Buying a house in East Dulwich? expect sealed bids!

[Jeremy]

Half price living and wait for 1989 - 1995 to happen.

It's a gamble which might not pay off. E.g. the much-hyped property slump of 2009 is now looking like just a blip.

renting a 3bed house for 1500 a month, so 18000 a year down the drain ??

It's not money down the drain though, is it? It's paying for a place to live. If you get a 400k mortgage, your monthly interest payments will be over ?1500, and you have to maintain the property. New buy-to-let landlords are taking a punt on property appreciation. It's not for everyone.

Bring on a huge house price crash

I'm not sure a sudden crash would be that beneficial, but there is definitely something wrong when you need to earn over 100k a year to buy a modest family home in a nice-ish suburb.

[Saila]

...'something wrong when you need to earn over 100k a year to buy a modest family home in a nice-ish suburb.'

much more acceptable for woman to work nowadays

so 2x ?50k isn't that unusual?

double incomes push up prices in this sort of area

[sophiesofa]

I thought 2x ?50k was unusual but I'm basing that on my own situation.

[????]

Three times joint income of ?50k = ?150K plus add in a deposit of probably 20% required and try and get near ?500k??? - which if we're honest is a price for the smallest terraced houses in ED....none of it adds up. It'll crash or we'll inflate our way out of it...I suspect the latter as there's far too much at stake for a crash...ie the banks' balance sheets and loan books. There is no way that current houseprices make any rational sense or are sustainable it's about affordabillity not desire/wishful demand.

[Saila]

agree but probably nore likely than 1x ?100k?

[cate]

I can't imagine many would spend ?500K as a first house purchase. So if there were two people buying it and both had flats purchased ten years ago which they either sell or take equity out of, they would have a substantial deposit to put down on the house. Even if only one of them had a flat then it is still do-able.

[Mick Mac]

???? Wrote:

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> Three times joint income of ?50k = ?150K plus add

> in a deposit of probably 20% required and try and

> get near ?500k??? - which if we're honest is a

> price for the smallest terraced houses in

> ED....none of it adds up. It'll crash or we'll

> inflate our way out of it...I suspect the latter

> as there's far too much at stake for a crash...ie

> the banks' balance sheets and loan books. There is

> no way that current houseprices make any rational

> sense or are sustainable it's about affordabillity

> not desire/wishful demand.

Isn't a first time purchase more likely to be in the 300k ballpark (eg a 2 bed flat)

15% deposit ?45k (saved or more likely borrowed from parents). A couple with 2 salaries of average ?40k and a mortgage of ?250ish - which at current interest rates would be easily affordable on these salaries.

Renting the same space may be slightly cheaper but you get no capital growth with renting.

[Brendan]

Not in the current market Mick. To buy a ?300K property you will need at least ?60 deposit plus a few grand for legal fees etc. I know I?ve just tried to do it.

Where a couple in their 20s-30s who earn 70 ? 80K jointly would get this unless bequeathed by mummy and daddy is anyone?s guess.

And households who bring in 70 -80K are actually pretty well off compared to many.

But that comes back to what I was saying earlier about ED having changed. 5 years ago it was a viable option for first time buyers but now it is only really an option for people who already have property and equity.

[skidmarks]

Brendan Wrote:

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> Not in the current market Mick. To buy a ?300K

> property you will need at least ?60 deposit plus a

> few grand for legal fees etc. I know I?ve just

> tried to do it.

>

Plus the ?9k you'll need for the stamp duty, quite a sizable chunk out of any deposit you managed to save.

[Brendan]

?60k I meant ?60k not ?60.

[????]

Mick...this thread is titled "Buying a house in East Dulwich"...were you like this at school not paying attention to the beardy bloke at the front?

[DaveR]

A conbination of rising incomes and cheap and easy credit has kept the market buoyant for so long that the nominal value of the equity held by people who bought their first property 10+ years ago is huge. This has kept the market going, both by enabling buyers to keep trading up despite prices rising faster than incomes, amd by providing parents/grandparents etc. with the funds to help out first-time buyer offspring to get on the ladder. It's also not going to disappear any time soon, and this, combined with the fact that in London particularly we are not seeing substantial falls in income or large number sof job losses, is keeping the market going. Over time there will have to be an adjustment but dramatic falls in prices will not happen (I predict) in ED and similar. One/two bed off-plan flats in the outer suburbs and northern cities - 30 - 40% down.

[Brendan]

Case in point regarding East Dulwich is that SE21 is now the cheaper option, excluding the village obviously. That definitely wasn?t the situation a few years ago.

[chantelle]

yes ED is great for location but who can afford ?500k plus prices? That requires a combined income for a couple of around ?150k. The only potential buyers are people with similarly overpriced houses who have benefitted from the not-yet-deflated bubble.

[Magpie]

The historical average income/house price ratio (since early 1980s) based on stats from the Nationwide is around 3.3 - it got to about 4 in the late 1980's before falling well below that. It didn't hit the 3.4 level again till early 2002, before topping off at around 5.5 end 2007. Prices then fell by around 15% to June 2009, though I believe they have now started to rise again. I looked at this last October, and calculated that it would need another 20 - 25% fall in house prices (on top of thr 15%) to get back to the long term average (I did this by multiplying average incomes by 3.3 and comparing with the average house price from the Nationwide). However, one does need to factor in things like low interest rates, dual incomes, rise in house ownership, population growth, lack of space etc as to why the future average will be higher than historics, but I still think average house prices in the UK have some way to fall.

However, this is about national averages, the property market in East Dulwich, as has been said above, reflects its relative attractiveness as an area - really the benchmark is Clapham, Wandsworth or Battersea, and I think ED averages are still below levels in those areas. Thus 500k for a family home, while sounding crazy, reflects supply and demand. The obvious long term plan for people who like the area is to buy in Forest Hill, Nunhead, Peckham Rye or further out from LL, and hope that gentrification continues.

PS - I am not an Estate Agent, nor do I work in property . . . . .

[Brendan]

That is just the nature of the area. Even if the overall market adjusts itself to allow more people access to home ownership ED has become somewhere people trade up to rather than start out in.

Now why there hasn?t been a national housing/development strategy that allows people to purchase a home fit for their needs and stay there rather than having to enter into a continuous, profit-seeking, trade up/down ladder is another question entirely. That question has more to do with supply and demand, the historical physical layout of the cities, land ownership and regulations and the reliance of the economy on a banking sector reliant on the economy.* And less to do with Inside 72 closing down, Jo Mama B opening and people who want to live in Clapham actually knowing that ED exists.

*Amongst other things and it is bloody difficult to pinpoint which bugger we should blame for pokey houses and high streets lined with estate agents.

[Smiler]

Don't think that it seems possible to get an 3-bed terrace with reasonable garden even for ?500k in ED at the moment. And someone mentioned ?1500 a month for renting such a property - think rent is more like ?1900 or ?2000.

Would be pleased to be corrected!

[chantelle]

we pay ?1,650 for a vast three-bed house, started renting it last year. A similar property on our street was listed on rightmove for ?650k last week (though I don't see it there anymore so either someone has vastly overpaid or the owner woke up to themselves).

There is still a massive premium to buy that is utterly unjustified when prices are stagnant and vulnerable to further falls.

[sambobia]

Average property price/ earnings ratios are of fairly limited relevance to property in ED. The main factors are:

(i) a fixed housing stock (little land in ED for development, little expansion in the housing supply);

(ii) high demand, relative to supply. Due to: desirable area, low interest rates, large numbers with equity in existing property, lots of affluent London professionals, tax-free capital gains etc.

Rising interest rates might well depress demand temporarily. Beyond that, high demand and fixed supply will drive the market and lead to further upward pressure on prices. Even though the majority -- unfairly perhaps -- remain priced out.

[edf]

sambobia Wrote:

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> Average property price/ earnings ratios are of

> fairly limited relevance to property in ED. The

> main factors are:

>

> (i) a fixed housing stock (little land in ED for

> development, little expansion in the housing

> supply);

>

> (ii) high demand, relative to supply. Due to:

> desirable area, low interest rates, large numbers

> with equity in existing property, lots of affluent

> London professionals, tax-free capital gains etc.

>

>

> Rising interest rates might well depress demand

> temporarily. Beyond that, high demand and fixed

> supply will drive the market and lead to further

> upward pressure on prices. Even though the

> majority -- unfairly perhaps -- remain priced out.

The previous two are correct but will balance by the following points.

(iii) Interest rates are temporary low and were artificially low for the least the last 5 years. The interest rates will move more to a historical average of 6-7% (possibly higher) as the artificial stimulus is removed his will force up the cost of borrowing. This will cause huge problems for any landlords holding properties with outstanding debts that at not covered by the rents. In many case leading to forced sales affecting the average price.

(iv) If property becomes cheaper, then cash rich buyers will normally seek to by in the most affluent areas possible, East Dulwich is very nice but they are more likely to buy in west London which has always been more desirable. Recently a large amount of people have been buying where they can afford instead of their most desired area; this trend will change and affect ?up and coming areas? a lot more than established areas but the whole of south London will probably affected, by the lack of new people/money entering area.

(v) People who have already purchased flats rely on the equity in the first property to be able to purchase their second home hopefully a house. If the housing cost have not inflated substantially they will not have this and will be prevented from stepping up the ladder leading to less demand for houses.

[Mick Mac]

???? Wrote:

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> Mick...this thread is titled "Buying a house in

> East Dulwich"...were you like this at school not

> paying attention to the beardy bloke at the front?

I assumed house was intended to mean "a property". Anyway the point is that ?300k (and whatever you can get for that) is a more appropriate starting point for a first time buyer than the ?500k used in your example.

[????]

Is your generic way with words why you keep on betting on donkeys in the hope they are horses? ;-)

[Brendan]

What sort of deposit do you need for a decent donkey these days?

[SteveT]

All seeing eye wrote:- Most agents trading now, if they have more than 2 years experience, have survived the hard times and learnt from them, and are likely to be good at their job.

Survived the hard times you must be joking quantative easing has prevented the hard times, I should wait until the election is history there will be no more quantative easing and then the hard times will ease in with a bump!

Anyone wishing to buy just wait, you may get value for money shortly.

[TheAllSeeingEye]

Nonsense. I stand by my comment, any estate agent in a job now with more than two years experience has been there, survived the redundancies, closures, bad press, hard times, lack of income, 7 day weeks for sod all money, etc and is still going, because they are more than likely to therefore be good at their job, and enjoying their job. Most of the sharks and chancers are long gone ... in ED at least.