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What Kind Of Discount Would You Want To See To Buy This Place?


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I was a lawyer in the City for 15 years, until a few months ago when i moved away from london. There are several thousand lawyers in the city whose jobs wont be affected by a recession because their work is international - if work dries up in the Uk, they refocus their work flow on other areas of the world. Non partner lawyers earn up to around 150k (excluding bonuses). Thats what i was on, and my husband the same again. Partners earn hundreds of thousands more. Thousands upon thousands of people in the city earn that and more. There is alot of money there to keep house prices underpinned. newly qualified lawyers in the city (ie around 22 yrs old) start on 50k now.

4500 people in the city were paid over £1m in 2006/07. The average remuneration in the square mile for a male is over £100k. nearly 20,000 people in the city were paid over £250,000 in 2007.

Therefore provided the city retains that advantage of being the premier player in the financial markets then prices in the suburbs of the city can be expected to hold some of their value. I am sure that houses in Clapham Dulwich will fall but wont collapse to some of the figures suggested by various posters to this thread.

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I would think 300K is a ball park post bubble valuation

based on a cost of funds of 8% which is what HBOS is likely to lend at given they are accepting deposits 7% 100bps mortgage markup

that makes a 30year repayment mortgage 2K per month... assume the 'owner' has an income of 95K per year ... and assume his job is crunch proof ... the wife will be stay at home..... thats STILL 50% of take home being pissed up the wall each month even when you take into acount a possible 150quid a year bonus for poping sprogs...

hardly going to be able to afford that AND private school for the kids are you...

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Guest DissipatedYouthIsValuable
I would think 300K is a ball park post bubble valuation

based on a cost of funds of 8% which is what HBOS is likely to lend at given they are accepting deposits 7% 100bps mortgage markup

that makes a 30year repayment mortgage 2K per month... assume the 'owner' has an income of 95K per year ... and assume his job is crunch proof ... the wife will be stay at home..... thats STILL 50% of take home being pissed up the wall each month even when you take into acount a possible 150quid a year bonus for poping sprogs...

hardly going to be able to afford that AND private school for the kids are you...

London falls are going to be quite incredible to watch.

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My back of an envelope would be that I'd expect the sort of person who lives there to have say £60k income. maybe £50k deposit.

60K would be the combined wages of two low-paid teachers , nurses or the like - can`t see them choosing to spend 600K on a house somehow -I`d want to be on at least 150K to live there ...

Edited by Wires 74
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That house looks to me like a bog standard terrace house.

With prices like that, you can shove London up your ****.

It's also fascinating to hear about all these grads on such massive amounts of money. Could someone please name say 5 professions where grads start on £35K? By the way, your not allowed to name Law or Finance.

I heard about a guy recently who graduated the same year as me (I have a 1st in Computer Science, but a useless degree like that doesn't command anywhere near the amounts of money that Law or Finance does), who is currently working in London. My mate told me how this guy was making a fortune, earning over double what we are making. Then, he told me what he pays in rent.

I worked out that after rent is taken into consideration, I have as much expendible income as he does. Like I said, in less polite terms above, you can keep London, thankyouverymuch.

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The evidence of the last 10 years is that people will do anything, take on 50 year mortgages, 6 x salary mortgages etc. etc. - just for the sake of property ownership.

I don't think property prices have ever halved before and they have had a good few years at current valuations (in my area) - which is why people are so reluctant to drop the price. So I wouldn't discount that property going down to what it is really 'worth' - maybe in the £200s - but I'll be surprised if it does.

Halved? They are in the process of more than halving. People only did anything for the sake of MULTIPLYING YEAR ON YEAR ASSET ownership, they won`t do anything to just own property because it is a drain on their finances on the way down. As said on here millions of times, the market is made at the margins. People can fly their delusional prices all they want, the market is steadily ratcheting down beneath their feet.

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So you obviously think that the house will be worth £250k sometime in the near future. When do you think that might be? I think it was probably worth about that in 1999-2000, you think we're going to be back at those rates within the next couple of years?

I do.

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Guest DissipatedYouthIsValuable
60K would be the combined wages of two low-paid teachers , nurses or the like - can`t see them choosing to spend 600K on a house somehow -I`d want to be on at least 150K to live there ...

And then, you wouldn't want to be there.

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Good luck to those buying/selling in London, it is a whole other world to yokels like me buying in the West Country. I would hope the whole country will return to sensible prices but I can't see it happening if the banks start opening the floodgates again. People suddenly haven't become any more sensible and they still want to buy at ridiculous prices wherever they are. I hope the credit cruch just holds long enough for sentiment to turn a little.

Looking at these salaries mentioned, I wish I had trained as a lawyer or accountant :lol:

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I was a lawyer in the City for 15 years, until a few months ago when i moved away from london. There are several thousand lawyers in the city whose jobs wont be affected by a recession because their work is international - if work dries up in the Uk, they refocus their work flow on other areas of the world. Non partner lawyers earn up to around 150k (excluding bonuses). Thats what i was on, and my husband the same again. Partners earn hundreds of thousands more. Thousands upon thousands of people in the city earn that and more. There is alot of money there to keep house prices underpinned. newly qualified lawyers in the city (ie around 22 yrs old) start on 50k now.

Wrong.

I went to a get together in Greenwich which contained people from large law firms SJ Berwin, Linklaters, Norton Rose, Olswang, Clifford Chance etc and they are losing business hand over fist. For a start corporate acquisitions have dropped dramatically. Big commercial property deals have fallen off a cliff. Large media clients at Olswang for example have halved legal expenditure. Large Advertising agencies have done the same. One law firm I know quite well rely almost entirely on large property clients, they have ditched half of their lawyers this Summer (410). I chatted to one such lawyer who told me he has no chance of getting another position because of his area of expertise. He has 2 kids in private school (was earning £210k) and a large mortgage on a house in Leicestershire. Luckily he only rents his London flat but he told me lots of his colleagues had bought city centre apartments recently and were now deep in the poo poo.

Its a scary situation. I think many have got their head in the sand. Brother in Law is an equity partner for a well known firm. He admits that the number of lawyers in London has doubled in 10 years and is now set to half. HALF !!!! Graduate recruitment has stopped at a number of firms and he tells me that the salary for a trainee lawyer at his firm is around £30 - £35k.

Imagine if half of all £100k earners in London were made redundant. Pretty scary how quickly £500k terraced house suddenly get seen for what they are.

I was involved in the dot com boom. I saw Marketing Graduates with Digital Media specialisms getting £65k jobs at entry level. I saw one ASP Developer get £180k a year and he was 24 yrs old. We all thought it would never end, we thought it would go on for ever. At a recent get together the ASP guy was now working as a Network Programmer at a games studio in Brighton and earning £35k. How we laughed when we realised just how disillusioned we were in those crazy days. I get that same feeling when people talk of 20,000 people earning over £250k in the city. Those Essex boys will be getting together in 5 years time up in Chelmsford as Hairdressers, mechanics, till supervisors and talking of their days in the city riding the wave of easy money.

In the meantime house prices in London will have halved if not dropped even further.

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Good luck to those buying/selling in London, it is a whole other world to yokels like me buying in the West Country. I would hope the whole country will return to sensible prices but I can't see it happening if the banks start opening the floodgates again. People suddenly haven't become any more sensible and they still want to buy at ridiculous prices wherever they are. I hope the credit cruch just holds long enough for sentiment to turn a little.

Looking at these salaries mentioned, I wish I had trained as a lawyer or accountant :lol:

There are 8million living and working in London. Only a tiny minority earn big money.

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Good luck to those buying/selling in London, it is a whole other world to yokels like me buying in the West Country. I would hope the whole country will return to sensible prices but I can't see it happening if the banks start opening the floodgates again. People suddenly haven't become any more sensible and they still want to buy at ridiculous prices wherever they are. I hope the credit cruch just holds long enough for sentiment to turn a little.

Looking at these salaries mentioned, I wish I had trained as a lawyer or accountant :lol:

Banks are making record losses. No way we are ever going to see the floodgates opening ever ever again. As banking returns to 3x joint salary mutiples then people won't be able to buy at silly prices.

Things will never be the same again. You are about to witness a new era of house prices. This will be as famous as the 1929 Wall Street Crash and 1930's Depression. Banking/lending will change and I for one am quite happy to wait and see what happens from the sidelines.

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Wrong.

I went to a get together in Greenwich which contained people from large law firms SJ Berwin, Linklaters, Norton Rose, Olswang, Clifford Chance etc and they are losing business hand over fist. For a start corporate acquisitions have dropped dramatically. Big commercial property deals have fallen off a cliff. Large media clients at Olswang for example have halved legal expenditure. Large Advertising agencies have done the same. One law firm I know quite well rely almost entirely on large property clients, they have ditched half of their lawyers this Summer (410). I chatted to one such lawyer who told me he has no chance of getting another position because of his area of expertise. He has 2 kids in private school (was earning £210k) and a large mortgage on a house in Leicestershire. Luckily he only rents his London flat but he told me lots of his colleagues had bought city centre apartments recently and were now deep in the poo poo.

.....

In the meantime house prices in London will have halved if not dropped even further.

That must have been one sobering party.

Presumably though some legal work, for example in commercial disputes etc., will actually pick up?

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In 1898, at the height of the Yukon Gold Rush, a dozen eggs were selling in Dawson City for five dollars.

Half a million for a two bed terrace in Wimbledon reminds me of a dozen Dawson City eggs

Years later, most of those involved in the Rush were broke, and still wondering how in hell they had got involved.

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i have freinds in many banks.... lets face it even the mighty GS is finding times tough.. and at the less fortunate banks people are clinging to their desks... its the deals the M&A stuff you can't bake up... with the banks hurting so much... credit commitees all over the square mile are shutting their breifcases and locking them.... sure business will go on... but without the lubrication of hubris... the days of come in your pants bonus letters are over.... sure some will still win... but once the momentum builds downwards its game over man...

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That must have been one sobering party.

Presumably though some legal work, for example in commercial disputes etc., will actually pick up?

Yes it was a barrel of laughs.

I imagine some work will come out of the downturn. What they mentioned was clients who usually didn't care about running up huge legal bills suddenly cracking down. So they were charging £300k in monthly admin fees and having to break it down literally into recording every fax, photocopy, courier service etc. Afterwards they were asked to half it. Hours charged were analysed with a fine tooth comb and clients had started putting limits on hours charged out etc. They were talking of accounts literally being halved and these are £10million a year accounts. The amounts being lost are much higher than anything gained from disputes etc.

One lawyer discussed a 2 week rush to get extra funds for his client from a bank in exchange for assets but the lender refused and their bill which is in 8 figures now remains unpaid and looks like a bad debt. They had used 15 lawyers over 2 weeks trying to get this lending agreed, offered shares in holding companies etc. This was a huge blow for this firm and will mean even more redundancies. This is being repeated all across London.

Unlike any other recession were you have big publicised lay offs from big companies this one is under the radar because it is 100 people here, 200 there...from call centres, law firms, estate agents, Building firms, Retail etc. Then all of a sudden one day it is going to be BANG!!!!

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The brother in law is a lawyer in W1 and his firm has just axed over 100 people (all on £60k+ jobs). He tells me that there is no recruitment going on in law so many are desperately selling their over stretched property before their 3 month redundancy pay runs dry.

That has scared me. I've not read or heard anything about this before.

I was a lawyer in the City for 15 years, until a few months ago when i moved away from london. There are several thousand lawyers in the city whose jobs wont be affected by a recession because their work is international - if work dries up in the Uk, they refocus their work flow on other areas of the world. Non partner lawyers earn up to around 150k (excluding bonuses). Thats what i was on, and my husband the same again. Partners earn hundreds of thousands more. Thousands upon thousands of people in the city earn that and more. There is alot of money there to keep house prices underpinned. newly qualified lawyers in the city (ie around 22 yrs old) start on 50k now.

How would you become newly qualified in the City at just 22 years old? Not starting an argument but I find it difficult to believe.

If things went smoothly I'd think, A-levels = to 18 years old, 3 years Law at Uni and a good 2:1 = 21 years old, 1 year LPC = 22 years old, 2 years as Trainee sitting in 4 x 6 month seats, to come out newly qualified = 24 years old.

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Imagine if half of all £100k earners in London were made redundant. Pretty scary how quickly £500k terraced house suddenly get seen for what they are.

I think news of redundancies will stop demand. If those around you are losing their heads...it sure going to make you more cautious

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ffs it's a 3 bed old terrace house in enthnic enriched London.

Did you know that apart from the new pointing thats 5mm deep that the cement holding the wall togeather has turned to duat and sand ?

i would put it down near 100k and if you think thats bad advice then don't take it and see how you get on.

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Guest Mr Parry
I'm interested in purchasing this place:

http://www.rightmove.co.uk/viewdetails-18737575.rsp

Assuming you are renting, would like to buy a new house and have the deposit you need, what kind of price drop would you need to see to make this a worthwhile purchase? Would a 10% drop make you feel happy about buying and not getting into trouble at a later stage? Or 20%? Maybe only 5%? I'm thinking that an offer of £520k in the current climate would be fair but am interested in what others think. Am I being a bit ambitious at thinking about such a drop?

90%

What's the matter with you?

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so many new comments on this thread.

einstein - I worked at one of the "big city law firms" you refer to in your post for 15 years. Yes, some areas have slowed down. But many areas have not - eg international energy projects; eg insolvency teams are ramping up and preparing to carry the rest of the firms just like in the last recession - a number of firms are transferring teams across to insolvency for fast re-training. Yes firms are taking advantage of the current climate to get rid of some dead weight that never achieved any thing in any event.

whoever queried my age description of newly qualified lawyers - alot of lawyers don't do CPE - they do a law degree in the first place; thus no need to do the transfer course from a stupid degree like philosophy. Maybe it 22yrs old, maybe its 23 - its a long time ago for me now. Same principle applies - 50k min for main city firms. Im not sure what benefit you think I am taking by lying about these simple facts - there does seem to be a slight "conspiracy theory" mentality displayed by some members to this site.

as i think numpty said, my income was not a large one in the city; most of my clients' incomes dwarfed my own, and there are thousands of them. I completely appreciate many people's desires to talk down the market. I am doing the same thing in my own market. But I think that alot of people on this site don't appreciate some of the particularities of the london market. No, it wont flow through to all areas of london, but for the areas where the City earners want to live, it will - eg wimbledon.

why have i joined this site? Not to talk up the market but to benefit from everyone' different views on where the bottom of the market lies and how low an offer one can make now in different areas of the UK, as long as it doesnt enter the realms of fantasy.

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sorry, I see it was friday talking about newly qualified ages, and he/she was referring to the lpc, not the cpe - ok, so maybe they are 24. They all just look very young to me. Does it really matter whether they are 22 or 24 - the same point applies - they are earning over 50k upon qualification, and as soon as they leave university / law school they hit around 27k immediately as trainees before they qualify. And these guys are the bottom of a very large pyramid of salaries. The City of London and its impact on resi prices around it is unique. I dont want to be given cack advice on this site by other people, and so I think other people interested in the london market equally shouldnt be given cack advice.

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We are only at the beginning of the crash, repos are rising, the recession hasn't started yet. It doesn't matter what you get the vendor to accept now. In two or three years time you will regret it.

Short & sweet but the most accurate post on this thread!

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s - alot of lawyers don't do CPE - they do a law degree in the first place; thus no need to do the transfer course from a stupid degree like philosophy.

Yes obviously everyone should just do a law degree. I mean, what "use" is art or literature or poxy theoretical science. Just big words, innit. Pleb.

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Halved? They are in the process of more than halving. People only did anything for the sake of MULTIPLYING YEAR ON YEAR ASSET ownership, they won`t do anything to just own property because it is a drain on their finances on the way down. As said on here millions of times, the market is made at the margins. People can fly their delusional prices all they want, the market is steadily ratcheting down beneath their feet.

There is an interesting, and surprising, article in my local property rag this week.

There are a couple of pages of editorial amongst the adverts - all about one particular agent - Prospects by name.

The tone is the usual guff, we're doing better than most, we've seen bad markets before, we're the best etc.

On the next page is another article which mentions property price drops in Reading.

I was surprised to see two or three agents quoted and all of them saying prices have already fallen 15% to 20%.

Mind you, it's probably a daft attempt to kid people that the worst is over and prices will now go up again.

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