and the consequences of over extending,

What? Someone will collect the old tat you have Freecycled?

First property mortgage £30k joint income at time £22 interest rate went up to 15%, so what if that situation, interest rates, happened today. We are talking 89ish
If you remember its when we had to come out of the exchange rate mechanism and who was lurking in the background when Mr Lamont went to the press a very young Master D Cameron

Interest rate need to rise as a safe conveyor for investments

I’m close to Leatherhead so not far from Reigate. A friend’s house in the village sold very quickly, experts are saying the price rises are rippling out from London so suppose prices will continue to rise for a few years now. Glad I bought when I did even if it was close to the peak of the last surge – early 2007. Took a while to complete then told by agent that I could sell for another £100k over agreed price. Dropped back then recovered.

“One day this bubble’s gonna end”

interest rate went up to 15%, so what if that situation, interest rates, happened today. We are talking 89ish
If you remember its when we had to come out of the exchange rate mechanism and who was lurking in the background when Mr Lamont went to the press a very young Master D Cameron

Keep in mind that at the time when that was going on, interest rates were under the direct control of the chancellor and as such were often used as much as political tool rather than just an economic one. These days that is not the case (you can thank Gordon Brown for that one) and it is very much more difficult to use interest rates for political ends. Whilst higher interest rates are certainly possible the volatility that we saw in teh late ’80s is highly unlikely to occur in the near future.

What? Someone will collect the old tat you have Freecycled?

Not just anyone, I only freecycle stuff to middle aged men with a moustache. That’s just the way I role.

Im currently running some models with resi values at £600 psf in Greenwich. Ive just sold my old one bed flat in Westbourne Park/Maida Vale borders for £750 psf as I thought prices were getting, as we say, a bit “frothy” and thought it time to cut and run.

However, am also running models with resi apartment prices around £2,000 psf in Kensington. And have seen some figures over £4,000psf in Mayfair. A typical one bed flat might be 500 sq ft. A 3 bed apartment might be over 1,000 sq ft.

Not just anyone, I only freecycle stuff to middle aged men with a moustache. That’s just the way I role-play.

😯

The increases are unsustainable and people are panicing. Speculators are just exagerating the trend, it makes it no more sustainable.

Forget London vs The North comparisons, Londons always been more expensive, its the *trend* thats important.

e.g….
http://www.rightmove.co.uk/house-prices/E8-3GB.html
2012, new buid 280k
2013, 380k

36% increase, 100k in one year.

I have a deposit saved, but salary isn’t enough for this, and even if it was, i don’t think this makes any sense. I’m renting, but if prices don’t come down, i’ll have to change job and move out of London. Why they keep building more high-rise offices is beyond me.

There was a small fire at London Bridge on Tuesday. Chaos ensued. Victoria station was shut due to overcrowing, and people were climbing onto trains and railway tracks to avoid being crushed. People being told to walk/cycle because the tube is full, whilst they dodge more and more lorries to construct the new offices. WTF?

nuts…

Yes I do wonder about that – public transport can’t cope but attracting more people to work in London. So that London Bridge / Victoria thing was really bad? I heard about it and went to Waterloo but didn’t notice any problems there.

Lots of reigatians here today!

Just sold my 2 bed flat in Reigate (2 mins from station) to an investor from Germany. It had appreciated by 20% since I bought it in late 2009, a period which includes the recent recession. While I am quids in, this shows how bonkers pockets of the local property market is, as @SkillWill and @spacemonkey will know.

Nigel

My OH has a cousin who rents in London – he has a well paid job etc but can still only afford to rent.

In order to buy a house his parents are selling their 350k 4 bed (Nice house) in Nottingham, downsizing and giving him a big wedge… They have worked their entire lives to pay for a house they are selling so their son can get on the property ladder – Madness.

London is a state of its own in the UK – I love visiting and looking around but would rather cut my dong off than live there!

We’ve (my family) have just sold a 3 bed detached place in Putney a few weeks ago. Didn’t sell straight away so original asking price was reduced by 10% (its an estate being liquidated so speedy selling was of the essence), had a veiwing day, got 3 offers over the new asking, so went to sealed bids. House sold for 10% more than the original asking price. To a UK developer too.

Crazy world…

if the supposed bubble didnt burst recently I suspect it isnt a bubble. Property prices sort of ‘paused’ briefly and then got back up to speed. is there a name for a permanent bubble? 😉

if the supposed bubble didnt burst recently I suspect it isnt a bubble. Property prices sort of ‘paused’ briefly and then got back up to speed. is there a name for a permanent bubble?

Sorry I’m not sure of you’re logic here- are you saying the bubble isn’t a bubble because it hasn’t burst yet? Isn’t that the nature of the thing- everyone thinks its fine, until it bursts?!

February 2012 we put an offer in on a house that went for 80k over asking at sealed bids.

Was a wrecker too needed new windows all round , a roof redoing , and a chimney at a strange angle.

Glad i didnt get it tbh although the 2 30 ft by 20ft workshops attached woulda been nice but not at 295k

It’s utterly freaking bonkers. We looked at a few recently and they all went for significantly over the asking price within the first day of being on the market. Most of them pushing into the next stamp duty band too.

We finally managed to buy a tiny 1 bed place in south London last Friday. According to Zoopla, in the 6 months process of trying to buy it we’ve ‘made’ £60k.

Sounds like there was a lot of land there, t-r. Might explain the bidding frenzy!

According to Zoopla, in the 6 months process of trying to buy it we’ve ‘made’ £60k.

😯

The problem is some people’s perceptions of value make them think it’s a bubble but the point is it’s the land that influences the value so no point comparing London with Wales. A lot of people want to work in London, a lot of them have a lot of cash – or potentially do so can borrow lots of it. Low interest rates means Mortgage payments seem justifiable compared to rental costs.

Me, I moved out as wanted a bigger place in the countryside and put up with commute times/costs.

Was actually quite compact. Sounds like alot but the house was small and the workshops faced each other.

Since then ive found The real reason for the bidding frenzy as a developer neeeded the land to get plans for a Business park through planning. He still doesnt have the house behind the house in question though.

I knew the land behind was earmarked for business park development which didnt bother me in the slightest – quiet neighbours at times when im there and little complaints about my noise.

Looking back im glad i didnt get it – it would have been trapped on a triangle of land where the new awpr joins to the wellington road.

Our kid has a three story Georgian townhouse in a nice part of London. It is now worth the GDP of Portugal and Spain combined

London goes in massive fits and starts, and certainly where I lived there has only ever been a pause rather than a crash…

60% increases around the turn of the century. The last house I owned in London increased by 51% from 2006 to 2012, only to add another 10% since then I estimate, I got out a little too early but still made a pile

I am not sure how sustainable it is, two people earning 80K each with a deposit of 60K = 700k @ 4x joint salary , surely the price of a modest flat or semi in the burbs cannot go much higher?!

With the exception of foreign money in the real London hotspots, it’s all based on some seriously dodgy lending/borrowing habits – there are people out there that gauge affordability by their monthly mortgage payments… at the lowest interest rates in over 300 years… without any understanding of how rate changes can impact repayments.

Now, whilst the BoE control of interest rates does mean that we’re unlikely to return to the kind of madness experienced in the 70’s/80’s/90’s, you have to realise that the base rate only has to go up to 4 or 5% to push an enourmous number of people into the red. It’s a bit of a ticking time-bomb IMO, and I think that pure blissful ignorance and a sense of mis-guided optimism is all that’s keeping people diving in to get themselves in hock. I’m not seeing any increase in wages, there’s no increase in employment (and certainly still millions ‘under-employed’), so what is driving it other than low interest rates and sentiment?

It is not just London, several houses near me in Berkshire have sold in less than a week for well over the asking price!

my two penneth is that the increases are driven by the tactics of the London estate agents and the information that gets fed to the press by them and the mortgage lenders. plus it’s driven by people’s “informed” (see first sentence) expectations of market movements based on wider economic circumstances and the way that they bid in response to these expectations e.g. people expect it to stall and it does because they are willing to pay at market or below, people expect it to go up because of inward foreign investment and it does because people think they have to pay more (prices in the centre go up and we expect to feel the repercussions spread into the wider London area), etc.

we are driven by the information that is fed to us – and we get far too much information that we automatically believe to be true and act upon it as a herd.

and this is based on living in this market and buying and selling property in it, and knowing others who also do – not just what I’ve read in the papers.

perception becomes reality, it’s just one big self-fulfilling prophecy.

I agree London prices are toppy. I am an investor there & tbh the capital values are academic as I doubt I will ever sell them, they will be bequeathed (apparently most are).

Its the yields that drive it, if you bought 5 years ago you’d be getting 5% net return (before tax), now c 4%. Still pretty good & sustainable.

The flats have enjoyed 100% occupancy & rent increases have outstripped inflation.

Ive seen some pre-sales go for 3-3.5% recently poolman. It’s made I tells yah!

Lots of reigatians here today!

Dorking FTW!

(spacemonkey’s 700 grand 3 bed “mews” terrace is bonkers. The park’s nice but Leith Hill is nicer).

Personally I’m not expecting a crash in nice places. If there’s a general crash there’ll also be a ‘flight to quality’ so it won’t affect in-demand locations IMO, just increase the disparity between areas and regions.

I really feel sorry for someone in the SE looking to buy or rent for the 1st time out on their own, the costs just keep going up at a rate people can’t keep pace with.

I work for the Government and if your job is inside the M25 then you get a £2.5k london weighting. So that’s the same basic as someone in Hull or Wigan and the £2.5k is meant to compensate for living here. It’s nuts.

We all suffer because quality people can’t afford to live in the SE and work on behalf of the country (NHS, Civil Service etc) so they move into the private industry and I suspect that’s what *they* want.

What do people see happening long-term in the UK housing market? People speak about bubbles and crashes, but nothing drastic ever seems to happen. Nothing really ‘crashed’ after 2007, just stopped growing at such a mental rate. I guess there’s only so much housing, for an ever increasing population, prices are always gonna be going up and up right?

I work for the Government and if your job is inside the M25 then you get a £2.5k london weighting. So that’s the same basic as someone in Hull or Wigan and the £2.5k is meant to compensate for living here. It’s nuts.

£2.5k wouldn’t compensate anyone for living in Hull or Wigan.

there’s a hell of a lot of personal wealth in housing in this country combined with a lot of personal financial debt. the government and the banks will do all they can to avoid a housing bubble burst as it will upset this fine and combustible balance. the question is can they do it (and do they want to) without increasing the gap in wealth between the haves and the have nots.

My OH has a cousin who rents in London – he has a well paid job etc but can still only afford to rent.

In order to buy a house his parents are selling their 350k 4 bed (Nice house) in Nottingham, downsizing and giving him a big wedge… They have worked their entire lives to pay for a house they are selling so their son can get on the property ladder – Madness.

Here’s what’s happened with two of our friends in the last few months:

Couple A: Her parents are GIVING her £375k cash to buy her and her husband their first house together!

Couple B: Her mum’s NEW husband LOANED her £770k cash so she and hubby could buy their dream home before anyone else beat them to it. This meant they didn’t even have to sell their current home! They then moved in, sold their house and found themselves owing the STEP FATHER over £400k. Tried to get a mortgage but were repeatedly declined because it was a personal loan, not a loan on a property. Doh! Finally found a company willing to take them on. Jammy gits. Could have gone badly wrong though.

Madness is an understatement.

Caught something on the news on the way home about a rise in interest rates on the cards but can’t find any more info.

Caught something on the news on the way home about a rise in interest rates on the cards but can’t find any more info.

The government (Bank Of England) are withdrawing some of the incentive schemes (e.g. cheap credit for banks) in the new year which will inevitably lead to a rise in interest rates.

http://www.bbc.co.uk/news/business-25137444

bank of england just waded in

What do people see happening long-term in the UK housing market?

I think it’s restructuring back to a situation where most people rent and a few people (or institutions/investors) own. The renters can’t buy because rental demand is very strong, therefore increasing rental yields, therefore owners hold and prices stay sky high. Go back to start of sentence!

The mass ownership period will turn out to have been a 50 year blip. Prior to that most people rented, and elsewhere they still do.

Short of net emigration of a few million, it’s sewn up.

Re the 2.5k weighting.

Sorry dont live there then. As I said earlier if I could afford I’d live in London.

Way to miss the point. 🙄

As I said, I am of the opinion that we all suffer because the best people leave public service because they can’t afford to be a public servant even if they are minded to.