The property market looks like its going to collapse and that's a good thing

[Ellreejeee]

Surely this madness is going to end soon and it will benefit the country?

Shed for sale in Somerset in someone back garden for 150k. Look at the pictures www.rightmove.co.uk/property-for-sale/property-37137567.html

London is insane, most overvalued many are saying www.bbc.co.uk/news/business-34676643

The average london house has earnt 2 pounds an hour for the last decade. And that's tax free if its your own home!

That 230k house looks fabulous value for London! Might be a mistake though.

I do think people just need to work more (2nd and 3rd jobs) and understand they won't be able to afford to live within walking distance of a tube.

If people keep working hard they can move up the ladder. The best thing is to just buy a studio that they can afford and then climb up the ladder.

I know people who were sitting on budgets of £800K in 2009 and couldn't find what they wanted. Expected more for the price and just kept looking and looking. Now, it's clear to see that the market moved on and they really should have just settled for the best available at the time. It's hard to imagine a property crash in the SE with rising population and foreign money pouring in.

I've managed to locate a version of a story I read elsewhere earlier this year. Apparently the number of new-build mostly 2-bedroom flats under construction, with asking prices in the region of £1 million, is 14 times the number of properties sold at that price over the previous year. (And those properties would have been bigger, on average.)

moneyweek.com/the-train-crash-waiting-to-happen-in-new-build-property/

I don't think this is a problem. Even if initially the new properties all get bought up by foreign investors, who leave them empty, all it takes is a clever new annual property tax to force them to either sell or let out, and a significant amount of housing capacity is added to the London market.

I like the new towers and think they will be good for London, but wouldn't buy in them at the prices they're asking.

Still no sign of the OP, then?

Posts a provocative OP, and after a couple more comments, buggers off never to be seen again? Goady fucker, perchance?

all it takes is a clever new annual property tax to force them to either sell or let out, and a significant amount of housing capacity is added to the London market.

Agree. Osborn seems asleep at the wheel on this one, though. It just never gets done. Not under Blair, or Brown, or the coalition, or now the Tories.

And don't forget there is a new annual property tax - ATED (startingv at £3k a year( which starts on flats worth £500k which apoplies to any residential property held by a company or trust.

Can you provide a link to that ATED change? Currently its on houses worth more that £1 million and really exists to stop companies avoiding paying stamp duty and such.

Its too low at £3000 if it is. That won't discourage firms from owning property, as its less that 1% and property is rising faster than that.

I'd suggest proper council tax reform, absolutely ridiculous that people who live in flats and houes that have gone up in value so much are still paying tax based on 1993 rates.

From next April www.ukbudget.com/commentaries/extension-to-ated.aspx
I had to break the news to a relative who is planning to buy a London flat within their limited company.
I know quite a few people actually who have bought London flats within their companies and will be hit by this as usually the flats cost under £1m but might well cost £500k.

It is certainly a precedent for an annual property tax based on values which I suppose they might change council tax to at some point (hope not as it would be yet another kick in the teeth for Londoners who need lower taxes than the rest of the country not higher given the fact we have to pay higher house prices).

Just thinking of the OP, will the London property market crash? Tokyo's did. New York and San Francisco's didn't though. Not even in the recent financial crash. I reckon London is closer to the New York market.

Which property market is going to collapse?

DB has a flat in London that has doubled in price since he bought it about 5 years ago. I'm sure lots of people in London would like the market to collapse

We have a detached house in the NE that has only just recovered its pre-2007 price according to Zoopla, although I doubt it would actually make that price.

thegiddy, same with my parents' house in the NE and that's in a fairly prosperous city on lovely road etc. The market is very split at the moment.

I saw my daughters for lunch in London yesterday. One was ssyaing she was so glad I pressured her to buy a London flat in 2012 before she could easily afford it - she let it out, had a buy to let loan (they were allowed then for your first property, they aren't now) let it out for two years and lived at home and with friends. At the time we weren't sure if it would drop in value as the previous ownes had had it for about 5 years and it had only risen £5k in value (that is in London !) but it has probably by £100k. All those sacrifices and costs and hassles of dealing with tenants and leaks and the new boiler that had to go in etc etc, were worth the effort.

It is hard to know even in London though when prices will flatten. At the moment there remains a shortage of property and viewing days and first day open for sale kind of stuff you get when there is a big property shortage. That might change of course and already people would might have bought further in will be looking further out in Surrey, Kent, Herts etc.

Allmybestfriends you don't need wealthy parents to be able.to buy a house. I didn't anyway! It's easier to get a FTB mortgage than some think.

When I say 'easy' the banks are actually very picky but I was surprised how low of a deposit was needed.

I don't think the property market will colapse, it may flatten out but prices long term are not going to come down, especially in London where the population is going up.

House prices in the NEW have started to recover to 2008 values, and have been above that in places like Durham for some time. Friends of mine who bought I'm Consett were a bit unhappy when theirs fell, but demand for houses there is just not the same.

Buying just before prices rise 25% or 50 % is pure luck not hard work or judgement.

Working two or three jobs to buy and live in a tiny studio seems nonsensical. You setting up long term problems stress. Logically it should be that a professional job gets you a small one bed flat with reasonable commute .as was the case in london til few years ago....but if you choose to work three jobs sure you get a 3 bed.

If you have kids you cant go out working three jobs.

If you have kids you cant go out working three jobs.

But you can (generally) go out working extra hours before starting a family, and avoid this problem arising.

I don't know essential, in the professional jobs I've had, "extra" hours aren't paid, you just do the extra hours for free. And, if you were "moonlighting" you'd be dismissed.

London will never crash. Doubles every 10 years that's why everyone invests there. Can't really get safer than bricks!

A couple on a professional graduate wage can buy a one bed flat for £200k in my London borough. Most people buy before they have babies and whilst they have two wages.

Yes, you have to plan ahead with your life. At uni, there was a girl in my class who bought a one bedroom flat in her second year. She worked in Tesco alongside her degree to pay the mortgage. A lot of us thought she was crazy, not just saddling herself with a mortgage but a one bedroom flat in a city she might not want to live in. Of course she sold it for a good profit, bought something nicer and now lives in a very expensive house.

Its not so easy to do that now, but it is still possible to buy a studio apartment on a single professional salary in London. I bought my first flat with a bank loan ("for a car") from the bank as deposit - cheapest way of borrowing. But you need to set yourself up before you have kids.

If I couldn't afford a large enough property and had to rent, I'd buy a studio and rent it out, so I had something for my retirement. I'd get a bank loan for the deposit if I really couldn't save for it.

Also, whats with people not wanting to move out of the centre or commute? My dsis has a lovely two bedroom house for rent on the outskirts of (another city), lovely area, and the number of potential tenants that have turned their noses up at living out of the centre is unbelievable, despite the fact its a new build in excellent condition, has great public transport links and is at a much cheaper rent than the centre properties. Yet the same people will no doubt be moaning about unaffordable rents!

Settling - I moonlighted as a junior lawyer/trainee - on weekends I used to tutor local kids. I'm sure the firm wouldn't have been delighted if they'd found out, but the likelihood of them doing so was minimal. Another lawyer friends works as an estate agent on weekends and has done so for years.

Life doesn't always go according to plan tho. Unplanned preganancy Divorce disability etc. They don't allow for smooth "ladder" and massive price rises in two or three years can wipe out plans. It s not down to poor planning.... steady rises in prices _ fine. Massive leaps make the market bonkers and you can't plan. Or if you on the wrong step at the wrong time.

Yes I know, Cestlavie (appropriate name!) but that's no reason for not planning at all. And I honestly don't understand why people are so fussy, or so dismissive of other peoples' choices not to be fussy.

I bought a house in a village close to my hometown once very cheaply, because it had both wet and dry rot. It was in fact mortgageable with a smallish retention. It was incredibly, ridiculously cheap because no-one else wanted it. The local paper ran a story that same week, with a photo of a young couple in their early twenties, no kids, standing outside a 4 bedroom detached new build, bemoaning the fact they couldn't afford to buy it. Now the 2 bedroom house I had bought would have been ideal for them, particularly because the man was a joiner, and I'm pretty sure they viewed it at the same time as me but turned their noses up at it. That house probably cost not double the price of a new car.

EssentialHummus I had two jobs for a while as well as a junior lawyer! I used to teach evening classes in the local FE college. I got permission from HR but honestly I don't know why I bothered, since everyone knows juniors don't get paid a decent salary anyway! It was a bit of a juggling act, since both required quite a bit of out of hours work (preparation).

I noticed in past 5 years whilst working in residential conveyancing that lots of youngsters bought with a sizeable deposit from their parents. Mostly as this was the only way they could afford to buy.

Lots of retirement age people bought buy to let properties and downsized to buy these too.

We also had lots of buy to let portfolio clients who would basically buy in cheaper areas (Catford, South Norwood, Mottingham etc) and often ex council properties.

Our area covered SW19 and surrounding areas so not exactly cheap. estate agents are numerous in this area and do a brisk trade.

I didn't honestly notice prices dropping if anything increasing.

Actually the street where I live in past 5 years prices for 3 bedroom semis have sky rocketed by a significant margin (combo of good school, nice area, very child friendly, villagey feel etc...)

Most of the 3 beds are 1920/30 semis which have 2 double bedrooms and a tiny box room so lots of people are now extending into loft or out into the back garden which tends to be big enough to do so.

I think prices have tailed off or dipped in past year though.

London will never crash. Doubles every 10 years that's why everyone invests there. Can't really get safer than bricks!

I bought a London flat in 1989 and sold it ten years later for slightly less than the original asking price. After you adjust for general inflation that means selling at a significant loss after ten years. (Though I was selling to buy a bigger property, so arguably property price index rather than general inflation would be a better benchmark, any "loss" on my sale was offset by a "discount" on my purchase.)

Prices fell about a third in the first year or two that I owned the 1989 purchase. Property was worth less than the mortgage for about ten years.