How far will house prices fall [volume 4]

[Tango13]

rovermorris999 said:

Tango13 said:

I've got my eye on a place just outside Skeg-vegas which is about a third of the price it would be down here.

Not far from Cadwell either.

Only 18 miles if my Google Fu is correct, also close enough for the beach racing and about 2hrs as the Triumph flies from Oliver's Mount.

Not that I'd let these things influence any decisions

[boxst]

loafer123 said:

Never sell an empty property.

80% of buyers lack the imagination to see themselves living there. Your competitor scheme is easily making £30k more through Help to Buy and other incentives, plus a show flat which makes the buyers think they are buying a lifestyle.

Reduce the price, lease a furniture package, make it look nice, and you might have a chance.

Oh really? I just bought a house without selling my current one and will be selling it after we've moved.

You think it is better to leave it partially furnished?

[Shnozz]

boxst said:

Oh really? I just bought a house without selling my current one and will be selling it after we've moved.

You think it is better to leave it partially furnished?

Without a doubt. Even better if fully furnished and dressed.

The estate agents (realtors) in USA/Canada earn their keep (albeit higher fees) by actually providing this service. An open day for prospective buyers where they will furnish and dress the house to make it appealing, arrange the open day for viewings and give a taste of the life you can live and not leave it to a buyers own vision which is often hard to do with a blank bare canvas.

[z4RRSchris]

agents in the states also charge 6%... snakes

[Shnozz]

z4RRSchris said:

agents in the states also charge 6%... snakes

Aye, but then they charge 5% in Spain and do the same non-job as in the UK. Some crap photos put on rightmove and a few viewings half-heartedly.

At least in the US there is some kind of service for having your pants down.

[boxst]

z4RRSchris said:

agents in the states also charge 6%... snakes

They typically charge 3%, but you have two agents: A buying and a selling, so the total is 6%. A most odd system.

They will as you say 'stage' your house. I'm off to see how much that is in the UK, as if it isn't very much it may be worth doing.

[Sheepshanks]

boxst said:

They typically charge 3%, but you have two agents: A buying and a selling, so the total is 6%. A most odd system.

Foxtons had a go over there and it was a disaster. Think they actually went bust?

[ooid]

boxst said:

They typically charge 3%, but you have two agents: A buying and a selling, so the total is 6%. A most odd system.

They will as you say 'stage' your house. I'm off to see how much that is in the UK, as if it isn't very much it may be worth doing.

Beyond staging, they would also work quite a lot on behalf of your property, especially to raise offers. If any issue happens during inspections, or mortgage they also engage quite proactively. In U.K., some agencies also provide this, perhaps on a much more light-approach.

I have been using the same agent (sort of one of big guys) in London since 2008, they have been pretty useful for selling and buying.

[ashleyman]

So, I enquired about these new 2 bed new builds being built in Sutton.

https://www.zoopla.co.uk/new-homes/details/4798377...

They start at £350,000 for a 1 bed and range up to £550,000 for a large 3 bed 'penthouse'.

Sample kitchen and bathroom were very nice. Show flats aren't finished yet so can't see any sizes but can't get over the initial cost + maintenance fees. I asked about parking and they said I could buy a space in the underground car park for a one time fee of £15,000.

A smallish 2 bed flat was £385,000.

I genuinely do not understand how normal people can afford this stuff. We have a combined income of £60,000, with a deposit of £30,000 and according to Barclays we can borrow £118,544. Natwest says £224,000

OK, so lets get Help2Buy. As the property is in Greater London thats a 40% equity loan of £154,000 that we'd still need to pay back in addition to the mortgage.

So deposit £30,000 + Help 2 Buy £154,000 means we'd still need a mortgage of £201,000.

Do we just have a rubbish combined income or is this normal?

I can't understand how people are affording to pay the mortgage payments + their help to buy loan + actually have cash free to spend.

I still think a house is a better buy than those swanky flats tho.

[okgo]

You could easily borrow £300k assuming you don't have a st load of outgoings etc. And yes, the income is barely above country avg and you're buying in one of the most expensive cities in the world (albeit on the outskirts)...

Why anyone would pay nearly 400k for a 2 bed to live in Sutton, I have no idea!

[p1stonhead]

ashleyman said:

We have a combined income of £60,000, with a deposit of £30,000 and according to Barclays we can borrow £118,544. Natwest says £224,000

This cant be right unless you have massive outgoings.

£300k (5x combined income) should be easy.

[fido]

Well it's handy for the station. That's the police station.

[jonah35]

ashleyman said:

So, I enquired about these new 2 bed new builds being built in Sutton.

https://www.zoopla.co.uk/new-homes/details/4798377...

They start at £350,000 for a 1 bed and range up to £550,000 for a large 3 bed 'penthouse'.

Sample kitchen and bathroom were very nice. Show flats aren't finished yet so can't see any sizes but can't get over the initial cost + maintenance fees. I asked about parking and they said I could buy a space in the underground car park for a one time fee of £15,000.

A smallish 2 bed flat was £385,000.

I genuinely do not understand how normal people can afford this stuff. We have a combined income of £60,000, with a deposit of £30,000 and according to Barclays we can borrow £118,544. Natwest says £224,000

OK, so lets get Help2Buy. As the property is in Greater London thats a 40% equity loan of £154,000 that we'd still need to pay back in addition to the mortgage.

So deposit £30,000 + Help 2 Buy £154,000 means we'd still need a mortgage of £201,000.

Do we just have a rubbish combined income or is this normal?

I can't understand how people are affording to pay the mortgage payments + their help to buy loan + actually have cash free to spend.

I still think a house is a better buy than those swanky flats tho.

I think your incomes are modest for that kind of value flat
But you have to question if you really want to put up with working flat out for 30 years and commuting etc to eventually own a 2 bed flat
I’m surprised more younger people aren’t emigrating
If and when the next crunch comes some people will really be screwed

[jonah35]

Ps regardless of what you could be allowed to borrow what about actually sense checking it?
Borrowing £300k means paying back interest and the mortgage and service charge and bills and so on
What about if one of you needs time off work for children etc
I personally feel that you would be signing your life away and almost being like a slave for that

I know each to their own etc but wow

[Shnozz]

ashleyman said:

So, I enquired about these new 2 bed new builds being built in Sutton.

https://www.zoopla.co.uk/new-homes/details/4798377...

They start at £350,000 for a 1 bed and range up to £550,000 for a large 3 bed 'penthouse'.

Sample kitchen and bathroom were very nice. Show flats aren't finished yet so can't see any sizes but can't get over the initial cost + maintenance fees. I asked about parking and they said I could buy a space in the underground car park for a one time fee of £15,000.

A smallish 2 bed flat was £385,000.

I genuinely do not understand how normal people can afford this stuff. We have a combined income of £60,000, with a deposit of £30,000 and according to Barclays we can borrow £118,544. Natwest says £224,000

OK, so lets get Help2Buy. As the property is in Greater London thats a 40% equity loan of £154,000 that we'd still need to pay back in addition to the mortgage.

So deposit £30,000 + Help 2 Buy £154,000 means we'd still need a mortgage of £201,000.

Do we just have a rubbish combined income or is this normal?

I can't understand how people are affording to pay the mortgage payments + their help to buy loan + actually have cash free to spend.

I still think a house is a better buy than those swanky flats tho.

Your (logical) thinking will serve you no good. It was my thinking years ago that the market made no financial sense when you looked at all the figures, mortgage affordability, LTV, local salaries, salary prospects, expectations etc etc.

There are far too many distorting factors on 2 levels. The first a personal level.

A straw poll around friends of mine, especially those a few years younger, reveals 80% of them have had a large parental chunk of help. We are not talking about wealthy parents, but normal people who have re-mortgaged, or used a lump sum from a pension, or have cashed in what previously might be a retirement treat to assist their kids get on the ladder. That sacrifice was not made to me or many of my friends back 20 years ago by anyway except those who had v wealthy parents - now it is the norm.

People are unafraid of high multiples (where available), or the fear of neg equity, or a reduced LTV at the end of their mortgage term, or of 35 year mortgage. Frankly property is seen as a one-way bet and people will sign up to any duration or terms to be able to buy.

People are prepared to compromise on the property size (less so location I would argue).

People are prepared to buy with their partner, sibling, friend, parent, whoever. A 1 bed flat when I first bought was usually the preserve of the single person or lower paid couple - so the ceiling was based on one income (or two low incomes) without parental contribution.

Then there are factors that are not on a personal psychology level but on a broader level.

Interest rates have been on the floor for years - the personal effect also crosses over here as people see them as the norm.

Help to buy schemes

Rampant inflation

Anything that the government, the BoE and the housebuilders can do to prop up the ever increasing values will be rolled out. The prospect of a decline in house prices, and the knock on effect, is too grim to consider. Artificially or otherwise, these parties have ever interest in avoiding a fall.

Your thinking assumes the normal, rationale approach. My view is that in the majority of current day purchases, that is out the window and there is more behind that purchase than is a straight forward 3 x salary + 10% deposit x 25 years than you or I will ever know.

[alfaman]

jonah35 said:

I’m surprised more younger people aren’t emigrating

Absolutely - being a slave for a huge mortgage for a shoe box in Sutton would be quite depressing.

I haven’t worked in the UK for 7+ years ..... a very Long hours / high pressure job based in Hounslow was a grim life : stty weather / Long hours / high tax / crap commute ... so I left th UK.

[okgo]

I'd have left the planet, via my own hands if I had to spend time in Hounslow tbf!

I know lots of folk that have gone over to various places, but they all miss the UK, from Aus, to UAE, to San Fran, to NY.

[jonah35]

The long and short of it is people only see property as a one way risk free bet that only goes up in value

They will sell a kidney, a grandma, a foot, wife or sibling to be able to purchase on any terms at all

All these home buyers wouldn’t want to be desperate to get on the property ladder if prices were falling 2% pa and interest rates were 6%

It’s been a one way bet for too long.

Why wouldn’t you hock up a few million for a London flat if it would make you £30k per month in appreciation? That’s everyone’s logic and the sad thing is they’re right!!!!!!!

The govt needs to let property fall for long enough that people realise it is no longer a risk free win

[Shnozz]

alfaman said:

jonah35 said:

I’m surprised more younger people aren’t emigrating

Absolutely - being a slave for a huge mortgage for a shoe box in Sutton would be quite depressing.

Could not agree more with this.

Amazes me as globality develops, and technology develops for so many jobs to be done via internet connection, that so many people remain content to buy in pockets of the country/world that see them sign up to a lifelong ball around their ankle. You would also think it might mean a displacement of such pockets but no sign of that in any way other than the fact the City is quieter on Fridays when so many WFH.

[ooid]

ashleyman said:

So, I enquired about these new 2 bed new builds being built in Sutton.

https://www.zoopla.co.uk/new-homes/details/4798377...

They start at £350,000 for a 1 bed and range up to £550,000 for a large 3 bed 'penthouse'.

Sample kitchen and bathroom were very nice. Show flats aren't finished yet so can't see any sizes but can't get over the initial cost + maintenance fees. I asked about parking and they said I could buy a space in the underground car park for a one time fee of £15,000.

A smallish 2 bed flat was £385,000.

I genuinely do not understand how normal people can afford this stuff. We have a combined income of £60,000, with a deposit of £30,000 and according to Barclays we can borrow £118,544. Natwest says £224,000

OK, so lets get Help2Buy. As the property is in Greater London thats a 40% equity loan of £154,000 that we'd still need to pay back in addition to the mortgage.

So deposit £30,000 + Help 2 Buy £154,000 means we'd still need a mortgage of £201,000.

Do we just have a rubbish combined income or is this normal?

I can't understand how people are affording to pay the mortgage payments + their help to buy loan + actually have cash free to spend.

I still think a house is a better buy than those swanky flats tho.

Due to labour + material construction prices, the new builts are not cheap. I have no idea about Sutton though, not sure if its worth to live there for 385-500k but clearly they do have customers.

Unfortunately, your deposit is small, call it un-fair but sad fact. You do need at least 50% deposit imho, otherwise it's very difficult for everywhere.