are just two examples of rapid rises being followed by rapid falls at the moment.

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Resistance to increases is lower than falls due to increased LTV's, extending mortgage peiods and like. Fall aren't so easy due to people mentality and the effects of negative equity, most who can, will weather the storm which will restrict supply and acting as some sort of support.

Having said that 'real term' falls are easier to envisage and the long term income multiple of 3.5 is like that for a reason. Just remember if a house falls 50% from 200 to 100, it has to go up 100% just to get back where it was!

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I can only speak from personal experience

I bought a one bed flat in Ealing - admittedly NOT central London but:-

Bought 1987 - £62,000

On Market - 1988 - £80,000

Sold 1989 - £62,000

1989 was just the start, so I am assuming it probable got down to around £40ish

50%

Things were no way near as over inflated as they are this time.

Only time will tell. :ph34r:

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We have seen, over the past 12-18 months, the most extraordinary HPI in central London. 100% is not abnormal.

Wanna back that up with some evidence.

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Wanna back that up with some evidence.

Uhuh.

55 Grange Road, Southwark, London, Greater London, SE1 3BH £796,500

Terraced Freehold Not New Build 12-Nov-2007

52 Grange Road, Southwark, London, Greater London, SE1 3BH £790,000

Terraced Freehold Not New Build 27-Jun-2007

51 Grange Road, Southwark, London, Greater London, SE1 3BH £510,000

Terraced Freehold Not New Build 19-Jan-2007

51 and 52 are similar. Compared to these 55 is not as nice, smaller and has no garden worth speaking of, suggesting a November 2007 price of 950 for 51 or 52.

That's 86% over 11 months and prices are firmer there now than they were then. 51 did need some of its rooms painting. :lol:

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Uhuh.

55 Grange Road, Southwark, London, Greater London, SE1 3BH £796,500

Terraced Freehold Not New Build 12-Nov-2007

52 Grange Road, Southwark, London, Greater London, SE1 3BH £790,000

Terraced Freehold Not New Build 27-Jun-2007

51 Grange Road, Southwark, London, Greater London, SE1 3BH £510,000

Terraced Freehold Not New Build 19-Jan-2007

51 and 52 are similar. Compared to these 55 is not as nice, smaller and has no garden worth speaking of, suggesting a November 2007 price of 950 for 51 or 52.

That's 86% over 11 months and prices are firmer there now than they were then. 51 did need some of its rooms painting. :lol:

I don't know this street because, well, because it's Sarf Lahndan and I wouldn't go there without good reason and suitable innoculations, however.. Google Earth allows me to visit it vicariously.

There's a row of terraced houses on Grange Road, some of which have gardens and others have what look like industrial units where there used to be a garden. Assuming this is the row you are talking about, can you tell me which way the numbering runs? I'd expect 52 to be just across the road, but the properties there look like nasty 60's council flats.

I guess what I'm saying is, show me several examples of very similar properties and I'll agree with you that 100% rises in a year are feasible, otherwise I'm going to believe the consensus of the various statistical indicators over the last few years which indicate low double figure rises and reply to you with a clear and concise.... AWOOGAH!

[edit - Breaking news! I will be visiting S. London in two week's time as I've just got a pair of tickets for the match at Twickenham to watch the bogtrotters lose. Right, must pop down to the B.A. travel clinic and get a top up yellow fever jab.]

Edited by Paddles

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Not that easy... as freehold properties round here (which are the ones showing the uplift) are few and far between. And those that there are, tend to be rather different sizes, so a £psf basis makes more sense, but you're not going to believe me... Whatever, low double figures are WAY out over the last 18 months or so.

Grange Road referred to above has a terrace of sequentially numbered houses, so the examples are all next door to each other. (The council block opposite is a s*****y [that's funny, I'm sure I put luxurie apppartment] flat development.)

33 Alma Grove, SE1 5PY £448,250

Terrace Freehold Not New Build 13-Jul-2007

43 Alma Grove, SE1 5QB £320,000

Terraced Freehold Not New Build 08-Dec-2006

32 Alma Grove, SE1 5PY £289,000

TerracedFreehold Not New Build 03-May-2006

So that's 55% for Alma Grove in a year, but missing out on the latter part of last summer; I'd guess they've hit the 500k mark by now.

75 Pages Walk, SE1 4HD £525,000

TerracedFreeholdNot New Build 19-Nov-2007

91 Pages Walk, SE1 4HD £405,000

TerracedFreeholdNot New Build 22-Jun-2007

65 Pages Walk,SE1 4HD £473,000

TerracedFreeholdNot New Build 05-Apr-2007

65 Pages Walk,SE1 4HD £330,000

TerracedFreeholdNot New Build 26-Aug-2005

That's 60% over an admittedly longer period, but nothing much happened market-wise from summer 05 to summmer 06

17 Bartholomew Street, SE1 4AJ £430,000

Terraced FreeholdNot New Build 05-Jan-2007

7 Bartholomew Street, SE1 4AJ £380,000

TerracedFreeholdNot New Build 26-Nov-2004

Bartholomew St is very similar houses to the Grange road ones in first example; they sell for similar amounts, and one (requiring a lot of work but a little bigger) is now on the market at 800k

Now to Marylebone - more your part of the world? :

http://www.primelocation.com/uk-property-f.../PRKP999000177/ - for sale at 1.35m and they'll get it - see my other thread about a nearby much less nice but arguably better located property with three buyers.

49 Molyneux Street, W1H 5JD £1,250,000

TerracedFreeholdNot New Build 31-May-2007

19 Cato Street, W1H 5HR £725,000

TerracedFreeholdNot New Build 29-Sep-2006

30 Molyneux Street,W1H 5HW £780,000

TerracedFreeholdNot New Build 16-May-2006

38 Brendon Street, W1H 5HE £795,000

TerracedFreeholdNot New Build 24-Feb-2006

OK, so that's a 75% increase over a similar period.

Crash? What crash? Not here.

Edited by Telometer

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So that's 55% for Alma Grove in a year, but missing out on the latter part of last summer; I'd guess they've hit the 500k mark by now.

.................

That's 60% over an admittedly longer period, but nothing much happened market-wise from summer 05 to summmer 06

.................

OK, so that's a 75% increase over a similar period.

Crash? What crash? Not here.

Good research.

If you're correct, then the people who have seen a 65% or more increase on their purchase are safe from a 40% drop in prices which is what a lot of the more rational opinions on here think we'll witness. Of course, if they've used their equity as a cashpoint, they might be a bit fooked though.

I still don't believe 100% in a year. Maybe one place in 10,000 got a mad punter with cash burning a hole in his pocket but otherwise, nah.

I'm not going to begin to argue the "crash, what crash?" statement, as that's just an opinion based on trailing rather than leading statistics.

[edit; too many "thoughs". Oh, and I'm going to Twickers and you're not. Na na na nah nah.]

Edited by Paddles

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I can only speak from personal experience

I bought a one bed flat in Ealing - admittedly NOT central London but:-

Bought 1987 - £62,000

On Market - 1988 - £80,000

Sold 1989 - £62,000

1989 was just the start, so I am assuming it probable got down to around £40ish

50%

Things were no way near as over inflated as they are this time.

Only time will tell. :ph34r:

How is this a 50% fall? It sold twice for 62K so a drop to 40ish would be 33%. By your logic if you had marketed it in 1988 for 400K that would of meant a 90% drop.

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That's 86% over 11 months and prices are firmer there now than they were then. 51 did need some of its rooms painting. :lol:

So you can't back it up then, you have cherry picked a few properties to prove 86% in a very small sample, your second attempt produced less impressive results.

33 Alma Grove, SE1 5PY £448,250

Terrace Freehold Not New Build 13-Jul-2007

43 Alma Grove, SE1 5QB £320,000

Terraced Freehold Not New Build 08-Dec-2006

32 Alma Grove, SE1 5PY £289,000

TerracedFreehold Not New Build 03-May-2006

Great, but what about 50 Alma road? Sold on 15th October-2007 ?????

So that's 55% for Alma Grove in a year, but missing out on the latter part of last summer; I'd guess they've hit the 500k mark by now.

Wrong... they are now at the £384,994 mark in October, god knows what they are today......

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Hi Paddles

SE1's my home patch, and it has been so hot it's unbelievable. Marylebone is a second home to me, and that's been just as hot. And they're still going up, see my other thread on Marylebone.

http://www.housepricecrash.co.uk/forum/ind...showtopic=69369

So yes, in areas where prices have nearly doubled over a short period in time (and I can't think of any more f/h houses in the area, and flats are too difficult to keep track of as they're all different sizes), provided you didn't buy at the top, who cares about a 50% correction. And if - as I did - you managed to sell at the high price, and buy at the low price (smug) because the sellers' rather dim agent hadn't caught up with what was happening, that's 200% house price return in no time at all, so prices can crash by 80% before I'm poorer than I was in Autumn 2006. I wanted to STR, but the opportunity to buy at 2006 prices - i.e. half price - was too much like good value.

I think you'll find, gilf, that 50 Alma Grove was a wreck so it didn't seem worth including; Sold 15 October 2007 means the offer almost certainly went in before the credit crunch happened and prices started to slide in the provinces; certainly no way they slipped 15% during the middle of last summer in SE1. Whatever you may want to believe. And add the Bartholmew St results in with the Grange Rd ones; similar increases.

Edited by Telometer

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Here's another part of town with impressive growth: E3 - Bow, Tower Hamlets.

179 Swaton Road,E3 4EP £455,000

TerracedFreeholdNot New Build 14-Sep-2007

175 Swaton Road,E3 4EP £364,000

TerracedFreeholdNot New Build 16-Mar-2007

78 Swaton RoadE3 4ET £300,000

TerracedFreeholdNot New Build 01-Sep-2006

72 Swaton Road,E3 4ET £245,000

TerracedFreeholdNot New Build 08-Jun-2006

183 Swaton Road,E3 4EP £310,000

TerracedFreeholdNot New Build 12-May-2006

So that's 50%

447 Mile End Road,E3 4PA £775,000

TerracedFreeholdNot New Build 01-Nov-2007

455 Mile End Road,E3 4PA £635,000

TerracedFreeholdNot New Build 26-Jul-2007

443 Mile End Road,E3 4PA £580,000

TerracedFreeholdNot New Build 04-Sep-2006

449 Mile End Road,E3 4PA £575,000

TerracedFreeholdNot New Build 07-Apr-2006

441 Mile End Road,E3 4PA £470,000

TerracedFreeholdNot New Build 15-Nov-2005

Map (E3 4PA)

That's "only" 35% spring 06 to autumn 07, but 65% is you stretch it back to a 2 year period.

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That's "only" 35% spring 06 to autumn 07, but 65% is you stretch it back to a 2 year period.

So, is it your view that there isn't going to be a crash or that if there is one it doesn't matter to most people?

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16,156b The Glass House Bermondsey Street,SE1 3TQ £660,000

FlatLeaseholdNot New Build 11-Oct-2007

16,156b The Glass House Bermondsey Street,SE1 3TQ £455,500

FlatLeaseholdNot New Build 28-Mar-2007

45% in 7 months... - this is a luxury apartment - so called

Edited by Telometer

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How is this a 50% fall? It sold twice for 62K so a drop to 40ish would be 33%. By your logic if you had marketed it in 1988 for 400K that would of meant a 90% drop.

I did market it at £80,000. I was offered £78,000 which I wanted to accept but my partner refused. When we put it back on the market a year later the valuation was £18,000 down.

That is what I was referring to - the peak @ £80,000.

The point is to yoyo £20,000 in the space of two years is nuts really.

Edited by Queen of Spades

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Oh they can fall....

New-build flats always sell at a premium and are worth less when second hand. Just like second hand cars. Who will pay as much for a flat which has a pre-used kitchen and bathroom and carpets as for a new one? Nobody. Just like a second hand BMW. Second-hand flats have no rental guarantees, free carpets, SDLT paid

So the point of your observation is...

... that second-hand goods without sweeteners are worth less than new ones with sweeteners.

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New-build flats always sell at a premium and are worth less when second hand. Just like second hand cars. Who will pay as much for a flat which has a pre-used kitchen and bathroom and carpets as for a new one? Nobody. Just like a second hand BMW. Second-hand flats have no rental guarantees, free carpets, SDLT paid

So the point of your observation is...

... that second-hand goods without sweeteners are worth less than new ones with sweeteners.

That's a non sequitur. I was merely pointing out that rapid falls are indeed possible. It's interesting that you use the fact that new-builds sell at a premium to justify prices drops. Property generally has been selling at a premium recently because we were in a bubble market financed by widely available credit.

In fact if an omnipotent being were trying to test your theory to destruction they would start by creating exactly the market conditions that we have now. You'll be shocked by how swift the drops can be.

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In fact if an omnipotent being were trying to test your theory to destruction they would start by creating exactly the market conditions that we have now. You'll be shocked by how swift the drops can be.

In central London - which is the only place that I presume to speak about - prices continue to rise. As I keep repeating! Buyers continue to fight over properties.

What's the non sequitur by the way - I cannot see any sequitu, let alone a non?

Has anybody ever denied that new build sells for a premium over second hand? It is true that in a rising market you may get more for a second hand flat than you paid for it, but that has nothing to do with the flat in question, does it.

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In central London - which is the only place that I presume to speak about - prices continue to rise. As I keep repeating! Buyers continue to fight over properties.

What's the non sequitur by the way - I cannot see any sequitu, let alone a non?

You started talking about new build flats when my point was about statistical averages.

As for your assertion that prices continue to rise in Central London, it depends how central you mean? I'm seeing asking prices slashed in Notting Hill and good properties failing to sell.

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You started talking about new build flats when my point was about statistical averages.

Errr, you pointed to a discussion on resale values of former newbuild flats in Nottingham as evidence of rapidly dropped values - when some of the drop at least is attributable to the loss of the 'new' gloss.

As for your assertion that prices continue to rise in Central London, it depends how central you mean? I'm seeing asking prices slashed in Notting Hill and good properties failing to sell.

W1, SE1. Notting Hill is a drugs-filled dump.

Prices slashed in EA windows have nothing whatsoever to do with a HPC. EAs slash prices even as prices rise, owing to over-optimistic pricing. Asking prices are not 'values'; they are exactly what they say. You don't get a value until the parties to a transaction exchange contracts.

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100% is not abnormal.

Still waiting for you to provide evidence of this.

Telometer: To what capacity do you work in property?

Edit to add: it's interesting that most of the rise in the Grange Road properties occurred in early '07. Only a few grand after that.

Edited by Disillusioned

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Errr, you pointed to a discussion on resale values of former newbuild flats in Nottingham as evidence of rapidly dropped values - when some of the drop at least is attributable to the loss of the 'new' gloss.

Whereas your anecdotal price increases have no context whatsoever.

W1, SE1. Notting Hill is a drugs-filled dump.

SE1? I see your knowledge of London geography is as good as your understanding of asset bubbles.

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Still waiting for you to provide evidence of this.

Telometer: To what capacity do you work in property?

I'd put money on Foxton's especially with the join up date 15th February 2008.

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  • 292 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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