Trying to buy a house in this area is near impossible

[Jeremy]

Depends how badly you want the flat, I guess. It is really outrageous that agents are doing this though.

[Otta]

In our situation the flat is with a new Foxtons office in Crystal Palace and they're doing a 0% commission intro offer. For this reason I'm hoping they won't be too bothered about getting a higher bidder.

[Dr De Soto]

In other countries (eg USA) it is common for both parties to put money in escrow with a third party, so if either side pulls out they forfeit this deposit. A lot to be said for this.

[poppet27]

Sorry to reopen this wound. Just sitting with the Sunday papers which are now saying prices are likely to be up 8% again this year.

What do you all make of this? Is now the time to pack up the rugrat and the dog and move, lest we're not able to ever again? And are people in East Dulwich *really* paying those crazy-assed prices that I see in the estate agent windows?

[Twirly]

Yes, prices are increasing. I first had my flat valued in April 2013, but didn't put it on the market until July - by which time we were advised by the estate agent to add 9% onto the price they'd recommended 4 months earlier. It went for over the asking price. (But we would not be buying the house we are, so I'm fine with that - it was enough.) We move on Friday :)

I reckon that if we'd waited until the autumn we'd have got even more. A flat a few doors down (which admittedly is being marketed by Foxtons) has roughly the same square footage but a different layout; it does have a small roof terrace, and a "kitchen diner" but both the bedrooms in the pictures have single beds in them. It's on the market for ?525k... which is ?175k more than ours was. http://www.foxtons.co.uk/search?keyword_type=postcode&keyword_value=se22&property_id=880011&resource=thumbnails&search_form=keyword&search_type=SS&sold=1&submit_type=search

So yes, prices are mad. The bubble will burst at some point. I am glad that we are moving when we are.

[worldwiser]

I've never sold a property without getting some money up front from the buyer - it's perfectly acceptable and I honestly don't understand why it isn't done as a matter of course. Nothing huge, just a grand or two. No honest buyer can possibly have a problem with this and the seller is compensated appropriately if they walk away for a frivolous or non-critical reason.

Stamp duty alone is responsible for a huge component of price inflation. If I buy a house and have to hand over 10k to the government, my property immediately has to be valued at 10k more than I bought it for if I'm not to be out of pocket when selling.

[SteveUK1978]

What assurances do you offer the buyer in exchange for their deposit?

[????]

Interesting how you figure a tax on buying a house causes price inflation? Scratching my head on that plus once you,ve exchanged contracts you are financially liable but a deposit before that.....?....never ever heard of that, how exactly do you enforce that legally? Is it contracted?.....or is it just bull?

[slh2009]

Just to say the madness is not just in Dulwich, a 3 bed semi in my road in Lower Sydenham has just sold for 660K...it was on the market at 495k...

[worldwiser]

SteveUK - any decent solicitor will deal with it. The money goes in escrow and is released back to the buyer only if there's a major structural defect or other unforseeable problem. They manage a similar system in most European countries that I'm familiar with, probably most of the rest of the world too - someone mentioned the US. In Hungary for instance, you have to pay a 10% holding deposit (rather unattractively in cash) at the seller's lawyer's office before it's taken off the market. I'm not advocating that, but we do have archaic conveyancing arrangements in England & Wales. Scotland is far better.

???? Because I'm immediately in effective negative equity if I choose to sell at a price which doesn't take into account the tax I've just paid to the government. There's been a huge and increasing trend towards turnaround property transactions in recent years but, in any case, I read an article last year that claimed the average length of house ownership in London is now only around 7-8 years.. Stamp tax inevitably has an inflationary effect. Less so if one keeps a property for many many years of course.

[poppet27]

I'm no economist but the behaviour feels like mass hysteria, akin to the gold rush. Surely the lack of supply and high demand has to plateau at some point. I have no need to move (yet) so I'm watching the hysteria from afar but it does strike me that this isn't sustainable. Or maybe it's because I have friends who went into sealed bids and paid ?19,000 over asking price because they were 'scared not to'.

Insane

[lane lover]

This situation was always going to happen.

The housing market was like a rubber band being pulled back. After years of low growth, there was a huge amount of pent up demand from those who were saving and waiting to buy or upsize when the market moved. Eventually, the rubber band was let go (through the help of better availability of mortgages, especially to first time buyers), and thats what we are seeing now.

There will always be a supply/demand imbalance in London as there are too few new houses being built for the increase in population. Its not mass hysteria, purely basic economics.

The growth will slow eventually, but dont expect any correction (i.e. negative growth) in London. We have just had the biggest stress test in many generations and the London housing market hardly flinched.

[intexasatthe moment]

my mistake

[LondonMix]

Stamp duty doesn't cause price inflation. Each person has a max that they can afford to pay for a property including taxes and fees. In a competitive market, everyone is already paying the max they are willing too including stamp duty. If stamp duty were lowered, it would actually increase prices as more of every buyer's total budget would go toward the actual price of the house.

No one should ever pay a seller a deposit. Some seller's won't take a property off the market until the survey has been booked (at which point they know the seller not only has a mortgage but is incurring significant costs) but actually giving the seller money is madness.

[worldwiser]

Escrow isn't 'giving the seller money.' It's in a legal suspension account with very specific conditions as to how it's used. Since most other countries have a version of this system, one could argue that NOT having it is madness. I've never seen a property transaction go bad with pre-exchange deposits in place: no gazumping or gazundering; no chains collapsing; and completion times invariably around the 6-8 week mark. Highly recommended. There is no genuine reason not to do this if you're serious about buying a property. It gives the buyer rights and places responsibilities on the seller at a very early stage. Without it, the power is always with one side or the other which I've always thought is totally wrong.

[poppet27]

So what will East Dulwich et al look like in 4 years?

Those who bought when ED was less chi-chi & have stayed

First time buyers who are over stretched on their mortgages?

And the super rich who don't mind paying over the odds.

[lane lover]

poppet27 Wrote:

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

> So what will East Dulwich et al look like in 4

> years?

> Those who bought when ED was less chi-chi & have

> stayed

> First time buyers who are over stretched on their

> mortgages?

> And the super rich who don't mind paying over the

> odds.

Yep. The same as the rest of London.

[KidKruger]

I've also used same method as worldwiser in the past. It's only madness if you suspect you're going to get ripped-off by the seller or you know there's a chance you won't be able to actually complete the purchase (in which case, take a 'normal' house purchase transaction where you're at liberty to dick as many sellers around as you like with no certainty for yourself either). People complain about the way it's done in UK, but then are unable to recognise practical measures designed to overcome the problem areas. Sellers are not counsellors, come to the table with the dough and in return you get first option on some land/a house.

For me, if someone's that keen and has their shop in order to purchase they'll put the dough down.

It's an option, not an obligation, for that particular property.

[????]

LOl East Dulwich and Super Rich...........

[MrBen]

Me too. Not many oligarchs buying 3 bed terraces on Fellbrigg Road.

BUT...at ?1M you're looking at incomers spending with a joint income of at least ?200K (+ carried fwd equity). In banker led London it can be easy to forget that less than 1% of the UK population actually earns this kind of money.

[poppet27]

My bad - by 'the super rich' I did mean those with 6 figure incomes/ can buy a ?1m property. I guess that's not so shocking in London anymore.

(Off to smash open my piggy bank and move to Weston Super mare)

[LondonMix]

Agree-- to most people someone who earns six figures is rich (and its true).

[MrBen]

You have a point though poppet27. It's all relative - to someone struggling on benefits or off radar completely and unemployed, anyone on ?100k plus IS super rich.

[fluffy]

Is anyone seriously suggesting that a person on ?100k plus isn't rich? London housing is actually insane, could easily rent a house elsewhere for the price of a room in a London flatshare!

[worldwiser]

Can I say that the escrow deposit approach is for properties at every price point - no lawyer should charge you extra for this service.

Fully expecting to be shot down in flames...

Some may be forgetting that anyone who's owned a property in London (or frankly anywhere) for 5 years or more may well be buying with a huge amount of unearned equity and may therefore be able to afford something which isn't strictly within their income bracket. It isn't just those people are terming 'the super rich.' Furthermore, a couple earning say 50k apiece before tax could hardly be described as such and could still comfortably afford the repayments on a half million. And there are decent flats in the area for half that. You might want to pause a moment before reclassifying the entire borough's population as belonging to the nebulous echelons of the super rich. People don't look at the price tag anyway.. they look at the monthly repayment and, with 15+ year fixes now available, so mitigate against interest rate rises. Compared to renting, mortgage repayments look dreamily affordable.