ian/555

I have Just seen on the news a report that says that, the prices of houses in London and the South East have started to fall, with the rest of the country continuing to rise.

Now if my memory is any good, the last time that there where reductions in the South of the country it was when interest rates went up, but this time that is not the case with them being at an all time low. So is it fair to say that with the sad events of Sep the 11th having an effect on job security with large lay offs and the fact that inflation is currently so low that people are in fact not able to take on ever larger and larger mortgages, knowing that the payments will soon shrink with regards to there income and also not being able to get on the property ladder in the first place due to high deposit/multiples required, has the bubble finally burst?

My own experiance is that I recently moved back to the South East after moving to Milton Keynes for just over a year and having completed my sale just last week. I was fortunate enough to get a 16% growth on the property, with the local market seeing no signs of slowing up as I had in fact sold my house on the first day it was marketed with two different agents, owing to the first prospectus purchaser pulling out and the first agent not informing me untill the very last minute [img]images/smilies/mad.gif[/img]

I have decided for the time being to live in rented as when I initially moved back here I noticed that propertys where not being sold as quick as when I left the area and in fact, before it was quite rare if a house was not sold before it hit the papers and the board was put up. Now that has all changed with propertys coming onto the market and still being available some 2-3 months later! So it would seem that given another 12-18 months the rest of the country will follow suit and start to slowly fall back to a realistic sustainable level?

What are other peoples opinions on the property market, is this just a blip or am I right in thinking, that the tide is starting to turn?


Regards ian

dsmith

Just considering a large move at the moment.

The last year in suffolk has seen some substantial rises. There is no doubt the larger properties have started to slow. They do still seem to be shifting though.

I personally cant see an actual fall here. I can see a year or six months of no growth. With interest rates so low (and may go lower soon ?) I cant see a large fall happening at all.

I know for myself that if houses started to fall at all we would move like shot. I guess many feel the same so a large drop is unlikely ?

Deano

Marc W

I don't think average prices in London and SE are falling, I think its just that some of the silly asking prices are not being taken up any more.

In some of the riverside blocks in SE London, flats were selling in 2000 / early 2001 for what my partner and I thought £30k - £40k more than they should be. A bit of realism seems to be returning.

I think (and hope) things are just slowing down rather than falling.

Tiggs

live in Reading and moving at the moment, things are quiet (as youd expect at xmas) but prices are fine. plenty of the homes we're looking at have sold before we had a chance to think about them! and they all seem to have gone for the asking price or close to it.

Tiggs

dsmith

Our Agents comment was that those flying a kite and adding 20/30K just on the off-chance are seeing no joy at all. Properties that are being sold for the right price in the current market are still
going (and that right price is still climbing slowly)

Whether that equates to an overall fall I guess is debateable.

Jerome

I have been wondering for some time how the ridulous prices in London can be sustained. Ordinary (as in earnings) people are having to move further and further out of London to find affordable houses. Either that or move to an area that makes Beirut seem like Butlins. There can only be a finite number of wealthy people. Where I rent at present, studio flats go for £175,000, 1 bed flats for £200,000. Who can tell me that is a reasonable price?

dsmith

Would agree - £200K for a nice 4 bed detached in the country sounds much better

Timbo33

Jerome's right - problem is the house prices in those 'further out of London' places rise as a consequence, hence Tiggs' point above...

This is just supply and demand boys and girls....you can buy a whole street in Hull for a quid....why? 'cos there's too much supply....(no dis. to the honorable citizens of Hull...)

Some of us are lucky enough to be able to earn the same wherever we are in the country...Tiggs and I have a colleague who's just moved from our office in Wokingham to Bristol...why? 'cos he can get a really nice 4 bed detached older house for the same price as his 2 bed terrace in Surbiton!!!

....mind you it helps that he's welsh

BTW Ian, renting is a mug's game...stable house prices just mean you've got time to choose what you want. Renting is money down the drain. Trust me, I'm a financial adviser

I live half a mile from Tiggs and the value of my house has risen probably £40,000 in the 18 months since I moved. In that time I've paid about £20,000 in mortgage and endowment payments, so I'm actually £20,000 up on the deal.

If I'd been renting, the same house would have cost me about £25,000 and I'd have nothing to show for it...



[Edited by Timbo33 - 12/19/2001 12:21:48 PM]

MattN

I completed a flat purchase last week.

I started looking around March time. Back then One bed flats were not even being advertised as demand was so high.

I got gazump on one property in June and since then prices of flats in the same block were about 5k more some 7k.

from what I've seen recently properties are hanging about longer but still getting near the asking price.

It's probably a different situation with bigger 4/5 bed houses. But for one bedders for first time buyers prices are not dropping in fact still increasing.

The problem with one bed places is the majority are rented out so if you want to buy one be prepared to do alot of work on them!

(the first one I looked at was in Basingstoke at 75k, needed new kitchen, carpets, completely re-decorating, bascially another couple of grand!)

Also the fact that interest rates are so low is encouraging people to move.

I can't see a drop in the prices for smaller properties - bigger ones I don't know.

All IMHO of course.

Dave P

Some 14 years ago I ought a purpose built flat for 52,500. It peaked at 86,000 and I got out at 72,000. Ten years later my brother in law bought the flat directly above it for 53,000 and sold it four years later for 90,000.

All house prices rise relatively to each other. The people that kick the chain are the first time buyers. No first time buyer no sell at half a mill. Problem is in the south now property prices at the first time buyer level have reached a point where young kids can't get the multiples up to buy. To buy a 90,000 property on your own means earnings close to 30,000 and there aren't many youngsters earning that especially with the drying up of the IT market.

Re the comment £200k for a nice 4 bed house in the country.... I live in East Sussex in a small country town and try £190 for a 3 bed semi. In Tunbridge Wells they have converted the old Post Office to apartments (big flats I guess), they start at £250,000 up to £1,000,000 !!!!!

Dave

JayRaj

How are people in the South East affording it?

I'm on the verge of buying my first house. Both my other half and I have good salaries (we're both classed as professional) and we can just about get a 2bed flat in New Malden. The problem is the flat is about the size of a mini and can't really justify the asking price. To buy a decent size house .....we would have to move to Luton!!

What's going on....it's so bloody frustrating!

J

Mo

J

look hard and you shall find. Try council estates. I purchased my three bed semi for £75k three years ago. 5 min. walk to central line, 30mins. to Liverpool Street.

OK it's now valued at £110k and it aint big, but it has three bedrooms and does me and the misses. Nice garden but no garage or off street parking, making car insurance difficult.

JayRaj

Council Estate??

yeah if I buy there, I can kiss the preza good bye.

I need a drive at least.

Thanks fr the advice anyway

J

Mo

There's your problem see.

Not all council estates are bad, do your research before deciding where to look.

I've lived on council estates all my life some very good, where I live now, and some very very bad, Where I grew up!

Snobery gets you nowhere in this game

JayRaj

You calling me a SNOB?

I'm not saying that all council estates are bad, but.....they don't seem that appealing to me because I've never lived in one.

Anyway Luton is lovely anyway...

J

JoeyDeacon

I lived on council estates up until about 4 years ago. Luckily my parents managed to buy their house in 1982 for 12K and sold it 2 years ago for 145K. They have now bought a house that isn't on a council estate and are VERY happy they have moved.

The road they used to live in was absolutely fine (you probably wouldn't know it was council) until about 3 years ago when the last few remaining council houses had undesirables move in which led to loads of problems. The point I am making is that no matter how quiet a council estate may seem all the time there are still council houses in it there is always that risk of scum moving in.

When I started looking at buying a house the first thing I said was I didn't want anything that was an ex council house. Call me a snob if you like but I spent the first 24 years of my life living on council estates and now I can afford not to the last thing I want to do is pay £150K for the privalidge of living in a street where your next door neighbour has probably been given the house for free.

want to get as far away from the scum as possible thank you!

[Edited by JoeyDeacon - 12/19/2001 2:53:51 PM]

Timbo33

Location, Location, Location......

.....better a nice street in a cheap place than a cheap street in a nice place.(No dis. to owners of old Council Houses...used to live in one as a kid, but ecoomics are economics....)

Getting on the ladder is one thing but you're going to want to move at some point and if you've bought cheap it'll mean you sell cheap later.

On the basis that prices go up about the same percentage whatever the property, you'll be buying a bigger gap when you come to move next time because the value of the next step up has increased more than the place you're buying.

Try and buy the best place you can possibly afford, especially while interest rates are low. Look for a good fixed or capped rate
to protect you against the rise in the future.

Biggest problem is trying to borrow enough due to income multiples;
usually 3 x biggest income + 1 x lowest or 2.5 x joint.

Some building societies offer enhanced multiples to certain professions or in some cases as a matter of course, e.g. Abbey National or Woolwich.

Lastly, don't discount Shared Ownership as a compromise if you can't afford to buy where you want to live.

MattN

I got 4 times my salary.

mutant_matt

that's just scary!!!!! !!!!!

Matt

Tiggs

whats scary?

SD

I'm afraid that those who say 'well I've made x amount because my house has gone up by x amount' is wrong. It's not real money as unless you are trading down a property then your next one will cost you the same increase. Unless of course you move to a cheaper area after . You've only made money if your house has increased in value and others haven't.

I entirely agree that it's the first time buyers that keep the chain moving. It's basic economics really. And down here in the crappy South East (I hate this place) I see all my peers struggling to get a foot on the ladder, it's as simple as that. Current prices are unsustainable IMO as we are seeing more and more job cuts which in simple turns will lead to less wealth. This is turn will have a knock-on effect on house demand and therefore house prices. Sure it won't fall a lot (we don't have the economic conditions for that at the moment) but as the reports are showing London and the SE prices are starting to slip a little. I remember seeing a similar report last month.

I went to see a friends new maisonette yesterday. He works in IT in London, and rents his second bedroom out to a friend. He got a 4x mortgage to afford his £116k upstairs 2 bed maisonette in a not-great estate. I see a lot of people moving away from the SE whilst this situation continues...

Simon

humbug

Once the Americans start getting back on track and sending executives back over to work the London market will pick up again.

Places to watch over the next 5 years are southeast London, with new tube services, big affordable properties, leafy streets and good central access will be good investments. My tip is Forest Hill and Honor Oak in SE23. Last real bargains in London, and much more pleasant environment than the Hackneys and peckhams of this world.

Brendan Hughes

Peeps, you're forgetting about the buy-to-let market. There were a lot of people who bought 1-2 bed flats as second places when they could see the repayments were covered by high rental prices, and the bank interest rates correspondingly didn't give such high returns. Where I am (surrey) a lot of property disappeared quickly to investors rather than 1st or 2nd time buyers.

Opposite factor can be local - can you guess how many airport related people have suddenly needed to downsize around Crawley (and doubtless other airport locations as well) in the last 3 months?

BJH

Timbo33

The buy to let market has definitely sucked away a lot of entry level properties - Studios and 1 bed flats, but most people now are waiting 'til they have a partner before lumbering themselves with a mortgage (usually staying at home with mum & dad 'til that point) which means that by that time they're looking at 2 & 3 bed flats/houses.

In buy to let terms, you get a better return on investment from the small places, and if investors have £120k to spend they'll often buy 2 £60k studios than a £120k 2 bed flat.

It's still back to supply and demand.....if people didn't want/need to live in an area and create such competition for properties, the prices wouldn't be so high!!

The only way of breaking the deadlock is for people to vote with their feet - move out of an area, or simply not buy - but that then could cause the kind of property price meltdown that hit us all ten or so years ago. We don't want to get back to that....