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!

London house prices will only crash if foreign money stops flowing in.

Huge amounts of these luxury developments will remain empty, not even rented and will act as just a port for investment.

If there is a market wobble, then this money will soon exit and the trickle down will be fairly catastrophic.

Its hard to imagine buying a home in London now

My first property we bought in 1978 for £9000 3 bed semi in the North West. When we talk of a crash how far do you think property would fall before it would be considered good value. My next property was a tiny studio in central london for £17,000. That was in 1982. Will property crash back down to 1982 prices? The next was a 2 bed terrace in North London for £36,000 in 1985. Are 2 bed North London terraces going crash down to 1985 prices? My next is the current house I am living in. 2 Bed bungalow with a large garden in South Herts. Bought in 1997 for £150,000 are we looking for prices to return to 1997 prices. The bungalow we have spent just under £100,000 remodelling to turn it from an 1100 square foot to 2000 square foot.
In 2007 it was valued at £475,000, prior to the remodelling. It is now valued at just over £1.1million.

At each point people have advised us to wait for prices to crash because they thought that prices could not go up any further and at each point we have ignored people and bought.

Where do people think house prices, especially in London, are going to crash down to? The question is if you think prices should crash down to a given year then you have to ask the question why you didn't buy in that year if you now think that year was the most affordable.

I think oliversmummy has a point. Our London home is now valued at over £4 million (crazy price!) it's not going to be affordable to us unless the market crashed to the price it was 25 years ago. I just can't see that happening.

this is bonkers asking price but par for london right now
www.rightmove.co.uk/property-for-sale/property-54963662.html
have a look at floor plan...it's clearly a one bed flat converted to three slim bedrooms...

Ugh, £600,000 for such a sad little flat.

Cestlavie - that flat is in Hampstead (NW3), which (apologies if you know this, but for the benefit of our viewers...) is a very expensive area which isn't really representative of London.

There is a real affordability crisis in London and the SE, but I don't think that particular flat exemplifies it at there is postcode cache at play.

I think the enormous price rises over the last couple of decades is a key issue with London prices. If our current property dropped 25-30% overnight it would still be worth more than we paid for it in 2012.

I bought a 2 bed flat in Zone 2 in 1996 for £73000 which I sold several years later at a decent profit. It is now worth at least 7 times what I paid for it so even if it halved in value it would be well above the value 19 years ago.

The flat is Primrose Hill which is luvvie central and has always been ridiculously expensive

Can't see London crashing any time soon, we've been trying to buy somewhere and there's normally at least 10 couples looking round in one day. People seem to offer over the asking price.

Meanwhile there are luxury flats popping up EVERYWHERE, I don't know who they're for, £450 000 for a 2 bed flat in a gritty part of SE London, it's mad. Mega depresso.

If our current property dropped 25-30% overnight it would still be worth more than we paid for it in 2012

This. Also, there are two markets (three if you include the insaniac "prime" category) - new developments of flats aimed largely at foreigners who regard London property in the same way people used to gold, and family houses for your actual London resident. The latter are in massively short supply, especially near good schools.

Our house is still worth less than we paid for it.

The London house price issue is not just to do with overseas investment its to do with the growing population of the place.

In 1939 the population of London was around 8 million but between then and its lowest level in 1991 the city lost over 2 million people in population. People moved out of the city to new towns, to the suburbs, to the commuter belt. This is what led the change in house prices.

Why could you buy houses in zone 1-2 on quite a normal salary back in the 80's and 90's? Because demand was low. The trends have now changed, people prefer city living over suburb, there are significantly more economic opportunities in London for young people starting careers etc etc. This all drives demand.

The population of the city will be an estimated 10 million in 10 years time, there will still be more demand than supply. House prices are going only one way.

Even a world wide market crash is likely to see more money flowing into London as the property market is seen as safer than the stock market.

But longtimelurker if the housing being built in London was more affordable bog standard flats rather than swankpads that would help house the increasing population, those flats are just out of reach to normal people. And they are popping up EVERYWHERE.

But "bog standard" flats in zones 1-3 are always going to cost a fair whack because of the leases they will have had agreed on them.

All over London there is property going up, go look at Hendon and Colindale, West Hampstead, Finsbury Park etc etc. Not all of it is flash, but it does cost a lot because of the cost of the land/lease.

Prices are rising in all areas of London but there are still affordable bits if people are realistic about the area/type of property. e.g. a 3 bed house with garden in Beckton (zone 3) for £255k. Not everywhere is going to be as expensive as Hampstead.

www.rightmove.co.uk/property-for-sale/property-50223496.html

Ah but witefarm, don't you know its everyone's god given right to buy a property where they want to live.

One of the great things about London's rental market is that actually it allows you to live in areas that you couldn't afford to otherwise. My area for example is full of 20 and 30 somethings, while they can afford the rent, they'd struggle to save enough to put down a deposit.

FTBs are going to have to do what people like me did in the 1980s and 90s, move somewhere unfashionable and "settle" your area. It worked for us!

I live in West London and it boggles me that 3 bed houses priced at £1m are built and bought within months.

What jobs are they doing, the people who buy these houses?
And these are often people with 2 kids at private school plus 2 expensive cars with this £1m house.

Another 6 built and sold in the last 3 months with 200 yards of my house - there must be a lot of people with money in London. I still boggle at what they do for a living.

Ah but witefarm, don't you know its everyone's god given right to buy a property where they want to live.
*
One of the great things about London's rental market is that actually it allows you to live in areas that you couldn't afford to otherwise. My area for example is full of 20 and 30 somethings, while they can afford the rent, they'd struggle to save enough to put down a deposit.

FTBs are going to have to do what people like me did in the 1980s and 90s, move somewhere unfashionable and "settle" your area. It worked for us!*

Most people do understand that, we currently rent in zone 2 but are looking to buy in zone 4, still doesn't mean it's any less competitive out there!

Bold fail sorry.

What jobs are they doing, the people who buy these houses?

15 years ago, a late-20s single girl-about-town, buys a flat for £150k on her £35k salary as a middle manager. Boy of similar age does the same. Both get 90%+ mortgages, as was easy back then.
10 years ago, they meet and move into one flat and rent the other out. Both flats now work about £250k, so £100k equity each

5 years ago, they sell one flat for £350k and buy a £500k house

This year, they sell the house for £800k and the flat for £500k and can buy a house for £1m, with enough left over to do the loft conversion, new kitchen, and have plenty left over for school fees.
Or they don't sell the second flat and that pays the school fees.

The key is that more than likely got a toe-hold in the market 12+ years, and that first flat will have been somewhere that was a bit grotty at the time, but is now highly desirable - Balham, Shepherds Bush, Hackney, Stokey, Brixton, Clapham. All perfectly affordable when no one wanted to live there

Spot on spare change.

When I bought a flat in now highly desirable Maida Vale back in the 1980s and kept it on when we moved up to Kilburn in the 90's. Both times people wrinkled their nose at where I was going to live, back in those days everyone wanted to live in Kensington, Islington and Notting Hill and whined about the prices there!

Longtime,

Of my friends, the ones who now have family houses are the ones that bought grotty flats in their 20s, in areas no one wanted to be in (Balham, Old Street, Tulse Hill, Finsbury Park, Cannonbury)
Those that carried on living in rented flats in Fulham and Islington are either still renting, or have bought a flat.

It is also going to be that you can rent somewhere much nicer than you can buy, and lots of people would prefer to take that option.

I'd be very pleased if prices did collapse but I'm not holding my breath.

They're obviously well out of kilter with incomes and rents but on the other hand interest rates are practically zero & there's probably a genuine shortage in a few parts of the country.

I really object to people praying for a crash... Great so you'll see thousands out on the street, just so you can buy a little cheaper.

No matter how much you have saved a crash will also probably mean another credit crunch, banks will stop lending, or only lend in very risk averse circumstances. That means that property that you will be able get a mortgage on will be no more than 2.5 times your salary + deposit.

This means that, especially in London, prices have to crash in a massive way. If that happens the economic implications are so far reaching that it would take ages to explain the consequences.

Sad thing is, that if property values crash it still won't benefit FTB cause they will get smaller mortgages, at higher interest rates and as likely the economic situation will mean that a lot of them won't have jobs to get mortgages on!

Okay can they just stagnate for a bit then