I've been reading this site for a while and thought it was time to introduce myself. I am an EA for one of the major chains (not saying which!) and I work in the South London area.

I think next year may see stagnation in the market, but the fact is that the City will be seeing another year of huge bonuses and there are no signs of any lay offs. The credit crunch is only affecting a minority of bankers and the rest are still pulling in the dough for their firms and themselves. Not to mention the lawyers who are as busy as ever.

The fact is that most people in London have not really been overstretching themselves to an insane level, so things are under control. A huge number of people are coming to the end of fixed rates, but the rates available now are not to bad and are likely to get better over the next 6 months as the BoE starts to cut rates.

I expect a torrent of abuse for this, but I'm just giving my point of view and hopefully making a few people a little more realistic in their expectations.

Hopefully there won't be any abuse - it's always nice to have the opinion of someone who introduces themselves as an EA (as opposed to the plenty here in the past who pretended to be first time buyers for example).

However, I don't think you're being realistic - I disagree with you almost entirely, but ultimately one of us has to be wrong, and only time will tell which one of us that is. In the meantime, we're always interested in the thoughts of people who think the market will not drop.

And the same can STILL be said for the US market yet thats been crashing for 2 years. Plus Im sure most of the UK market doesn't consist of rich Londoners. So yes your getting slated.

Ah well. It's all too expensive for me.

This GP is off to Canada either as soon as the remaining debt is paid or once significant pound devaluation makes it rational to service the remaining debt from overseas.

I simply can't afford what my working class father would have been able to buy on a single salary.

Perhaps the bankers and property speculators really are able to base an entire economy on
high prices.

Clearly the survivors of the next generation are only going to be those whose parents have sufficient equity to help their children, I suppose the rest can live rough or in tents.

Thanks for the warning.

Fancy a bet on it? I'll wager £10k at evens on a 10% or more real terms drop (using RPI) Uk average.

You're an Estate Agent, a V. I., so you would say this wouldn't you.
I was checking out A&l's mortgage rates today and they quoted 8.1% APR! And you say thats not a bad rate!
The credit crunch is just starting and has a long way to go.
You only have to watch some of the property porn shows or news bulletins to see just how far people are stretching themselves to get on that mythical, ponzi "Property Ladder"

I dont agree with this view because what turns is sentiment.

People have seen others making absurd amounts of money over the last decade by simply purchasing a property. It seems that purchasing a property is a road to riches. Buy a house, borrow the deposit from Mum & Dad, borrow the repayments even, and be rewarded with tens of thousands of pounds in increased equity the next year.

When people see values stalling, they just see people struggling with increasng repayments, increasing bills, increasing living costs and mounting debts and, to top it all, at the end of the year they have gained nothing, just a lot of stress, a lot of debts and an asset that is worth less than they paid for it.

People will not buy into this. They will rent, keep their freedom and wait for a better market.

Sure prices are dropping in Detroit and other economically bombed-out places, but I haven't heard of the Manhattan house price crash, have you??

I think your points might be valid for the top end of the London market, but the majority of house owners aren't bankers or lawyers so I'm not sure how they apply to the rest of the market? Given yields on property are so low and capital gains prospects are a fraction of what they used to be, I can't see many top earners investing in property in 2008.



Presumably you have some evidence of this fact? Recently published CML figures show that affordability for FTBers is as bad as it was in the early 90s before the last crash.



Going from, say, 4.5% to 6.5% (I've pulled these out of the air but I think they're in the right ballpark) might not sound "too bad" but that's a 40% increase and I suspect that's more than many will be comfortable with.

Not going to abuse you for posting, but I don't quite understand the parallel between your predicted city bonuses and house prices, unless you think the UK is just confined to a square mile. The vast majority of house buyers, in London and the rest of the UK, do not work in the City of London, are not getting any bonuses and do not have the inflated salaries of the few thousand that do. In other words, city bonuses are nationally not even statistically relevant.

Of course you are entitled to your views, but you seem to be regurgitating the received wisdom of those in your profession, but it's refreshing to see you are honest at least about how you make your living.

VP

I can't speak for London, but that argument has already been proved wrong around here in Manchester. There have in the last few weeks been quite substantial falls in prices and still people don't want to buy. My dad when to a well publicised auction on Monday. Many houses there with substantial discounts e.g. Houses that had been on the market at £125-130,000 that could not even reach their reserve of £90,000. By easter you will know what I mean!!

You are clearly not reading the same threads on this site as me!

I don't find people are abusive on this site to EA, especially if the post in the way you have done. Your opinion is a very valid one, and is probably based on very sound evidence that you are surrounded by in London atm. However I do not feel you can judge the effects of the credit crunch just as the whistle has blown to kick it all off. The City are hiding huge losses and getting away with it. Mainly due to the incredible performance of the DOW, because the Americans know how serious this could get if they allowed the markets to crash as well with everything else. The markets are being protected and have not even begun to fall so as you say the inept greedy buffoons that caused this will probably feel little pain this year.

I can not see a positive outcome from this mess and believe London could be one of the worst hit areas. I hope you are right as I would love to continue the dream we seem to be living at the moment.

This time its different

California and Florida are econmically bombed out??? No s**t didnt realise it was a 3rd world country,

Hello, welcome...
I do not agree with your view what drove the market up will drive it back down again, city bonuses are not being paid in cash this year more like shares which they can not sell for a period of time, as for people overstretching yes they have and are, however they dont like to report it.

If the BOE cut rates and the pound drops inflation rises and the estimated GDP is now 2.5% or less meaning the UK economy is on it tip toes and at this position is difficult for the government and BOE because teh wrong move would be Devastating.

............and other bombed out places like Florida and California?

Out of interest LondonEA - how long have you been in the business? Obviously on an internet forum you could give any answer you want to lend weight to your views, but if you are a relative newcomer, then maybe we can help to make your expectations a little more realistic?

Edit to correct wrongworditis.

Hi.
Good to have an EA on here. It would be good if you stuck around as then we would be getting some good anecdotal evidence on both sides rather than the bear picture that can be rather overpowering here.

I am not sure Manhattan is relevant though to most people here, in the same way that Kensington And Chelsea aren't either.
London is a large city and I suspect that what will happen there is similar to what happened last time, in that some areas will fare better than others over the next few years.

The ones that I think will do badly are going to be the places that used to be downmarket but are now "desirable". You would probably know those better than me, but I am thinking of places that were obviously cheaper 8-10 years ago and people came to because that's all they could afford at the time.

People here have said that it is turnover that will suffer first. Obviously a few months aren't necessarily an indicator, but have you noticed sales falling off at all recently?
We have been hearing of broken chains and some distressed sales of BTL portfolios.
Have those increased at all round your way?

Obviously in most places it is now a buyers market. Are you seeing that change at the moment?

It would be good to know.

Regards
Bob

Are you suggesting the property market in the UK, in its entirety, is driven purely by the size of City bonuses?

I think this EA is partly right, but I still hold my view that I'll be able to afford in a year's time with the same savings that leave me with no options today.

You see, the linchpin is this: The system can't afford individual properties to drop in price... but a property bought in 1997 and sold in 2008 has 10 years of preposterous claimed house price inflation before the property price drops. This means a 60% drop in today's assumed price would not represent a loss for the vendor.

I think the "average" house price can remain fairly stable at around £200K, but (and this is important) the house that is sold for £200K will be substantially better than the one on offer at that price point today.

I think that the people buying above average quality homes will have substantially larger deposits - 40%, say, in cash - and this will (in future) find them favourable mortgage rates relative to skint but spendthrift competitors.

Houses are not equal - some houses are more average than others.

I believe this is why, in the last crash (199x) the public perceived far bigger reductions than were recognised by the statistics. The statistics could not appreciate the difference in worth of the homes that were sold - only the difference in value. Much of the rubbish will be sub-prime mortgaged - and, hence, with negative equity anticipated, will not be brought to market... and, if it is, it won't sell. These owners will be priced-in and unable to escape their debts.

The good news is that, once the credit industry has worked out how to sensibly price risk, estate agents will have a flurry of customers - all be it, likely, customers who are more careful in negotiation and unlikely to be won-over by house-dressing; the smell of freshly baked bread or the colour of the emulsion. These are the buyers who have, in recent years, simply given up as they can't compete with sentiment driven numpties with recklessly large lines of credit.

[BTW - Londonea... What is the current price (rental and purchase) for a 2 double-bed flat with parking (in an area where you wouldn't worry about leaving the car parked) within half an hour's travel from Canary Wharf? Do you think these prices are sustainable? ]

Yesterday, the two most authoritative "City" newspapers, The FT and the Telegraph ran big stories on how city bonuses will be slashed this year and job losses were already underway. I have a friend who works for Bank of America and they are laying off WHOLE DEPARTMENTS. I passed on the names of some lawyers to them.

You sound like a nice innocent enough guy, but don't believe what the manager tells you - as you know your industry is known for incredible spin, and ultimately total denial..... Along with politicians you guys are seen as the worst bluffers ou there, and the public is starting to cut right through the "supply/demand/city bonuses/ HP can only go up, Government will step in b%%ll which has been peddled for too long now.....

Looking at your post there is not much to argue about. No thought or research has gone into it, its just spin. There have been some very clever and amusing bulls on this site. Sadly you are not one of them.

With reference to some of your opinions, you might like to read this:

Thousands of job cuts expected in UK’s financial sector due to volatile equity and credit markets

Your argument ignores the fact that most of the UK isn't london.
The effects of the credit crunch are yet to be felt.
If people aren't being stretched explain why retail sales aren't rising.
Lending for new properties is down 20% - Think about how this affects house prices.
If people aren't being stretched explain the predicted rise in repos.
"The rates available now are not too bad" - This statement may lack the rigour of scientific research.

A
W
O
O
G
A
!


c'mon guys even i sussed this out

or maybe I'm being a cynical paraniod tw*t.......

Hi and nice to have an EA, and always healthy to get alternative perspective.

I know you can't give obvious clues as to what area you work in London, but I do have a couple of questions.

If you see stagnation coming and thus expect the market to level rather than drop. Do most the people you meet that are selling still expect the growth gains of the last few years or are most already aware the market is slowing and 2x digit growth in prices is un-realistic?

Also be nice to get a gauge of what the average buyer is opting in at, this time last year people where banging in offers at asking price, is it the same this year or are some trying it on with a 3-5% reduction and haggling up?

Abuse no, why abuse you, you are entitled to the opinion you hold. But you have a vested interest, so are not independent?

Its like a fish telling me fish fingers taste horrible?

Anyway, i could not disagree with you anymore, if as you say you have been reading this site for any length of time then you will have learnt something quite unique. House prices are so over priced that anything is possible?

You talk about London, i am talking globally, house prices are at insane levels globally, why because of cheap easy obtainable credit, it is as simple as that.

This is now drying up, so will halt house price growth for now, then this halt in cheap easy credit filters through globaly to the normal people, not the special ones in the city, the whole pyramid will collapse. We are now seeing this happen in the USA, and in parts of the UK. Next stop Australia.

You just cannot keep house prices permanently high forever, and they are too high in relation to the ability to service the loan to buy the house in relation to the abiilty to earn a wage to service the loan globally.

Unless we have a massive shift in wage growth, then the party has stopped for the VI's because if my house is worth one pence, and i want to sell it to you for one pence, but you do not have one pence, and no one will lend you one pence, i cannot sell you my house, and you cannot buy my house.

Sorry but you are totally incorrect, but you may find holes in my post?

On second thoughts, to me, you're a particularly greedy malignant parasite and an unwelcome form of contraception.
If this host is likely to die, you can be sure I'm taking a few of your kind with me first.

As you point out the US really hasn't seen any large falls in house prices but they never really had a problem did they?.
There is currently a global squeeze on credit and liquidity is starting to dry up. Although, as you say, it has not affected the UK yet you will have noticed a couple of banks connected to the mortgage and loan market in some difficulties and this is before the "credit crunch" has taken any real affect.
You will find that these huge bonuses will dry up completely and the people that have told you their bonuses for next year will be unaffected are misleading you.
London will see the brunt of this financial tightening and there has already been talk of cut backs job losses to an extent that will devastate the financial sector for over a decade. You have not got long to waite to see all this happening and many of the papers are already reporting some of the initial fallout.
The US may not have a major problem with overpriced housing but we sure do, as I suspect you already realize and why you searched out this site.

For an an example (admittedly small-scale) have a look at the auctions section on

http://www.foxgrant.com/regionalauctions.asp

and clock the phenomenal difference between the 92% sold September Auction and yesterday's disastrous results (for the vendors, anyway)

hmm. has the OP returned to answer his critics seeing as he believes so strongly in his predictions......nah didn't think so

Oh dear. Another hit and run bull.

Oh dear. Another hit and run bull.

Say it again Sam - it sounds so good

No abuse, but no agreement either.

As someone who works in the City, I can't emphasise how bad it is out there at the moment - I had major firm of lawyers offering me free advice today because they are so quiet...I have been invited by the head of a professional organisation to a symposium to discuss how to restart the markets...the discussion in the office is about how many will be made redundant, not whether it will happen...need I go on.

The final and damning conclusion is that markets never stop and plateau. It just doesn't happen. Emotion and sentiment drive markets, especially something like property, and you can expect it to get alot worse as mortgages reset and redundancies take hold.

I sold my house in South London in April, and keep a very close eye on the market (it is also my profession, although not EA), and IMHO values have already dropped something like 10%.

Finally, the issue of interest rates will help prevent wholesale repossessions, but the real thing in the market which has changed is lending standards, and it is these multiples, not the interest rates themselves, that will drive down affordability.

Nevertheless, welcome

I just find it strange the amount of cretins that joined today. First one this morning around 10.30 am, that post was so sick it was deleted. Second also joined this morning same time, that post is now in the troll forum.

Yep, I'm sure we'll see more of this in the cold winter months as more people get turned down for a mortgage, more deals drop through and the City starts to shed jobs. Lots of potential EA customers visit these forums and the poor EAs must be getting lonely with only a fridge full of sparkling water and a 50" plasma TV to help them while away the days in between appointments.

Looking on the bright side for a moment, at least there will be a decent supply of low mileage new minis on the 2nd hand car market.

I have heard of waving a red flag at a bull, but waving a grilled salmon at a bear is summit new to me

House prices are obviously going to crash hard in the UK. The writing is writ large on every wall. As for being realistic in your expectations, well, a bit of advice for you.. start tarting your CV up now - once the price spiral starts noone will be buying and your EA will have negative cashflow....

Good points but who knows? I think the best thing to do at the moment is just buy a boat, sail away and let the dust settle.
However just cos the BOE may cut rates it does not mean there will be an abundance of cheap money in the future.

I'm afraid an awful lot of people are seriously overstretched; the oft quoted consumer debts figures speak for themselves. While there may be some good headlines remortgages available, they invariably come with massive product fees, upping the APR by 1-2%.

When I can rent a flat (not in London mind) fully furnished for less than 5% p.a of its so called market price, and look at a smaller new build around the corner offered for sale at 20% more, the BtL brigade and hence market is only going to the equator.

The great indebted are being squeezed by higher taxes, mortgages, food and fuel, which will badly hit their interest cover and their discretionary spending in the rest of the economy. There were some interesting retail sales figures released today. And the MEW tap is quickly being turned off.

With 8m economically inactive, and goodness knows how many more earning more £ from tax credits than their part time jobs, UK plc is looking peachy!

That's a bit unfair - one of me and over 30 people disagreeing with me. I would need a lot of time to keep up!

Unfortunately the market is still ticking over nicely so I have lots to do.

Things aren't as busy as they were, but the fact is there are fewer available properties as well in any given price bracket/area. So I see transaction numbers going down, but prices staying up.

hi i'm new here. i have lurked for a while. am waiting to buy a place myself. i dont share all the negativity i see here. i think people are prone to overexaggerate what they see when their views are reinforced by those with the same viewpoint.

i think the market will cool next year and hopefully i will get a payrise so i can afford to buy! maybe i need to change jobs to something more well paidl

I think we all deserve a reply, no hurry, we did reply to you, looking forward to some in depth analysis of the reply posts, rather than a typical property Bull VI estate agent pissed off because transactions globally cannot go one forever at the ever inflated costs applied by people like you.

Mods - just an observation. I'm guessing the moving of the thread and the Multi-ID Troll branding is due to the OP posting with two names on the same IP?

Totally agree with the actions if this is the case, but I think in cases like these it would help to post a quick explanation - there are more people then ever coming to this site now, and to some who haven't formed a view point yet, it could look like victimisation of someone with a different point of view?

Correct.

The EA's assumption that the City Boys will keep buying is brilliant.

These people buy into rising asset classes. Now UK property has peaked, they will move on to next rising asset bubble.

Hello ramper troll, welcome!!!......How long do you intend on staying, hopefully for more than a couple of posts.