To worry about the predicted 30% fall in London house prices

[feellikeahugefailure]

This would have huge knock on affects if they let this happen to everyone in the country.

It wouldn't help people that cant afford a home, it would probably make them worse off as banks won't lend. The poor will be hit the hardest by any downturn.

Mr Carney does need to do something imo, was surprised that the rate wasn't dropped. But it will have to be in August.

I know the evening standard last week was reporting that some London areas and developments have already seen a 10% drop since the referendum

House prices have already fallen in the City of London by 9%

prices in london went up by at least 30% 2014 to 2016 - (give or take, roughly - am going by local nw london specific properties i have followed - in some cases even more... ) so it's only taking it back couple of years really if they fall back. and you only impacting negative equity on people who bought with high ltv at top of market.

But is the drop, if there actually has been a drop more to do the stamp duty rates changing and everyone wanting to buy tried to get the deal done before the rate change and now we have a bit of a slump in sales because most got pushed through before as opposed to a steady flow of sales rather than than the results of the referendum

www.theguardian.com/business/2016/aug/09/average-london-property-price-falls-30000-in-july-haart-brexit-vote

It appears to be happening...

That works out at 5.5%

In West London it's 12% down and in North London it's 9% down, and that's after only one month.

"The impact of Brexit has been most dramatic in north and west London, Haart said. Postcodes stretching west from Mayfair through Hammersmith and Chiswick saw prices fall by an extraordinary 12.9% on the month alone, while in north London, prices plummeted by 9.3%, knocking £60,000 off the average home."

It's too early to say. There is also talk that the decline in sterling makes London property more attractive to international speculators. I expect such people (who frankly have no business buying London property) are waiting to see if prices and sterling drop further. If so, prices will go back up again soon enough.

Another point is that London has such a high proportion of luxury property (especially in places like Mayfair) that the averages are skewed by fluctuation in their prices. They show nothing for normal people. A 12% drop overall might mean 0% change for a 3-bed semi in Wallington.

The OP is right to be worried, prices falling in Chelsea by 13% and Camden by 15%. Even rents are falling in London which was always sold as this magical place where rents could only ever go up. Things are different now as the UK is not as an attractive place to move too or invest in. We have not even had Brexit yet and there are tougher lending rules coming in 2017. Thats probably why no one is buying at the moment, no point buying now when you could save thousands waiting six months or more.

Re negative equity. The problem with the argument "it only affects you if you want to sell" is that people's circumstances change and you become trapped. My parents had to live together for two years after they split up despite there being a lot of DV in the relationship due to negative equity, and I was raised in an extremely violent home due to negative equity. There are plenty of valid reasons someone might genuinely need to sell their house, other than greed or investment purchase gone wrong.

I dunno. Something's give at some point, Shirley?

Don't call me Shirley.

I'm not worried and I'm not waiting 6 months to buy even if prices did drop by 30% as I'm more worried about mortgage offers being withdrawn or lending criteria changing and not being able to buy

So I'm just about to exchange on a London flat. Even if it fell 30% it's still half the price of rental of the same size. And if things got desperate I could rent out a room.

I wouldn't care if all my equity disappeared as long as I could afford my mortgage.

Sentiment or palatable risk is key. There have been a hell of a lot of props to support prices since 2007 by Hmg and Boe.
Housing has now definitely become a political concern, the media is stuffed with negative stories to soften the public up for a crash.
I feel certain the props will be removed.
Just how far prices fall from these ridiculous levels remains to be seen.
As ever it starts in London, prime central first, and spreads out, reaching the regions a year later.
Highest gainers naturally lose hardest and first, heavy debt gearing on the rise works wonderfully, its a millstone on the fall.

Prices probably won't fall as much in the regions because there has been little or no price inflation in the last 10 years and they haven't even got back up to peak levels in some areas.

True, but 2007 was the genuine high, the crash should of cyclically happened then.
The last ten years gains have been supported by 300 yr low interest rates to save the banks.
The banks are recapitalised, rates will rise, there is no reason to think values cannot fall below the 2007 highs.

jennyj123 said " Even rents are falling in London which was always sold as this magical place where rents could only ever go up. "

Is that true?

What is going on in the London rental market atm?

We moved overseas a few years ago (hopefully temporarily), and our little London flat will be on the rental market soon as the tenant has given notice. What can we expect?

From a distance, it seems there are a glut of rental properties available atm - maybe a result of investors piling into the buy-to-let market ahead of Brexit and the stamp duty change.

If London house prices are set to drop significantly, how is that likely to affect the London rental market?

I let out a property in very central London middle GFC...massive city job losses and my rental income 20% down versus that I achieved in mid 2007.

It clawed back up quite fast but never again reached those 2007 heady peaks prior to my selling in mid 2014.

If Brexit impacts city jobs in the same manner, I fully expect the same effect.

Following. We aren't sure to sell in London and bail on the UK or buy a bigger place and commit to another 5 years here. Currently I think house prices are ridiculous and don't want to buy but if there was a drop we'd reconsider.

The only realistic way that house prices would plummet like that is if there was a surplus of available housing. This is unlikely because I can see only two plausible reasons that this would happen:
a) Massive population decrease
b) Too many new homes built

The first is unlikely because our population continues to grow, both in terms of immigration and because people live longer. Short of a total ban on immigration and the removal of the millions of immigrants already here (including their children and grandchildren) I cannot see a huge decrease happening. 60 years of immigration can't be unpicked unless the BNP get elected, which is somewhat unlikely.

The second point will regulate itself. Developers build homes to sell for profit, precisely because the demand is so high. It is effectively a risk-free investment. If house prices started to fall considerably, they would simply stop bothering to build new ones. They build for profit, not to provide more affordable housing.

I know someone who back in the early 90s lost £80,000 of inheritance from his aunt, due to a drop in house prices. I think she left the house to him. He had to sell low.

It happens. We advised him to rent and then seek elsewhere. He and his girlfriend had split up. These things happen. My mum's house will not sell for what she wants it to. But this doesn't bother me. I do hope to be mortgage free in a good home in the next year. I'm still poor though.

Earlybird - Yes it is true rents are falling - just google it but remember the media will try and put on a spin on what is really happening. There is a glut of 1-2 bed apartments coming on to the market in London, wages are stagnant and companies will not be investing in the UK now we have decided to leave the EU.

I know four friends, one girl from Denmark, two from Spain and a guy from Switzerland all leaving London next year due to Brexit and the falling £ means they are better offer working in native countries and not earning £'s anymore.

I personally would welcome a correction in London property prices- it is completely & utterly insane here!

Before anyone starts frothing at the mouth, I'm not wishing for a "massive crash", just some kind of re-adjustment.

It's the only way me & DH are ever going to be able to buy something in London.

We both have decent jobs & a deposit in place (just not enough- never will be!).

SnatchedPencil - house prices are mostly based on the availability of credit.

Why did they fall 20% in 2008/09? Did millions of people leave the UK?

Nope, in fact population continued to increase as houses fell in price every month. Prices fell because banks stopped lending and there were no props from the government to 'help' people borrow money. Interest rates only need to go up 2%, or landlords start panic selling 2017/18 as they are taxed even more or lets say Help to Buy is removed and this would turn sentiment and prices would see a similar large fall in my opinion. Please be very very careful if buying a house in this present uncertain economic and political climate. Only go for somewhere you will still be happy with in 10-20 years.

TurquoiseDress - take a look at what is happening in Vancouver at the moment. That might give you some hope to how things can turn very quickly. Foreign investors are being hammered by taxes allowing prices to fall to more affordable (but still high) levels for locals. Would not be surprised to see this from a Labour Major soon.