Chartered Surveyor

A quick update on the London housing market Since April 2011 the market has gone quiet in the volume of instructions received. I must add that I am at the coal face and tend to get the cream of all instuctions. The remortgage market is getting stronger with applications applying for either 2 year fixes or tracker rates though it must be said the applicants are 60-75%LTV (Loan to value) An intersting trend is 75% of those sales I deal with are for BTL (Buy to let). This market suggests cash rich buyers are geting out of sterling. It is only an opinion of mine that I consider a sell off (the money markets that is), over the summer with a very short deflationary period about to set in. Gold silver will go down as well as all commodities. This is all contrived and to me is only a ruse, as the FUNDAMENTALS are only getting worse. Gold and silver will hold well. Here is an antidotal tale. Today I did a remortgage valuation. The house was bought in 2005 at £485,000 at just shy of a 100% LTV. The same house today is worth £750,000 yet the applicant now owes £490,000. This is replicated all over. At the end of the day most people waiting for a house price crash need to preserve their purchasing power. A significant nominal crash will NOT happen. So far against gold they have crashed spectacular. One should have sold out in 2008 and converted their £ savings and bought gold. Did you know Prime London for a house over £2milion has gone up 57% since 2008. Compare this agaisnt golds rise since 2008 and you will calculate a huge drop against Gold. I do not see this position changing even if you are late to the party in buying gold today. There is an old Biblical saying 7 years good 7 years bad. With Uk debt long dated I can see a few years hardship up to 2013/2014 just before the next general election were alot of money will be injected into the market to create the feel good factor. From 2015 onwards housing in the UK set against gold will be the sweet spot. The UK housing crash is not in nominal terms in sterling but against inflation and gold. My point is get out of sterling even now and buy and hold gold. The cycle will eventually reward you and I will say in 2015. If I am wrong as the markets can stay irrational longer that you can stay solvent then I will hold my hands up and say get on with you life as you only live once. But i am confident that I will not be wrong as I have put my money were mouth is and hold no sterling any more. Yes I am waiting to buy.. The value of a house in sterling is irrelevant. It is the amount of gold ounces is the measure. From now till 2015 housing values in gold onces will go down. My only regret is I never listened to my gut instinct and bought all the gold I could aford in 2008. I would be a content man now.

I will do a break down of Central and West London values on a £sqft shortly. Ealing new builds are grossly overvalued and are not selling. The cross tram link will not happen. As geography goes Ealing is actually one of the best areas in London for tube/transport connections yet it is not well perceived with London buyers. Stay clear of new builds this part of London and stick with converted period properties. At present these are averaging between £380 - £420sqft with average rental yields at present circa 4.3-4.8%. The market in this part of London is struggling especially flats.

Dr Bubb I would suggest you warn Hong Kong/.Chinese buyers about new builds in London. I recall Dickens yard you mentioned in Ealing. I have just advised a couple of lenders on the background to a new build in Ealing Common were the vast majority were Chinese investors who bought under companies held in the Virgin Islands. These new builds are trying to be resold onto the market. Surveyors are marking the value of these flats with very big haircuts. It would appear that fraud is still alive and well except new suckers are being sought in the far east.

The London market has gone very very quiet especially prime positions since April 2011. Maybe it is a new seasonal trend or is the market now telling us something is afoot.

If you think the City will hold out and continue to boom then London prises will not only hold up but carry on rising. For me its a false dawn and I am now raising the RED flag. The FUNDAMENTALS are all back to front. The battle may be won but mother market will always win the war. My gut feeling is something is gonna snap this year.

Goldfinger - I was recently asked to write a paper on the London rental market. The banks are now very interested in focusing their attention to this part of the market. There is real talk now with asset managers as to whether repo properties are to be released back onto the market to recover what they can or to be held back and let back to the former mortgage occupier. The scales are favouring the second option. So what we will get is not a greedy landlord held in place at the expense of the saver but a greedy Banking landlord propped up by the tax payer. Political time bomb this will be. It may also mean that the market will hold up that bit longer. Who knows?

As a fellow Chartered Surveyor the RICS spokesman for Scotland is a spiv and a talking head. He does not represent my views or all of the Chartered Surveyors that I know carrying out mortgage valuation work. We all know that the housing market is being held up by various means solely to protect the banks. To be fair government intervention has worked worked very well for the last 2-3 years and it has surprised me it has lasted this long. How much further this prop job will last I do not know. But what I can suggest is in my opinion the nationalised banks will soon become the biggest landlords in the country.

London Zones 1-4. My workload has just exploded. Housing is 5-10% above peak for family houses with demand far outstripping supply. Best and final offers are in full swing. Flats are now selling again after a very poor September - December 2010 period. Buy to let sales have also been very strong early part of 2011 especially properties below £500,000. Most buyers I suspect are City types disposing of bonus money. Alot of downzing has been noticed from Chelsea and Nottinghill especially families cashing in on their property and buying more space for their money in Zones 2-4. Will it last? or is this a crack up boom?

Goldfinger Thankyou for your time offered

Goldfinger Are you able to shed any further light with respect to your SIPP and SIPPs in general with respect to gold. I was inetersted in this about a year ago following an article I read but never followed this up. Is the minimum amount £50,000 that can be invested in a Uk SIPP and what is the investment in. Is is Physical Gold and stored at a bank or is it paper gold? Your comments would be most welcome on this topic.