Monday, Jun 26, 2006

My property pram test: London prices actually falling

Sunday Times: My property pram test

"Rightmove includes in its survey only the asking prices of houses that have been put on its website that month (not the sale prices, however) and ignores all those put on in previous months that may not have been sold yet, or sold at a much-reduced price.

The survey therefore tells us nothing about what prices are really like, merely about what sellers and agents would like them to be like. These, as anyone who has ever tried to sell a house will know, are entirely different numbers."

"This just isnt the kind of environment in which house prices rise. I think they are falling and I think they are likely to keep doing so. Lets not forget that the housing crash of the late 1980s and early 1990s took seven years from top to bottom. "

Posted by Doomwatch @ 10:40 AM (531 views)
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1. Tangara said...

So help me god...

Monday, June 26, 2006 11:21AM Report Comment

2. inbreda said...

Excellent article. Not pessimistic but realistic. The survey sounds unbias and sensibly constructed. It also seems to reflect the reality.

The BTL brigade that are keeping prices up will realise their mistakes only after revaluing or trying to sell their properties that were bought in the last couple of years. That could take a long time. But fair play to the STR brigade - I'm sure that they've been in the right position for the past couple of years and are in no danger of losing out in the near future either.

Monday, June 26, 2006 11:34AM Report Comment

3. Gregzki said...

Think Merryn took the STR route last year (previous article in Sunday Times) so although you could say she is a bear with a vested interst, I think shes right to point out that the overall economic climate does not point to price rises.

Monday, June 26, 2006 12:55PM Report Comment

4. inbreda said...

Fair point - although you could argue she is just putting her money where her mouth is...and then continuing to report in the same vein.

Monday, June 26, 2006 01:23PM Report Comment

5. bidin'matime said...

It occurs to me from the above comment, that STRs may be under-rated by those who are would-be FTBs. As an STR myself, I can tell you that to give up your home, a very comfortable one that you could live in for ever more (mortgage paid off, children left home), to live in a modest rented property (its hard to find really nice rentals available long-term) requires a very firm commitment to your belief in economics.

Everyone says to us (variations on) - But what if houses keep going up in price you would have to borrow to buy a house equivalent to the one you had! Wouldnt it be better to live in a house that might go down in value than risk having to live out your life in a smaller one than you could have??

These are tough questions, which we inevitably ask ourselves too, resulting in hours and hours of continued discussion of the options, as well as an exceptionally keen interest in economics...

So yes, we STRs have a vested interest in a crash, but I would suggest that we have also bet quite a bit more of our own life savings on it than most of the people who post on this blog

Monday, June 26, 2006 01:41PM Report Comment

6. Retiredbanker said...

My daughter bought an investment property in the centre of Loughborough, paying 60k about 4 years ago.
She had to spend quite a lot of time and money to put this property into good order, and was also involved
in some legal costs to evict a tenant ( the tenant was quite willing to go but needed the eviction notice in order
to obtain a council house).
Tired of the aggravation she put the property up for sale last autumn for 120k, and has since reduced the price
in stages to 103k, but still no buyers.
The problem is that there are a very large number of other properties for sale in this price range.
She is now thinking of trying to dispose of her property at auction, and will be lucky if she manages to break-even
on her investment.
And this is in a university town with a huge demand for student-lets!

Monday, June 26, 2006 05:09PM Report Comment

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