Yes the house prices in London will crash by 30%. It is unrealistic to think that a pokey 3 bed terrace house in Harrow can cost close to 300000. But yet that is what is costs. What you get is a 2 reasonable sized bedrooms and the smallest bedroom possible. A midget would find it hard to live in it, let alone a 6 foot chap.
Yesterday I went to look at three houses in Rayners Lane. 2 were in Torbay Road and 1 was in Ravenswood Crescent. Prices ranged from 327000 to 274000. There was a price difference of about 50000 pounds between the 3 houses. Yes the cheapest house needed a lot of work to be done. It had been rented out for the past 4 years and now the owner wanted to cash out and make a quick buck. I am wondering if certain buy to let landlords are of the same opinion.
What people don't seem to understand is.... you cannot get a mortgage of 250,000 based on a average salary of 250000. Maybe with a joint income of 60000 that still leaves the person getting a mortgage of over 4 times his/her salary. Who is the right mind is going to think that a bank will lend that type of money. What is clear to me is that since house prices are clearly overvalued people cannot afford to move. First time buyers are having to get in to a shared scheme where they buy 1/2 a house and rent the other half. What is that about? When you buy a house you buy the whole thing and not half. This shared ownership business reveals the real hidden story. Property Developers looking to maintain the high property prices are renting the other half instead of letting market forces to its job. They are the cause of the high prices.
Secondly, what is happening now is as clear as mud. Estate agents being the vultures that they are are inflating the demand prices to make even more money. In 2009 when no one was selling as they saw no-one could get a mortgage, the government stepped in and started to print money to get us out of the hole that the banks got themselves in when they were lending money irresponsibly.
On May 6th 2010 the General Election will be called and soon after that the biggest public spending cuts will be announced. I can for see that this will result in a lot of people being made redundant!!!! and house prices will collapse as people are looking to get out while the prices are relatively high. The panic selling will mean that more and more people who have had buy to let houses will also be looking to get out. Hence this increased pressure will create a self fulfilled downward spiral of house prices.
Just look at this survey by rightmove.co.uk and report in the telegraph
Obviously a survey done by rightmove is a great indicator to stimulate the housing market. They get paid £3000 per month per estate agent that advertises on their website. What a joke, I wonder if turkeys really do vote for Christmas. Where do they get these figures from. What has really changed in the last 6 to 9 months. All that has happened is the Bank of England printed money to ease the liquidity in the banking sector. What will happen next is a run on the pound. I wonder how far this crisis will go. Has the UK government gone far enough in its attempt to curb the bankers greed....
