Looks like City Living is falling out of favour in my home town....some City Living New Build "apartments" (flats) new/re-sell prices in my local town:
Here in NE London (fairly close to the City) there are a few newly built appartment blocks (one tower block even) and renovated schoolbuildings turned into 'Loft style' appartments.
Local EAs are telling me the newly built are much harder to sell than anything 'period' (incl. flats, houses, school conversions).
Oh and the canal side warehouse conversions aperently also do well (and they're rather pricey).
Literally hundreds of apartments are being built in and around Norwich City Centre. Some 1 bed flats built next to the football ground went on sale from £155k but now the starting price range is from £139,950. I'm not sure how big they are but I bet they are smaller than my 1 bed ex-LA flat. I think they might drop to £110k in order to shift them all.
I'm hoping that this market will get saturated to the effect that I might be able to afford a flat in this area (a bit of a risky strategy I know). At least I won't have far to stagger home on a Saturday!
Birmingham City Centre has been saturated with the building of new flats, however the valuations of these properties when bought off plan and the one given by lenders have led to deficits of £30k. I cannot see the attraction of paying a lot of money to live in a flat when I can get a perfectly decent semi in a good area for less.
Originally posted by beeswift: Birmingham City Centre has been saturated with the building of new flats, however the valuations of these properties when bought off plan and the one given by lenders have led to deficits of £30k. I cannot see the attraction of paying a lot of money to live in a flat when I can get a perfectly decent semi in a good area for less.
It's all about the lifestyle you want. I have a flat in BCC and I love to be able to walk to work with no commuting and being able to just walk out of my flat and into the middle of everything. No buses, trains or taxis home, all the clubs, bars, cinemas, theatres, etc. etc. right on my doorstep I prefer a flat to a house, too.
~*~Member Number 465 of... The New and Improved RACHEL Fan Club~*~
The seller of Flat 27 took a hit here. Much worse than it looks when one takes into account the original buying and then selling costs.
Newbuild price falls clearly not a local phenomena. I was thinking oof buying a newbuild-ideal for a sigleton like myself I thought. This must just be a blip
A question for those in the know: If these recent buyers of newbuilds are buying into a falling market and have bought with a 5-10% deposit, does this not mean recent purchasers will soon be in negative equity, assuming prices continue to drop, (which they won't, I'm sure)?
Originally posted by bazzzz: The article highlights a nottingham surveyor who was asked to survey a flat recently bought for 210K and he could only value it at 150K.The more I look into this teh more baffled I am. Must be bored journos having a larf.
No, this is endemic for new builds and not just flats, it's houses too and involves many of the large builders such as B*****s. It works thus:
Builder puts property up for sale with an inflated price tag.
Builder offers discounts (of circa 15%-30%) to the mug who shows interest in buying. These discounts can be a straight discount, cash back, fees paid, carpets supplied, or other goodies even cars.
Tame surveyor rubber stamps valuation at inflated asking price, so mug thinks they've got a good deal and decide to buy.
Now here comes the really nasty bit, it's the inflated asking price/valuation that gets entered into the land registry data. Mug pays stamp duty on this inflated price but he hasn't actually paid that price for the property due to the discount.
For the next property a second buyer comes along. This poor mug (mug2) looks at houseprices.co.uk to check previous sale prices and lo there is property one with it's inflated price. The builder offers the discount again and mug2 thinks he's getting a bargain so agrees to buy. Mug2 has no way of knowing what discount was given to mug1.
So the builder gets his sales and is the only one who knows what the true sale prices were.
Until the mugs come to sell and then they get a nasty shock.
quote:
Originally posted by bazzzz: If these recent buyers of new builds are buying into a falling market and have bought with a 5-10% deposit, does this not mean recent purchasers will soon be in negative equity, assuming prices continue to drop,
Most certainly.
quote:
Originally posted by bazzzz: (which they won't, I'm sure)?
Are you? As I said once the mugs come to sell on there will be trouble. On paper it will look like there has been a massive drop (there hasn't really as the mugs didn't pay the land registry price but it's only they and the builder that know this). Any new buyers will see this massive drop, think it was real and will run a mile! The builder will probably have moved on by then so it will be the mugs left in trouble.
But that means tens of thoasands who have completed in the past year are now in negative equity or very close to it. And some of them will be victims of this obvious fraud.
Isn't this a mis-selling scandal? Haven't the banks then been duped by the developers into providing loans on overvalued flats/houses? Surely this means banks exposure has been increased should prices fall? Does this not mean house prices are being artificially inflated?
I think I'm getting angry. I don't understand how this has come to pass. This is a major nationwide fraud on buyers and the banks. It's an outrage. I suspect our couple from Birmingham are probably victims of this.
Originally posted by Fran Tick: No, this is endemic for new builds and not just flats, it's houses too and involves many of the large builders such as B*****s. It works thus:.................
Fran is right, there's a whole industry built on this "scam"....Including "reputable" Developers, Surveyors, finance advisors, Agents and investment clubs:
Originally posted by BTLOptingOut: Fran is right, there's a whole industry built on this "scam"....Including "reputable" Developers, Surveyors, finance advisors, Agents and investment clubs:
It goes much deeper than just these property clubs/seminars.
I'm talking about ordinary buyers going to the ordinary sales offices at new build sties of many of the large builders. The singing pig example I gave is just a buyer off the street turning up at a B*****s development and buying a house.
You've only got to read the weekend papers to see discounts advertised and these are just the tip of the iceberg. Go into the sales office and look interested and you will get further discounts, like cash back, none of which show up at the land registry. You will think you are getting a preferential deal, say because they need to meet this months sales figures or because you are a good negotiator, but you are not. The reality is the properties are not worth the inflated asking price so you are not really getting a discount at all and the figure entered at the land registry is fiction.
Originally posted by Fran Tick: The reality is the properties are not worth the inflated asking price so you are not really getting a discount at all and the figure entered at the land registry is fiction.
Agreed, those 4 re-sells from one development that I listed at the top of this thread equate to an average 17.5% "drop". <b>Most</b> of that "drop" is due to the hidden incentive "discount" not posted within the original LR figure.
However the re-sell price sets the new "comparables" for any future survey/valuation and hence mortgage offer. This has two impacts:
1) Developers are going to have difficulty continuing their inflate/discount marketing policy. 2) Existing owners will never be able to capitalise that "discount", and their expectation will turn from profit to loss.
Just as HPI is a self-fulfilling prophecy (and the real motivation behind that Phil & Kirsty programe this week) so is HPD. As the expectation of gains turns to losses, re-sells and re-sells-of-re-sells will chip that "comparables" headline figure down further.
The chickens really have come home to roost....and they are nesting heavily within Clity living New Build (CLNB).
However the flats being built in Birmingham are absolutely gorgeous and five minutes from my work. Is it evil of me to hope the buyers panic and try and off-load them at vastly reduced prices?!!
Originally posted by decca: However the flats being built in Birmingham are absolutely gorgeous and five minutes from my work. Is it evil of me to hope the buyers panic and try and off-load them at vastly reduced prices?!!
No more evil than those who bought them were hoping for a secure and prosperous future for their families/retirement.
Hang on in there for 18-24 mths and you may just secure yourself an affordable city crash pad.
Originally posted by BTLOptingOut: Fran is right, there's a whole industry built on this "scam"....Including "reputable" Developers, Surveyors, finance advisors, Agents and investment clubs:
It goes much deeper than just these property clubs/seminars.
I'm talking about ordinary buyers going to the ordinary sales offices at new build sties of many of the large builders. The singing pig example I gave is just a buyer off the street turning up at a B*****s development and buying a house.
You've only got to read the weekend papers to see discounts advertised and these are just the tip of the iceberg. Go into the sales office and look interested and you will get further discounts, like cash back, none of which show up at the land registry. You will think you are getting a preferential deal, say because they need to meet this months sales figures or because you are a good negotiator, but you are not. The reality is the properties are not worth the inflated asking price so you are not really getting a discount at all and the figure entered at the land registry is fiction.
This makes me angry. It's plain cheating and the banks are being misled.
I can only hope the government and/or banks do something about this.
Surely action must be taken by the banks, if for no other reason these practices are seriously undermining their position and creating more risk for them.
I do not understand wht the banks have not acted in a concerted way to prevent this. I cannot believe they do not have the power to prevent these practices.
This studio flat was only completed a few months ago yet I suspect a BTL investor may be offloading it as he/she can't find a tenant who is prepared to pay the rent.
The studio flats in this block went on the market last autumn for between £99,950 to £105k. If the flat sells for anywhere near the £125k asking price then that person has done well.
Originally posted by MattW: This studio flat was only completed a few months ago yet I suspect a BTL investor may be offloading it as he/she can't find a tenant who is prepared to pay the rent.
The studio flats in this block went on the market last autumn for between £99,950 to £105k. If the flat sells for anywhere near the £125k asking price then that person has done well.
Keep us posted. it will be an interesting barometer of the market in relation to newbuilds.
Originally posted by pont: Local EAs are telling me the newly built are much harder to sell than anything 'period' (incl. flats, houses, school conversions).
Couldnt agree more. Cant beat a georgian/victorian school house conversion. Most period conversions are better to offload when you need to as long as the price was right in the first place.
quote:
Originally posted by bazzzz Isn't this a mis-selling scandal? Haven't the banks then been duped by the developers into providing loans on overvalued flats/houses? Surely this means banks exposure has been increased should prices fall?
Only when banks start loosing their money in this scenario will you see big stories. Also with the bulk buying club scenario, the developers usually try and sell their best plots themselves for near to asking price or maybe go as far as 10 percent worth of incentives. So there are are usually people out there willing to pay big money and set the ball rolling. Its these few people that have 100 percent confidence in future growth.
Remember that the bulk buy clubs generally insist on using their nominated broker, nominated solicitor and using only 1 or 2 lenders to ensure minimal risk of deal breaking. If you end up paying for a seperate survey yourself, that may show something is not quite right.
ive read a lot about surveyors undervaluing a purchase on the forum too. All they have to work with is comparable properties and other info such as other current buildings popping up, regeneration in place and loads of other random stuff. There really isnt such a thing as a current market value, its just an opinion. Houses sell at the price the buyer was willing to pay if the lender agrees, the problem comes with the blurring in between from EA, bulk buy clubs and slack lenders.
Look at this bulk buy scenario rip off that would never hit the headlines. You get a 15 discount off headline price and all your fees paid, maybe even furniture so all youve gotta pay are ground rent(leasehold) and mortgage payments known as no money down. If you are lucky, the bulk buy club has done their homework, and they know demand for your flat will be high upon completion. Say 20 people bought, maybe 3 will try and sell and the others will rent it out. They are competing with each other and maybe even the developer still has a few of their own trying to sell but at this stage its unlikely. Estimated rent was 600, mortgage is 500 but because of competition you take 500 rent breaking even monthly. You may notice a few for sale at prices low in your mind and realise you made a mistake and the discount wasnt as rosy as it looked. You hang on for 5 years renting the house gradually oputting rent up and sell for a decent profit 5 years down the line. This is happening now as BTLers cant afford to loose their money and dont go the papers. If this info got in to the news it may put more people off that area and make it harder for this person to sell hence stay quiet and let it.
I think thats why it comes as a surprise that these fake discounts dont make headline news.
