Friday, Dec 28, 2018

Prime Central London has been crashing for nearly FIVE years, but this HPC site has almost died

Financial Times: Regent’s Park buyers take fright at London downturn

[...] prices in the area have been declining: in the past four years, prime prices have fallen 9.3 per cent, according to Savills’ prime London index. In the year to June, they dropped 5 per cent. [...]
Normally HPC site goes quite just before the market tops. All the bears capitulate.
Not this time! They've been quiet through this slow-motion crash. Why...? Gone to Twitter??

Posted by sneaker @ 06:17 PM (1955 views)
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17 Comments

1. tenyearstogetmymoneyback said...

I guess it is the story of "The Boy who cried Wolf"

Personally I expected a correction back in 2003 after this programme https://www.youtube.com/watch?v=vT1UnGS91BY
but absolutely nothing happened. When, shortly after the programme I commented on the stupid Loan to Income ratios being offered to a BTL investor his comment was "its great isn't it".

Then, not really by choice, I moved into rented accommodation on the day Halifax came within hours of going bust. Government intervention meant that the only people who lost out were Lloyds share holders like myself.

In about fifteen years of posting here I have decided that the name is a complete nonsense. Unlike shares House Prices never crash. However, they can go into a steady decline which is why I couldn't sell the house I bought in for £65K in 1989 for £50K six years later.

I still think that the best comment I ever read here was that "The Red, Yellow, and Blue wings of the Home Ownerist party will never let house prices drop". However, that certainly wasn't true in 1992 when the Government was far more worried about things like the exchange rate and our place in Europe.

Will history repeat itself ?

Saturday, December 29, 2018 05:48PM Report Comment
 

2. libertas said...

Sorry, but this looks like a plateaux that began in 2016 that is much like the four year plateaux between 2009 and 2013.

It looks like we will see prices march forward again 2019 / 2020, depending on Brexit outcomes. Whilst the vast majority of Londoners don't believe in Britain, the City and Canary Wharf are busy romping through a pipeline of skyscrapers. A clean Brexit will then see British politicians finally focus on local priorities with £12bn EU savings, an unexpected windfall of no £40bn exit fee and a likely diversion of the foreign aid budget back home.

https://www.theguardian.com/artanddesign/2015/dec/11/city-of-london-skyline-of-tomorrow-interactive

What will likely occur is that we activate various infrastructure projects, finishing Crossrail, activating Crossrail 2 and 3, HS3 and likely HS2 to Scotland. Taxes will be cut alongside regulations plus major trade deals that transform the country.

I suspect that we will begin to see an average of 4% economic growth alongside a boom in house prices. With immigration under control, economic growth will, like the 1970's to mid 1990's period, translate into wages. The average graduate earned around £1k in the mid 1970s, rising to around £20k in the mid-1990's, during which time average house prices soared from around £15k to £150k. I feel we will revert back to that. No wonder the EU is freaking out.

As with WWI and WWII, Britain will once again lead the way in Europe away from Totalitarianism, in this case from an unwieldy Technocracy not dissimilar to the Soviet Union. This time, it will be through the rule of law rather than through warfare and one by one, European countries will find their cajoneys.

Sunday, December 30, 2018 02:42AM Report Comment
 

3. taffee said...

UK is in a serious financial hole you need only look at UK profit warnings

People are maxed out and after 10 Years of emergency economic policy and props there is nothing government or boe can really do to stop the coming crash/decline

Near zero rates money printing and other props are here because things are really bad not time to party

Sunday, December 30, 2018 05:48AM Report Comment
 

4. quiet guy said...

"Prime Central London has been crashing for nearly FIVE years"
That sounds pretty aggressive. Out of interest, I downloaded five years worth of average property prices for the UK and City of Westminster Local Authority from the Land Registry. City of Westminster is the best approximation I can think of for Regent's Park. I'm happy to be corrected about that because my knowledge of London is limited.

Image and video hosting by TinyPic

The slump till last June is confirmed but the overall trend over the last five years does not look crashy to me. Brexit may subdue London prime properties for a while but I'm not sure that there will be a crash for most of the UK.

Sunday, December 30, 2018 12:13PM Report Comment
 

5. libertas said...

That chart shows what I am seeing in north east London. August for Rightmove (The last month they are reporting) was the third best price value in the series. Things may well have subdued now due to Brexit, but at the same time, sellers are holding back for Brexit, so prices are not budging much.

There will be a whole bunch of Europeans seeking to front-run border controls and buy property now and also executives from countries that expect trade deals moving into town. Lots of American firms taking out leases on plush central London offices right now. Things like insurance.

Yes, agreed that many Brits are maxed out, which is why a clean Brexit with tax cuts, trade deals and regulation cuts could unleash us. Control migration could see wages rise. The £30k income threshold to migrate is because those earning much less than that are, due to tax allowances and credits, a drain on the State and so if there is a focus on immigration from value added employment we should see normalisation of public finances plus the wage rises I mentioned above as tighter markets result in higher wages.

Sunday, December 30, 2018 08:00PM Report Comment
 

6. libertas said...

Remember, under World Trade Organisation rules, EU has to offer us tariff free for ten years. Trump signalled that he would support that when he advised May to sue the EU. What he meant was, leave with no deal then sue the EU if they impose tariffs and it is clear from Trump's statement, that he will support the UK on this.

Sunday, December 30, 2018 08:02PM Report Comment
 

7. mombers said...

"Agents also blame uncertainty caused by the Brexit vote and the anti-money laundering laws that came into effect in 2015"
LOL. I'm still trying to get HMRC to prosecute people for paying Annual Tax on Enveloped Dwellings with unexplained money. An anonymous company sends a cheque for £226,950 every year and no enquiries are made as to where such a huge amount of money comes from??

Monday, December 31, 2018 11:27AM Report Comment
 

8. britishblue said...

In The South West and Surrey houses are down on average 15%. How do i know? I run a removal company so move people when they have sold. Obviously I only have a sample of around 200 houses over the last year in a 20 square mile area, but that should give a good indication. These figures do not show in the charts as strongly as they should because:
a. The better house sell and the worse houses stick. Therefore a 3 bed house that has 150k extension and remodelled all the way through, is still a 3 bed house according to the index.
b. The indices do not pick up houses that are sold without a mortgage. My customers have represented a far greater proportion of these in the last year.
c. People that are heavily mortgaged can't take the hit and stay put, so houses that should sell for less, don't come intro the equation.

I have seen no indication whatsoever that house prices will go up. I also haven't seen any indication that they are about to crash or go down significantly, but we are now going into the two worst months of the year for sales, so we will see.

Tuesday, January 1, 2019 03:50PM Report Comment
 

9. taffee said...

I think the point is that the market is stalling/falling with the greatest set of props in history

Even here people no longer seem to discuss/predict rates rising or props being removed

Wednesday, January 2, 2019 05:43AM Report Comment
 

10. techieman said...

Libby :

"Remember, under World Trade Organisation rules, EU has to offer us tariff free for ten years. Trump signalled that he would support that when he advised May to sue the EU. What he meant was, leave with no deal then sue the EU if they impose tariffs and it is clear from Trump's statement, that he will support the UK on this."

That's the first i've heard of that (not saying its incorrect). Do you have a source please ?

Wednesday, January 2, 2019 04:53PM Report Comment
 

11. judgandury said...

@8

I don't think many people share with their removal guy exactly how much they sold their house for. Let's say that for some reason your customers all tell you. Even if that was the case you'd have to know exactly what their house was worth a year before they sold it to make your 15% price drop claim. You don't know that, so you can't make the claim.

You are still saying that the indices don't pick up house sales that are made without mortgages. As mentioned on a very recent thread the LR HPI index does and it doesn't show 15% drops.

Thursday, January 3, 2019 08:20AM Report Comment
 

12. tenyearstogetmymoneyback said...

BritishBlue wrote "People that are heavily mortgaged can't take the hit and stay put"

That is completely different to the 90s then. Back then people who were heavily mortgaged ended up being repossessed and those with moderate mortgages like myself ended up with large ones (both as loan to value and monthly payments).

I would think that a major factor stopping people moving is stamp duty and estate agents fees, which both being based on house values have soared. Walking back from a local club tonight there were two 1980s built houses in the same road with skips outside obviously having major home improvements done. You can do a lot of home improvements e.g a new kitchen for the price of moving house.

Thursday, January 3, 2019 10:30PM Report Comment
 

13. judgandury said...

@12

The number of people struggling with large mortgages is often exaggerated. Only 35% of households even have a mortgage. When surveyed only 12% of people with a mortgage considered it to be a burden.

Friday, January 4, 2019 08:07AM Report Comment
 

14. tenyearstogetmymoneyback said...

judgandjury

I wouldn't disagree with those figures.

I would be interesting to compare different areas though.

I was thinking of the areas built in the 1980s where I and my colleagues lived, with a high proportion of people in their twenties and thirties. In contrast my parents bought their 1930s house back in 1968 and paid more on their double glazing when they eventually had some fitted than they paid for the house !

Friday, January 4, 2019 06:58PM Report Comment
 

15. britishblue said...

JJ @11. On what basis do you think customers don't share information with me. Try not to be so discourteous. I am probably only one of a few people on here that has a working knowledge of what is happening at the front line. FYI i own and run the company and am not a 'removal guy'. When prices go up, people just bank the money,. when prices go down, they interrogate their estate agents, move agents, check other properties that are selling, etc. They become fair more clued up with the market than in the good times. I have had some people reduce the asking price by as much as 25% to get a sale, whilst a customer i saw today said it was 8%. Generally speak agents are now setting lower expectations. Whereas if they did this 18 months ago, they wouldn't have got the listing and the customer would have gone to a more 'positive' agent.

Saturday, January 5, 2019 11:18AM Report Comment
 

16. nickb said...

@15
I think your perspective as someone in the front line is very valuable. Could you be talking at cross purposes regarding the indices though? When a customer says that they dropped the price by 15% they are talking about their asking price compared to the accepted offer. The LR etc only record the latter, not the asking price. The initial asking price would have priced in an expected increase, which market conditions have not allowed to materialise. RIghtmove does record movements in asking price (only) and if I recall has been showing some of the biggest falls MOM.

Saturday, January 5, 2019 11:40AM Report Comment
 

17. judgandury said...

tenyearstogetmymoneyback. What area do you want to know about?. I'll see if there is a report that tells you what you want to know.

@15 The point remains. The data does not support your claims of 15% price falls for sales with or without mortgages.

Anecdotes are always more fun than facts but they are ultimately of little use when hard data contradicts them. No discourtesy intended but you have been making similar claims for several years. They have never panned out. I won't be the only person to have noticed that. Anecdotes can sometimes indicate what will happen in the near future. A few years ago I checked out a particular claim you made about significant price falls in Surrey because I wondered if something was forming out there. In that instance the data directly contradicted your anecdotal claim and prices in Surrey continued to rise strongly for years afterwards.

Maybe I lived in America for too many years but "removals guy' is not meant to imply a particular level of seniority. On the internet we never know who anyone is or what they do. A few years ago I used another name on this site (flashman) based on a character from a George MacDonald Frazer novel. I was amazed that no one twigged the outrageous hammy characterisation. Icarus was the well read chap who finally got it. I wasn't actually a Victorian scoundrel and you might not be a removals guy (I'm not saying you aren't). I asked the site to retire the flashman name when I wanted to limit my posts to the topic of housing inequality in the UK. Victorian scoundrels don't tend to care about housing.

I am fortunate to have access to several institutional sources of data and I provide information here when it is called for (I worked in the city for many years and now work for a housing charity so have always had access to all the main subscription services). I can understand someone getting bent out of shape if they provide anecdotes and someone else disproves the anecdote or incorrect statement. In this instance you claimed that the indices couldn't pick up your claimed price falls because they don't show mortgage free sales. I am entitled to point out an index that does show mortgage free sales and that the data doesn't support your claim. My motivation for doing so is that we desperately need house prices to fall (and housing quality to rise) and inaccurate price tumble anecdotes are a bit of a slap in the face to anyone who has tried and failed to find the mythically reduced house prices.

Maybe as Nick suggests, you might have meant something else? Maybe you meant that your clients have dropped their asking prices? Asking prices have definitely fallen. I personally put little store in initial asking prices because they reflect delusion and willfulness. Here's my anecdote... I would say that on average people I know overestimate the value of their houses by about 20%.

Saturday, January 5, 2019 07:11PM Report Comment
 

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