The Bad News

[Tim Lund]

At the risk of confirming Dot's idea that we're all obsessed with property prices, here's an interesting picture:



Look at this, imagine yourself a bank or building society lending money to someone who wants to buy, and you're going to want a very substantial deposit. The relevance for Sydenham is that there will be significant numbers of newish property owners who are stuck here, perhaps with the tastes Dot and the Wolf like to make fun of, but not necessarily the money to pay for them. Somehow I think this will impact Sydenham Road over the next few years, though I'm not sure how.

Another part of the property story is the amount of money going into housing benefit, which this pdf shows is where 20% of the money Lewisham handles goes

http://www.lewisham.gov.uk/NR/rdonlyres ... ingMap.pdf

Any government would have to tackle this, and in the short run it's the poorest who will suffer most. But only in the short run; longer term it's buy-to-let landlords and other renters. Some housing associations will probably go bust.

There's a relationship with the mess bankers got themselves into recently, but it's more the legacy of a general obsession with property. Something similar happened in Japan about twenty years ago, and their economy has been fairly stagnant ever since.

Of course, we do have the London Overground effect, so it's not all doom and gloom!

[digime2007]

Personally I think it's good news that house prices are falling.

I agree there has been an obsession with property over the last 15 years or so. One of the things I think the last government got wrong was allowing the market to inflate unsustainably. It seems blatantly unfair to me that those with money have been able to buy up property and let it out as an investment, putting up prices even more and preventing those without the same financial good fortune from buying simple homes.

I don't disagree with the idea of property investment in principle but things clearly got out of hand. I know people who bought before the boom and used the equity to buy up a string of other properties over the years. I also know people who couldn't/didn't buy at the time and now struggle to buy at all. These are people on decent salaries. It's obviously even worse for young people starting out and those in less well paid jobs. That's blatantly unfair.

I think property in Sydenham offers amazing value and those lucky enough to have bought a place here are currently enjoying pretty low mortgage interest rates. The fact that prices are falling shouldn't mean they don't have money to spend on Sydenham Road. They may be stuck here but that might make them appreciate the local area even more.

One side effect of the good value in the local area may be that we'll see an influx of housing benefit claimants. I've not looked at the figures but I'd imaging rents here fall under the caps to be introduced by the government. That may have a bigger effect on Sydenham Road.

[Dot]

According the 2001 census,

thttp://neighbourhood.statistics.gov.uk/dissemination/LeadKeyFigures.do?a=3&b=5941893&c=sydenham&d=14&e=16&g=342076&i=1001x1003x1004&m=0&enc=1o

...the overall split of owned vs rented properties in Sydenham was 49%/51%. It will be interesting to see what next year's census reveals. On the disputed assumption that the town is becoming slightly more affluent, the home owners should be in the majority, but maybe not by much.

Draw from the statistics what you will, but the crude hypothesis that the educated, home-owning middle class want many more upmarket shops doesn't bear out. Maybe to compensate for faltering house prices the landed classes aren't prepared to pay more than a pound for their fried chicken right now.

[digime2007]

Draw from the statistics what you will, but the crude hypothesis that the educated, home-owning middle class want many more upmarket shops doesn't bear out.

Why is the hypothesis crude? Why do you have to be "educated, home-owning [and] middle class" to want a wider selection of places to eat, drink and shop? Why do stats on home ownership predict people won't shop on Sydenham Road instead of East Dulwich, Crystal Palace, etc?

Maybe to compensate for faltering house prices the landed classes aren't prepared to pay more than a pound for their fried chicken right now.

What knowledge do you have that questions the improving retail statistics and shows the "landed classes" have changed their spending habits because of house prices?

Forgive me but I don't understand the antagonism in your posts.

[G-Man]

Personally I think it's good news that house prices are falling.

You wouldn't if you were in negative equity as many are.

G-man

[digime2007]

Personally I think it's good news that house prices are falling.

You wouldn't if you were in negative equity as many are.

G-man

For most people that just stops you moving. Hardly the end of the world.

I do have sympathy for anyone who can't meet their payments but also can't sell. Labour did a lot to help people in this situation but sadly I think the ConDems are changing that.

In general though house prices are way too high and deny many ordinary people a fair opportunity to buy their own home.

[Thomas]

Negative equity can also stop you re-mortgaging - handy if your existing mortgage becomes uncompetitive, or if you want greater security by switching from a variable rate to a tracker - and not being able to move is also a problem if you need a bigger home, for example if a young couple start a family, or if you want to move to a different area.

[digime2007]

Negative equity can also stop you re-mortgaging - handy if your existing mortgage becomes uncompetitive, or if you want greater security by switching from a variable rate to a tracker - and not being able to move is also a problem if you need a bigger home, for example if a young couple start a family, or if you want to move to a different area.

Granted, but again - not the end of the world.

[Thomas]

You could still end up stuck with a very uncompetitive rate as banks change their policy, and I wouldn't want to be in a one-bed flat with two small kids - not as bad as having your home repossessed, but still some real short/medium term pain for those concerned.

I can see why people say why prices are too high, but given the current very low interest rates it is fairly rational - but of course things could change very rapidly if interest rates do move back towards their long-term average.

[bigbadwolf]

there will be significant numbers of newish property owners who are stuck here, perhaps with the tastes Dot and the Wolf like to make fun of

I say, Tim, that's a dash harsh!

I like to think that I treat you all with equal contempt. Not just the tattooed and toothless vagrants that plague the thoroughfares of our parish. But, that said, the more pretentious among us only invite scorn by rolling-up the bottoms of their chinos, exposing the brown loafers that compliment their campagnolo cap rounded off with a brown waistcoat (if you are one, you really should ask yourself why).

Why, haven't you heard? Tweed and velvet a so in right now...

https://www.youtube.com/watch?v=Xzocvh60xBU

[digime2007]

Thomas - yep, and that would suck but you're describing inconvenience and the potential for paying more than you'd like for your life long investment.

That's not ideal but is in no way the same as never being able to afford your own home or having to leave the place you grew up in to be able to buy a property.

Things could get a lot more ugly if interest rates do go up. But if that happens rents will follow mortgage payments anyway so it's not clear cut.

I'm not saying falling prices are ideal I'm just looking at the bigger picture and seeing that it's not without its benefits. Clearly, house prices falling, staying the same or increasing always involves hardship (or benefit) of one kind or another for those that do or don't own their own place.

It's swings and roundabouts but my point is that more people should be allowed into the playground and not just those with financial good fortune.

[Chazza]

Just to counter some of the doom and gloom, I bought a house in Sydenham at pretty much the top of the market in 2007 and (having learned a valuable lesson) have just sold it at a loss of only 2%. Given that the mortgage has been cheap as chips for the last 18 months, I'd say I got away with a bad decision and was saved by the arrival of the ELL, which was one of the reasons I bought in Sydenham in the first place.

By the way, my next place will be rented

[ Post made via Mobile Device ]

[Tim Lund]

Chazza:

You're a loss to Sydenham.

Dot:

You write

the crude hypothesis that the educated, home-owning middle class want many more upmarket shops doesn't bear out

but in my original post I wrote

Somehow I think this will impact Sydenham Road over the next few years, though I'm not sure how.

which is hardly a crude hypothesis.

Digime2007

I don't think it's all bad news either, for just the sort of reasons you give. I was going to put a '?' in the subject line, but thought I'd wait to see how others reacted to the subject. There's what I'd call a radical right view on this, which is that the sooner a market inefficiency is recognised and corrected the better. The problem is the short term pain, which will be real.

BBW

We understand.