Housing Market

[Alan Dale]

removed

[macroban]

"Demand" should not be confused with "effective demand".

[Brendan]

Or ?need?.

[JohnL]

If 3 children inherit one house - I think the estate might have to be liquidated - meaning its the wrong time to die surely. My grandmothers house got sold for a pittance in the early 90's and apparently holding on to it for rent was not an option.

[Andyng]

Doc,

why did you sell your flat for ?25 less,and not hold on to it?

[snorky]

Dr De Soto Wrote:

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> doodlebug Wrote:

> --------------------------------------------------

> -----

> > How low will prices go? When

> > will things pick up? ...

>

> Doodlebug, for all the pontificating by the

> 'experts' like Phil & Kirsty in the media, your

> guess is probably as good as anybody's. But East

> Dulwich (and the rest of London) has probably

> already seen a 10-15% fall in prices from the

> inflated and often speculative prices seen in

> estate agent windows last summer. One house near

> me went on the market at ?600k in January,

> probably a 'realistic' price at the time if you go

> by what others were on the market for, but it got

> no viewings. Its price has now been slashed to

> ?530k.

>

> This is all very reminiscent of the 1980s/early

> 90s. At the time I had a 2 bed flat in East

> Dulwich, and at the very peak in 1988 flats like

> mine were going on the market at ?75k. Whether

> anyone was buying was another matter, but

> naturally everyone immediately assumed that is

> what their own place was 'worth'. Five years

> later, I sold the flat for ?50k, which given

> inflation levels at the time was probably a 50%

> fall in prices in real terms. Not even the

> gloomiest forecasters would have predicted that in

> 1988.

>

> By 1993 the mood had turned overwhelmingly

> negative, and I remember 'experts' saying that

> house prices might not reach their 1988 levels

> again for a decade. Two years ago, I noticed my

> old 50k flat sold for ?300k. So what do the

> experts know?

String / length interface

[benmorg]

I've been keeping a v. close eye on E. Dulwich market over the last year. A year ago there were around 230 properties for sale (you can see total on Rightmove) but there are now 370-380. Prices are all about supply and demand. Since december, supply has shot up and demand has dwindled. Normally there would be a "spring bounce" and hike in prices this time of year as people hoping to buy this year get into action and demand accelerates, but this year it hasn't happened. Estate agents tell me "we're still in january" - i.e. no sign of spring bounce. Depending on which agent you speak to, actual completion prices were down 10-13% from last summer's completion prices before the mortgage drought got out of control in the last 2-3 weeks. When the rising cost of mortgage filters through, prices are likely to come under more pressure.

Several agents have recommended waiting until winter, when prices usually drop seasonally even in good years. That's likely to be a very good time to snap up a bargain, though there's no guarantee that the market will recover thereafeter.

[bawdy-nan]

really liking this site

Of course I'm a renter with a family, and yes, I know people are suffering but somehow, and meanly, I like looking at it.

[macroban]

Nothing on the market for more than 343 days, or is this a "feature" of the web-site?

[bawdy-nan]

no idea - I'm sure its got its flaws - isn't 343 days quite a long time anyway?

[Siduhe]

I believe that a number of the property websites have prevented propertysnake from taking listings off their websites citing copyright.

[giggirl]

Property snake is an excellent site. But also try this one for research

http://www.nethouseprices.com/index.php?con=sold_prices_street&year=All&house_style=All&house_age=All&street=&outcode=SE22&incode=&search_radius=&searchType=&find_street=&find_town=&find_locality=&cCode=EW&order=&start_limit=100&start_limit=0&curPage=1

[benmorg]

the copyright argument was used to block links from property snake to rightmove or estate agents' websites, but all the properties are still there. You have to identify them by price, then marry them up with the listings on rightmove.

the fact that nothing's been on the market for more than 343 days doesn't signify much, just that the oldest property has been on sale for nearly a year.

It's interesting that some of the biggest reductions on propertysnake are in south london. On the home page you'll see a flat in Streatham at number 1 position, reduced 50%, and a Greenwich property at number 7. So much for London being "safe" in a crash. It's more likely that locations where prices have peaked dramatically, including East Dulwich, will show the steepest falls. Only time will tell..

[macroban]

East Dulwich is said to be an "at risk" area. At ?100k for a one-bedroom flat, prices have a little way to fall yet.

[karter]

Macroban, how much would you value say the shop and flat above, freehold, next to the butchers at the present time?

[benmorg]

macroban Wrote:

-------------------------------------------------------

> East Dulwich is said to be an "at risk" area. At

> ?100k for a one-bedroom flat, prices have a little

> way to fall yet.

absolutely. The areas that fell most in the last crash were secondary areas that had only just gentrified. People are pushed by the ripple effect into such areas during the boom, then flee those areas first in a downturn. East Dulwich has only been considered yuppified for a few years. It's not long at all since it was a bog-standard run-down south london area.

A lot of people seem to think London is safe from house price falls, but in the last crash it was hit harder than nearly everywhere else. Prices fell on average 13% in the UK in the early nineties, but london prices fell 29%. Given the vast price rises that have happened in E. Dulwich over the last couple of years, you have to wonder how much they might fall if things do get worse.

[macroban]

karter,

Using the baseline calculation I told you about last year, I'd say ?275k-?325k. But I'd need to visit Lordship Lane to take a closer look.

MacRoban

[MrBen]

benmorg Wrote:

-------------------------------------------------------

Prices

> fell on average 13% in the UK in the early

> nineties, but london prices fell 29%.

We all know you can make statistics say anything. But generalised statements such as "london prices fell 29%" don't mean much unless you relate it to locality and time. From memory it was very specific to area and good areas actually held their value. In 1992, Battersea was a recently gentrified area and prices there fell by only 13% and even then that was only for a year or so. By contrast Hackney was down 30% and took longer (4 years or so) to recover.

Victorian stock, good schools and organic butchers will prevent a 30% slide in East Dulwich and my estimate is up to 15% off last summers highs before we regain some stability in a year or two.

Gordon Clown will get back into my good books if he can actually breathe some life back into the mortgage market as that would be a massive help. If you can get a mortgage they are still relatively very cheap -its when base rates rise and hit 10% you can all poo your pants. As someone who spends too much time in the city....I honestly dont see any signs of that happening soon.

[macroban]

> Victorian stock, good schools and organic butchers will prevent a 30% slide in East Dulwich and my estimate is up to 15% off last summers highs before we regain some stability in a year or two.

Estimate based on which data, or is this a guess, or a joke?

[*Bob*]

It's a fact, Macroban.

To calculate how much the market will dip in any particular postcode, simply: add-up the number of Foxtons minis, multiply by the number of organic butchers and subtract the number of times you've changed electricity provider in the last five years.

[lozzyloz]

Macroban, don't you think your estimate of the freehold value of the shop and flat above is a little on the low side? Or did you use *Bob*s formula in which case it's ?3, 8 shillings and thruppence.

[macroban]

*Bob*, that's probably the valuation formula used by some of our local estate agents. [Got your free breakfast yet?]

lozzyloz, unfortunately no, it's the baseline formula of 8% ROI I used during my working life, but I've not yet been past the premises to make an estimate of refurbishment costs.

MacRoban

[ibilly99]

Gordon?s Brown?s No More Boom and Bust (in a dour Scots accent) is SPECTACUARLY falling apart. This chapter of the cheap credit fuelled asset binge of the last decade is now unravelling; we won't be going back to 'normal? for along time yet if ever for our society. House prices have departed a long way from fundamentals and the well overdue correction is upon us. George Soros one of the most successful investors in history says this is the worst financial crisis since the Great Depression and sub prime is only the first wave.Alt A mortgages are the next shoe to drop and they are about twice as big as sub-prime (type in ALT A in you tube for video) and that?s not to mention record commodity prices and the coming bond crisis so the financial situation is going to worsen and deepen.

What are the factors that will be driving house prices?

1. City job losses could be as high as 40,000 - a lot of bonus money has been coming this way which will significantly reduce hard cash coming into the area.

2. First timers both priced out and unable to borrow same multiples as before.

3. Sentiment seriously turned - mantra of prices can only go up turning sour ? why buy now when prices will be cheaper by waiting?

4. A property developer builder friend of mine getting seriously worried. There are just no buyers out there and he is highly leveraged - or where there are the chains are breaking down as mortgage deals break downs, buyers get cold feet or gazunder. If you are selling get your prices at the head of the queue - he who panics first at least get some of their money back

5. Disposable income getting hit on fuel, energy food.

6. Mass Eastern Europe immigration reversing as salaries ,optimism and their currencies improve in their home counties and they pack their bags and go home to seek their fortune thus reducing demand for the buy-to-let landlords who serviced their needs.

As for counter arguments there is nothing like the deluded optimism of the seriously invested ? as they say you don?t ask a barber if you need a haircut!

So what does all this mean for East Dulwich prices?

I've lived in East Dulwich for 20 years now and my house at the peak (which was last May) was around 600k - which is absolutely ridiculous - houses should be for living in and not an investment. In my heart I feel it should only be worth half of that and resent the inflation and obsession with empty speculation that has rotted our society for the last decade. As an economy we are increasingly dependant on the Financials, Insurance, Real Estate and service economy. They should be servicing the real economy not be massive casino for speculators. I've lived and worked in Asia and once you've seen how hard and diligently they work and save, the strengths of their families and schools it?s no wonder they are winning. Whilst China and India roars we've been running a pyramid scheme a ponzi scheme of debt. I do feel sorry for all those that have bought in the last few years - you have bought into a highly inflated market - the biggest bubble in history and where was our prudent Gordon Brown steadfastly on watch to look after his people?

I have friends in the Hedge Fund business and they love this deluded optimism as they short the markets and whilst optimism remains they have a window to build positions which benefit from a fall. Things are really scary out there.

Conclusion

Governments are scared the banks are basically bust and we could be heading for Great Depression 2.0 .Prices will drop significantly over the next few tears as global adjustment means wealth and power move over to Asia. I predict East Dulwich prices in 2012 to be at least 40% down from their peak of 2007.

The good news - hopefully the shallow consumerist society which defines individuals by what they own rather than who they are will have been seriously disrupted. People will seek happiness in real things like the smile of a child or a summer?s day or buying books from a jumble sale or a walk in the park and ever increasing debt bondage will be a thing of the past .I does hope so in fact I?m banking on it!

[macroban]

Good one, ibilly99.

I suspect some people here don't know about taking short positions.

I would add the position of tenants of foreclosed buy-to-let landlords to your analysis.

I note that the terms "savings ratio" and "GDP deflator" are now making brief reappearances in journalists' vocabularies.

MacRoban

[celineblondon]

Does that mean renting will be more expensive?