Property Watchers - are house prices ever going to stabilise/fall in London?

[twoisenoughmum]

And if so, when prices are falling, are you in a better position if you want to trade up or trade down?

Dino's cellar is luvverly! We didn't have a cellar done, but had a complicated extension done to kitchen and sitting/room. Wd recommend getting architects rather than dealing with builders direct as (a) they have ideas we would never have thought of and (b) they are used to dealing with builders and will take no nonsense. Builders do what they're told when architects, and you never have to confront the builders yourself, which is worth a fortune imo.

We are now moving ourselves and will need work doing again, and will def. get architects for anything but the most minor stuff. I have quite a few architect friends, happy to recommed if you need someone.

Btw dino, our moving costs are going to be significantly more than Blu's figure -- I nearly passed out cold when I saw the solicitors' quote for stamp duty and other fees. Once we've paid off Gordon Brown, the estate agents, the surveyor, the movers and solicitors and old uncle tom cobbleigh and all, it's an extra £50K on the mortgage. Ouch and ouch again.

Jeepers, that is a shocking amount of money. DS1 just better get into Moss Bourne, that's all I can say .

Well, I've made appointments with 3 estate agents to come and value our house next Thursday - gives me some time to tidy up the house LOL!

I was sort of stung last time there was a property crash (bought a flat in Hackney in 1988 and had to wait until 1997 to sell at the price we bought it for!) But, on the other hand, we bought a small 3 bed house in East Dulwich for £106,000 in 1998, sold in 2003 for £290,000. Now those houses go for £350,000 +.

We cannot afford to rent in London though! We would definitely buy, and as long as we down-sized enough to make the expenses of moving worth it, would have a comfortable amount of money to put in the bank.

Unless DH gets prospect of work very soon, I think this is what we'll do. I could work but, even if I worked full-time and DH did all the childcare, my salary would never cover our mortgage here plus living expenses. DH has about 3 x my earning capacity.

I'm a bit like Dinny. I'd like to see house prices coming down, and not just for my own selfish reasons. There is a shortage of property for everyone because the first-time buyers are just not there. I cannot see that this situation is good for anyone unless you are actually investing in property or moving away to a much cheaper area. For the rest of us, it makes no odds, does it?

Hit another nail on the head there tiem. Are you still in SE London? If so would be v. interested what your EA says about the state of the market etc? Also by what % your house has increased by. Please please don't think I'm being nosy just a rough percentage idea whould be fab.

Skiwear - yes, still in SE22. Estate agents not coming til next Thursday, the 25th, although they all almost bit my hand off when I described our house. Don't mind you being nosey at all. Its not as if I'd done anything to earn the money, after all. Will try and remember to let you know. One EA said to me "20% rise in the last 12 months in this area" if that gives you any food for thought. He hadn't seen the state of our house though! We bought it at rock-bottom price in 2003 because it needed a lot of work doing to it. Still not done the work! So we'll see if they're still so keen to put it on their books after next Thursday...

tiem they'll probably suggest a 30% rise then because of the "potential"!! Good luck for Thurs.

Sorry guys couldn't get back last night couldn't throw dh off the computer! Well the short answer is yes I do think prices will fall in London (and tiem if falling generally better to trade up). If pushed to guess when I would say possibly second quarter 2007 but some have said it will be 2008 before they do.! Why, well affordability, the market is built on BTL (which is now loosing money outside of increasing equity) and MEWing (mortgage equity release/remortaging) plus a smattering of interest ony mortgages and a dollop of self/cert and enhanced multiples. A recipe for a crash just like tha last time. FTB can no longer comfortably "get on the ladder" and people are having to buy what they don't really want/live where they don't want to live. Eventually a critical mass have enough and don't buy, no FTB/BTL and the market stagnates. However last time it took a big shock (interest rates went from 10 to 12 % ie increased by 20%!)admittedly coupled with the ?exchange rate whatever. Once people get a sniff of prices falling then even more will hold off etc.etc. Round here prices have been crazy 30% yoy increases for the last 2 years and quite frankly the places are not THAT nice! Small terraces that would push the salary of a GP!!
I think the availability problem has a lot to do with the fact that people can't afford to trade up (of all the places we saw/offered on recently the only ones to sell were people "moving to the country" developers are sitting on banks of land just not in their interest to build on it all) so a nice "correction" would help that too.
However there are factors that I can't account for. The banks have been relying on cheap money from Japan I don't know whether/if that will dry up. What happens when a critical mass default on their mortgage? There were rule changes associated with BTL that made it very profitable if some of them are reversed or Gordie sees it as the cash cow it could be for tax then the whole thing changes. Property is very difficult to get out of quickly so.....
There's my opinion fwiw no great insights I'm not an estate agent and certainly don't have an economics degree. I have also admitted that I am currently "priced out" so looking at this from a certain viewpoint! None of the weekend places have gone here yet! one back on the market from before Christmas but one did go from Sept/October!!! (was very overpriced will be interesting to see what it gets) Got to go wining toddler!

well piss yourself laughing the one from December has just gone up in price by 7%
who do we guess pulled out the buyers in horror at all the past and future interest rate rises or the greedy vendors!?

Interest rates do seem to have an upward pressure. However, this time around I expect any real decline in prices to be expressed as making it very hard to sell house.
In my view, people can cling on to their houses for a long time and simply wait for the negative equity to go away. The more violent the drop, the more that people will avoid selling if they possibly can. Thus reducing the size of the drop.
More people will do what we did, and move by doing a buy to let on the old property, indeed I expect to see the providers marketing such products soon.
I'd be quite shocked if there were wholesale repossessions next time around. They did the lenders no good at all, and there are people who are ready to snap up such bargains quickly.

The only thing that might cause a sudden hard drop, is if somehow the government got the balls to address the chronic housing shortage in this country. But that's very unlikely.

two, best solution would be if your dh could get another job. But if you think he will and you just need tiding over why not just remortgage and release some equity at the very least to pay off the £15k tax bill?

I don't think it's wise to get out of the market if you've a family. Also inflation is up so if that continues the amount you owe will in effect go down and wages will rise.

Not planning to get out of the market - just thinking about the possibility of downsizing. Since I have no idea whether or not DH will get another job, it seems to be a sensible option. If we add another £15,000 to our mortgage to pay off the tax bill, we just have the headache of increased monthly payments when what we really need at the moment is v small or no mortgage payments. We are very risk-averse as a couple, luckily have no other major debts and as we are both couldn't be less interested by things like house size or lifestyle or how much money x or y has in the bank, I think it might be the solution for us.

We were given details of a house today that is one post-code away from ours, still within reasonable distance of school, infact in better catchment for secondary schools, has 3 bedrooms like ours, but is smaller overall, and a bit shabby (but then so is ours!). Asking price £175,000 - £200,000 less than what we think ours will be valued at.

We are considering it.

You must do what feels right for you both. I'm quite a risk taker. I always think there is a fortune to be made in the future and things will always year on year get massively better.