Trying to buy a house in this area is near impossible

[alachlan]

"very high qaulity residneital development"

"all maintainance"

"consierge service"

"communal rooftop gardens or libraries or games rooms"

"Often they have gyms and pools too"

"close to transport hubs"

Sounds like it would be really cheap, definitely in the same market segment as someone struggling to find an extra hundred pounds a month for a regular rental. :)

[cle]

There is also the assumption that people would be able to afford more over time... ?200 p/m over 2 years is about a 4k increase in salary. Not much. Depends on the sector of course, but this is London and that upwards trajectory is not unrealistic by any means.

[Blackcurrant]

LondonMix Wrote:

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

> 4. If you accept the Shelter re-weighted analysis

> for 2011 is correct and the 2011 ONS data for the

> same period is wrong, what in your view was behind

> the recovery in rents? Real wages were falling

> dramatically and the country was in recession...

It's not just about wages. Rents are driven by supply and demand, just like any other marketable item. After the financial crisis there was a glut of unsold properties that fed through into rentals, pushing up supply and pushing down prices - at a time when unemployment and redundancies were more frequent. After the crisis faded, the market corrected. This graph from the now defunct findaproperty rental index (which ran until 2012 and which you can browse on waybackmachine if you're interested) shows the clear relationship between supply and price:

http://i62.tinypic.com/au84yr.jpg

> 5. The significant increase in the ability for

> would-be renters to become first time buyers (as I

> mentioned several pages ago) is predicted to

> result in a temporary slow down in rental growth

> as people moving from the rental sector to owner

> occupation reduces demand for rental properties.

> This kicked in most strongly the latter half of

> 2013. This phenomena in and of itself drives up

> housing prices, while like for like reducing rents

> until a new equilibrium is reached. Therefore, one

> would expect to see going forward, a like for like

> slow down in rental growth and an acceleration of

> the increase in house prices until a new

> equilibrium is reached.

House prices in London were rising very strongly before 2013. The volume of sales is actually still quite low and the number of people moving from renting into buying is small. Most people simply can't afford to buy, so demand for rented property hasn't fallen as much as you imply.

What's missing from your analysis is the significance of the low base rate. Because mortgage rates are so low, almost nobody is being repossessed or pressured into making a quick sale due to tight finances. Consequently, there are very few forced sellers on the market and the supply of properties for sale is very small. By my count there are 168 properties for sale in SE22 at the moment, but in 2008 there were over 400. Obviously the housing stock hasn't halved, but the effective supply has more than halved, and house prices have consequently shot up. These numbers can change overnight if lending rates change significantly. This has happened several times before - it's a fickle market. Don't make the mistake of thinking the current high house prices are supported solely by a structural shortage housing as they aren't.

[PokerTime]

I completely agree Blackcurrant. The low lending rate is an intentional move also to protect the market from negative equity and reposession following the recent financial crisis. It's one of the things that has been learnt from the end of the 80s, when up to two million homes were sent into negative equity following that economic blowout, and repossessions hit a record high of 75,000 for 1991 alone.

[Blackcurrant]

Yes it's deliberate policy. The main reason for supporting house prices is that it recapitalises the banks and thereby encourages them to lend more widely, which supports business and helps the economy grow. The problem is that house prices have taken off again and wages aren't keeping up, so we're heading back into the same kind of unstable mess that wrecked Gordon Brown's reputation and career.

[LD929]

Does anyone understand this?

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=35938543&sale=999133&country=england

[Earl Aelfheah]

That does seen fairly crazy...

[v_the_gelfling]

Give it up!

[jimbo1964]

For a two bed house!

[pinecone]

got to be foreign money

[Sue]

A small terraced house on Ulvercroft Road "in need of some modernisation" has just been sold for ?815k . Where will this end?

[*Bob*]

In tears?

[khedley]

It's completely bonkers but I believe it's been converted (to a reasonably high standard) into a 4 bed - still wouldn't pay that money & I live on the same street!?!

[Blackcurrant]

This is going to carry on for at least another year as there's no prospect of the base rate rising while "inflation" is so low. And since the government's official measure of inflation happens to exclude house prices, inflation is going to remain low however much house prices rise.

[eastdulwich_dweller]

Not sure if people realise this but the Bank of England will find it difficult to raise rates quickly. The most indebted creditor is the UK Government. They have taken on all the debts from the banking crisis and implemented pretty much zero austerity despite the rhetoric. The analogy applies that we have simply slowed down spending on our credit card whilst making the minimum payment each month. When the minimum payment rises the government will not be able to pay it and extra QE (the only reason most people can't see a difference between "austerity" and pre-2007) will make the bond market very nervous to lend money to the UK. We have to stay in a low interest rate environment for years to pay off this debt overhang and Mark Carney knows it. More and more money will move into lower yielding assets such as property as there is less incentive to take risk in this environment. The stock market will soar and people will wonder why, but if pension funds don't get assets at yields of 4-5% soon they will start going bankrupt so they will need to move more money into risky assets like property and equities.

[alachlan]

Yes but he needs to make these statements so it looks like he is at least slightly independent and worthy of his office and pay cheque. It's a thin veneer in my opinion, but also a difficult line in expectation management to tread.

[alice]

softening of prices? - no 4 beds or 3 bed houses sold in ed in last 2 weeks

[the-e-dealer]

I sold mine but no estate agent ! yipee!

[Mustard]

I spoke to a local agent last week who said the 'fizz' had gone out of the market because more and more houses were coming on the market and buyers had more to choose from. Her words, not mine.

[Crissy]

The 'fizz' may have gone out of the ED market..., but not my way in SE25.

[Loz]

We are just entering the busiest time of the year for house-buying, so I'd be surprised if the fizz doesn't stick around for a while.

[pinecone]

3/4 bedroom house wanted in SE22 / SE21 -- PM me

[Sue]

khedley Wrote:

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

> It's completely bonkers but I believe it's been

> converted (to a reasonably high standard) into a 4

> bed - still wouldn't pay that money & I live on

> the same street!?!

xxxxxxx

I live on the same street as well :)

A house a few doors down from that one - converted around December/January from two flats - has also recently been sold.

It was on the market for a similar price ie over ?800k, but I don't know how much it went for.

It has been "done up", but only has three beds.

It seems to have taken some time to sell it, but I guess the market has now caught up with what seemed very overpriced in January.

It was originally owned by a housing association, so I hope they got a decent price for it before the developer got his/her mitts on it ......

[adonirum]

Sue Wrote:

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

> A small terraced house on Ulvercroft Road "in need

> of some modernisation" has just been sold for

> ?815k . Where will this end?

But Sue, if you live in the same street, surely that bodes well for the price of your property. Not quite sure why you would appear to find the high valuations/prices so distasteful. It is something that can only be to your advantage and benefit.

[the-e-dealer]

Well there is a distinct "Loads a Money" flavour to it and the net effect will be to outprice many people who want to buy.

Also when the crash comes the misery that may cause is not pleasant.