Just seen an ad in Thursday's (29/9) paper offering reduction on new build town houses in Teignmouth:

"prices from £225000" reduced to "prices from £199950"

Spoke to someone the other day who had their home in Davis Avenue, Torquay valued last year at £142k. He had it valued again last week at £135k. EA explained the discrepancy by admitting that prices had dropped in the last year by about 7% (though the 7k difference is only about a 5% drop!). The EA said the owner should hold off selling for a while as they are hoping prices will start to rise again soon!

Jock1967

Another source today (connected with a residential development in Torbay) confirmed that the local estate agents and others in the know (local solicitors) accept that the market has dipped in this area volumewise and pricewise. However they are hoping for a pick up in the market after Christmas. I'm not sure whether these hopes are based on wishful thinking or some inside knowledge.

A contact in Dartmouth has had their place (ca £300k) on the market for almost a year now and can't shift it. Changed EA's, had a few more viewings and still can't get a bite. It seems that nothing in that price bracket is getting sold, maybe because those lower down the ladder cant move up due to the dearth of FTB's and the resulting stagnation.

Jock

[size=7]I live on the 'willows' development in torbay. Last year a local ea knocked on my door to ask if I would sell up. He said a house across the road has just gone, and he could sell mine for 160k in two weeks.
The same house is now back on the market, at last year's price, and it's remained un-sold for nine months now, with only 4 viewings. Nothing in my area is selling at present, each seller clinging to 2004 price's!

1 bedroom flat in Babbacombe Road, Torquay. Put on the market in October 2005, after extensive refurbishment, at £115k. Price dropped to £99k 6 weeks later, then £94.5k, then £89k early 2006. Rumoured to have sold for £84k (will have to wait for land reg to find out for sure). That's a drop of 27% in 5 months. Not bad!

3 Bed end terrace in Shiphay. On the market since last summer at £175k. Changed EA's and now on at £170. Still not sold. A drop of 3%.

2 bed bungalow in Cadewell. On at £225k over a year ago. Lying empty now. Still not sold. Price still £225k!!

Jock

The EA's should be saying sell now or you will be chasing the market down for the next 2 years!

3-Bed detached bungalow in Collaton Road, Shiphay. On at Connells. Reduced from £275k to £250. Drop of 9.1%

I'm lovin it

Jock

Of course that should have read

'Reduced from £275k to £250k',

though I liked it better the other way!

Hi all
Update from last October. Sold my place, 2 bed on the 'willows' for £145,000, no reduction! (2004 price) I'm STR'ing in to rented, until IR rises reduce prices down in next 12 months I hope!!!!. Something strange going on in Torbay, one bed flats being snapped up for £98,000, no reductions, while propertys above 250k being reduced down by as much as 25%, work mates farther reduced his 4 bed 'brunel Park' bungalow from 370k last October down to 335k in March, still no takers. 3 beds on the 'willows' being snapped up for BTL at the right price. What about the rest of Devon, you local guys?

3 bed town house in Shiphay, Torquay. On at Connells a month ago for £165k. Now reduced to £158950. A reduction of 4%.

Only one of the 30-odd houses I am monitoring has sold at the original asking price in the last few months. The rest have either been reduced, withdrawn or are still waiting for a mug ... sorry I should have typed 'buyer' there.

Jock

Still little movement in my part of Torbay. Of the 39 I am closely monitoring one has been reduced this week and two are under offer.

4 bed detached bungalow, reduced from £274950 to £269950, a reduction of 3%

4 bed detached in The Willows for £279950, SSTC
3 bed end-terraced in Shiphay for £169995, (reduced from £174950) under offer

Jock

Update

That flat I said had been reduced by 27% in February and then sold, well it didn't sell. Still on the market and very few viewers apparently.

Jock

More good news. Of the 585 properties on at 9 EA's in Torbay that I checked last week only 6 have sold and the following are the reductions:

2-bed semi-bungalow, reduced from £147500 to £145950 (-1%)
3-bed detached, changed EA and reduced from £289500 to £265000 (-8.5%)
5-bed semi, reduced from £249950 to £244950 (-2%)
2-bed terraced, reduced from £189950 to £179950 (-5%)
3-bed detached, reduced from £185950 to £179950 (-4%)
3-bed terraced, reduced from £169950 to £160000 (-6%)
3-bed terraced, reduced from £196500 to £189950 (-3%)
2-bed terraced, reduced from £189950 to 179950 (-5%)
3-bed terraced, reduced from £169950 to 160000 (-6%)
2-bed semi, reduced from £147000 to £145000 (-1%)
4-bed terraced, reduced from £169950 to £164950 (-3%)
3-bed terraced, reduced from £219000 to £215000 (-2%)
2-bed end terr, reduced from £154950 to 152950 (-1%)
3-bed end terr, reduced from £184950 to £179950 (-4%)
3 bed terraced, reduced from £169950 to £160000 (-6%)
3-bed end terr, reduced from £169500 to £164950 (-3%)

Can EA's survive with such a low level of sales?

Jock

Results for this week:

600 properties between £130k and £300k, 9 EAs.

Withdrawn - 36

SSTC - 4

No longer SSTC - 2

Reduced:
3-bed semi bungalow, reduced from £229950 to £224950 (-2%)
7-bed terraced, reduced from £219950 to £215000 (-2%)
2-bed flat, reduced from £215000 to £210000 (-2%)
2-bed nungalow, reduced from £19450 to £185000 (-5%)
2-bed flat, reduced from £167950 to £164950 (-2%)
2-bed terraced, reduced from £189950 to £179950 (-5%)
3-bed end terr, reduced from £148500 to £144950 (-2%)
2-bed terraced, reduced from £175950 to £169950 (-3%)
2-bed cottage, reduced from £154000 to £149950 (-3%)
3-bed bungalow, reduced from £230000 to £224950 (-2%)
Studio, reduced from £189950 to £179950 (-5%)
3-bed semi, reduced from £174950 to £169950 (-3%)
2-bed bungalow, reduced from £169995 to £167500 (-1%)
3-bed detached, reduced from £214950 to £204950 (-5%)
3-bed detached reduced from £235000 to £225000 (-4%)
3-bed end terr, reduced from £228500 to £215000 (-6%)
4-bed semi, reduced from £187500 to £182500 (-3%)
5-bed terraced, reduced from £180000 to £175950 (-2%)
2-bed semi bungalow, reduced from £152500 to £145000 (-5%)

I know I'm not tracking all price ranges but surely this price range is the bread and butter for most EAs. How can they survive with this low level of transactions? Isn't there meant to be a Spring bounce or something?

Is there anyone from Torbay/South Devon who finds this detail useful? If not I will stop posting it as one of these days my boss is gonna catch me!

Jock

I'm in South Cornwall not South Devon but your research shows a similar pattern to whats happening here

Thanks

Results for this week:

500-odd properties priced between £130 and 300k, 8EAs

Withdrawn - 24

SSTC - 14

Reduced:
4-bed detached, from £297500 to £289000 (-3%)
4 bed semi, from £295000 to £275000 (-7%)
3 bed semi, from £149950 to £144950 (-3%)
2 bed bungalow, from £235000 to £229000 (-3%)
2 bed semi, from £153950 to £148950 (-3%)
4 bed detached, from £297500 to £289000 (-3%)
4 bed semi, from £209950 to £199950 (-5%)
3 bed terraced, from £190000 to £185000 (-3%)
2 bed bungalow, from £239950 to £234950 (-2%)
2 bed terraced, from £139950 to £137950 (-1%)
4 bed terraced, from £159950 to £154950 (-3%)
3 bed terraced, from £144950 to £142950 (-1%)


That'll be the spring bounce then, up from 4 sales to 14, spread among 8 EAs.

Jock

These reductions in asking price to selling price are quite predictable, every seller expects to be knocked down and likewise all buyers expect to knock something off the price. Without this game, the buyer would not feel he/she had obtained a bargain. The real comparison should be last years prices to this years actual selling values for properties with the same attributes. This is what the Halifax etc use when conducting their surveys. I believe that prices will continue to rise, the main reasons for this are low housing stock, reducing gap between avg earnings and avg property prices, first time buyers are leaving it later to buy and this cycle of younger first time buyers and older first timers is now in its second cycle. I do concede however that the growth rate will be much lower than the past, typically 4-6%, the higer end of this forecast being good quality properties in desirable locations but at the lower end of the market.
astos

Astos

You should do your homework before posting bullish comments about rising prices look at the link to the OPDM figures below

http://news.bbc.co.uk/1/shared/spl/hi/in_d...ml/county29.stm

As you can see most areas of Devon are reported as falling - these figues are a long way behind and I suspect "adjusted" to show the best of the worst by talking up the positives and ignoring the negatives

Jock is providing useful information for his area - although only on asking prices - you can do a similar comparison on sold prices by gathering statistics from

http://www.houseprices.co.uk/

Pick your chosen postcode and calcualte the figues - I did this in South Cornwall (not too different from South Devon) and found a 15% average drop from Q1 05 tp Q4 05 I can provide you with all the figures if you want

I suggest you do some research of your own to find out how prices are holding up if you want to know the truth I think you will find the aren't - if you don't want to know the truth (as many people don't) you can continue to believe the enormous hype of the VI's and hope that you are right


CS

I agree that the best comparison is between what houses actually sold for and I have Land Registry figures showing that for postcodes around me houses fell between 3.2% and 5.1% from q4 '04 to q4 '05. In Devon as a whole prices dropped a more modest 0.9% over the same period. I think that one of the interesting things so far about my data is that the volume of sales in this area is so low. I don't know if historically this is significant but will certainly keep my eye on it.

You may well be correct in that initial asking prices have expected discounts built-in, but during the boom years houses readily sold for the initial asking price. This no longer seems to be the case. Also interesting, to me at least, is the fact that none of the houses I am tracking that have been reduced have yet sold!

I'm not sure if you are in South Devon, but your statement about the 'reducing gap between avg earnings and ave property prices' helping to maintain the market doesn't quite take account of the low wages down here and the high cost of housing due to 2nd home owners. I'm not sure of the figures but think it's true that ave house prices are something like six times the average Devon wage and so, unaffordable for most.

I wasn't clear on what you meant by 'first time buyers are leaving it later to buy and this cycle of younger first time buyers and older first timers is now in its second cycle.' Could you explain the significance please?

Cheers

Jock

This week's results:


602 properties on at 8 EAs

Withdrawn: 27

New Instructions: 31

SSTC: 8

Reductions: 2%, 4%, 5%, 1%, 1%, 2%, 3%, 4%, 3%, 10%, 3%, 3%, 5%, 5%, 2%, 3%.
Average reduction: 3.5%

Jock

Hi Jock, keep up the good work………
Living in the Ashburton area, looking to move just north of Exeter. Tip for you all, go in to any TEAM agent and ask for the local statement of the market……its unbelievable, an EA group that publishes true numbers about its business for the past month.

March, briefly……..
Average sale price has not moved a jot for at least 6 months.
Demand v supply, many more houses coming on to market.
Speed of sale, Slower.

Always quiz my local EA on the market when I pay my rent, telling me that they have been swamped with new instructions in the past few weeks, but business is good, prices flat.

Finding that prices are moving down, but do you have to push hard to get any movement, example, north Exeter, asking price £330K 4 bed single garage. One across the road with double garage and study went 3 months ago for £310K – when I questioned the EA why, guess what the answer was, well house prices are still rising, Devon is still popular, don’t you read the papers !!!!!!!! I could have landed him one. Anyway offered £307K and still waiting for an answer.

I re-confirm by belief that house prices will continue to rise in the South West of England. Why not visit the nationwide housing survey property price calculater - this is driven by real sales in huge volumes.

Here are some stats for you -

Q1 2005 - Q1 2006 = +4.75%

2005 - Q1 - Q2 = +2.83%
2005 - Q2 - Q3 = - 0.42%
2005 - Q3 - Q4 = +0.66%
2005 - Q4 - 2006 Q1 = +1.63%

How can you claim that prices are not rising in the south west. A slight blip in Q3 last year, every other quarter has seen growth.

What about monthly changes this last two months.

March 2006 - +1.1%
April 2006 - +0.1% (Still rising!)

Why not read tonights herald express in Torbay Page 5 " Value to double in ten years"

Advice - If you want to get on the ladder, get on now before it is removed altogether - do not listing to these people who are trying to convince you and themselves that the market will crash. Its now or never people, believe me. For some, its probably too late.

astos

Get on the ladder now , who writes your scripts? I think that if we could have got on the ladder most of us would have years ago but we are simply priced out of the market. Even with a huge crash of 25% some people still couldn't afford without having mumsie and dadsie sticking up a huge wad as deposit.

Wot happendd to 3.5 times salary prices? Mind you the new houses they seem to be building look shite to me anyway all bunched together or blocks of flats that look like prison cells.

I will stay renting and ignore these morons that say buy now!!!!! I hope you all use your common sense too - almost everyone I speak to now agrees that houses are overvalued so what does that tell you eh?

astos,

for me it is too late. I had to move regularly for work between 1997 and 2003 so renting was the best option I moved here about three years ago and could just about have afforded a not very good two bedroomed something in a poor district. Not ideal for a family of 4. I was not prepared to impulse-buy without knowing the area. Within 6 months prices for even these less desireable (to me anyway) areas had risen about 10% and were now outwith my reach. I therefore have no chance in the current climate to buy.

I too believed the figures bandied about by Nationwide, Rightmove etc and was resigned to never being able to own a property. Then I became aware of this site, read about the vested interests and how their figures were not always what they seemed and recently started to do my own research rather than rely on what I was being fed. As I've stated already Land Registry figures show that for postcodes around me houses fell between 3.2% and 5.1% from q4 '04 to q4 '05. In Devon as a whole prices dropped by 0.9%. These are real sales, and as you mention these are the figures we should be watching. According to the BBC the Land Registry data is considered to be the most authoritative.
(see here http://news.bbc.co.uk/1/hi/business/3132863.stm ).


My examination of my own local market shows that volumes are low, houses are remaining available for long periods of time and initial asking prices are being reduced, though I'll admit these reductions are modest. These are merely my own observations over the past few months and this may be a temporary blip. They don't seem to tally with what Nationwide and the local papers are saying and I'm sure that you prefer to believe them than me, but they are an alternate view of the market from someone who has nothing to gain from misleading anyone. Feel free to dismiss them if you wish.

I wasn't clear whether the quarterly stats you quoted were volumes or selling prices. Be aware that if they were selling prices these could be affected by drops in the volume of sales of lower priced properties (due to fewer FTB's) such that the more expensive properties changing hands leads to an increase in the average price. Such an increase would be bad news, and not a sign of a healthy market.

Jock

This t0sser will do and say anything in an attempt to earn his commision, if you can call estate agency earning in the true sense, think Whistleblower

Just re read the above quote, total unsubstantuated bull5hit....take this for instance....tonights herald says ....its a newspaper FFS, it's quoting the Cabal of Crooks ...... the National Association of Estate Agents....any numpty who is capable of turning a key can be an estate agent.

Another newbie VI spouting 5hit, but there will be many more crawling out of the woodwork as their job security diminishes by the minute...tick tock...tick tock

You would do better to spend your time visiting a re training website than posting on here.

Astos - What planet are you living on?

I posted a reply to your remarks over a week ago that you seem unable to understand - the statistics put out by Nationwide, Halifax, Rightmove and some times the OPDM are manupulated fro commercial and political reasons - as such they are not reliable the only evidence that can be trusted is the Land Registry's sold prices.

You are quoting prices form the South West overall which everyone knows is the UK's most variable region and as such an overall figure often does not represent anything like what is happening in a local area

People can only judge what they know

Jock is seeing prices fall in South Devon - I am seeing prices fall in South Cornwall, there may be some rises at the top of the South West region and in Swindon but it is 200+ miles away from me so there is little correlation between the markets

I worked in finance for 20+ years and came across many people giving bad advice - anyone who is a dismissive as you and puts across insubstantiated arguments wants shooting

CS

Astos, I will second what Cornwall sceptic said, WHAT planet OR what part of Devon do you live in, because it’s not the same as the one I live in.

As pointed out to you by Jock via the BBC web site the LR figures for the last quarter show:
Quarter Annual
All properties
East Devon -2% 0%
Teignbridge -4.8 1.8%
North Devon -2% -8.1
Mid Devon -5.5% -.3%
Torridge -2.5% -3.2
Exeter -6.3% -6.9%
Torbay -.5% .7%
Plymouth .2% .3%

And it seems like you did not read my last post correctly, the comments I got came from a LOCAL TEAM EA published document for the region, and I shall repeat, “Average sale price has not moved a jot for at least 6 months”.

I do not know what EA you work for, but try the real world, like I think about one of my daughters in Exeter paying £500 pcm for a dump, who I would love to assist. Even at 4 x salary (120K) with her partner they can not afford anything. This subject starts to make me mad.

I find it difficult to understand how you fail to see the blinding obvious. As I have already suggested, it is now probably too late for many to get on the ladder. I really do not think that this site is helpfull to those people who want to own their own place. This site and its content may put off some FTBs making that final push to get on the ladder ( Yes even if its with a little help from mum & dad). It is sad that they may beleive some of the dribble being quoted and join the ranks of the discontented.

If its not too late, try and get on the ladder now, why wait for many years of frustration in the vain hope of some economic disaster. I urge anyone who wants their own place, get away from these people and their chanting, be positive and focus on your goals. The longer you leave it the harder it will.

Q. What do you do with an opportunity?

A. Take it!

Prices are only going one way and that is up!

Don't let this wind you up! Just accept it and move on...

astos

[quote name='astos' date='Apr 28 2006, 08:12 PM' post='362526']
I find it difficult to understand how you fail to see the blinding obvious. As I have already suggested, it is now probably too late for many to get on the ladder. I really do not think that this site is helpfull to those people who want to own their own place. This site and its content may put off some FTBs making that final push to get on the ladder ( Yes even if its with a little help from mum & dad). It is sad that they may beleive some of the dribble being quoted and join the ranks of the discontented.

If its not too late, try and get on the ladder now, why wait for many years of frustration in the vain hope of some economic disaster. I urge anyone who wants their own place, get away from these people and their chanting, be positive and focus on your goals. The longer you leave it the harder it will.

Q. What do you do with an opportunity?

A. Take it!

Prices are only going one way and that is up!

Don't let this wind you up! Just accept it and move on...

astos

----------------------------

Astos

Can you not read

You say the only way is up

Are you so disnumerate that you cannot see the minus signs in the table that Nordiclad posted - here it is again with the munus figures in red - unless you are colour blind as well

All properties
East Devon -2% 0%
Teignbridge -4.8 1.8%
North Devon -2% -8.1
Mid Devon -5.5% -.3%
Torridge -2.5% -3.2
Exeter -6.3% -6.9%
Torbay -.5% .7%
Plymouth .2% .3%

Please be kind enough to point out to me where prices are going up

CS

Plymouth

CS - They can't all be wrong, look at this BBC report on housing predictions for 2006, all but one predict growth for 2006 and beyond. You really need broaden your mind. There is wealth of info on the web relating to these matters, you need to read more.

Click here dopey

astos

Do you understand VI or vested interest all of these will suffer if stupid narrow minded people understood the real position that UK plc is bankrupt - they continue to pander one of humans strongest emotions - greed

Anyway Astos tell us something about you - what is your experience of finance upon which you base your opinions ?

CS

CS - Yes I understand VI, this is a cloak that you people use so that you can ignore genuine professional robust data! You really are in denial and need some help. I am a portfolio landlord with 23 BTL properties in South Devon (Particularly the South Hams) - most of these properties are now debt free. The capital growth I have experienced over the past few years has been overwhelming. even last years aquisitions have shown healthy growth. Its all in the purchasing strategy. There is a magic forumla in terms of the type, location and price band in which I trade. I will not reveal anymore than that to you. Why not tell us about yourself, are you an academic only or do you actually have real life business experience in the property sector????

astos

astos,

so would you say that you yourself have a vested interest in talking up the property market and in believing what Nationwide et al. say? If so why on earth should we believe that your view of the market is a balanced one?

I wonder if your 'capital growth' is also based on what Nationwide etc say. If so then it may be, as yet, paper profit only and you could have a nasty shock coming should you have to sell. You yourself may become a victim of the spin the VI's put on their figures. However if you are in it for the long-term then you will probably be okay. Were you in this game before the 'overwhelming' growth of the last few years or do you expect it to always be this way?

I truly believe that if you felt there was nothing to fear from the existence of this site that you would have laughed quietly on reading the contents, shrugged at the naivety of the market opinion expressed and gone off to make more money. Are you just a little bit unsettled by what you have read here are you a true altruist with our interestes at heart?

Jock

Jock

When I stumbled across this site, I was interested in what people had to say. Its amazing how us humans can have such diverse opinions, even when sharing the same information! Of course, I have an inner belief in what I do, or else I would not do it. It may well be that you and the others are right, its just that I dont believe it. The reason for this is due to my experience in this sector over the past 15 years. Yes, I am in for the long run, you would be mad not to be, where else could you get such expodential growth than in property over the past 15 years. I am sure that if you purchased property today and held it for 15 years you would make more money than any other commodity. In addition to this, whilst actually enjoying the property to live in, you would be paying yourself (via the mortgage repayments) rather than the Landlord. even better Jock, if you can get a property to let out for the next 15 years not only will you enjoy the capital growth but it will be your tennants that buy the property for you. This is not a 'downer' on tennants. where would I be without them, home owning is not for everyone, some people like to move around. I like to give my tennants good quality properties to live in. The cost is reasonable and I always aim for a long term tennant. Many have become friends over the years. It really is a win-win situation.

Can you argue with what I have said, is there really anyone who believes that property purchased today would not be a long term investment.

Anybody reading this who is thinking of taking the plunge, please do not be put off by some of the negative comments being made. Go for it,

'what is an opportunity if it is not for the taking'

astos

astos,

I wouldn't argue. I too believe that property is a good long term investment, and I think most people on this site agree too. The point is that it is so highly inflated in price at the moment that if I bought now (which I can't afford anyway) and the market headed South I would be unable to sell it should I desire to move in the future. Therefore I would have to wait for the price of my home to get to where it was when I originally bought before I would be able to move on without incurring a loss. Who knows how long that might take and what career opportunities I might have to forego. I would also be paying interest on a mortgage sum which might be substantially lower in a couple of years from now. Not a good position to be in and not a position I could advise others to put themselves in.

Further update to an earlier point I made: According to HBOS the average salary in the South West is £29204 and the average house price is £185216. That's 6.3 times average local salary, and so unaffordable for most who live and work here.

Another interesting statistic they quote is that house prices in Torquay fell 1% from q1 '05 to q1 '06. Also a 3% drop in Newton Abbot. Modest I'll admit but still a different story to that the VIs had been pushing.

Jock

Astos

I appreciate your frank reply, the way in which you write about yourself is quite different than your original posts which were bullish in the extreme

If you had said in your post that "over the long term property only ever goes up" I could not agree more

As someone with a portfolio of 23 properties you are obviously successful and intelligent - however to make an unqualified statement that the "only way is up", irrespective of market conditions, timeframes etc. then I would ask how you would substantiate that given the world is a series of peaks and troughs and positives an negatives - you know that to be the case

You state your portfolio is mature with little debt- an excellent place to be - even if the market does dip it won't affect you greatly - people will always need to rent and some less astute lanlords may need to sell so you may be able to increase the size of your portfolio at a knockdown price

It seems (with what you have said in your replies to Jock) that you are an honest business man who looks after his clients - I too share that sentiment and try to run my business in the same way- however there are many, many idiots on this forum who spout total cr*p and even more in the wider world who have opinions based on heresay and VI spin

My background - I am not an academic or should I say I did't get the chance to go to university after school - (I have been to Uni in adulthood) - Started with nothing - spent 20 years working in finance so I understand money - I worked for a Mortgage Company through the last property crash so saw first hand some of the real problems greed and lack of financial knowledge created - I have been running my own business with my wife for last 13 years - successful consultants in Food Safety - not driven by money alone would rather have the respect of clients than as much of thier money as possible - can identify the friendship angle - many of our clients are now friends.

I have a little experience of property and would not profess any expertise although I understand economics very well - the reason why I look at this website is to get an all round view of the market as I feel that the VI's are not telling the whole story, in South West Cornwall where I live and am looking to buy the market is significantly overvalued in comparison to income. This is to protect what little money I've earned when I decide to invest again

I have given much more personal info than I am comfortable with but not too worry

Regards

CS

BTW you posted something about beetles in Ipswich? causing problems - pest control is one of my specialties have you any more information?

I guess Astos represents one group of people who believes in ''prices always go up'' myth.

I'm a property investor. Have been in the business since 1990. I first invested in Hong Kong and sold my last property at the peak of 1997. Prices crashed. Down average 65% to 85%(depending areas) Now, it's still 45% below the peak. 10 years on. A lot of friends are still in negative equity! Don't under-estimate how a price crash can destroy your life!!!

In 1997, I started to invest in London property and sold my last property in 2003. I'm renting right now.

What goes up, must come down.

Housing unlike stocks. In the end, the purpose of housing is for people to live in. Not for flipping or speculation.

If there is PE ratio for stocks, there is also PE ratio for Property. That is the rental return. The most important indicator for property is affordability. We have to afford to buy or afford to rent. Anytime in history, when the house prices are unaffordable, it HAS TO come down. Natural adjustment. There is no exception.

When I was in Hong Kong in 1997. Everybody laughed at me to sell up. They said Hong Kong was different from Japan. It WILL NOT fall. Look at what happened?????

Since 2003, I bought properties in Calgary, Alberta, Canada(oil city). Prices was SO CHEAP and rental yield was good. Prices have double since then. Another bubble in the making!

Now that the property bubble is growing world wide. With ultra low interest rate(after tech bubble) and mania behavior of other speculative markets, sure there will be a global property prices melt down.

When? I have no clue!

At the height of this property bubble cycle, better to wait and see.

You are not going to lose out much when prices are already so high in England. If you jump in now, the price to pay is high. Look at those speculators in Hong Kong?

Of course, lots of people think that England is different from Hong Kong. Same as those in Hong Kong said once said that they were different from Japan!

To bring the house price back to neutral.(affordable). prices have to come down at least 30% in England.

Last time round, I said: 60% for Hong Kong. Everybody thought I was nuts. In the end, it went down 65% to 85%. When it rises, it overshoot. When it comes down, it overshoot too.

I don't see the crash in England come right the way. Because lots of people are still like Astos supporting the market.

In a long term downward trend, there are rebounces. The same applies to upward trend, there are corrections. I believe property in England is in a long term downward trend.

According the 18 years property cycle theory, last peak was 1989. The next peak should be 2007 or 2008. A crash will happen more likely in 2008. However, I don't see prices going up the next two year. Prices will be in a range with 5 to 10% up and down. And it will come down with recession!

Because if prices don't go up from now on and just staying there, lots of speculators will sell up or give up after years of negative cash flow with their rental.

And the world recession very likely will come between 2008 to 2010.

So, better to wait and not get yourself into debt. One mistake is for life.

I never expected to buy and sell like I did. But prices in Hong Kong and London both rose to a level I considered unreasonable. I had to sell up and move on.

That I invested in Calgary and didn't expect such a big increase. If prices continue to rise out of control, I will consider to sell up also.

I planned to be a long term investor, but this world wide property bubble is pushing me out of it. I'm looking to cashing in and start to buy bonds later in the year and get ready for the next recession!

Also, with the rebounce this spring, it's time to get out. Not to get in. Like 1999 in Hong Kong, there was a rebounce in the spring after 1997 crash. In the end, it proved that was a rebounce and was a small hole to escape the ultimate disaster!

These days, investors are looking world wide. Buy to letters are selling up and buying world wide. Help fuel global bubble.

I don't see any gas left in the tank for UK house prices!

I am not too sure that you can compare Hong Kong with England. Here is a snapshot of some interesting differences between the England and Hong Kong, mainly politcal and social being the cause.


"This is an intensely irritating feature of the Hong Kong market. In other places, people often ask 'How old is this building?' as an aside, finding it charming or even value-enhancing to know they'd be living in an art deco era apartment tower, or a sturdy nineteenth-century brick house, or even a 400-year-old stone cottage, as you might find in the UK. But here, a block of flats that's 10 years old is already suspect, and many potential buyers won't even set foot in a flat that's 20 years old or more. 'How old is it' is just about the first question many buyers consider, and becomes the primary criterion for winnowing through properties for sale. This is a handy tool when you're buying, but its common usage becomes increasingly disturbing as one owns and occupies a Hong Kong flat. We Hong Kong homeowners have to ask ourselves: how long can I hope to live in my flat before no one will ever want to buy it if I decide to move?

As if these problems weren't enough, we've now got to consider the Hong Kong Government's price-fixing strategies. What?! -- you exclaim -- isn't Hong Kong the bastion of the free market, the world center of laissez-faire capitalism? Well, yes, but there are a few exceptions. The Government here has a two-handed stranglehold on the property market. First, it owns nearly all of the land that could conceivably be built upon. It can, at its whim, release parcels of that land for sale, thereby affecting the market directly. In addition, the Government supplies huge numbers of public-housing flats for rent, and also sells subsidized properties as well. This is great if you qualify to live in or buy one of these flats (the Byzantine regulations controlling access to these privileges are too depressing and complex to get into here) but if you own a lower-cost flat (as Mr and Mrs Tall do), and the Government suddenly undercuts the market by flooding it with similarly-priced but newer flats, what can you do but grin and share the joy of your fellow Hong Kong citizens who are in buying mode?

So: is there any way to win at the Hong Kong property game, you ask? Yes, I can assure you there is. My wife and I have just bought a new flat, in a brand-new building -- so new, in fact, that it's not even close to being done yet. If all goes well, and the building is indeed completed more or less to plan, the word is that our pre-purchased property will immediately appreciate in value upon its completion (i.e. not surprisingly because an existing property is de facto worth more than a brochure and a mock-up).

So, if you want to make money in the Hong Kong property market, you can simply follow these easy steps:

Buy a flat that doesn't yet exist.
Wait until it does.
Sell it immediately.
What? There's a problem with this plan, you say? Oh, yes -- someplace to actually live. You can't rent, of course, because that would eat up your profits. Fortunately, Hong Kong is liberally blessed with flyovers, so I'll see you in one of those cozy nooks beneath them! "

I stumbled on this very interesting debate (what's that?) astso and sabola. It's a pity it isn't on the main discussion board.
I hope you both stay and your thoughtful opinions are given the respect they deserve.

Of course every market is different from one another. However, there are two rules of thumb for property investment:

1. Affordability
2. PE ratio: Rental yield.

In a bubbly market, nobody cares about them.

Market does overshoot and in the end, it adjusts. The process could be painful!

I understand what you talked about HK market. In fact, I bought again in 2003 when I saw my chart of affordability sending out buying signal. That means the prices fell SO Much that affordability was TOO GOOD and rental yield went to a good level too. New flats or old flats. Doesn't matter. who cares. Prices jumped all across the boards the end of 2003.

HK proerty prices jumped over 30% from the rock bottom in 2003 in a year. I bought a pre-sale like you mentioned and sold it within two months with 20% rise. 200,000 pounds profit. I sold the unit even before they built it. I believe Hong Kong is now in a new 18 years cycle. Starting from 2003. It's on a long term upward trend. Don't see any bubble yet as most people were burnt and still very cautious when prices climb too fast.

I don't see any big gains in UK the next 5 years. 3 years later, there could be a very bad recession. Don't help the market to recover either!

Prices in Calgary, Canada are rising fast. I bought a few properties there last year and all of them went up over 50%. Those I bought in 2003, have doubled!

The affordability and PE ratio told me that there are still more rooms in Calgary market. So I stay long. For London and other places in UK...nah.......How many % gain you expect from this extremely overvalued market??????? When everybody buying property, it's the end of the market.

Believe it or not. There is natural adjustment. Prices have to come down in UK to meet affordability.

Properties are different from stocks. A company's profit can grow year after year. But property prices can't keep going up without the support of fundamental. Prices overshoot the last few years and it has to come back equilibrium!!

I'm happy with discuss further in the main thread. How do we do it? Or somebody can help put the link of this thread to the other thread?

Been away for the long weekend, returning to find a fantastic debate going on here.
As MUTTLEY suggested, get this up on the big board.

Now back to Devon, one word is the key down here “Affordability”………and how many of us down here earn the so called average of £29.4K for the SW as per nationwide, and 4 x that does not get you anything.

And just to throw a little petrol on the fire, did anyone note the figures from home.co.uk for the South West –6.1% Shall I do it in RED again -6.1%
link

This week's results:


600 properties on at 8 EAs

Withdrawn/No longer listed: 16

New Instructions: 33

SSTC: 10

No longer SSTC: 4

Price Increase: 3%

Reductions: 3%, 4%, 3%, 3%, 3%,
Average reduction: 3.2%

Much fewer reductions than in recent weeks and even one price increase! Is the market turning?

Jock

Here is more narrative that the crash is not going to happen.

Click here to read the whole article


"The economy is expanding, and that's both manufacturing and services, the housing market is rising more sharply than at any time for two years and the stock market is soaring. The pound is strengthening, commodities are booming and just about everything that can rise has risen or is rising.

and some more...

"The housing market looks like it's booming again which could easily fuel a new consumer spending boom - good for retailers but bad for personal sector indebtedness. "

I keep telling you guys but you dont listen...

astos

astos,

that was a curious report to choose to support your argument that we should all dive in before it's too late. Here are some further excerpts from it which you chose not to post:

"But markets are mortal, as the gods know, and it's only a matter of time before they hand down a few choice lessons. That will almost certainly be done through their representatives on earth, the Bank of England's monetary policy committee who are going to have to vote for a rate rise soon. "

And

"the nation is so heavily in debt that a rise in rates will put many people in deep trouble. Although a 0.25pc rise may not sound much, which is what the market expects to happen, people are so stretched that even that sort of rise can send them into a tailspin. It's a call that's impossible to get right but it's a call that's going to have to be made.

Mervyn King was right about one thing, however. Back in August the MPC decided to cut rates, a mistake as it turns out, but King was very firmly on the side of the hawks. He voted against the move. He will be proved right, but at what cost?"

I don't think in your position you have too much to worry about if the above comes to pass. But for those who have stretched themselves to the limit to get on the ladder this is grave news.

Jock

And what does that do to inflation?
And what does inflation do to IR's
And what do IR's do to mortgage rates?
And what do higher mortgage rates do to mortgage payments.

IR's have been low due to slow growth and other reasons, Japan cheap money etc.

The markets have already factored in two increases to base rates before year end 06 which is
in line with with what is going on around the rest of the planet.

Sadly you need to look at the bigger picture and understand economics a little better.
Halifax will have sent a shiver through the MPC
with their claim of 2.0% regardless of the fact the Nationwide produced only 0.1% growth
a week earlier.

You guys need to get your stories straight, I thought you ignored everything the Halifax and Nationwide had to say, dont use them as part of your argument when it suites. I will not go repeating why I believe the crash will not happen, you can read my reasons from my previous posts. The facts are, price growth will and has slowed down, but it will not go negative. Property will remain a great long term investment.


As you opinion of my economic understanding is so low, lets all hear what you have to say
what is your prediction? When will the crash happen. How intense will the crash be in percentage terms, how long will it last, what will happen after the crash?



astos

So it will not go negative will it?

You may have not noticed but Devon has already gone negative:
http://news.bbc.co.uk/1/shared/spl/hi/in_d...ml/county29.stm

Exeter -6% over the last quarter.

As for the length and depth of a crash you are embarrassing yourself by asking such stupid questions because
that's impossible to answer as there are too many variables. I won't go into the variable as you wouldn't understand
if I did. But I'll give you a little clue as to what to watch. Interest Rates......

astos

I think we've already agreed that most on this site do believe that property is a good long term investment. My problem with your previous posts is your encouragement to others to plunge into the market ASAP. That, in the current climate, is irresponsible IMO.

Jock

I find it amazing how you can respond without any basis to support your argument, where are the facts, what will happen, you cant answer any of this, all you want to do is rubbish any opposing view to your own. It seems you are incapable of constructing a robust argument based on opinion but supported with a least some supplimentry foundation. Go on Denzil, put your money where your mouth is, lets hear what you think will happen and when, we can then all sit back and see who is right me or you. If you cant do this, then any opionion you have is completly flawed. It is you who should feel embarrased you fool.