Trying to buy a house in this area is near impossible

[Mick Mac]

StraferJack Wrote:

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

>

> I think the fall out of this crash will far exceed

> the 2008 one

>

The 2008 "fall" was pretty insignificant compared to the 1991 one. This one could rival the 1991 one, but we are a long way off the peak yet. We are supposedly entering an economic upturn and hence the renewed confidence with which 30somethings are approaching their purchase decision, and rising wages could lead this much further before the fall.

Anyone who thinks we are at bubble bursting point or anywhere near it I think is wrong.

[85volga]

Look its not rocket science it London and zone 2 in a lovely green area that has been gentrified and a nice escape from the city, its a no brainer really , have you viewed the prices of equivalent properties in North London and Clapham ? we are still far far behind in equivalent pricing.

Whether you like it or not the property prices will continue to rise and rise until the limited housing stock is exhausted and continually turned over with the overflow pushing up the prices of the less expensive suburbs nearby and within ED.

The natural progression of people tiring of the London scene and moving out naturally leads to someone else will arriving and take the vacant spot at the increased price ect ect.... It was tough enough in relative terms buying a place in the first place here so hedge your bets on where you can afford and crack on :)

[MrBen]

I think whats happening is that economic confidence is returning very quickly in London which is always the first to notice and benefit in terms of business and housing. The two problems I see with this are that (i) the recovery is only just starting in many regions outside of London and so there is that lag to consider and (ii)its all happening much faster than UK fiscal policy can adjust to without choking the recovery in the regions. So I'd like to see the BoE introduce a modest interest rate rise early rather than later but pitched at the right amount to slow things down yet maintain confidence. Something like 1% initially in the next quarter?

The current London price spike in housing started in July 13 and prices have risen so steeply since that, rather than continually play catch up, agents have just gone super high and are now taking offers. This means that current valuations are now much higher than any actual sale amounts that will be achieved in practice. If I'm wrong on that and you have just sold (i.e. exchanged) your non-descript 4 bed terrace with bad layout for ?1.2M let me know....

The regional lag behind London won't last and the gap between London and regional prices is right now probably greater than ever so I'd say this is one of the best times in recent history to sell up your London flat and head for the country. If you can factor in the Help to Buy scheme into that (arguably a once in a lifetime policy that won't exist after the next election) then it looks even better still.

And what not to do? Well for those sitting on London property you'd be dumb if you think you're virtual equity now makes you somehow "rich" or safe from future market moves. And it would be dumb to leverage their equity further into the current inflated market. Instead, I'd be remortgaging onto a longer term fix rates and paying down debt... if you're able to. It is a bubble, question is whether it deflates gradually or pops. Right now there's nothing to suggest the latter.

Just my opinion......

[hpsaucey]

StraferJack Wrote:

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

> "It didn't seem to have occured to her that we

> were looking for a place to live in not an

> investment."

>

> in a nutshell right there

>

> Everyone is viewing it as an investment market and

> not a residnetial market

Spot on, but makes me so mad! We - eventually - raked up enough to buy a shared ownership property last year. It's our HOME and I wake up grateful for it every single day. All we ever wanted was somewhere to live. I know there are 'logical' reasons for people buying as an investment, but when people who want a property just to bloody live in are priced out by those looking for immediate investment/profit it sucks quite frankly.

H

[Earl Aelfheah]

This is interesting: http://www.theguardian.com/business/2014/feb/02/london-property-market-bubble-cool-down-ey-item-club

[Earl Aelfheah]

What's really irksome is that investor's get tax breaks.

hpsaucey Wrote:

> Spot on, but makes me so mad! We - eventually -

> raked up enough to buy a shared ownership property

> last year. It's our HOME and I wake up grateful

> for it every single day. All we ever wanted was

> somewhere to live. I know there are 'logical'

> reasons for people buying as an investment, but

> when people who want a property just to bloody

> live in are priced out by those looking for

> immediate investment/profit it sucks quite

> frankly.

>

> H

[hpsaucey]

rahrahrah Wrote:

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

> What's really irksome is that investor's get tax

> breaks.

>

Didn't know that - shocking!

[Earl Aelfheah]

rahrahrah Wrote:

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

> This is interesting:

> http://www.theguardian.com/business/2014/feb/02/lo

> ndon-property-market-bubble-cool-down-ey-item-club

"....Arguably it would be more appropriate to treat it [London] as an investment market, rather than a residential market."

[Twirly]

rahrahrah Wrote:

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

> This is interesting:

> http://www.theguardian.com/business/2014/feb/02/lo

> ndon-property-market-bubble-cool-down-ey-item-club

It is. And as I said earlier, it's those rich foreign buyers again. If this is correct, then it is up to the government to do something about it, but I suspect they won't, and it will be the poorer people who live in London who suffer. Those who have stretched themselves now before they get priced out of the market altogether, whilst those rich foreigners flit off with their profits to the next investment opportunity in the next country...

[LondonMix]

I have friends and neighbors buying here and in Brockley and houses are selling above asking in most circumstances. Our neighbors have gone to sealed bids on multiple properties.

Trying to extrapolate what?s happening in East Dulwich to the rest of London isn?t appropriate. Areas that have recently gentrified are increasing in value at a much faster rate than London as a whole. In fact, prices in central London are actually lagging behind London suburbs now . http://www.bridgepoint-ventures.com/media-center/opinion/outer-london-property-prices-gaining-on-central-zone/

It appears the market is so tight in central London now that en masse, a large number of buyers are moving further afield to areas that once were too grotty for them to consider. Similar to most major cities, London is undergoing a shift. The current massive pricing discrepancies between areas within the city are reducing. This happened in New York 15 years ago. Manhattan once had grotty cheap areas but now is pretty universally gentrified and expensive.

Even amongst areas outside of Central London, East Dulwich?s house prices are increasing faster than average in part due to new amenities?better transport links in surrounding areas, the increasing appeal of Peckham (the reputation of Peckham used to put people of ED but as its reinventing itself as a hipster / artistic hub that is changing), increasing numbers of nice shops and restaurants, improving schools, etc are all playing their part.

I think most people who are buying are looking at where they live as a home not an investment. However, I agree that price rises has frightened more people into buying now to avoid being priced out of their preferred areas. However, I have 3 friends who have bought in the last 6 months and no one paid more than what they were planning to. Price rises meant they moved to cheaper areas or bought smaller houses. I?m not sure there is any evidence borrowing ratios are actually increasing in London or the country as a whole.

[lane lover]

Those that think there will be a fall in London prices - especially a "pop" - are way off the mark.

The current sharp increase in prices is driven by:

1. Foreign investment. Cash is coming out of the EM/BRIC countries into the West as growth prospects improve. Hence, London is becoming the World's bank. SE22 is indeed impacted by the kick on effects from the rich.

2. A lack of supply relative to demand. More people want to live in London and the level of new builds is clearly too low.

3. Increasing availability of credit. I saw 5% deposit mortgages are back. Scary!

Hence, to offset this increase:

1. Foreign investors would need to leave London. Fat chance: especially when the pound is still below historical levels.

2. New housing: not going to happen overnight. Indeed it will take a number of years.

3. Banks reducing mortgage availability. Banks are heading the other way and currently reducing deposit levels and increasing salary multiples. Also, rates remain low. Mortgages are seen as a good money earner for banks, and there is increasing competition for market share.

Those buyers already in the market are riding with the market - hence creating more equity to pay higher prices. Those who arent on the property ladder are those who are losing out at the moment.

Its a sad state of affairs, but house prices will continue to rise for some time to come.

[Earl Aelfheah]

... or by a hike in interest rates... or another banking crisis brought on by 5% deposit mortgages and the like.

Personally, I don't by the lack of supply argument. 70% of new builds in London are snapped up by investors and I'm sure a large number of them are overseas. So how many would you need to build for it to have an impact on the residential market? It's not like there are fewer properties than people - far from it, in prime London there are a lot of empty properties. Until government pursue policies which discourage international speculation in the 'property investment market', then prices will be all over the place and bear no relation to local wages or housing need.

[Earl Aelfheah]

70% of new build homes snapped up by investors:

http://www.dailymail.co.uk/money/mortgageshome/article-2394704/Foreign-investors-snap-70-new-build-homes-central-London.html

Billionaires row scandal:

http://www.theguardian.com/society/2014/feb/02/tories-taxing-poor-ignoring-billionaires-row-scandal-labour

[DovertheRoad]

I guess everyone's a property expert on this thread.

They've already hit foreign buyers with a new CGT charge from 2015 - but as it's based on any value increases from that date it won't have much impact for another 5+ years.

Jacking up interest rates is about the only way forward now.

[Earl Aelfheah]

I'm not sure anyone is claiming to be expert, but we are exchanging opinions on a public forum.

[DovertheRoad]

Yeah cool.

Base interest rates back to 3.5-$% to give 5-6% mortgages is the immediate solution.

[Mick Mac]

DovertheRoad Wrote:

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

> Yeah cool.

>

> Base interest rates back to 3.5-$% to give 5-6%

> mortgages is the immediate solution.

You're a ray of sunshine.

[ratty]

Wouldn't that just create lots of homeless people?

[LondonMix]

I really don't think anyone is pushing themselves to breaking point. Personally, no one I know is doing that as they are all aware of potential interest rate rises (mortgage lenders have to illustrate this to you explicitly during your meeting). The stats also suggest that lending multiples are not increasing dramatically and affordability for 2013 compared to 2012 actually improved...

https://www.cml.org.uk/cml/media/press/3620

http://www.cml.org.uk/cml/media/press/3743

As you can see, lending multiples have increased by circa 4% for first time buyers from 3.59x to 3.74x between 2012 and 2013. Mortgage repayments (as a precentage of take home pay) have actually become more affordable for first time buyers in 2013 in London.

[Hillstop]

Having just looked at property for sale in N16 & E5, it actually makes prices in ED and the surrounding areas look relatively affordable. Hackney has gone crazy. My favourite was a fixer upper 3 bed terrace off Church Street for ?950k. Unbelievable.

[cle]

Where we are (Ivanhoe/Grove Hill Rd triangle) seems to be mental. ?1m houses are not a rarity and it's quite scary stuff. I guess it's also overspill from the Grove Park/Camberwell Grove market as well as ED/Bellenden ones.

But on the other hand, if you get ?1m for your house, then it is worth that. And property doesn't have a static value, nor do areas. They're constantly evolving and shifting, so you could never say it's "too much" because the market dictates that. And you can guarantee corresponding areas are going up similarly so it's not unique to the area.

Anyone tempted by the HS1 Javelin trains? Could have a palace by Seasalter!

[Mick Mac]

MrBen Wrote:

>

> The current London price spike in housing started

> in July 13 and prices have risen so steeply since

> that, rather than continually play catch up,

> agents have just gone super high and are now

> taking offers. This means that current valuations

> are now much higher than any actual sale amounts

> that will be achieved in practice. If I'm wrong on

> that and you have just sold (i.e. exchanged) your

> non-descript 4 bed terrace with bad layout for

> ?1.2M let me know....

>

> Just my opinion......

Agreed - there is a 1.35m on Friern Road (yes Friern Road!) now and a couple of 1.2s on Upland Road. But nothing to my knowledge has actually ever completed for more than a million on these roads according to nethouseprices. http://www.nethouseprices.com/index.php?con=sold_prices_street_detail&street=UPLAND+ROAD&locality=LONDON&town=LONDON&cCode=EW&year=last_three_years&house_style=All&house_age=All&search_radius=&outcode=SE22&incode=0DA&isSearchPostcode=1

Of course it takes 6 months approx to complete on a house, so a December 2013 completion reflects summer 2013 prices, but it will be interesting to see how these optimistic pricings pan out.

As against that I'm told by someone trying to buy a 2/3 bed that the asking prices are being regularly exceeded and in general an asking price offer has little hope, its best bid over asking price in ED now, sometimes 30/40k over asking.

Not sure this also applies to the 4/5 beds though, they take a little longer to go under offer.

[El Pibe]

Did anyone watch the report on Inside Out London. It laid the blame squarely at the feet of China & Hong Kong.

[Mick Mac]

No, but I don't really get the foreign money argument at our level. I know they say it filters down, but I have to admit I don't really understand it.

[Jeremy]

Property investment is very common in China/HK - not just amongst professional investors or HNWI, it's not uncommon for middle earning professionals to invest in overseas property. But surely there are other factors here? Not least that London seems to be continually increasing its economic dominance over the rest of the UK.