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Frank Hovis

London - 1 in 3 analysts predict crash, 40% falls mentioned

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This is going mainstream.  Ok about ten years later than a lot of us expected but openly stating the possibility of 40% falls is going to spook a lot of people.

Bring it on :)


 

Quote

 

LONDON (Reuters) - House prices in London’s overvalued market will fall this year and next, a Reuters poll of analysts and experts predicted, and will tumble if Britain fails to reach a deal ahead of its departure from the European Union.

The quarterly poll of around 30 housing market specialists, taken in the past week, said house prices in the capital - where foreign investors have previously fuelled skyrocketing prices - will fall 1.6 percent this year and 0.1 percent next.

“Central London is tanking because the traditional international buyers are staying away - and the quantum of buyers is falling. A disorderly Brexit will exacerbate this trend,” said Tony Williams at property consultancy Building Value.

Uncertainty over how Brexit negations pan out has already spooked foreign investors. When asked what effect a disorderly departure would have on London prices, responses ranged from “short-term fall” to “damaging” to “disaster”.

“In the short term the additional uncertainty will disproportionately affect London, causing the value of some properties, particularly high value properties, to fall further,” said Ray Boulger at mortgage broker John Charcol.

Britain is due to leave the EU in March and sterling fell to a near one-year low against the euro on Tuesday amid no-deal angst. A weaker currency should make UK houses more attractive to foreign buyers but Brexit uncertainty is keeping them away.

When asked about the likelihood of a significant correction in London’s housing market before the end of 2019 the specialists gave a relatively high median of 29 percent. The highest was 75 percent.

But that might not be a bad thing - certainly for first-time buyers.

When asked to rate the level of London house prices on a scale of one to ten, where one is extremely cheap and ten extremely expensive, the median response was nine. Nationally they were rated seven.

“The weight of evidence suggests that housing is overvalued once more,” said Hansen Lu at Capital Economics.

In August the average asking price for a home nationally was 301,973 pounds and in London a whopping 609,205 pounds, according to property website Rightmove, putting home ownership out of the reach of many - despite historically low borrowing costs.

The Bank of England pushed interest rates above their financial crisis lows this month but signalled it was in no hurry to raise them further. It will add another 25 basis points in the second quarter of next year, taking Bank Rate to 1.0 percent, another Reuters poll predicted.

So with mortgage rates staying low house prices are expected to increase nationally by 2.0 percent this year and next - slower than inflation - and then 2.3 percent in 2020.

“We see little upward or downward pressure on house prices at current near-zero interest rates. However, risks lie substantially to the downside,” said Andrew Brigden at Fathom Consulting.

“Were interest rates to return to pre-crisis levels or higher, which may prove necessary if there were a sharp fall in sterling after a General Election, for example, then house prices could fall by around 40 percent.”

 

 

https://uk.reuters.com/article/uk-britain-property-poll/london-house-prices-to-fall-this-year-and-next-1-in-3-chance-of-a-crash-idUKKCN1LE0D6?il=0

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I've been watching a stack of property programmes set in Italy - people moving from here, to there. Those span about 15 years; you have to go back quite a way to find episodes about Italy since it's not a common destination.

In every episode, you hear exactly the same. "I spoke to the local agents", says the presenter, "and the market is up-and-coming. There are bargains to be had but it won't last. There's a lot of interest from overseas investors".

And in every episode, from circa 2003 to 2017, the identical thing happens. "This house has been on the market for 2 years. The vendor may accept offers". And, indeed, they do. A studio in a highly desirable coastal village to which "everyone" wants to move. On for £98,500. Offer of £80,000 (IIRC) accepted.

Offers at below the asking price being accepted isn't that unusual. It's the pattern. It cannot be simultaneously true that overseas investors are snapping these up, and, they're on the market for years with surprisingly low offers being accepted.

With property the next boom is always "just around the corner". Apparently. If you want a view of the property market, never ask anyone with vested interests in selling property.

But that's why your post is significant: if even those who stand to be impacted are warning of risks, and top-end properties in London are being increasingly offered as prizes in raffles because they "can't sell" (read as: they are overpriced and/or there is little interest anyway) while for example Foxtons appears to be going to the wall (no great loss to anyone) then the scope for further rises isn't evident. And the property market is like a juggernaut, rarely does it stay still. It takes ages to turn and when it does it remains going the same way for a long time.

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Funnily enough when I was buying "Practical Classics" for a few years there were always several interviewees every episode who shoehorned in how great a bargain their particular model of car is now, how prices are only going to keep rising, buy now while you can afford it, don't miss the boat etc.

Having been on ToS for several years prior to this I recognised this for the desperate, wishful, ramping propaganda that it actually was rather than thinking "Oh, I must buy immediately".

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The market in my area has pretty much ground to a halt. Checking Rightmove lots of the nice boomer/probate property (£550-800) that have been listed for near on a year are STC or under offer but very few seem to be going through by the looks of it. I guess it takes a while to filter with the lag but only four properties sold in June according to the rightmove house prices section.

Something like this would have sold really fast this time last year but now...

image.png.2bbb60f1a2d1c4679cc5295f1e248984.png

The few I know personally that is actually buying/bought recently is doing it through Help To Buy. I don't think there really is much of a market in the SE outside of that. One friend who was selling their property in Croydon area, with a planned moved to Kent, has just taken their house off the market after a year and two sales falling through. The last one was meant to be a cash buyer but turned out to be a BTL'er and couldn't get the funds.

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6 minutes ago, Frank Hovis said:

Funnily enough when I was buying "Practical Classics" for a few years there were always several interviewees every episode who shoehorned in how great a bargain their particular model of car is now, how prices are only going to keep rising, buy now while you can afford it, don't miss the boat etc.

Cars are definite bubble territory, a couple of big dealers in trouble (JD Classics for one) some gone bust (Cheshire Classic Cars) but still valuations are rising. However cars are not selling so the valuation is irrelevant.

It seems to follow the same pattern as houses because people treat both as investments, not as shelter and transport.

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Sounds like another Brexitwogapocalypse prediction to try to scare us into a soft Brexit (I shamelessly pinched this phrase from THE MAJOR). Wishful thinking for most people but the City / MSM don't get it.

 

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Posted (edited)

I read this recently.   

Quote

Expensive London property is getting more expensive, but people ain't buying

I think this is a likely scenario, at least for a little while -- a completely dysfunctional market with no volume.  Of course, the Chinese (mostly) investors might force a crash when they have their great depression next year (or whenever).

1 hour ago, Option5 said:

Cars are definite bubble territory, a couple of big dealers in trouble (JD Classics for one) some gone bust (Cheshire Classic Cars) but still valuations are rising. However cars are not selling so the valuation is irrelevant.

It seems to follow the same pattern as houses because people treat both as investments, not as shelter and transport.

Great story I read earlier in the week in Pistonheads*, here.  The article itself starts of very nicely (..!)

Quote

Taking out a loan to buy a future classic isn't entirely crazy - not if it'll pay off the interest by appreciating in value

[I left it in big bold because it is such a great line]

But the interesting thing is the comments, which are pretty much all scathing of the idea.  And if all the potential customers are saying that it's going to crash, well...

[I love the term 'future classic'.  I myself have made loads of money by investing in 'future 10-baggers'.  Sorry, did I say 'made'?  I meant 'lost'.]

[* Pistonheads' editorial are such tarts -- half of their articles are about selling cars that their advertisers have for sale.  I find it a bit depressing -- petrolhead kids should be buying up clunkers and turning them into monsters by effort, not dreaming about the best type of finance to buy a (nearly) new BMW.]

Edited by dgul

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31 minutes ago, dgul said:

I read this recently.   

I think this is a likely scenario, at least for a little while -- a completely dysfunctional market with no volume.  Of course, the Chinese (mostly) investors might force a crash when they have their great depression next year (or whenever).

Great story I read earlier in the week in Pistonheads*, here.  The article itself starts of very nicely (..!)

[I left it in big bold because it is such a great line]

But the interesting thing is the comments, which are pretty much all scathing of the idea.  And if all the potential customers are saying that it's going to crash, well...

[I love the term 'future classic'.  I myself have made loads of money by investing in 'future 10-baggers'.  Sorry, did I say 'made'?  I meant 'lost'.]

[* Pistonheads' editorial are such tarts -- half of their articles are about selling cars that their advertisers have for sale.  I find it a bit depressing -- petrolhead kids should be buying up clunkers and turning them into monsters by effort, not dreaming about the best type of finance to buy a (nearly) new BMW.]

Love the comments!

"Find a car that is going to appreciate" - FFS!

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23 minutes ago, Frank Hovis said:

Love the comments!

"Find a car that is going to appreciate" - FFS!

It goes with "Find a house that's going to appreciate"

TBH the "modern classic" car game is a joke and I for one will be happy if it collapses even though I have skin in the game, my insurance is partly based on valuation.

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Just now, Option5 said:

It goes with "Find a house that's going to appreciate"

TBH the "modern classic" car game is a joke and I for one will be happy if it collapses even though I have skin in the game, my insurance is partly based on valuation.

Ditto houses, I own a house but if all house prices dropped 40% fine by me.

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40% would be a dream.

We'll see. Already seems to be starting in NE London where I'm looking. Anything that's not htb is stalled or dropping price wise.

Friend was looking recently and even the EA told her, off the record, to wait a year if she could!

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Posted (edited)
25 minutes ago, spunko2010 said:

40% would be okay, 75% (In the SE) would be great.

I'd say it would depend on the property.  40% 'on average' would be a stretch -- they'd intervene way before it got to that.  But 50% on a house that needed work, etc but in a decent area* and that needed to be sold (probate usually) -- sure, very possible.  The largest falls will be the shitty properties in shitty areas -- the falls could be extraordinary.

[* IMO this is the shame about the recent market -- the tired but otherwise okay house has gone, the price bid up by semi-amateur do-it-uppers.  This means that the young family can only move into a new or newly done-up place -- but those were the very individuals who would have (historically) done the place up slowly as their children got older.  The market would be a better place if there was capital gains tax on all property; this would dissuade that sort of activity from professionals, but leave normal folk alone**]

[** CGT on normal residential only has the effect of keeping property prices under control.  It never produces the situation where people can't afford to buy 'as they can't use the gain on their old property' -- Indeed, it is the very inability to use the gain that keeps prices under control]

Edited by dgul

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Posted (edited)
4 hours ago, Admiral Pepe said:

The market in my area has pretty much ground to a halt. Checking Rightmove lots of the nice boomer/probate property (£550-800) that have been listed for near on a year are STC or under offer but very few seem to be going through by the looks of it. I guess it takes a while to filter with the lag but only four properties sold in June according to the rightmove house prices section.

Something like this would have sold really fast this time last year but now...

image.png.2bbb60f1a2d1c4679cc5295f1e248984.png

The few I know personally that is actually buying/bought recently is doing it through Help To Buy. I don't think there really is much of a market in the SE outside of that. One friend who was selling their property in Croydon area, with a planned moved to Kent, has just taken their house off the market after a year and two sales falling through. The last one was meant to be a cash buyer but turned out to be a BTL'er and couldn't get the funds.

Ive recently done a job offshore and was getting £500 a day doing absolutely scary as fuck stuff .. and if i worked 12 hours a day every day for 2 years and the tax man kindly said i didnt have to pay tax or NI during this time ... and he gave me several thousand pounds worth of luncheon vouchers to feed the family aswell as free fuel, free rent and days out ...... I could then afford a that house that ought to be knocked down in a crap part of London that isn't even London!

Cant but help thinking somethings gone seriously wrong here.

Edited by Banned

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31 minutes ago, spunko2010 said:

40% would be okay, 75% (In the SE) would be great.

It'd need somewhere closer to the 75% so 4-5 times salary buys an average house. It will happen eventually as the one thing Gidiot said correctly is you can't run an economy on house price inflation and debt ... then he got elected.

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10 minutes ago, Banned said:

Ive recently done a job offshore and was getting £500 a day doing absolutely scary as fuck stuff .. and if i worked 12 hours a day every day for 2 years and the tax man kindly said i didnt have to pay tax or NI during this time ... and he gave me several thousand pounds worth of luncheon vouchers to feed the family aswell as free fuel, free rent and days out ...... I could then afford a that house that ought to be knocked down in a crap part of London that isn't even London!

Cant but help thinking somethings gone seriously wrong here.

You are earning in real terms half of what you would have done in the 1970s.  Government aim successfully realised - cheap labour.

Houses cost in real terms ?four times what they would have cost in the 1970s.  Government aim successfully realised - expensive capital.

Nothing has gone wrong; the government serves big businesses and rich property owners.  They don't represent or give a stuff about working people other than to ensure that they keep working by preventing them from saving or clearing debts so that they keep paying income tax and NI and pushing out the pension age because "we" can't afford it.

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8 minutes ago, Frank Hovis said:

You are earning in real terms half of what you would have done in the 1970s.  Government aim successfully realised - cheap labour.

Houses cost in real terms ?four times what they would have cost in the 1970s.  Government aim successfully realised - expensive capital.

Hence why i cant be fucked to work too many days.

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Posted (edited)
28 minutes ago, Banned said:

Ive recently done a job offshore and was getting £500 a day doing absolutely scary as fuck stuff .. and if i worked 12 hours a day every day for 2 years and the tax man kindly said i didnt have to pay tax or NI during this time ... and he gave me several thousand pounds worth of luncheon vouchers to feed the family aswell as free fuel, free rent and days out ...... I could then afford a that house that ought to be knocked down in a crap part of London that isn't even London!

Cant but help thinking somethings gone seriously wrong here.

It really is quite sickening.  The thing is we are all really to blame by playing the game. Friends of ours who bought in London at the tail end of 2015, think they got a steller deal on a 3 bedroom that looks like its an ex-council house. They've done a fantastic job on the inside, still no hiding they probably bought a RTB from someone for £600k. Who do you think is buying up our nice 3,4 and 5 bedroom houses here in Hampshire? You really can't make it up. I've tried to drop crumbs about HTB to friends, they're not interested. They still go and lock themselves into an overpriced shitbox. The brainwashing is strong.

Edited by Admiral Pepe

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7 hours ago, Frank Hovis said:

Funnily enough when I was buying "Practical Classics" for a few years there were always several interviewees every episode who shoehorned in how great a bargain their particular model of car is now, how prices are only going to keep rising, buy now while you can afford it, don't miss the boat etc.

Having been on ToS for several years prior to this I recognised this for the desperate, wishful, ramping propaganda that it actually was rather than thinking "Oh, I must buy immediately".

When it comes to cars i hate to say it but they were probably  right the first one would not even been classed as a classic at the point in time ,that im guessing you are talking about 

https://www.kgfclassiccars.co.uk/details.php?cid=873

https://www.kgfclassiccars.co.uk/details.php?cid=884

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2 minutes ago, Long time lurking said:

When it comes to cars i hate to say it but they were probably  right the first one would not even been classed as a classic at the point in time ,that im guessing you are talking about 

https://www.kgfclassiccars.co.uk/details.php?cid=873

https://www.kgfclassiccars.co.uk/details.php?cid=884

Wow.

You're right about the first one; not Practical Classics' thing at all.

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8 minutes ago, Frank Hovis said:

Wow.

You're right about the first one; not Practical Classics' thing at all.

The Scooby P1 is a limited edition so is collectable (but not as much as the 22B).

Fiesta XR2 was just a common hot hatch, even the Fiesta supersport is rarer.

 

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Remember the 1980s Vauxhall Nova 1.3 SR 'warm hatchback'? When I was 19 I fancied one of these secondhand as they looked cool but were cheap to insure. About £1500 for a 10 year old example in good condition.

Multiply that figure by 10 for this one:

https://www.ebay.co.uk/itm/Superb-Early-Vauxhall-Nova-1-3-SR-Fully-Warranted-16K-Miles-From-New/223018189327?hash=item33eceb820f:g:PscAAOSwf05bIqaB

s-l1600.jpg

Never underestimate the value of trying to sell a car with a white background. :D

Anyhoo...back on topic. Yep, I'm glad that the London housing market is suffering. I hope it's not long before we feel the ripple effect of it in Norfolk!

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2 minutes ago, UmBongo said:

Remember the 1980s Vauxhall Nova 1.3 SR 'warm hatchback'? When I was 19 I fancied one of these secondhand as they looked cool but were cheap to insure. About £1500 for a 10 year old example in good condition.

Multiply that figure by 10 for this one:

https://www.ebay.co.uk/itm/Superb-Early-Vauxhall-Nova-1-3-SR-Fully-Warranted-16K-Miles-From-New/223018189327?hash=item33eceb820f:g:PscAAOSwf05bIqaB

s-l1600.jpg

Never underestimate the value of trying to sell a car with a white background. :D

Anyhoo...back on topic. Yep, I'm glad that the London housing market is suffering. I hope it's not long before we feel the ripple effect of it in Norfolk!

!6k for a Nova, the worlds gone mad.

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Posted (edited)
27 minutes ago, UmBongo said:

Remember the 1980s Vauxhall Nova 1.3 SR 'warm hatchback'? When I was 19 I fancied one of these secondhand as they looked cool but were cheap to insure. About £1500 for a 10 year old example in good condition.

Multiply that figure by 10 for this one:

https://www.ebay.co.uk/itm/Superb-Early-Vauxhall-Nova-1-3-SR-Fully-Warranted-16K-Miles-From-New/223018189327?hash=item33eceb820f:g:PscAAOSwf05bIqaB

s-l1600.jpg

Never underestimate the value of trying to sell a car with a white background. :D

Anyhoo...back on topic. Yep, I'm glad that the London housing market is suffering. I hope it's not long before we feel the ripple effect of it in Norfolk!

Norwich is the only airport where planes land and advise you to set your watch to local time, it's really difficult to wind your watch back 50 years :D

Oh and I have half a house in Martham :)

Edited by Option5

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