UK House prices: News & Views

[BoldAsBrass]

Just reading the post above about Barrat's - I thought I would have a look at the share price of Berkeley Homes - the developers of the house I mentioned in the post above. Their share price went from 3285 on the day of the referendum down to 2685. So they fell 18% while Barrats fell 50%. I wonder why Barrats fell so much more.

[AndyT]

Just reading the post above about Barrat's - I thought I would have a look at the share price of Berkeley Homes - the developers of the house I mentioned in the post above. Their share price went from 3285 on the day of the referendum down to 2685. So they fell 18% while Barrats fell 50%. I wonder why Barrats fell so much more.

 

I think Barratts are much larger and more diversified.

 

I'm intrigued by the example of your sons who are paying £1200 per month, where the rent would be circa £1900. If you dont mind me asking - did you put down a very large deposit? It sounds like an enormous difference. I've been waiting to buy for years (in my 40s now) but I havent seen sucha wide gap between renting/buying.

[drbubb]

The very low interest rate helps, I believe.

 

How long with this last? That's a big question, I suppose

[drbubb]

UK - Falling property prices : "biggest drop since November"

 

The price of homes for sale in England and Wales fell in August, posting the biggest drop since November, as the summer lull added to uncertainty surrounding Britain's decision to leave the European Union, property website Rightmove said on Monday.

Asking prices fell by a monthly 1.2 percent, according to a survey by Rightmove that covers properties put on sale between July 10 and Aug. 6, after shedding 0.9 percent in July.

The biggest drop was in London and the South East, with asking prices falling by 2.6 percent and 2.0 percent respectively.

"Many prospective buyers take a summer break from home-hunting, and those who come to market at this quieter time of year tend to price more aggressively," Miles Shipside, Rightmove director and housing market analyst, said.

"This summer is also affected by both Brexit uncertainty and the aftermath of the buy-to-let rush in March to beat the stamp duty deadline."

Britain voted to leave the European Union in a referendum on June 23 - a decision many economists think could tip the economy into recession and which prompted the Bank of England to cut interest rates for the first time since 2009 earlier this month.

More http://uk.reuters.com/article/uk-britain-economy-housing-idUKKCN10Q0OE

[drbubb]

(Note on London Property from JLL)

 

Update on Prime Central London market as of Q2 2016 – report from JLL London

This week JLL issued press releases on both the sales and lettings markets in Prime Central London. Both releases contain a vast amount of information about the market at present so, given the level of detail, we would like to present them in their entirety. The definition of Prime Central London in terms of the data used covers the postcodes of SW1, SW3, SW5, SW7, SW10, W1, W8 and W11.

PCL sales market press release

Prime Central London sales prices decline in Q2, but the market is demonstrating resilience given strong headwinds

The Prime Central London (PCL) sales market was notably quieter during Q2. This was driven by a combination of EU referendum uncertainty and weaker demand after the Q1 buying surge to beat second home stamp duty surcharges. In addition, higher stamp duty for high value properties continued to impact on market demand.

Demand eased during Q2 as potential buyers adopted a wait and see approach ahead of the EU referendum. Since the vote to leave the EU, and the subsequent weakening of sterling, some international buyers have been more active although uncertainty still remains, especially for the medium-term PCL outlook. We have seen some activity from domestic purchasers in this market, encouraged to buy now that the result is known.

The number of properties on the market has increased again during Q2 as vendors fail to sell or elect not to sell at prices unacceptable to them. This additional choice and bargaining power for purchasers is contributing to the price falls.

Neil Chegwidden, Residential Research Director at JLL reflects on the impact for prices: “Given recent uncertainty it is unsurprising that prices have weakened during Q2. On average prices have fallen by 3.3% in the year to Q2, as a variety of influencing factors have impacted on confidence and switched the balance of power in favour of buyers.”

Prices slipped by 0.9% in Q2 having fallen by 1.1% in Q1. Price falls over the past year have been greater for higher value properties although large lateral flats continue to hold their value better than other large apartments or houses.

The sub £2m market continues to be the most resilient. However, prices have fallen marginally in each quarter since Q1 2015.

In the year to Q2 2016 the number of sales increased by 13% compared with the year to Q2 2015. It is notable that transaction levels had reached the highest level in 8 ½ years in Q1, showing that overall the market remains very active.

===

(received by email)

[rigger]

http://info.lonres.com/rs/147-UIS-364/images/LonRes%20Residential%20Review%20Summer%202016.pdf?aliId=501759

 

Q2 2016 was apparently down 40% yoy.Overall H1 was 25% down in terms of transactions

[drbubb]

THIS Video is from an old friend in London who has sometimes posted on GEI

.

The Top Ten Causes of Wealth Inequality

Published on 14 Feb 2016

Dominic Frisby on the Top Ten Causes of Wealth Inequality.

 

(the TAX System is an important subject, but little exploited in comedy shows... thus far anyway)

 

Dominic Frisby discusses his new Edinburgh Festival comedy show about Tax with The Gentleman Cabbie

 

Published on 3 Aug 2016

Dominic Frisby chats to The Gentleman Cabbie about his new Edinburgh Festival comedy show on Taxation, how he became a financial writer and columnist and his views on the London property market.

 

Why is London Full of 1-million Quid, 2-Bedroom flats?

(And how much is 1-million quid? Answer: USD 1.33 million, or about PHP 60 million. That's BIG money)

 

To answer the first question, checkout the video below:

 

(this one is good too - but less relevant for PH, where the land suplly was not so restricted)

 

"A Functioning 21st Century economy?"

 

Why you will never own a home ... New app explains

 

Published on 26 Feb 2016

The real reason for unaffordable houses explained through the medium of Dominic Frisby's new economics app which ensures they remain unaffordable.

[BoldAsBrass]

Sorry for delay replying - don't look in that often. Deposit was about 30 grand I think. They used help to buy and have a mortgage of £385k which is fixed for 2 years at 1.99%. What will happen if/when interest rates go up who knows. That said, they could move home and rent it out if things get sticky. And they are both relatively at the beginning of their careers so should earn more as time goes on.

 

I was in two minds about their decision to buy. On the one hand it seems nuts, but we have been waiting for a correction since the early 2000s and, even with the 'global financial crisis' of 2007/2008 - prices didn't go down that much (where we live) and recovered again within a few years. They only moved in a couple of months ago - but the house was reserved by someone else 6 months earlier but they failed to complete. My sons bought it at the '6 months ago' price. Now, let's say about 8 months on from when that house was first reserved, houses on the next phase (which are a little bit smaller and not so well specified, are going for £40k more than they paid.

[AndyT]

Sorry for delay replying - don't look in that often. Deposit was about 30 grand I think. They used help to buy and have a mortgage of £385k which is fixed for 2 years at 1.99%. What will happen if/when interest rates go up who knows. That said, they could move home and rent it out if things get sticky. And they are both relatively at the beginning of their careers so should earn more as time goes on.

 

I was in two minds about their decision to buy. On the one hand it seems nuts, but we have been waiting for a correction since the early 2000s and, even with the 'global financial crisis' of 2007/2008 - prices didn't go down that much (where we live) and recovered again within a few years. They only moved in a couple of months ago - but the house was reserved by someone else 6 months earlier but they failed to complete. My sons bought it at the '6 months ago' price. Now, let's say about 8 months on from when that house was first reserved, houses on the next phase (which are a little bit smaller and not so well specified, are going for £40k more than they paid.

 

That makes sense now as they're not paying for the £100k or so from Help to Buy for 5 years. Im not one to push this, but if I was going to buy a new property I would definitely use the scheme especially in London where its 40% contribution. That figure itself demonstrates the insanity of our current situation!

 

Like you I waited for the crash that didnt really happen. I think that if it ever does, it will crash everything in the country and that's will stop at nothing to keep it going.

[colonelmustard]

I don't know about the London market..other than to say it is unique..but in my area outside London..lets call it the Shires.. the market seems bouyant. I know two examples of property sold recently one was with an agent who shared it with " trusted " clients and sold in 6 days without being offered to the general public. In the other instance the flat sold by word of mouth before coming to market.

 

My impression is there is alot of cash looking for yield and they are buying property with it. Also heard of people who were planning on buying in Europe but after the Brexit vote and fall in Sterling have cancelled those plans and invested in property at home

 

Things may change but if you don't want to invest in the stock market a 5 % yield on rental property doesn't seem a bad return compared to 1% or less in the bank.

[AndyT]

It's a fair point and it's not one I've had to deal with until recently: my mother is retired and spends most of her time back home (in another European country) and recently she decided that to simplify her life, she should sell her freehold property (shop plus flat above). The only problem is that it earns her an income and its around 6.5% which is not available almost anywhere else, so she is thinking about putting it in the hands of an agent so she can move back home and not have to deal with tenancy issues directly.

 

This confirms what you were saygin about returns - there are not many classes of investment that do as well as property which is why it can be compelling and so much money ends up there. This may be obvious for most, but its taken me until this point of having to help deal with 'excess cash' to realise that property 'makes sense'. It is surely insane to keep stoking the bubble but I'm finally starting to think that my 'priced out' generation may be priced out for good and the crash simply wont happen (or at least it may not be dramatic).

[drbubb]

LONDON: Jewel no more

 

Says article in today's Business World (PH) via Bloomberg

 

:London is at risk of becoming the country's worst-performing region

Rightmove says asking prices were up just +2.5% in the past year, making it the 2nd worst region

 

+ National price inflation:+ 4.2%

+ northeast was the worst performing, at -1.20%

 

"London used to be the country's Jewel," said Miles Shipside

Average prices in London are GBP 645.8k, - more than double the national average

[BoldAsBrass]

This reply is to AndyT's latest post (this forum software is weird - you click Quote under a post and it opens a window at the bottom of the screen to reply in ... you are not sure if your reply will appear where it should. Anyway ...

 

I never thought I would say this, but I would advise and encourage you to do whatever you can to buy something. Lifelong renting is not desirable unless you have a sensible rent and an assured tenancy - neither of which are available these days unless you get to the top of the 50 year council waiting list.

 

I've been into this 'house price crash' thing since before the original HousePriceCrash site was set up. Post 9/11 we had, at the time, a 50 year low in interest rates (yes, 3.5% base rate was a 50 year low then!) - house prices were rising and I was convinced we were in for a repeat of 1988 when we did actually have a house price correction (I won't say 'crash' as house prices are very, very sticky on the way down - whereas they go up at the drop of a hat (or an interest rate). I sold in 2003, rented, and gave up in 2010. I think my foray into renting (which was horrible, by the way) did save me about £50k.

 

But, back to the present day.

 

Base rate at 0.5%.

Massive mortgages have been doshed out at 1.99%.

House prices are still very high (in the areas of the country where the work is and people want to live)

You can't earn money leaving it in the bank.

The stock market has been essentially flat for 20 years.

You can't put your capital at risk in the hope of getting a dividend yield as dividends seem to up and down like yo-yos these days

The ONLY place you can get a reasonable yield is property and your capital, although at risk, seems to be less at risk than in the stock market

 

All I can see is the present situation continuing. Anyone with a bit of spare cash will sink it into property. And this will keep the house of cards standing.

 

If you can, buy.

 

Edit. And, no, this reply to AndyT did not appear under his post, or connected to it in any way, despite my clicking the Quote button under his post.

[drbubb]

BE CAREFUL ! with your investments

Base rate at 0.5%. Massive mortgages have been doshed out at 1.99%.

House prices are still very high (in the areas of the country where the work is and people want to live)

You can't earn money leaving it in the bank.

... If you can, buy.

- B.A.B. about the UK property market.

 

There's usually a strong LOGIC for buying, at or near the Top.

Personally, I think we are past the Top, at least in London - per BDEV

 

BDEV.L / Barratt Dev'l ... update

 

But I am removed from the UK market... and I am also now removed from the HK market.

 

HK-12 / Henderson Land ... update

 

I sold out in Hong Kong over 12 months ago, and have bought 3x Houses in Philadelphia,

and 3x flats in the Philippine. No debt was used in these investments.

Because the sticker price of these investments is far less than what I sold in Hong Kong

I am still sitting with a fair amount of cash, and some gold... Waiting.

 

PHM / Pulte Homes ... update

 

The waiting is not hurting me.

I bought my first house in Philly in last July at about $75k.

The house next door to it, which is very similar and the same size, just sold at $110k.

While waiting, I am earning 11% pre-tax. The earnings on these investments are more than covering my Rents in HK.

[drbubb]

London Real Estate Prices Are Crashing

by Tyler Durden

Oct 28, 2016

... And the easiest way to confirm it, is to look at recent (and not so recent) home listings in Kensington and Chelsea, where we find something stunning: out of 130 pages of adverts, with 15 ads per page, nearly half of all properties, or 53 of the pages show price reductions.

==

> See Ads etc.: http://www.zerohedge.com/news/2016-10-27/london-real-estate-prices-are-crashing

[cranberryDog46]

How are you getting 11% pre tax?

[drbubb]

How are you getting 11% pre tax?

 

Eaxmple:

I paid just under $75,000 for my first house.

And I get $700 paid into my bank account each month for Three Years.

And at the 36th-39th month, I can sell it back for what I paid.

Or keep it, if the value is higher.

 

The $700 monthly is AFTER all costs, except my Income Tax

[cranberryDog46]

ok, so the 11% is yield on property.

 

I have some capital which is currently evaporating.

 

Don't see what else to do with it other than BTL.

yield will probably only be 4% after upkeep but you still have value of the asset.

[drbubb]

ok, so the 11% is yield on property.

 

I have some capital which is currently evaporating.

 

Don't see what else to do with it other than BTL.

yield will probably only be 4% after upkeep but you still have value of the asset.

 

Right. It is a Cash-on-Cash Pre-tax yield, and Capital Gains, if any, would come on top of that

But there are various cautions I would want to give you.

They may not put you off, but it would give you a better perspective on HOW it works

 

If you want more info, let me know, but first please look at these two items:

 

#1 : High yields in Philly - about 2X NYC and Boston

> http://www.greenenergyinvestors.com/index.php?showtopic=20764&page=1

 

#2 :Philly Presentation:

> http://www.greenenergyinvestors.com/index.php?showtopic=19729&page=1

[cranberryDog46]

I don't have the resources or know how to do international so would be in UK,

[drbubb]

The opportunity exists only in Philadelphia, not in any other cities I am aware of

 

WHY?

+ Yields are higher there in Philly - for various reasons:

=============================================

Northeast Corridor Home Prices
City ---------- : Value (1) : Rent(1): Yield(1): Value (2) : Rent(2): Yield(2): Vl.+chg. : Rt.+chg.
==========: Dec. 2012 : --------------------- : June 2016 : -------------------- :
Boston ------- : $365,000 : $2,309 : : 7.59% : $493,000 : $2,580 : : 6.28% : + 24.9 % : + 11.7 %
NewYork City : $469,000 : $1,881 : : 4.81% : $605,000 : $2,350 : : 4.66% : + 29.0 % : + 24.9 %

Philadelphia: $104,000 : $1,081 : 12.47% : $126,300 : $1,212 : 11.51 % : + 22.4 % : + 12.1 %
Washington - : $385,000 : $2,403 : : 7.49% : $516,300 : $2,595 : : 6.03% : + 34.1 % : + 7.99 %
============================================

 

+ We are dealing with the largest buyer of Homes in the City - he has bought over 4,000 houses there in his career

 

+ This is a special structure for HK based buyers (but maybe could be extended to some friends)

 

+ Philly is at an exciting stage of gentrification. I have seen this in other cities I lived in so think I recognize the pattern

[cranberryDog46]

the 11% yield is Philly only,

 

5.5 - 6% still acheveable in UK

 

I've never even owned a house, how could I make first investment philly?

[cranberryDog46]

how would I manage it if something went wrong,

fly to philly stay in hotel?

 

think it's out of my league.

[drbubb]

It is basically a passive investment - no need to Fly to Philly.

 

But if you know the city, and select well, you have a better chance of making a capital gain - Like I did on my first house

I haven't even seen properties #2 and #3, except on Zillow and on Google

 

If you study the Links, I gave you, and ask a few good questions, I will be happy to explain more via Skype.

I don't want to spoon feed you everything, it is late here,.

Study the links, I spent many Hours researching and collecting info. It is there to study

[cranberryDog46]

thank you,

I will study