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!

What I'd really like to see is real wages rising.

The multiple between average income vs. Average house prices just keeps increasing.

I'd agree settling, in many industries wages haven't really gone anywhere for about 10 years, where as inflation (apart from this year) has been fairly high.

I guess people have felt lucky to have a job since 2009...

A crash will probably mean that those with loads of spare cash and no need for a mortgage will be able to out bid FTB who will struggle to get a mortgage as banks will become very risk averse. I could get several btls in a major crash and make out like a bandit. It's not my cup of tea but you see how a crash would unfairly advantage cash buyers.

A wage increase to meet prices would be much better and more controlled solution than a price crash.

Probably already been said but I can't be arsed to read 7 pages (so shoot me), it isn't the shed that's worth £150k, it's the site. A developer will remove it and build on the plot attached to it.

I can't see them crashing any time soon unless interest rates shot up. On my current 3 bedroom terrace interest rates would have to go up to around 7% before it cost me more in interest than to own. Currently they are around 1.79% so effectively the difference is additional equity for my future family home.

It may not have been much fun being ftb in '87-'97. I graduated that year (1997) and could get a 110% mortgage.The multiples were crazy and they would lend to anyone. We definitely had it easy. I am 39 and me and most of my contemporaries own 4 bed houses in London or the home counties with minimal mortgages. Very unfair on the hose only 5 years behind.

There are a couple of factors that are going to impact on property prices, particularly London. First,no domiciled buyers will be liable for capital gains arising some point this year (I think April). That will start to make it less attractive to some buyers and make the UK more comparable to other countries when they are thinking of where to buy. Second the tax changes to the buy to let regime will make it less attractive to some landlords, particularly those with a high loan to value. This will introduce some more supply into the market but only gradually. Lastly I think housing is going to be such a politically sensitive issue that there will be more incentives for developers to provide normal as opposed to high end development. (Not that necessarily means affordable as most people will call it). As to whether there will be a crash, don't know. I really can't see prices continue to revise upwards. The huge cost of property, both residential and commercial, I'd already impacting people's decision on where to live.

• non domicile

Second the tax changes to the buy to let regime will make it less attractive to some landlords, particularly those with a high loan to value. This will introduce some more supply into the market but only gradually

This would be great if the FTBs actually bought the places coming available but having had several experiences with FTBs dithering and messing about then LLs who don't need such high LTV mortgages or cash buyers will quickly pick up the lower priced properties because the rental income will probably not be going down, more than likely it will go up with fewer rentals available so making the whole deal look very attractive. then the whole process of property prices rising will start again.

If that makes sense?

Ditherydora - are you still there? Can you explain a bit more about the non-domiciled buyers? Does that mean you think there will be a slow down in the rate at which foreign investors are buying in London and just leaving properties to rise in value, without even sometimes being bothered to let them?

How much tax will they pay? I wonder how much revenue has been lost already by not having this tax in place before now? I'm so angry about this particular issue! Blood is boiling.

Mintyy

In a nutshell, non-doms have not been liable for CGT on property they sold in the UK until recently. Osbourne announced a few years ago that the loophole was being closed, and all property owned by non-doms had to be valued by 1st April this year. Anything sold by non-doms after this date will be liable for tax on the difference between the 1 April value and the sale price (not the purchase price and sale price, as is the case for UK residents).

So it doesn't mean they will neccessarily stop buying, or start renting them out, but it does mean there is (a bit) of tax to be paid on them when they are sold on.

Thanks sparechange

It won't necessarily stop non dome buying, but will at least mean they might think twice

The property market will not collapse (at least in London ) when you can get £500 a month rental for a cupboard under the stairs in Camden .it is far cheaper to buy than to rent if (BigIf) you can raise a decent deposit .
There are too many people chasing too few houses . Propery market in West Midlands,LondonManchester (recent personal experience) is still very buoyant

for ftb or even moving up it isnt cheaper to buy versus rent in parts of london where 500k gets you a 2 bed flat at best (and these are flats which 2 years ago were going for 350-400k) as you need minimum 100k deposit really to make it as cheap as renting...100k deposit means 400,000 mortgage [meaning you have to be earning 100k....) which will cost some 2,300 (give or take) per month mortgage - which is same price as you paying rental for that flat. renting a 2 bed or 1 bed in nice area is cheaper on monthly basis than buying it - unless you have huge deposit of eg 100k/150k. to save up 100k in say five years means saving >£1500 per month for five years...

so buying the 2 bed flat you rent for 2200 in london means you on a 100k salary plus have 100k deposit saved up to get that 500k needed to buy it...also 2300 can rent you a flat worth 700k or 800k. (i know because that is what i am doing) and that would cost >£3000 /month for 600k mortgage - if one had the 100k deposit.

nice professional room shares can go now for £900 a month in london eg clapham (colleague at work - newly arrived from france...) . that would only get that person a 200k mortgage which would not get them anywhere near a one bed or studio flat to buy in same area - unless they had 150k deposit.

Yeah but after 10 years it will be cheaper and eventually you own the place so no mortgage to pay. That's why it's cheaper, not the first couple of years.

toby
Very few people can buy a property in London that will still be suitable for their life in 10 years time though...
Preference for location and size are things that change quite a bit in a decade

2 years ago I bought a 1 bed flat in a very nice area of London for £110,000. Mainly because FTBs had looked at it and turned their noses up at it. It was perfectly mortgageable but was really very very dirty. Sold it cleaned up 1 year later for double to a BTL. Tried to sell it to 3 FTBs who messed me around and spent thousands on mortgage arrangement fees only to pull out at the last moment for various spurious reasons.

FTBs need to realise that when you start out if you cannot afford your dream 2 bed flat in zone 1,2 or 3 then you have to travel and live in an area you can afford. Quick look on Rightmove and after discounting studios, over 60s living, auctions and shared ownership then there are 1 bed flats for sale at around £140000. A quick look at mortgages suggest that HSBC are doing 90% mortgages so with £14,000 deposit and a mortgage of £126,000. you can be homeowners.

Why would you be buying for the next 10 years. In 10 years I had bought lived in and sold 4 properties. The 4th one being completely unaffordable to me if I had tried to buy it 10 years before. When you start working you start at the bottom and work up so why would you not do that in property?

What Oliversmumsarmy said.

There is so much hand-wringing about the average price of property in London being £500,000. Well, a typical FTB/couple doesn't need an "average" property. A 1 bed/small two bed flat is fine, and although not cheap, isn't totally out of reach.

Hummus we sold our average two bed flat for over £500k last spring. It was zone 2 so relatively central but still over half a million for a two bed with no outdoor space.

There were no houses in our area for less than £1.2 million and they needed work. We're now in zone 5.

I don't know how we'd clamber onto the property ladder now (with two children to house and pay childcare for) if we hadn't bought in 2010 (for £375k so after prices had started to spiral) and we are both professionals earning well over six figures between us.

Don't know if anyone has mentioned Cambridge. It is eye watering here. We are lucky that we will make silly money on our house but our children will never be able to stay in their home town (unless they get remarkably well paid jobs). It's bonkers.

Until the average cost of a house is 2.5 times the average wage, nothing will improve. Until they have plenty council/rented houses for those who cannot afford a mortgage, nothing will improve.

The market was altered when folk were able to sell their council houses for hugely inflated profits and when interest rates fell so low that it's hardly worth saving anymore. This is an false economy, built on sand and when it crashes, it will be even more dramatic than several years ago.

Yes, most people start out in a dreadful outer London area in a tiny studio or one bed,. It is those who think they are entitled to some wonderful family home for their first time buy who will rent for life.

Will prices drop? Probably not any time soon in a major way in the SE. In the NE my parents' house has risen about 9% over the last 7 years. Here in outer outer London zoopla reckons my house has gone up 37% in the last 5 years and in zones 1 and 2 London my chldren's flats by 47% and 51% ( not that they have owned them that long) in the last 5 years. A massive regional difference. The house my mother grew up in costs £50k today (I kid you not - in a part of the NE) although even that would be hard to buy if you had two in a couple on a £14k a year minmum full time wage each).

It's expensive Bear, but your place (if you didn't move twice) increased in value from £375k to £500k (ish) over four years - a 33% increase in market value, consistent with price increases in the capital. It was fairly expensive to begin with.

(I speak as someone in a 2 bed flat in Zone 2, SE London, that cost £179k two and half years ago - now edging past £340k.)

There are cheaper properties available, in short. Not "forever homes", not perfect, possibly not in Zone 2, but people do what you did, and move out to Zone 4/5.

There are serious affordability issues in the capital for those on low pay, key workers, teachers and so on, but there is also a fair amount of hysteria. I posted on this thread to begin with because someone had posted a RightMove link to a dismal-looking place on the market for £600k that had been turned from one bedroom into three. Clicked on the link. It's in Hampstead. Well, no shit, Hampstead is expensive...

Better protection is needed for renters. Much longer leases if people want them. A tenant can be given two months notice no matter how long they've lived in a property; this should change.