Trying to buy a house in this area is near impossible

[Loz]

My understanding is you need to have at least a 5% deposit, not a max of 5%.

[Blackcurrant]

Loz Wrote:

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> My understanding is you need to have at least a 5%

> deposit, not a max of 5%.

You're probably right, but anyone with a deposit of 20% or more, which includes most people trading up, can already access cheap mortgages so help to buy won't make any difference to them. Only first time buyers with little cash will be likely to use the scheme.

[Grotty]

Mick Mac Wrote:

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> There is no chance at buying a house in ED at

> Zoopla's valuation, its a waste of time.

>

> Not directly referring to the OP (Grotty) as don't

> know the age or whether he has owned before - but

> as for young people bemoaning the ability to buy

> their first property in ED - I rented in Clapham

> before I bought my first place and I knew I could

> not afford to buy there, so I just bit the bullet

> and bought where i could afford to.

>

> It happended to be Hither Green near Lewisham, a

> considerable step down in terms of buzz and

> excitement but there you go, it was a 2 up 2 down

> and it was our first home.

There is actually still affordable housing fairly close to ED and more central than ED. The streets between Peckham Hill St & Kings Grove, Queens Rd Peckham. This is where we bought 4 years ago a 3-bed terrace on Furley Rd for ?250,000. It was/is perfect 1st time buyer territory, a handful of streets of nice Victorian affordable houses & cottages, and now more than before, close to some great things (Overground, Peckham bars, short walk to Bellenden Rd/East Dulwich). But it is North of Peckham High St and sits within a handful of estates, so is obviously less desirable and masses discount it as a result of that. Anyway, now we are in a better financial position we want to edge closer to friends/schools/shops etc, so have been looking around. Just generally flummoxed by working out if that's even a possibility now!

[jimbo1964]

What I've noticed is that people who bought flats a few years ago and had kids now find it very difficult to afford a bigger property. So they have to move out of the area and change schools when they really would rather stay around here, which is a shame.

[LondonMix]

Yes but the extra dosh the first time buyers have will result in these "climbing up the ladder folks" to sell for more which in turn will lead to them pushing up prices further up the housing food chain so to speak.

Blackcurrant Wrote:

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

> Loz Wrote:

> --------------------------------------------------

> -----

> > My understanding is you need to have at least a

> 5%

> > deposit, not a max of 5%.

>

> You're probably right, but anyone with a deposit

> of 20% or more, which includes most people trading

> up, can already access cheap mortgages so help to

> buy won't make any difference to them. Only first

> time buyers with little cash will be likely to use

> the scheme.

[Earl Aelfheah]

You can still find a decent period house for around ?250,000 - ?300,000 in South Norwood. Fast trains into town, connected to the overground etc.

[Saila]

Spencer Dale (one of the rate setting committee members of BoE) in today's guardian saying rates may go up as early as 2014...

... Pop!

[Earl Aelfheah]

Yikes. SELL, SELL, SELL!!!!

[MarkE]

Blackcurrant Wrote:

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> It's easy to see why prices are rising so fast in

> SE22 and other parts of London simply by looking

> at the supply numbers on Rightmove. Excluding

> properties under offer, there are only around 130

> properties on the market. The number was over 400

> in 2009. Supply has plummeted and we all know

> about supply and demand (note that the fall in

> supply is not primarily a demographic phenomenon,

> though that does make it worse).

Saw two properties come on the market around Felbrigg a few weeks ago, both holding open houses on the same day priced at c.?800k for 3-bed terraces. They've both currently got 'Sold' signs up.

You're right that supply has dropped, but when you consider the state of the economy over the course of that period since 2009 and general lack of wage inflation, it's staggering to think that the level of demand has sustained itself. Where are all these people coming from? Even if you're somehow able to secure a sizeable mortgage to the tune of ?400k, there's still the same again to be found to finance the rest...

[El Pibe]

business as usual in the city im afraid.

[sheilarose]

http://www.zoopla.co.uk/for-sale/details/30802743?search_identifier=f79b4de34d65fa7c8197768cb6203bf6

Three bed terrace needing work in East Dulwich for ?485K

[Mick Mac]

Saila Wrote:

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

> Spencer Dale (one of the rate setting committee

> members of BoE) in today's guardian saying rates

> may go up as early as 2014...

>

>

> ... Pop!

Of course, mortgage interest rates are typically nowhere near as low as 0.5% now and when they were 5%, there were fixed rate offers significantly lower than that.

I imagine also they will creep up rather slowly, so I don't see this as armageddon. Recent higher deposit requirements will reduce the repossesions risk which is good as this can create fear and uncertainty.

A potential deflation of the market at worst rather than a pop. Set against these negative factors, is of course peoples level of optimism generally, many will still buy despite interest rates, those with large deposits or even no deposit will still buy of course.

In 2007 people predicted a 35% fall in house prices in the midst of the biggest shock to the financial system in living memory and it didn't happen (in London) so it would take a rather severe and unexpected set of consequences to bring about a "pop" rather than a calculated rise in interest rates.

[Jeremy]

That's a half-house. Which tbh I think of more as side-by-side flats than proper houses.

[Blackcurrant]

LondonMix Wrote:

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> Yes but the extra dosh the first time buyers have

> will result in these "climbing up the ladder

> folks" to sell for more which in turn will lead to

> them pushing up prices further up the housing food

> chain so to speak.

>

>

Yes, but the trickle-up effect will fade up the chain. Most of the benefit of help to vote will be felt at the bottom of the market, particularly outside London.

[Saila]

Currently a lot of the demand is from overseas investment. Take the 'story' away and they'll leave.

A change in the direction of IR could have a material impact on sentiment.

I personally believe this is a bubble. Yes, it may not drop by 50% perhaps not even 35%

But even say a 20% drop - is a huge amount of real money on these massive numbers.

[Blackcurrant]

MarkE Wrote:

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

> You're right that supply has dropped, but when you

> consider the state of the economy over the course

> of that period since 2009 and general lack of wage

> inflation, it's staggering to think that the level

> of demand has sustained itself. Where are all

> these people coming from? Even if you're somehow

> able to secure a sizeable mortgage to the tune of

> ?400k, there's still the same again to be found to

> finance the rest...

Part of the explanation is that buyers in London tend to have lots of equity, so can access the cheapest mortgages. So the top of the market keeps rising while the bottom is stagnant. But there's also a London effect at work. London has changed dramatically since I moved here in the early 90s and is now the de facto financial capital of Europe and the biggest city in western Europe by far. The liberal tax regulations make it a huge magnet to wealth. People who would once buy in Kensington or Notting Hill are now displaced by foreign money to Wandsworth/Clapham, and would-be Claphamites are displaced to East Dulwich.

There's no political will to address the shortage of property in London as everyone in power has a stake in the market, so it's always going to be expensive here. But there is likely to be a correction when the rate cycle turns.

[Mick Mac]

Saila Wrote:

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

> Currently a lot of the demand is from overseas

> investment. Take the 'story' away and they'll

> leave.

>

> A change in the direction of IR could have a

> material impact on sentiment.

>

> I personally believe this is a bubble. Yes, it may

> not drop by 50% perhaps not even 35%

>

> But even say a 20% drop - is a huge amount of real

> money on these massive numbers.

If you read this forum from 2007 you will get the same message. Didn't happen though.

[Saila]

No-one preidcted the view that london property would be considered a 'safe haven' in Europe during the crisis years that followed 2007.

If that money continues to flow in / stays invested here, then all will be fine.

But if it goes. I struggle to see what will prop it up at these levels other than record low IR forever...

[LondonMix]

Those asserting that there is a tit for tat relationship between current interest rates and house prices are forgetting one key point. House prices in general are affected by people?s long term (not short term) interest rate expectations. This should be obvious unless you think EDF users are the only people in the country cognizant of the fact that rates will rise. So yes, a fall in mortgage rates from a norm of 15% a generation ago to a norm of circa 5-6% now corresponds to a dramatic change in house prices (though not affordability necessarily). There is no evidence that people?s long term interest rate expectations have changed as a result of the current 0.5% BoE rate. In many parts of the country outside of London, low interest rates have led to no increase in house prices and other parts, house prices are still in decline.

Again, I?m not arguing that house prices will be resilient because I have no idea. The only reason I?m saying anything is one of my friends is really nervous about buying because they keep hearing people say things like ?it?s so obvious this is a bubble and everyone buying now is going to lose all their money?. It terrifies them as it?s taken them years to save a deposit and they don?t want to make a huge mistake and end up trapped in negative equity in a house they can?t ever move on from.

However, what is going to happen in the London housing market isn?t obvious at all one way or another. Interest rates are only one of many key drivers including investment from abroad, house building (which is woefully inadequate to keep up with population and jobs growth), demographic trends (families increasingly choosing to stay in London / older people living longer / increases in the birth rate / immigration) and economic growth to name a few.

If you can afford the home you are looking to buy comfortably when interest rates do rise, there really isn?t anything else to think about. Just be prepared to weather any storms and choose some place you could hopefully live in for 5-10 years if you had to. Over that period of time you?ll have amortized enough of your mortgage to have equity even with a dramatic decline in prices and the upshot is that your next step up the ladder will be easier than would otherwise be the case :)

[DaveR]

Re interest rates, I wonder whether there are many current owners who are 'zombies' i.e. can only pay their mortgage debts because they have a very low pay rate and/or their mortgage company is unwilling to repossess. It's now been 5 year since the worst point of the credit crunch to the vast majority of borrowers (everybody who wasn't on a long term fix or pure floating rate) will have had to re-mortgage during that time. To get a really low rate they will have had to be both equity and income rich so would be likely to be able to withstand a rise to more 'normal' levels.

Because of that it's difficult to see rate rises leading to falls in prices, but should definitely act as a brake on house price inflation.

Re overseas money, it's difficult to see any reason for that changing imminently, particularly at the top end. I saw a news report recently that said foreign buyers of ?1 million + properties came from > 40 different countries. It's a fashion thing; London has always been attractive to the global wealthy for various reasons, and there are now more of them, from more countries, and London seems to be even more attractive.

[Loz]

Curiously, London is quite low down in the areas where properties are bought mortgage-free (i.e. cash), given the supposed level of city bonuses and overseas buyers.

http://www.thisismoney.co.uk/money/mortgageshome/article-2454161/Cash-buyer-hotspots-A-homes-bought-mortgage.html

[Blackcurrant]

Mick Mac Wrote:

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

> Saila Wrote:

> --------------------------------------------------

> > But even say a 20% drop - is a huge amount of

> real

> > money on these massive numbers.

>

> If you read this forum from 2007 you will get the

> same message. Didn't happen though.

But prices did fall about 20% in 2008-2009, even in prime central London. They rebounded very fast after interest rates were cut to near zero and QE started. That kind of sudden change in prices clearly isn't caused by insufficient building or population rise, which work over longer timescales - it was government intervention and safe haven money flooding in.

[Jeremy]

Not really surprising. After tax, very very few poeple will get a bonus big enough to buy a decent house in London outright. They'll still need a mortgage.

But I can imagine quite a few could buy a tidy holiday home in Somerset in cash.

[Blackcurrant]

DaveR Wrote:

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

> Re interest rates, I wonder whether there are many

> current owners who are 'zombies' i.e. can only pay

> their mortgage debts because they have a very low

> pay rate and/or their mortgage company is

> unwilling to repossess. It's now been 5 year

> since the worst point of the credit crunch to the

> vast majority of borrowers (everybody who wasn't

> on a long term fix or pure floating rate) will

> have had to re-mortgage during that time. To get

> a really low rate they will have had to be both

> equity and income rich so would be likely to be

> able to withstand a rise to more 'normal' levels.

>

> Because of that it's difficult to see rate rises

> leading to falls in prices, but should definitely

> act as a brake on house price inflation.

>

> Re overseas money, it's difficult to see any

> reason for that changing imminently, particularly

> at the top end. I saw a news report recently that

> said foreign buyers of ?1 million + properties

> came from > 40 different countries. It's a

> fashion thing; London has always been attractive

> to the global wealthy for various reasons, and

> there are now more of them, from more countries,

> and London seems to be even more attractive.

I know quite a few people who couldn't sell during the financial crisis and were forced to rent out their first home to fund a move and now have 500K to a million in debt. Even a very small rise in mortgage rates would hurt people in that position.

[JohnL]

Could be a lot on the SVR.

DaveR Wrote:

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

> Re interest rates, I wonder whether there are many

> current owners who are 'zombies' i.e. can only pay

> their mortgage debts because they have a very low

> pay rate and/or their mortgage company is

> unwilling to repossess. It's now been 5 year

> since the worst point of the credit crunch to the

> vast majority of borrowers (everybody who wasn't

> on a long term fix or pure floating rate) will

> have had to re-mortgage during that time. To get

> a really low rate they will have had to be both

> equity and income rich so would be likely to be

> able to withstand a rise to more 'normal' levels.

>

> Because of that it's difficult to see rate rises

> leading to falls in prices, but should definitely

> act as a brake on house price inflation.

>

> Re overseas money, it's difficult to see any

> reason for that changing imminently, particularly

> at the top end. I saw a news report recently that

> said foreign buyers of ?1 million + properties

> came from > 40 different countries. It's a

> fashion thing; London has always been attractive

> to the global wealthy for various reasons, and

> there are now more of them, from more countries,

> and London seems to be even more attractive.