Investing in housing/apartment/flats?

[Ulti]

Hey Hexites,

Basically my girlfriend is an international student and her mum wants to buy a place for her while she studies, and after she completes her studies, her mum will want to earn money on it (via renting).

Simply put, does anyone know the advantages/disadvantages between each one and have any opinion on which would be better to invest in. As we go to LSE it'll mostly likely be in central London if that helps. Better yet, does anyone know any good websites that I could read up on investing in these things so that it doesn't look like I'm just relying on everyone here?

Would be great if Saracen entered here

Thanks!

[Rave]

www.housepricecrash.co.uk
http://www.moneyweek.com/

[Spud1]

Depends on how you want to manage it, and what your exit strategy is.

Put simply, if the owners cannot be there regularly to inspect it and mange it themselves - don't do it at all. Very very risky, and a single bad tenant will cost you thousands.

If you plan to own for a very long time (10, 20 years) then a flat is a reasonable investment for renting purposes, especially in London..however be aware that they are nigh on impossible to sell for a profit, and you have to be very careful about which one you get - bad neighbours, bad owners of other flats, bad management companies..lots of things to go wrong.

A house is still a safer bet - generally harder to rent out and clearly more to buy, but better residual value and will likely go up in value over the next 20 years.

Personally I think it's mad at the moment to get into this game unless you have enough money to buy a few properties to spread the risk

[Ulti]

Well it's going to be rented out (by the way, I may use the wrong terms as I've really only read a bit about housing on Wikipedia so my knowledge isn't really the best) so I understand that a house is harder to rent out. But surely with a house there's more maintenance to upkeep; more things to inspect? Therefore more risk?

They think that investing in a flats/apartments would be better than a house whilst my parents argue the opposite. From what I've seen, students are pretty lazy and really don't care about the upkeep of their flat/room much but this risk applies to both flats and houses; obviously it's not going to be rented only to students though.

From the research (little and poor I've got to admit) I've done, I can see that, in terms of investing to resell on the market, house prices are the ones that rise whilst apartment prices rise less over the long term. In the short term I see that it fluctuates a bit.

I'm pretty sure the demand for flats will be greater due to being in the capital though but this is just what I think.

I guess the most important thing would be location and risk? But these two are pretty interlinked right?

[pp05]

I think Spud has pretty much listed some of the major risk factors in buying flats. If you do decide to go ahead with it I would say avoid new builds if possible.

At present I wouldn't buy unless you get it at knock off prices.

[TheAnimus]

www.housepricecrash.co.uk
http://www.moneyweek.com/

First off I have to mock ya for this same song rave.

You've been banging this drum on hexus for 5 years iirc! And have been wrong for 5 years.

Soon as there is an adjustment you'll jump up and down saying your right. Ignoring how much money you'd have lost over the last few years.

But myself I don't think she is right to be looking at investing in property. For a start off she might find it complex due to not been a brit cit, secondly the market is iliquid, finding a good property in Central London is very hard due to the demand far outstripping supply. So somoene who is at a disadvantage who is going to loose out by not being there investing just strikes me as asking for trouble (if the property was any good, someone else would have bought it logic)

[Lucio]

TBH, she's better off buying the property, having your sister living there for however long, and then selling it at the end of it's use. Providing house prices continue their gradual upward trend, it should still leave a small profit and more importantly, offers savings compared to renting.

[Ulti]

Well her mum already has quite a lot of flats (when I say quite, it may actually only be a few or could be more than a few, not sure, also it may be houses but houses in China seem quite rare to me but I don't visit China much so don't really pay attention) in China, but I heard that in China there's lots of "extra things" to pay for for the flats.

As my Chinese sucks too much (we're both Chinese but I'm a Brit Cit) I won't go anywhere near China to work in the future and so I'm pretty sure I'll stay here so I'd probably have the time to check the flat.

The thing with China is that land price has risen dramatically over the last decade (I'm not sure of figures but I'd imagine it may be similar to the housing bubble in the UK in real terms) so while her mum is gaining a lot in China from her investment, I know she probably won't get anywhere near as much here.

[Saracen]

I'm not convinced that buying property to rent out is that good an idea at the moment, and I'd certainly say it's a risk, being as a large part of the usual motivation is capital appreciation, and right now, that's quite a gamble.

But .... if your GF is going to be here for several years, she's got to live somewhere. In the absence of owning the property, she'll be paying rent to someone else, and that is quite a lot of money straight down the drain.

So, perhaps, buying a property that your GF can live in, and perhaps rent bits of to others, and then looking at long-term rental might make a lot of sense.

....

Would be great if Saracen entered here

I appreciate the vote of confidence, but I'm not sure it's justified. I'm no expert in this field even if you were talking about a simple UK resident, and if (as appears to be the case from the way you phrased it) your GF's Mum operates in China, then I'd be way out of my depth offering much advice. For a start, I've no idea what the tax implications may be.

But for whatever it's worth, here goes ....

Overall, my guess (and I stress GUESS) is that property is still a good investment, despite what I suspect Rave would have to day, provided you're looking at it long-term. But a lot of property investment in the UK has been done largely with the expectation that there'd be 15% pa (or thereabouts) rises in the capital value, so people thought they'd get the rent to pay the mortgage and that the capital value was a cash cow. And that, I'd certainly agree with Rave, would be very optimistic.

The UK property market is, in my opinion, still probably a bit over-valued. The question is .... what'll happen over a period. It could be that the market will stagnate, and that real-term values will drop because of erosion by inflation. It could be that some as-yet unknown factor will still cause a crash. For instance, we are NOT yet out of the woods in relation to a banking crisis, and a phase two crisis could still hit. Also, there is considerable uncertainty over the Euro and the PIGS countries. And on top of that, it remains to be seen if the UK coalition government's much-vaunted "cuts" actually work or not, and whether the perhaps rather optimistic growth projections materialise or not. If we can't cut the debt, or at the very least, cut or eliminate the deficit, and if growth fails to materialise, what does that imply for short and medium term property values?

Answer? I don't know, and not does anybody (and I mean ANYBODY) else.

Ulti, I don't know if you remember the last property "crash"? From your post, you may be a bit young. As an example, I watched a property I owned double in price in about three years, then I watched it almost halve in price over the next few years, leaving me back within about 10% of purchase price, and since then, it's about quadrupled in price over what I initially paid.

If I had bought and sold at the right times, I could have doubled my money in a couple of years. However, if I'd bought a couple of years after I did, and then had to sell a couple of years after that, I'd have lost nearly half of the capital sum.

We went through quite a few years where "investing" in houses was seen as a golden bet that couldn't fail. Right until it did. People never learn the lessons - what goes up can (and just might) go down.

So .... your GF (or her Mum) has a job of research to do. What are the costs of buying? What are the costs of maintenance? What are the costs of getting tenants, either while your GF is living there (depending on the property size) or afterwards? If your GFs' Mum is based in China, she'll presumably need full-service agents that can not only find tenants, but collect rent, oversee maintenance and repairs, etc. That drives the cost up. She'll want to be aware of what costs can and can't be offset against rental income, and what are capital charges that can be offset against capital gains made between purchase price and the eventual sale price. She'll want to consider possible costs of damage by tenants, and she'll want to consider the costs implied of any periods where the property is standing empty, while new tenants are sought. And she'll absolutely want to know what the tax arrangements are between China and the UK, especially in terms of reciprocal tax agreements. Or, if your GF's Mum is just loaning your GF the money and the GF buys, then what, at least while she's UK resident, will her tax status be?

Many of these questions come down to the quality of the agents employed, and there are some cowboys out there that ought to be given a very wide berth, and their low up-front rates can be a false economy if they aren't proactive about getting new tenants, or if they aren't honest with rents received or costs incurred.

By and large, by comment would be that long-term property investment is probably still a good bet, but that the "investment" people have been doing for the last 15 years or so is more like property speculation than property investment.

And finally, what's the opportunity cost?

If your GF's Mum is providing the capital, then she ought to be looking at what that capital could earn invested in, say, property in China? Or the stock market. Or gold. It might be that it'd make more financial sense to buy property in China, and pay for the GF's London rental out of income from it, than to risk the volatile UK market, and the potential for costs and expenses in London if she lives in China.

And finally, if all the above isn't enough to think about, also consider that the London property market is something of a special case, a kind of microcosm, and that what applies in much of the country isn't quite the same in London, and certainly not in Central London. And one very last final point .... if she does this, key to the success will be buying the right property at the right price. That can take quite a lot of time and research to achieve.

Then again, all that changes if the GF's Mum is UK-based. But then, if she is and she's in the property market, she sure as heck doesn't need my advice on it.

[Rave]

First off I have to mock ya for this same song rave.

You've been banging this drum on hexus for 5 years iirc! And have been wrong for 5 years.

Right hang on, I imagined the near 20% fall in property prices from 2008-2009 did I?

Predictably there was a dead cat bounce last year, and prices rebounded about 10%, but that couldn't and of course didn't last, and prices have been falling for near on 6 months now. And it's only going to get worse with banks terrified to lend more than 75% LTV.

But myself I don't think she is right to be looking at investing in property. For a start off she might find it complex due to not been a brit cit, secondly the market is iliquid, finding a good property in Central London is very hard due to the demand far outstripping supply. So somoene who is at a disadvantage who is going to loose out by not being there investing just strikes me as asking for trouble (if the property was any good, someone else would have bought it logic)

Well without knowing the mother's situation, she might be at an advantage, or not. If she's going to be a cash buyer (or buy with not much leverage) she might be at a considerable advantage over someone who's reliant on a big mortgage- she might even be in a position to negotiate a sizeable discount from a 'motivated' seller.

But .... if your GF is going to be here for several years, she's got to live somewhere. In the absence of owning the property, she'll be paying rent to someone else, and that is quite a lot of money straight down the drain.

I would disagree that renting is necessarily money down the drain- I rented for years for less money than the interest on a mortgage would have cost me- in that situation you'd have to argue that the interest payments were money down the drain unless you were seeing sizeable appreciation in the value of the house.

The UK property market is, in my opinion, still probably a bit over-valued.

Various respected institutions and publications I've read think that it's 20-30% overvalued. Probably more than that in London. I think even that's optimistic, because I fully expect to see property fall, at some point in the next few years, to its long term average, or even below it, since markets tend to overshoot. The long time average is widely agreed to be 3.5x average earnings.

I'm not sure whether that is median or mean average, which obviously makes a difference, especially in London. But even if it's mean, that makes my target average price in London not far north of £200k, I will be looking to buy when the average reaches that point (adjusted for inflation, of course).

So .... your GF (or her Mum) has a job of research to do. What are the costs of buying? What are the costs of maintenance? What are the costs of getting tenants, either while your GF is living there (depending on the property size) or afterwards? If your GFs' Mum is based in China, she'll presumably need full-service agents that can not only find tenants, but collect rent, oversee maintenance and repairs, etc. That drives the cost up. She'll want to be aware of what costs can and can't be offset against rental income, and what are capital charges that can be offset against capital gains made between purchase price and the eventual sale price. She'll want to consider possible costs of damage by tenants, and she'll want to consider the costs implied of any periods where the property is standing empty, while new tenants are sought. And she'll absolutely want to know what the tax arrangements are between China and the UK, especially in terms of reciprocal tax agreements. Or, if your GF's Mum is just loaning your GF the money and the GF buys, then what, at least while she's UK resident, will her tax status be?

Yes quite, there's a great deal to consider. At the very basic level, to start the process off, I would find some suitable properties, and compare the rents being asked to the cost of the interest on the mortgage (or, if she's a cash buyer, against the ROI she could get from putting the cash elsewhere). Then factor in maintenance on the house if you buy- at least £1k a year to be on the safe side I would say; some years it will cost nothing, other years you are bound to be hit with a big bill (my mum had to spend £3k on having our roof redone a couple of years ago when it started leaking).

I actually don't know what the answer to that comparison will be, as rents seem to have risen quite sharply recently- it could well be that buying comnes out cheaper on a monthly basis at the moment- but of course this is while interest rates are historically low, and I think (and certainly fervently hope) that they will start to rise soon.

And of course others on here will disagree with me, but as I said I think property, especially in London, is still very overvalued and headed for a further correction very soon. A lot of people think that London is a special case, but in the 90s crash that turned out to be an illusion- London fell faster and further than anywhere else, because the prices had become so overinflated.

And finally, what's the opportunity cost?

If your GF's Mum is providing the capital, then she ought to be looking at what that capital could earn invested in, say, property in China? Or the stock market. Or gold. It might be that it'd make more financial sense to buy property in China, and pay for the GF's London rental out of income from it, than to risk the volatile UK market, and the potential for costs and expenses in London if she lives in China.

The Chinese property market has arguably had as big a bubble as ours did, just lagging us somewhat.

Ulti, at the end of the day you and your GF need somewhere to live, and in the costly London market it's a toss-up whether buying or renting will be cheaper- in the short term. Buying, however, is far riskier for several reasons, and my personal gut feeling is to avoid buying, as I have done myself (I could have saved harder, got a loan from the Bank of Mum and Dad, 95% mortgage etc. etc. but I'm glad I didn't). Renting isn't as nice as owning your own home, always a landlord to answer to etc., but you pay your money and at the end of the tenancy you can walk away (or be asked to leave obv.). A bank won't let you walk away from thousands of pounds worth of negative equity....

[TheAnimus]

Right hang on, I imagined the near 20% fall in property prices from 2008-2009 did I?

Predictably there was a dead cat bounce last year, and prices rebounded about 10%, but that couldn't and of course didn't last, and prices have been falling for near on 6 months now. And it's only going to get worse with banks terrified to lend more than 75% LTV.

Where is your data for that. If I'd seen a 20% drop in London prices, I'd be living in a nice place in Zone 1 right now!
http://www.londonpropertywatch.co.uk...c=LON&t=2b&c=p

Well without knowing the mother's situation, she might be at an advantage, or not. If she's going to be a cash buyer (or buy with not much leverage) she might be at a considerable advantage over someone who's reliant on a big mortgage- she might even be in a position to negotiate a sizeable discount from a 'motivated' seller.

Tbh I've not seen this for a Central London place and I've been looking for an investment place with a friend, we're mostly cash too.

The supply just isn't there, and we are anemic to addressing it properly, we've wasted so much money on transport links to the wrong places. It still amazes me that mill hill east to edgware is not completed. Yet they pork barrell in a cross rail extension.

[Bugbait]

Bit busy at work so I can’t give the detailed response I’d like. However, I’ll try to include the key points.

Know your market!

Speak to students and look at the type of properties that students favour. Any local estate agent should be willing to give advice on what is desirable for a given market, in your case students. Don’t forget to specify the type of student market you’re targeting. Local, self funded students will have different criteria and budgets to overseas, cash rich students for instance. This will set the base assumptions and key criteria you should look for in a property. The demographics for students versus corporate is vastly different when it comes to purchasing a property for (eventual) BTL.

Then start looking at a range of properties in the areas you’re considering varying from basic to something a hit nicer but nothing too fancy. The latter point is important as most students are less likely to be able or willing to pay extra for luxuries (nicer fittings and furnishings, etc.). Compare all incoming (rent) to outgoing (agent fees, maintenance, interest, etc.). Now compare this to the cost of renting.

If you want to be safe, you should consider any capital gains on property as a bonus. A good BTL investment should pay for itself, ie. At a minimum you should never have to top up the mortgage to cover interest and outgoings. Any monthly cash injections should only cover the capital repayment.

Once you have narrowed the area in which you wish to purchase, get an idea of property gains or losses over time. A good start is www.mouseprice.com or similar sites. Don’t look at projections but Land Registry data as these are actual transactions and are FACT. Is there an upward tread (good thing)? Does the same property change ownership often (bad thing)? Is there high general turn over in the area (possibly bad)?

Remember to compare any potential purchase against the criteria established earlier. Does it offer most of the thing students’ value? Transport links? Amenities? Good internet access? Is the cost of including these in the purchase price reflected in returns from rent? Eg. If you spend £50k more on a property that meets the criteria, are students likely to pay more rent for them?

If the above is not true then maybe you should consider renting. This is a gross simplification of the process and you should do an abundance of research before purchasing advising your GF’s mother to purchase. She should do the same or get her daughter to. Buying blind is never a good way to invest in anything.

Prices might be going down relative to list price but this does not mean the “real” value is decreasing which is a distinction that many people don’t understand. Here’s an example using a real transaction based in my area. It’s current as exchange occurred several weeks ago and completion is due in the next week or so.

A 3BR flat was purchased during the property boom (mid 2006) for £X thousand. After just under 5 years it was placed on the market at £X+170k. On the first day of viewings there were 4 people resulting in 2 offers. One was £15k below list and in a chain. The other was at list, no chain. It went into a bidding war with the chain purchaser stopping at £X+193k and the “cash” buyer at £X+196k. Without giving the exact numbers away the value of X is under £500k.

It would be easy to say that this is a good sign for the property market in my area as it sold very quickly above list. However, it’s more accurate to say the agent undervalued the property. Regardless, a £196k increase in 5 years (only thing they did was repaint for £1300) seems to buck the “house price crash” trend. As a recent house purchaser I would say list prices are more realistic and buyers are far more discerning. You will see multiple offers and bidding wars on premium/primary locations (close to transport, amenities, school catchments, etc.), often at or above list, with regular discounts and below list offers on secondary and definitely tertiary properties.

The sellers are friends of ours so the above is not sales jabber from an estate agent. I would consider their property a primary location: Low density flats in a conservation area (bordered 3 sides by fences and surrounded by English Heritage land) with gated, offstreet parking and large communal garden. Their ground floor flat had mostly garden views with a private patio space.

We are currently renting our old flat to a corporate tenant. The net rent collected (ie. Minus ALL expenses) covers the monthly interest and capital repayment on the mortgage. Effectively the tenant is buying our place for us.

Bottom line? There is money to be made, even now if you purchase wisely.

Probably loads of things I’ve glossed over and omitted but time is limited! As a final note, be wary of what you read on www.housepricecrash.com forum. There is some good information in there, especially about tenant rights and landlord obligations. However, I’ve found the information to be a bit lopsided and sometimes outright wrong when it comes to London, especially the more affluent parts.

[Saracen]

....

I would disagree that renting is necessarily money down the drain- I rented for years for less money than the interest on a mortgage would have cost me- in that situation you'd have to argue that the interest payments were money down the drain unless you were seeing sizeable appreciation in the value of the house.

It's not quite that simple though, is it. First, there's a difference between buying a property to live in, and buying one as an investment, or as a business opportunity. To live in, there are often good reasons to rent not buy, one of them being the lack of exposure to potentially large maintenance costs, and another being the considerably increase mobility you get, by being able to move without the hassle and cost of selling a property.

But, as an investment/business opportunity, the calculations are a bit different. For a start, not everybody buying for investment/business needs a mortgage. There are people with disposable capital and if so, the calculations are about costs versus revenue from rental income, and any potential capital gain (or loss) and capital costs, like repairs. And in that case, you're certainly looking, on the revenue side, at rental outgoings for Ulti's GF offset by rental income if she rents out part of a property, versus the opportunity cos of not doing something else with the capital.

So, suppose you're in the fortunate position of being "stuck" with, say, £500,000 you don't know what to do with. You can park it in a bank (and risk bank collapse), you can put it in bonds (where returns aren't great), you cab shove it in shares or any one of a range of financial instruments of varying degrees of cleverness (and risk), you can "invest" in gold, diamonds, artworks, etc. Or you can stick it under the mattress and get it nibbled away at by inflation.

So a LOT depends on Ulti's GF's Mum's financial situation. Obviously, assessment of risk in the housing market is a large part of that, but if this is an investment, so is the duration of the investment. If she's looking at a 20-25 year investment, for instance, the assessment of risk, even over a possible 25% (or whatever) crash is heavily mitigated because, at least in my view, property prices over the very long term will go up. The real danger is if you "invest" by taking out a mortgage, find interest rates go up and can't afford the mortgage, and find you have to sell right when the market is down.

If this investment is at least with a view to the long-term, then a crash of 50% doesn't matter a damn IF you can ride it out and prices come back, just like they did in the last crash.

An investor that's cash0rich and looking for a place to park capital won't be looking at short-term property prices, but about revenue streams and costs, and at the projected long-term prospects for property prices.

....

Various respected institutions and publications I've read think that it's 20-30% overvalued. Probably more than that in London. I think even that's optimistic, because I fully expect to see property fall, at some point in the next few years, to its long term average, or even below it, since markets tend to overshoot. The long time average is widely agreed to be 3.5x average earnings. ...

Perhaps they're right. Perhaps they're not. Some of those respected institutions have been saying that for years. So, as it happens, have I. But property valuations are a strange phenomenon, and it's at least as much about perception and confidence as it is anything else. And they are VERY hard to predict and quantify.

....
....

And of course others on here will disagree with me, but as I said I think property, especially in London, is still very overvalued and headed for a further correction very soon. A lot of people think that London is a special case, but in the 90s crash that turned out to be an illusion- London fell faster and further than anywhere else, because the prices had become so overinflated.

I entirely agree, on both the over-valuation and the "correction". But as I've said before when we've discussed this, the real question is whether the correction proves to be a relatively modest decrease or a crash.

My personal view, and I've said this before too, is that it's likely to be a modest decrease and slow resumption of growth unless some significant and unpredictable external shock jolts the market and destroys confidence, big-time. To be honest, I'm surprised that the size, nature and speed of the credit crisis didn't provide just such a shock and trigger a collapse. It certainly trigger a pause, and something of a decrease, but that decrease was far more restrained than I thought it might be, and that gives me some serious cause to expect that a "correction" will be relatively gentle, not an utter collapse, if indeed we get a correction at all rather than just minimal growth.

What might, of course, provide adequate shock is if the PIGS countries can't survive even with support packages and start big-time defaults, perhaps (or maybe probably, if that were to happen) with the Euro collapsing, and the zone either dissolving altogether, or failing back to a retrenched position with the core 'stable' countries only. The economic fallout throughout Europe of that, on top of existing woes, could indeed cause major problems in the property market. But, it might also bolster it a bit in that the effect on corporate performance and indeed longevity might well prompt the ages-old reaction of flooding out of shares and into bricks and mortar.

All told, all I feel I can say with confidence is that the bubble has burst, the property is not the sure thing people thought (wrongly) it was, and that the golden age of speculative returns is over, certainly for the foreseeable future. Though if there is actually a collapse, rather than a more modest correction, I'll bet now that it'll be followed, at some point, by another boom and bubble. Some people will see the prospects and make real money. Then the cattle will see it and jump on the bandwagon, and there you have it .... the ground conditions for a bubble.

[Aimvpr]

My personal view, and I've said this before too, is that it's likely to be a modest decrease and slow resumption of growth unless some significant and unpredictable external shock jolts the market and destroys confidence, big-time. To be honest, I'm surprised that the size, nature and speed of the credit crisis didn't provide just such a shock and trigger a collapse. It certainly trigger a pause, and something of a decrease, but that decrease was far more restrained than I thought it might be, and that gives me some serious cause to expect that a "correction" will be relatively gentle, not an utter collapse, if indeed we get a correction at all rather than just minimal growth.

The market didn't collapse? Are you kidding? The decrease in value was less apparent in more affluent areas but for city centre apartments or less desirable areas prices went down sh*t creek. At one point you could buy a 2 bed terrace somewhere in West Yorkshire for as little as £50k whereby prices prior to the crash was around £105k - 120k. We were just very fortunate that the recovery in the property market was fairly swift in comparison to the early 90s.

The housing market tracks the commercial market fairly well and let me tell you, commercial property prices was seriously fux0red. We are seeing a recovery in the commercial sector though, particularly for prime stock. Secondary stock, not as much.

And regarding the OP: Buy is always better than renting provided you have the initial capital for a deposit and can maintain mortgage repayments. Yes, there maybe times where you have to spend a bit of CapEx on the building for repairs but generally speaking this shouldn't be massives of amount provided you don't buy a property that's not structurally sound and that you actually look after your property and not treat it like some student hall. Other things to consider is that mortgage rates are very favourable at the moment and unlikely to remain at these levels for the remainder of 2011!

[TheAnimus]

we are talking about London thou, Central London.

Not some crap hole mine town with no economy, exporting under achievement ,importing government subsidies and Iceland ready meals.

[Aimvpr]

Even in Central the housing market wasn't resilient to the fall in house prices. Back in 2008 you could pick up a decent re-possessed flat in decent parts of London for 25-35% off market value.

London has just seen the market come back much quicker than the regions, which, has always been the case as it is, afterall, the financial capital of Europe *cough cough*

If you don't consider a 35% fall in house prices in central london to be severe then perhaps numbers would be more useful. A quick search on aboutmyplace.com. Looking at Clapham Junction in London and pickign a random road say Limburg Road. Flats on Limburg Road in 2007 (height of the market) sold for around £575k. In 2008 (bottom of the market for London) flats sold for £350k. In 2009 (recovering in London) flats sold for £380k. So from the height of the market to the bottom in Clapham Junction - historically a decent area for housing saw a 40% drop in value. That's £225k off the value of your investment. If that isn't collapsing, I don't know what is.