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Central LONDON Property: Databank & Charts

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Following on from my earlier comments re buying directly or indirectly this is what I am thinking:

(1) If I buy direct property it is likely to be residential. The issues with this are:

(a) use of agents to find tenants - I am likely to find this leads to a 10-15% (say) leakage in terms of fees

( B) void periods - I think it is reasonable to assume say 10% ie one month of voids per year

© tax on capital gains - I think a lot of people forget the capital gains tax on non primary residences

(d) competition - lots of people doing buy to let

(e) supply - demand - as highlighted elsewhere there is a lot of build going on and does CrossRail alter the competitive catchment area ie if I buy in Central London I will be in competition with Slough?

(f) refurb costs - lets not be blind that bad tenants can mean the need to refurb a property / or at least put in new furniture

(g) illiquidity - typically I think people miss the costs of transactions ie stamp duty, agent fees and time taken

 

The advantage of direct ownership is that I can be selective on what I buy and control it directly (this assumes of course I will add 'alpha' to the process rather than just be underpricing my time and being rung in the middle of the night after the tenant has broken the shower.

 

 

Any thoughts?

 

- agent's fees: 8% first year, 4% 2nd year, 3% 3rd year. Nothing after. Say average of 7%.

- void periods - in london, voids should be minimal (say 1 week per year)

- don't sell, or live there before selling etc.

- deposits to cover damage/refurm

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Plus retired people often have grand kids. This anchors them in a certain location. There is more move inertia than people realise - moving to the country is not the obvious choice for many.

 

Buying at Half price, and eliminating all debt, is a pretty powerful incentive !

Especially when you may have some doubts about future Pensions.

 

Mo : Rt'mov London RestUK L-R Gap Ratio

12: 224,060 438,324 146,967 291,357 298.2%

F : 233,252 449,252 149,658 299,594 300.2%

M : 236,939 455,159 151,853 303,306 299.7%

A : 243,737 464,944 152,815 312,129 304.3%

M : 243,759 469,314 152,803 316,511 307.1%

J : 246,235 477,440 153,332 324,108 311.4%

Jl : 242,097 460,304 151,633 308,671 303.6%

A : 236,260 454,875 150,173 304,702 302.9%

S : 234,858 456,237 149,719 306,518 304.7%

O : 243,168 478,071 151,123 326,948 316.3%

N : 236,761 483,709 147,163 336,546 328.7% : Record GAP, & Ratio

D : 228,989 464,398 144,953 319,445 320.4%

=====

 

ukhaliwlond.png : ukhaliwrest.png

 

ukhaliwuk.png : ukhaliwratio.png

 

Markets have a way of sucking people in at/near the Top !

(I am not guaranteeing that the Nov.'12 Ratio was at the Top, but it might turn out to be.)

Of course, the average person will not "get it", until we are well off the highs.

 

And sometimes the intensity is even higher immediately after the top, when some people think they can get a bargain on the first dip

Are we now in that sort of market? Let's next look at what one of the Top pundits for Central London has to say.

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London Property's advantages are under threat

 

Global Game changers - FT article in Sat. edition

 

Liam Bailey, Knight Frank:

"From London to Hong Kong, the one constant of post-financial crisis residential markets has been the

ratcheting up of property taxation, and restrictions on property purchases..."

"Affordability of housing has become a growing issue in lots of cities..."

(Some restrictions) "... are designed explicitly to penalize foreign buyers"

 

Yolanda Barnes, Savills:

"Across the developed world, capital is concentrated in the hands of older, homeowning households.

Globally, the generational divide between equity rich "boomers" and equity-poor "millennials"

is significant and growing."

. . .

"No choice renting is rising fast" (for the under 40's)

"We need to find new ways to help disenfranchised generations accumulate equity, and access home

ownership..."

(Am I getting a wiff of Income Redistribution, from these London based commentators?)

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London's Lead is falling down

 

ukhaliwratio.png

 

Prime reasons to Quit London - FT, 2/15/2015

 

The family friendly towns and cities attracting buyers from the capital... Many people are choosing to flee the capital for small, more family friendly cities

 

In a report entitled, "new Prime Urban markets", Knight Frank highlighted four locations they think will be worthy of Special attention.

 

(What GBP 1 million can buy you in...):

+ Oxford: A 3BR, semi-detached house in Jericho, near the city centre

+ Cheltenham: A 5BR, Regency townhouse in the centre

+ Bristol: A 4BR, Edwardian house in Clifton, an affluent suburb

+ Bath: A pretty six BR townhouse, a short walk from the city centre

 

What they're aiming for:

"The Best of both worlds, (a cheaper price, like 40-50% cheaper and) ... you can be in the centre of town and have the buzz of being in London, with coffee shops and restaurants, and in 10 minutes you're walking through a field overlooking and empty valley" (or some other non-urban experience you may favor.)

 

"They are all very different... But they have similar drivers: good schools, a good cultural offer, and attractive period housing - and that's what sets them apart."

 

The price shift has already started, with three of these areas outperforming London:

+ Prime Central London : +5.1%

+ Bath : +5.0%

+ Oxford : +6.1%

+ Bristol and Cheltenham, both: +6.8%

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With gold at £650 per ounce and latest nationwide showing 257,000 as average London property price (Jan 9th - it will be lower already) that means we are now at 395 ounces for the average London house. Looking at the chart, we are at the first level of support. I think we will see 300 by the spring.

 

HP_UK_in_gold_1973.PNG

 

Now in 2016...

Nationwide London HP: £457,000

Gold in GBP: £757

 

Ratio: 603 ounces

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Now in 2016...

Nationwide London HP: £457,000

Gold in GBP: £757

 

Ratio: 603 ounces

Please can someone repost Cuthberts original image...?

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