Newcastle Upon Tyne

[Quokka]

Another one going to auction here. Starting price represents a cut of 40% from asking price.

http://www.rightmove.co.uk/property-for-sale/property-27422968.html

[Mr 0.01%]

I see Bellway have just started work on another block of flats at the Ochre Yards estate in Gateshead.

Downturn? What downturn.

No link, just saw the building work whilst driving past.

[neilrich]

Gateshead firm Dreamport Properties Ltd collapses

The Journal

Administrators are now working to secure the future for tenants of Dreamport Properties Ltd which owns more than 100 residential properties in Sunderland, Billingham, Ferryhill, North Shields and Newcastle.

He went on to say the company had invested heavily in property in the last year and is believed to have borrowings of over £5m.

“Its assets are mainly traditional terraced properties.”

[stuckmojo]

Gateshead firm Dreamport Properties Ltd collapses

The Journal

some fools who thought they were getting back in the game early to reap the profits.

[Quokka]

A little bit of desperation here from our EA friends. Looks like they're ready to start cutting each others throats

http://www.rightmove.co.uk/property-for-sale/property-28177177.html?utm_content=ealertsmoredetails&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdates_sep09&utm_term=buying&sc_id=4687115

[stuckmojo]

A little bit of desperation here from our EA friends. Looks like they're ready to start cutting each others throats

http://www.rightmove.co.uk/property-for-sale/property-28177177.html?utm_content=ealertsmoredetails&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdates_sep09&utm_term=buying&sc_id=4687115

that is a sign of desperation indeed.

I'm waiting for developers to start funding the full 20% deposit on their new shitboxes and then the game is really up.

[Mr 0.01%]

A friend of mine bought a house through Sarah Mains.

She said they were disappointed with their service from start to overdue completion.

Agreed though, desperate.

Edited December 31, 2010 by Mr 0.01%

[meow]

A friend of mine bought a house through Sarah Mains.

She said they were disappointed with their service from start to overdue completion.

Agreed though, desperate.

I've had dealings with a lot of EA's over 8-9 years, I'm yet to be even partly satisfied never mind impressed with their service.

[stuckmojo]

Halifax reports a much-fiddled -1.3% drop for prices in December.

I wonder what's going to happen up here. So far, we've been immune from a real crash. I was looking through the EA window in Low Fell yesterday and was wondering who the hell can afford £300,000 for a house in Gateshead.

And there's tons of them.

I guess that the owners are those sitting on very low IR mortgages and are just about able to sit tight, for now.

I mean, realistically, what do people earn in the North East? Surely not many people on over 40,000£ PA?

[PhoneyMcRingRing]

was wondering who the hell can afford £300,000 for a house in Gateshead.

...

I guess that the owners are those sitting on very low IR mortgages and are just about able to sit tight, for now.

....

I mean, realistically, what do people earn in the North East? Surely not many people on over 40,000£ PA?

Yes, no real crash in the Newcastle area. But no forced sellers means that most prices are in la la land. Will it last long enough for wage inflation to catch up?

P

Edited January 10, 2011 by PhoneyMcRingRing

[jaynewcastle]

Same sky prices in Monkseaton/Whitley Bay. Can't really see them falling much, whatever happens

[Quokka]

Halifax reports a much-fiddled -1.3% drop for prices in December.

I wonder what's going to happen up here. So far, we've been immune from a real crash. I was looking through the EA window in Low Fell yesterday and was wondering who the hell can afford £300,000 for a house in Gateshead.

And there's tons of them.

I guess that the owners are those sitting on very low IR mortgages and are just about able to sit tight, for now.

I mean, realistically, what do people earn in the North East? Surely not many people on over 40,000£ PA?

I am seeing a lot more reductions in areas I'm watching. A long way to go though, another 2 years I'd guess, as long as we see rising IR's. A lot of patience needed.

The NE earnings question has been discussed in this thread. At the very start I think the consensus was 18k but this was challanged as being too high. That was 5 years ago so what are opinions now? (I don't live in the NE so can't really contribute)

.

[stuckmojo]

I am seeing a lot more reductions in areas I'm watching. A long way to go though, another 2 years I'd guess, as long as we see rising IR's. A lot of patience needed.

The NE earnings question has been discussed in this thread. At the very start I think the consensus was 18k but this was challanged as being too high. That was 5 years ago so what are opinions now? (I don't live in the NE so can't really contribute)

.

I see reductions too, don't get me wrong, but I cannot fathom how anybody except for a very small minority would be able to afford a 300k house to begin with, and to want to pay that much to live in Low Fell as well.

To be able to buy that, you'd need to be on, what, 80k PA? That's over four times the salaries I see around here. Even as household income, that's probably 3 times the average (assuming that both people work in the household)

I read somewhere that 96% of the NE salaries over a certain level were in public sector. That's a scary stat. But I guess it explains some of the prices.

The other thing of course is that most of these houses have been on the market for ages, and reality hasn't kicked in with the vendors yet.

2 years is the target time for me too.

[deeplyblue]

I see reductions too, don't get me wrong, but I cannot fathom how anybody except for a very small minority would be able to afford a 300k house to begin with, and to want to pay that much to live in Low Fell as well.

To be able to buy that, you'd need to be on, what, 80k PA? That's over four times the salaries I see around here. Even as household income, that's probably 3 times the average (assuming that both people work in the household)

Only if you have little or no deposit. If you have (say) a 50% deposit, the whole thing becomes more manageable.

I'm not suggesting that many people have £150K knocking around their bank accounts, but some will. Someone who's STR and now wants to get back into the market (waiting for the perfect house, and sees it, for example). Secondly, perhaps someone who's just sold a house of equal or similar value may have a mortgage taken out 10 years ago, when prices were a lot lower. There's even the BOMAD.

The other factor which I think is generally under-rated is inheritance. The explosion in house ownership occurred in the 80s with the sell-off of council houses. Take someone born in 1940, who buys their council house in 1985 for £25K - they hit 70 in 2010, and if they were still in that house, it's probably got a market value of £185K now, and the mortgage paid off. Suppose they have savings of ~ £25K. The partner dies from smoking-related disease a decade ago. Upon hitting the proverbial three score and ten, they fall off their perch. After the costs of winding up the estate and selling the house they leave ~£200K for their two children to split. Each of their heirs then has £100K, which they can use to pay off their debts, send one child into private education for a couple of years, or add £100K to the amount they can put down as a deposit for a house.

Even if they already have a hefty mortgage, that £100K is going to make a considerable difference to the amount they can afford to pay. They'd probably also calculate that someone asking for £300K is going to be prepared to take less. I'd reckon that £300K might be a price that basically said, "No, I am not going to lower my price below £250K, but I might take £270K, and I'd be thrilled to get £285K."

Even when you add on the other expenses (Stamp duty, removals, new carpets) they might spend £300K, which, once you have taken off the £100K, leaves them finding £200K via mortgage, savings and any profit/deposit on the price of the previous house. With a little luck and/or good judgement, they might then need a mortgage of £160K - which is a very different proposition from £300K. It's still a fair amount of money (I'm too far out of the mortgage market to know what that's likely to come to on a sensible mortgage), but it might well be manageable.

As for whether Low Fell is worth that - well, it would have to be the right house.

db

[stuckmojo]

Only if you have little or no deposit. If you have (say) a 50% deposit, the whole thing becomes more manageable.

I'm not suggesting that many people have £150K knocking around their bank accounts, but some will. Someone who's STR and now wants to get back into the market (waiting for the perfect house, and sees it, for example). Secondly, perhaps someone who's just sold a house of equal or similar value may have a mortgage taken out 10 years ago, when prices were a lot lower. There's even the BOMAD.

The other factor which I think is generally under-rated is inheritance. The explosion in house ownership occurred in the 80s with the sell-off of council houses. Take someone born in 1940, who buys their council house in 1985 for £25K - they hit 70 in 2010, and if they were still in that house, it's probably got a market value of £185K now, and the mortgage paid off. Suppose they have savings of ~ £25K. The partner dies from smoking-related disease a decade ago. Upon hitting the proverbial three score and ten, they fall off their perch. After the costs of winding up the estate and selling the house they leave ~£200K for their two children to split. Each of their heirs then has £100K, which they can use to pay off their debts, send one child into private education for a couple of years, or add £100K to the amount they can put down as a deposit for a house.

Even if they already have a hefty mortgage, that £100K is going to make a considerable difference to the amount they can afford to pay. They'd probably also calculate that someone asking for £300K is going to be prepared to take less. I'd reckon that £300K might be a price that basically said, "No, I am not going to lower my price below £250K, but I might take £270K, and I'd be thrilled to get £285K."

Even when you add on the other expenses (Stamp duty, removals, new carpets) they might spend £300K, which, once you have taken off the £100K, leaves them finding £200K via mortgage, savings and any profit/deposit on the price of the previous house. With a little luck and/or good judgement, they might then need a mortgage of £160K - which is a very different proposition from £300K. It's still a fair amount of money (I'm too far out of the mortgage market to know what that's likely to come to on a sensible mortgage), but it might well be manageable.

As for whether Low Fell is worth that - well, it would have to be the right house.

db

Thanks for taking the time to reply. Very good points there.

I have considered the inheritance, savings, equity, and gift from BoMaD in my full picture, and I still can't see how people can afford that many houses at the price they are offered.

It would be good to have a demographic distribution of the buyers, so that we could see who buys the 350k house on Durham Road. With the exception of a few very successful young people, I expect the buyers to be somewhat mature and up to, or beyond, their peak earnings.

It is also true that most of the houses on the market at that price point were purchased years ago when really affordable, for a fraction of today's perceived value. However, it is also true that a vast chunk of the boomer generation squandered their gains through equity withdrawal.

I believe that the majority of the boomers do not have much in the way of cash savings, and are unable to offer any deposit gifts to their children since the MEW mania has stopped. That is a big factor. All they have is whatever equity locked in their house and their pension pot (mostly public sector, of course).

Most of these who trade up, have massive chunks of equity in their houses. How many people have been prudent and not blown some or all of it?

To summarise, I agree with the fact that some are able to buy the 300k house on a 30k combined salary due to the factors described above, but in my opinion there aren't enough of these around to support the price level.

And this is before you consider the huge rise in the cost of living, the negative wage inflation, poor job security and the staggering amount of debt most young people are burdened with.

[Spangled]

Wife and I have been considering a relocation to Newcastle. She's originally from Low Fell (Gateshead) and has a number of family/friends in and around Newcastle.

We're currently in North Hertfordshire but could do with a bigger property (two kids under two). Currently my work is fairly London- and office-based. If I can remove the office requirement from the equation and just come into London say one day a week to see clients, then a move further away from the Smoke seems more of a possibility.

Been looking online at South Gosforth and Jesmond. They seem to have the sort of larger Victorian terraces that we favour. Would prefer Jesmond but stronger possibility you're living next door to a bunch of students.

Property seems overpriced though, for Newcastle. £330k for a four-bedder? No thanks.

Sorry, not much to add really - but I'm a close follower of this thread.

[deeplyblue]

Wife and I have been considering a relocation to Newcastle. She's originally from Low Fell (Gateshead) and has a number of family/friends in and around Newcastle.

We're currently in North Hertfordshire but could do with a bigger property (two kids under two). Currently my work is fairly London- and office-based. If I can remove the office requirement from the equation and just come into London say one day a week to see clients, then a move further away from the Smoke seems more of a possibility.

Been looking online at South Gosforth and Jesmond. They seem to have the sort of larger Victorian terraces that we favour. Would prefer Jesmond but stronger possibility you're living next door to a bunch of students.

Property seems overpriced though, for Newcastle. £330k for a four-bedder? No thanks.

Sorry, not much to add really - but I'm a close follower of this thread.

We left Jesmond a couple of years ago, leaving a large-ish (for Jesmond) Victorian terrace. We went for 2 reasons, one was that we no longer needed a house quite as large as that and needed something easier/cheaper to run and the other was the change in Jesmond over the last 10 years.

The problem is not just that you might find yourself living next door to students, but that you might well find yourself living within the atmospheric bubble of Osborne Road, some sections of which are now solid nightclub/ restaurant/ pizza /bar places. Short anecdote: one local resident went out at something like 1 a.m. on a week day to ask some youths outside to make a little less noise. He was told, "Jesmond is a student area, if you don't like it - move." Another one said how fed up he had got with spending Sunday morning clearing the vomit from his front garden. My home help got fed up with verbal abuse from outside drinkers whilst she waited for a bus at 5 o'clock in the evening. In fairness, I should add that we had to put up with noise throughout the night, but never with anything much worse than crisp packets and the odd takeaway carton in the front garden, and we were quite close to Osborne Road.

The other problem with student areas is that many students now run cars, and this means that parking can be a major headache if you don't have a garage - this applies elsewhere in Newcastle where there are students. In fact anywhere where big Victorian terrace houses are being eyed up by people who think that they could be turned into HMOs or converted into proper flats. If the houses are too expensive for students, then they're going to be above the sort of money you are looking at. Much of central Jesmond (the large Victorian terrace bit) is now covered by parking restrictions and residents' parking permits only areas, and that helps only a little. Seeing it out of term time gives a totally different feel to seeing in term time - make sure you see any property during term time, and preferably in the evening - otherwise you will get a false impression.

However, Jesmond does still have its advantages. It has its own range of shops which are within walking distance of pretty much anywhere in Jesmond. For those who are prepared for the exercise (or can't park in Newcastle) you can walk into town. If you want to stretch your legs, or take the kids for a picnic, there's lovely Jesmond Dene. Jesmond has two Metro stations, though the bus services are terrible, and always being threatened with being axed altogether. You will still find lots of professional people putting up with the student residents and the yob visitors.

There are two reasons for this. The first is that there are still some very desirable Victorian terrace houses around there - they have lots of room in them (one person took a look at our kitchen and said, "You could fit my entire flat in here!") and some of them still have some nice period features. Note: my next door neighbour had a lovely Victorian ceiling, cornicing, ceiling rose, the lot, one day she'd just finished hoovering and left the room. Ten seconds later the entire ceiling came down - if she's been there it might well have killed her.

The second reason people go to Jesmond is the schools. Firstly the more well off can easily get their children to one of the private schools which congregate in Jesmond, including Newcastle's Royal Grammar School (universally known as RGS), which now takes girls as well as boys and is probably the region's premier school. There are others which have attached junior schools as well. The there is West Jesmond primary school, which is generally considered to be the best primary school in the city. West Jesmond (a state school) is one reason why property prices for family homes in Jesmond are so high. As to state secondary schools, well the picture is not so rosy - from Jesmond you can get to Heaton Manor or Gosforth High. The latter has the better exam results, but the former is the one which West Jesmond "feeds" into. This accounts for the number (and fairly good quality) of private schools around. There are also Catholic schools in the city which seem to do quite well, but I don't know much about them, and the only one in Jesmond has, I think, recently closed its doors.

If you want a run down on Gosforth (which is very different from Jesmond - larger and more heterogeneous for a start) just say so. You also have some other options, but the question of schools can be critical If you are looking for private education, then your housing options are a little wider, but the cost of private education is more (IMO) than the cost of housing.

db

Edited January 13, 2011 by deeplyblue

[Spangled]

Great insight - thanks for the detailed post DB.

We know Jesmond a little bit - we were married there in fact - but haven't done much on-the-ground research yet in terms of housing. Your point about proper scouting of the area at all times is very valid.

If anything, leaning towards Gosforth, just because there seems to be better value for money. Close to South Gosforth metro (seen a few nice places online on Windsor Terrace, Bath Terrace etc).

Yes, schooling is important and we'd almost certainly be looking at state rather than private.

TBH, it's all a bit insubstantial at the mo though - the move depends on a number of factors, not least the work situation, so I can't see it happening for at least a year, probably more. Hopefully prices will have come down in that time!

Cheers.

[meow]

I am seeing a lot more reductions in areas I'm watching. A long way to go though, another 2 years I'd guess, as long as we see rising IR's. A lot of patience needed.

The NE earnings question has been discussed in this thread. At the very start I think the consensus was 18k but this was challanged as being too high. That was 5 years ago so what are opinions now? (I don't live in the NE so can't really contribute)

.

Off the top of my head I believe the ONS said the average is 21-22+ or something insane, then I forget whether someone found a stat. or merely suggested that the median would be a better metric and the figure would be mid to late teens.

[meow]

Thanks for taking the time to reply. Very good points there.

I have considered the inheritance, savings, equity, and gift from BoMaD in my full picture, and I still can't see how people can afford that many houses at the price they are offered.

It would be good to have a demographic distribution of the buyers, so that we could see who buys the 350k house on Durham Road. With the exception of a few very successful young people, I expect the buyers to be somewhat mature and up to, or beyond, their peak earnings.

It is also true that most of the houses on the market at that price point were purchased years ago when really affordable, for a fraction of today's perceived value. However, it is also true that a vast chunk of the boomer generation squandered their gains through equity withdrawal.

I believe that the majority of the boomers do not have much in the way of cash savings, and are unable to offer any deposit gifts to their children since the MEW mania has stopped. That is a big factor. All they have is whatever equity locked in their house and their pension pot (mostly public sector, of course).

Most of these who trade up, have massive chunks of equity in their houses. How many people have been prudent and not blown some or all of it?

To summarise, I agree with the fact that some are able to buy the 300k house on a 30k combined salary due to the factors described above, but in my opinion there aren't enough of these around to support the price level.

And this is before you consider the huge rise in the cost of living, the negative wage inflation, poor job security and the staggering amount of debt most young people are burdened with.

This is why the idea of "the only people left are cash buyers and the top end playing musical chairs" is often mooted, if you look at the break down statistics across all the regions you'll find a similar trend that the larger/more desirable properties are still "almost" business as usual; come a step down and the smaller house market (in the pockets where things aren't already dropping) is, presumably, being supported by people trying to stretch for nicer small houses or just "a house"; and then a step below that you find a mix of big drops in flats, smaller drops for well located/large flats with reasonable minded sellers, and 2007 dreamers.

I would say the market kinda looks like this...

Upper | ---------stagnant--------- |

Mid | ----stagnant---- | -drops- |

Lower | -----drops----- |-stagnant-|

If my ascii approximation makes sense? This is a VAST change from the very recent mini boom that ended in 2010.

Edited January 14, 2011 by meow

[StuM82]

It's been a while since I've done a Rightmove "for sale" search in my preferred area (city centre flats) as I've given up on buying for the next few years/forever but I did one just now and I'm staggered by how many there are available right now. Perhaps your average BTLer has realised sentiment is turning and is trying to offload while they can. The thing is there is a massive variation in prices, say £90k to £150k for one-bedders that are all essentially the same but also some two-bedders in there. As the posts above suggest some 2007 dreamers in there mixed with some realistic, maybe desparate sellers. Interestingly low prices in some "prestige" developments like St. Anne's Quay/The Turnbull and quite a few available in each block.

Shame is that with few 90/95% mortgages around these days those that would be interested in these properties, i.e. young-ish FTBers like myself, couldn't raise the finance even if they wanted to.

Edited January 14, 2011 by StuM82

[Snafu]

Just wanted to say Deeply Blue has got it spon on about Jesmond. I lived there for 4-5 years as "a young professional", in other words in a sodding house share with 7 others paying too much rent. I now hate students with a passion.

[meow]

From a thread on the main site...

http://www.housepricecrash.co.uk/forum/index.php?showtopic=158195&st=15

http://www.demographia.com/dhi.pdf

Rating Median Multiple

Severely Unaffordable 5.1 & Over

Seriously Unaffordable 4.1 to 5.0

Moderately Unaffordable 3.1 to 4.0

Affordable 3.0 or Less

----

Severely Unaffordable Markets...

U.K. Newcastle & Tyneside 5.5 (based on 130k median house price and £23600 median wage... I severely doubt the wage figure being so high!)

----

Severely Unaffordable Housing Markets

Ranked by Severity of Housing Unaffordability

47th in the world, U.K. Newcastle & Tyneside, 5.7

----

They also suggest the historic norm in the UK is a median price 3 times median wage, that would mean the median house price should be ~70k, since a reasonable-ish semi is about the current median (asking) price, then I would say 70k for a semi would be "a lot more like it", but, if you doubt the median wage somewhat then I could still see it being lower before you got a fair price.... In essence though, we are talking about at least a 50% drop from prices as they stand, you can't argue with that as a start.

Edited January 25, 2011 by meow

[dieseldriven]

Mouse price give quarterly price / earnings ratios

Ponty Land looks rather highly leveraged

[Mr 0.01%]

Great stats, thanks both for posting.

Reading over the table...at first I felt exasperated....then I felt sad....then I felt angry....then I felt weirdly desperate and confused.

I know these are only averages....but who is prepared to look to 'buy' a property where their income/value ratio is 10x! Let alone 6x. Let alone 3x... At these multiples, 'buying' is just another way of saying renting.

It makes me feel like some of medieval feudal serf. Maybe that's all the majority still are - just updated for the noughties, or teenies, wherever we are.

Anyway, sorry for rambling, it just makes stark reading.