sign of crash in london?(46 Posts)
Some observations in north london recently:
2 chain free property, was on the market since March. Asking price 900K and 950K respectively. Based on my evaluation at that time was over 10% higher than 'fair' price. We offered 800K and 860K in April respectively and was rejected. Both houses reduce asking price to 870K and 920K 3 weeks ago, today received email from agent saying it is open to offer OIRE 850K and 900K...
2 bed flat in the same area, on the market since last thursday, the asking price is 100% of 5 years ago. Today (one week) it reduced 10K..
property was asking price at 1M since March, now changed with another EA with asking price at 900K today
My colleague just had to put his house in London back on market after chain collapse and received an offer for 80k more than previous sale price (sold in March originally).
Maybe area dependent?
There was an article in the Telegraph yesterday (sorry, my IT skills are not up to posting a link), saying that there had been a big drop in the demand for 'luxury' areas in London and there had been a dramatic drop in St. John's Wood.
It seems that a lot of people are capitalising on the differential between London and outside to buy a much bigger home for their money, as now appears to be the optimum time, before the rest of the country starts to catch up.
I am following it closely, as I want to buy a flat in London for my DC, but I am very unsure as to whether or not now is the right time. I look at some of the prices and my gut feeling is that they are too high and that London property is not good value for money right now.
I seriously wonder who can afford these prices. I know that the agents talk it up and that there is huge demand, limited supply etc, but how many people, even with two high earners in the family, can afford to buy even an average home in zone 2?
My impression is that a huge amount of people are mortgaged up to the eyeballs and that as soon as interest rates go up, which they surely will - the latest talk is that it might be as early as this year - the London market will be affected. I don't expect that prices will ostensibly fall as such, but the market will stagnate, and those who need to sell will be forced to be more realistic in their asking prices.
Aren't those examples of vendors testing the market and reducing asking prices when it was apparent that they had overpriced rather than an imminent crash?
The London market is propped up by a constant influx from overseas that spreads ripples outwards. Don't expect a drop. If you want something, I'd buy now, long term, London property only heads in one direction & that's upwards. I'd look in areas where there is lots of construction going on because the developers will be competing against one another. Edgware is good right now & there's masses of choice.
The people who buy in London are wealthy. Amongst the over mortgaged or those who have taken advantage of crashes and falls are many many people who buy without mortgages, who are wealthy. In these London property threads people seem to forget they exist.
Just wait for that property crash nutter to come on now
OP I think it's been acknowledged for at least 6 months that the London market is cooling but it won't crash. Never has really, as hard as 2008 was it was over quickly
Yes, I think you are right in all you say, Moonlight. We are to the north of London, and here it's still madness, no doubt driven by people moving out from the city. We've just completed on a property that we sold before we were even on the market. Our buyers had a cash injection from bank of mum and (retired banker) dad. I think the market may stagnate in London, and there may be a fall in some of the grotty areas where people are mysteriously paying stupid money, but the better areas won't fall.
London property prices increase. Full stop. They may stall briefly. They may fluctuate minimally.
Overall they steadily increase.
Any other script you attempt to impose on the facts,can only be hypothesis based on .....not a lot.
My cousin had a flat in Highgate in 1989 that he couldn't sell for years. Anyone seen a black swan recently?
You always get properties you can't sell. Our last one (£900k 2 bed flat) didn't sell for a year, because it wasn't period. It was priced ok, (ie cheaper than period equivalents) just needed to wait for the buyer who didn't care about period features to come along and he did (wealthy, paid in case, bought it for his daughters first home)
I've been keeping a very very close eye on the property market round here (naiceish area in West Hertfordshire, just outside the M25) for three years now - we eventually bought last month after renting for 2 years since selling our old place in London.
I have a Chrome plug-in that tells me if a price has been reduced or gone up since it was on the market and by how much. Before Christmas, prices only ever stayed the same or even went up if a sale fell through. But in the last 3-4 months and especially the last month, there are so many reductions now. Half the new listings on Rightmove seem to be reductions. Houses used to be on the market for days and then disappear, now they're staying on for months. It's definitely cooled down here, whether that's temporary or not, who knows.
So basically, as usual, it looks like we bought at the wrong end of the market. Again. We sold our last house just before the last great rise too. I'll never learn!! (not that I've ever really had a choice about when to buy/sell, sadly)
I bought my house in north London in February last year OP and moved four months later after completion. You may remember this was about the peak period of London property prices. Friends and family had advised this was the wrong time to buy in view of the looming General Election and the much predicted property crash to follow.
I took no heed and proceeded. I’ve never believed London property prices to crash come hell or high water having lived here in this great city for more than 30 years. Just checked Zoopla two minutes ago and it tells me my property is worth 12% more than what I paid for just over a year ago. And I’m in no great hurry to sell anytime soon.
Exactly what Belleview said.
Anything else is anecdotal!
agree with Belleview.
Depends on the individual house, too. There will always be some that are overpriced, for whatever reason. The vendors may be comparing their house with another, but potential buyers don't see them as equals. A completely done-up house that's in horrendous taste and terrible layout may be priced more highly but be worth less to a prospective buyer than a similar house untouched for years. How much do you allow for railway lines, busy roads, school catchments etc?
I am afraid that I am older than the demographic on MM and I remember the crash of 1987, unfortunately. We paid a mortgage on a house in North London for 7 years and then had a to sell the house at less than we paid for it and take a loan for the shortfall when we sold. We were trading up so negotiated a good price on the property we were moving to, so it worked out ok in the end.
However, it is naïve to believe that London property prices can't come down. The crash in the late 1980s was triggered largely by interest rate rises
Yes, there are wealthy people but not every one is a cash buyer, maybe up to a third. Property prices have to bear some relation to earnings and prices are now running at over 12 times earnings in the capital. This is only sustainable because of the historically low interest rates.
What we probably need is a period of inflation so that earnings rise and the mortgage debts become proportionately smaller, but I don't see that happening for a while.
Interestingly, one of the headline threads running on MN at present is how people struggle even on a dual income mainly because of high housing costs.
Another backup evidence would be the number of mums in MM that believe London house will never crash
I would like them to crash, as so my DC can eventually afford to buy. But politically, it seems it's been decided to keep interest rates low... if interest rates do go up suddenly, then that's another matter. I remember the 80s, too.
Well increasing house prices aren't a good thing for anyone - apart from the minority who downsize. The "value" of your house goes up and you want to trade up then the "value" of it has gone up more.
The crash should have been allowed to happen in 2007. It would have been over with by now and there would have been a more level playing field with lower house prices. Much better for the majority.
I think it's only a matter of time before house prices stagnate or start to fall. Common sense dictates if wages aren't rising for most people how can house prices go up and up and up. But I don't think they will fall significantly till the interest rates go up and then it might be panic.
It's a simple answer really, the economy is and has been f.cked since 2008, to people thinking we had a crash then and look we are fine now are on another planet. If we are fine why are interest rates so low propping the whole pyramid up? We are now in an even worse position that 2008, if interest rates do go up which I don't think they can it will be carnage. Essentially all that can happen now is the market will reach new peaks in areas and stagnate essentially as people won't be able to borrow anymore.
"The crash should have been allowed to happen in 2007." Hear hear!
But politically, it's been propped up. For example, you still get tax advantages re BTL. That should be stopped.
In our area we could never afford to buy, despite having two really quite good salaries. We're looking at tiny houses (zone 3) in not very posh areas away from transport for £550K - they're just not worth the money when the same amount pays for enormous 4 beds only a couple of miles out of London. The price of the houses on the street we're renting on has tripled in 10 years, while wages have stagnated. It's all well overdue for a crash imho.
In the 80s interest rates went up suddenly by several % (to about 15% iirc?). This market could do with interest rates going up a couple of % simply because there's absolutely no incentive to save (so people put their money in houses...).
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