To wonder wtf is happening with the London property market?!

[MeAndMine21]

Unbelievable. It's never been this bad.

Will it just keep going up?

Very interesting read.
DH and I bought a 3 bedroom gardenflat last year in zone 3 for £275k, it was a struggle and we queued up to view maybe 20 other properties before we got lucky and our offer was accepted.
Dh grew up in this area, I am from overseas. People definitely are put off when we say where we live but the area has changed massively since he was a kid (we even have an organic cafe!)
I suspect we live close to Deo from reading her posts.

red
I'm talking about the volume of sales : the proportion of the housing stock affected by buying and selling
and its under 4% in any year

and its under 4% in any year

and what's the regional variation? That makes a difference.

But the other point is that even if it is having a small affect on RPI (not yet established that it is, especially regionally), that the inflation is showing up in housing prices. To counter the claim that it's just not anywhere.

Second, your claim (I think it was yours) that a rise in interests rates will cause a collapse of the economy. What does that tell you?

that too many businesses are over leveraged because debt is tax deductible and equity is not.

I know in the NE where I am from originally my parents' hold house went up something like 7% over the last 5 years which is not very much. The markets are so regional. Even out here in outer London we have about 6 years before and after the credit crunch with very few rises at all whereas inner London was increasing.

The BoE is expected to make banks hold higher capital ratios for BTL mortgages than residential mortgages. That will cause BTL interest rates to rise without increasing interest rates for businesses and residential mortgages.

Central London is fairly stagnant at the moment.. We have just had an offer accepted on a flat (everything crossed) but it took ages to find. The agents all say there is a severe shortage of stock under £1m but in the over £1m market, people aren't buying anyway because of the changes in Stamp Duty.

I would have thought that even the changes in stamp duty woudln't have had that much of an effect, if you can afford houses over £1 million you can afford the stamp duty..

From reading up on a few things, and talking to a few in the market, SD hasn't had that big an effect, but the waiting pool of people who are able to pay for the most expensive properties has fallen. The growth in these properties was exponential between 2009 and 2015, there cant be that many people left who need one!

www.economist.com/news/britain/21679496-house-prices-go-through-roof-londoners-explore-beneath-floor-subterranean-home-slip

i thought all the surveys showed high stamp duty was crucifying the upper end?
I won't move to give the state £300k for the privilege so they won't be getting one iota of stamp duty from me.

My sibling is probably not going to buy the £1m+ London second property because they don't want to bestow unto the state masses of stamp duty.There are other assets in which to invest without bothering with handing the state such a huge windfall.

" if you can afford houses over £1 million you can afford the stamp duty.." No treally. It tends to be dual couples working all the hours God sends and with massive mortgages. it is not people with £1m cash in the bank.

Ignore the headline here but look at the data:

Month on month prices fell by 0.1%.
New prospective buyers declined by 34% but viewings only fell by 4%. Sales volumes in September rose from August and were on track to match September 2014.

So prices are very slightly down, speculative demand has fallen considerably, but sales in September were like on like for the previous year. Its hardly stagnant, just not growing at an exponential rate as before. Which if you consider how many are able to buy that kind of property is probably about right seeing as the number of sales of this type rose between 2009 and 2015.

I don't rate the argument about not handing the state such a huge windfall. Surely the properties of this type wouldn't be worth anything as much without state input.

Fairly pleased someone who is set to buy a £1 million plus "second home" for investment purposes has been put off.

Also this statement " it tends to be dual couples working all the hours god sends". Lets do the sums on this figure.. So lets start with a deposit.. How much do you need to have a house worth £1 mil, so lets start with the very basic 10%, that leaves £900,000 mortgage to pay. Ok so to get one of these you would need to have £200,000 dual income a year. Which gives you approximately £16, 666 a month gross salaries. The increase on SD for this type of house is only £3,750. I'm sure someone on that kind of income can cover it.

Otherwise the people buying properties like this, and yes I know the increase on something that is worth £1.5 million is £18,000, are ones who have seen the value of their own property rise significantly and are able to pay hefty deposits themselves. Again, the increase isn't really an issue for them.

The people buying this type of property are not put off by taxes, please don't trot out the "working couple" line because it really doesn't make sense.

It depends if we continue to get increases. If prices don't rise then big stamp duties make those who might move - couples from a flat to a house say - are a waste of money and definitely have stopped people making so many interim moves.

As for our young couple no one will weep for them but higher stamp duty is a lot of money for them to have to find so they might be more inclined to stay put and extend and any incrase in the property value isn't cash to them just as to me my house could be worth £3k or £3m - makes no difference to me as it will only be in about 30 - 40 years I die and it might be sold. So the stamp duty is the cash you have to find/ waste and the increase in property value if there is one is irrelevant for those not planning to move.

Most people buying at £1m have had years of earlier properties and property gains and hard savings rather than just coming in at £1m.

However the bottom line is that the state can legislate how it likes for tax and I certainly agree that higher stamp duties on second homes/ buy to lets may well have an impact. So it might well work. Though it may just reduce prices hugely which my relative hopes so that once the prices are much lower they will swoop in, take the stamp duty hit and buy to let. We shall see. Now after 30 years I've paid off my mortgage I'm going to help the children buy so I won't need to think about having spare money for buy to lets or second homes anyway for a good few years.

If you were watching The Apprentice last week, you can see what is causing most of the problems. People buy off plan, don't care what the flats look like because they never intend to live in them. These blocks of flats going up all over the place might as well be blocks of gold bars. They are bought to sit empty, then sold to someone else who wants to stick their money in the London property market. They don't even rent them out. Just buy by the square foot and sell on. Empty flats all over the place owned by foreign investors and criminals.

Lets be honest, the higher stamp duty isnt that much extra cash for people on the kind of incomes needed for mortgages of this type. Even £18,000 ro so extra on £1.5 Million is just over 1 % more.

So again, even with a hefty £600,000 deposit on a property we are still looking at a £900,000 mortgage and very large incomes. So not only are they fairly assett rich but cash rich too!

I think the slowdown in very expensive property is mainly to do with the demand shrinking, short term speculators and potential non-doms put off by rule and tax changes are a small part of this, mostly its probably down to there being only so many people who can afford that type of property and the slow down in the number of people moving assetts from economies like Greece, Spain etc.

I would say, that if you are looking to buy this sort of property though, you'd be pretty unwise to go for a big mortgage, interest rates rising by a small amount won't badly damage those with under £300,000 too much (a % change would see the mortgage increase by £100 monthly or so) but borrow a large amount and ....

Regen.. lots of speculation goes on with these off plan ones. Near me all the flats in West Hampsteads new build blocks sold when released off plan, 6 months down the line two or three have crept back onto the market and gone for £100 -£150 k more, nice work if you can get it !