House Prices - Are Estate Agents To Blame
Discussion
I live in a suburb of Cardiff and the 20year old estate I live in has 3 bed semis that all look the same. The price of these houses have stayed about the same for the last 8-10 years give or take 5-6k, one sold across the road last year for the same standard price.
Next door has come up for sale but at £60,000 more for the same house. Ok it has a slightly bigger garden but not much and also the inside is immaculate. Even if someone wanted £30k off the asking price its still £30K overpriced.
I was outside yesterday and got speaking to the estate agent as he gave me a leaflet. He was saying that as its a really nice area and not too many comes up for sale they were chancing their arm.
I know estate agents must act to get the best price for their client (and their commission)but no wonder people can't afford housing.
Next door has come up for sale but at £60,000 more for the same house. Ok it has a slightly bigger garden but not much and also the inside is immaculate. Even if someone wanted £30k off the asking price its still £30K overpriced.
I was outside yesterday and got speaking to the estate agent as he gave me a leaflet. He was saying that as its a really nice area and not too many comes up for sale they were chancing their arm.
I know estate agents must act to get the best price for their client (and their commission)but no wonder people can't afford housing.
Some agents are too optimistic but what would you do? If you are one of 3 agents invited to quote, you know the going rate is £200k, one has said £200 and the other £225, if you don't say £225 then who's getting the business?
The market will eventually decide. The huose I bought went for 18% less than the original asking price, my parents sold theirs after a similar reduction.
The snag is that right now money is cheap, the baby boomers are dying off and leaving largely untaxed money to their children, and housing in desirable areas with lots of well paid work is in short supply.
The government wrings their hands about housing but it's crocodile tears. Any govt that did ANYTHING to halt the rise in houising cost would be committing suicide. They could halt it at a stroke with changes to Stamp Duty and/or Cap Gains but they would have to be mad because it's the only thing that Joe Public gives a toss about.
The market will eventually decide. The huose I bought went for 18% less than the original asking price, my parents sold theirs after a similar reduction.
The snag is that right now money is cheap, the baby boomers are dying off and leaving largely untaxed money to their children, and housing in desirable areas with lots of well paid work is in short supply.
The government wrings their hands about housing but it's crocodile tears. Any govt that did ANYTHING to halt the rise in houising cost would be committing suicide. They could halt it at a stroke with changes to Stamp Duty and/or Cap Gains but they would have to be mad because it's the only thing that Joe Public gives a toss about.
Mostly supply and demand is to blame. In spite of government promises/efforts we have significant net immigration, more relationships are failing leading to families separating (must be the most common thread type in the Lounge) and the elderly are much more likely to be cared for in their own homes by paid carers than move in with family.
All of these reduce the available housing stock, and nimbyism means houses don't get built fast enough to keep up. Round where I live (East Cambs) houses sell at asking price within days of going on the market, including my neighbours' place which had gone up over 50% in 7 years ignoring the usual new build premium.
All of these reduce the available housing stock, and nimbyism means houses don't get built fast enough to keep up. Round where I live (East Cambs) houses sell at asking price within days of going on the market, including my neighbours' place which had gone up over 50% in 7 years ignoring the usual new build premium.
Dont ask dont get.
Estate agents have a short supply of stock right now. You can always reduce the price.
Regarding new housing it is not in any developers interest to flood the market with houses.
So you can abolish all planning laws tomorrow and the developers will not build any faster. Keep supply short and demand high and you can set whatever price like you like.
Theres 7000 houses going up near me,but you can only buy them as they build them. When phase 1 is done they will start on phase 2 but not before phase 1 is all sold. In an inflating market this also means they can charge more for phase 2. if the market crashes it will simply be left as a muddy field until things pick up.
Estate agents have a short supply of stock right now. You can always reduce the price.
Regarding new housing it is not in any developers interest to flood the market with houses.
So you can abolish all planning laws tomorrow and the developers will not build any faster. Keep supply short and demand high and you can set whatever price like you like.
Theres 7000 houses going up near me,but you can only buy them as they build them. When phase 1 is done they will start on phase 2 but not before phase 1 is all sold. In an inflating market this also means they can charge more for phase 2. if the market crashes it will simply be left as a muddy field until things pick up.
And how much influence has the seller had on the asking price?
Agents will put houses on the market at prices dictated by the seller and higher than is realistic to make sure the property is on their books once the vendor sees reason, hopefully before the cost of selling exceeds the fee charged for doing so of course. Plus a sale board is as much an advertisement for the agent as the property.
Agents will put houses on the market at prices dictated by the seller and higher than is realistic to make sure the property is on their books once the vendor sees reason, hopefully before the cost of selling exceeds the fee charged for doing so of course. Plus a sale board is as much an advertisement for the agent as the property.
It's complicated. But....
In the old days demand was limited by 3.5 times your salary.
The banks have helped fuel the booms over the years by relaxing their lending policiys and enabling more buyers hence demand.
The banks profit margin on lending means they are increasing profit by increasing the size of their lending book.
Individuals have to borrow more to buy the next house - there is no winner unless they are an investor or looking to downsize.
I blame banks.
In the old days demand was limited by 3.5 times your salary.
The banks have helped fuel the booms over the years by relaxing their lending policiys and enabling more buyers hence demand.
The banks profit margin on lending means they are increasing profit by increasing the size of their lending book.
Individuals have to borrow more to buy the next house - there is no winner unless they are an investor or looking to downsize.
I blame banks.
Estate agent is just acting as a broker - they dont take a position on the market and therefore other than talking the market up or down have no influence on the price no.
The buyer and the seller must agree, if either think the price is wrong the sale wont go through, and the price will move until both sides are happy.
The buyer and the seller must agree, if either think the price is wrong the sale wont go through, and the price will move until both sides are happy.
surveyor said:
It's complicated. But....
In the old days demand was limited by 3.5 times your salary.
The banks have helped fuel the booms over the years by relaxing their lending policiys and enabling more buyers hence demand.
The banks profit margin on lending means they are increasing profit by increasing the size of their lending book.
Individuals have to borrow more to buy the next house - there is no winner unless they are an investor or looking to downsize.
I blame banks.
Banks' lending policies are tighter now than they have been in the past, driven by memories of losses and FCA MMR.In the old days demand was limited by 3.5 times your salary.
The banks have helped fuel the booms over the years by relaxing their lending policiys and enabling more buyers hence demand.
The banks profit margin on lending means they are increasing profit by increasing the size of their lending book.
Individuals have to borrow more to buy the next house - there is no winner unless they are an investor or looking to downsize.
I blame banks.
Mortgage repayments as a % of income has remained fairly stable over the last 20 years, therefore as we have had numerous years of unprecedented low interest rates the amounts people can borrow have increased driving prices up. Baby boomer cash funding deposits has offset lower FTB LTVs. Large scale immigration has increased competition.
House prices are dependant on the supply and demand of credit (if you can't borrow it, you can't buy), hence with the current easy credit, the lowest base rate ever, schemes like funding for lending to allow rates to be even lower and thus ruining savings rates (so people reallocate their money), printing money (shapes the yield curve). So the cause of the current extremely high house prices are the Government/Bank of England, the reason for this is anyone's guess.
Similarly the situation is made worse by current restrictive planning policy etc, but since they aren't millions of people living in tents, there can't be that much of a shortage - just a bit of misallocation.
Estate Agents are just opportunists, they don't help the situation but the main driver is the Government/BOE, Estate Agents haven't changed they want as much commission as possible like any sales person, but they need the sale to get it. They have always been this way.
If you want it to change, think carefully who you vote for as career politicians don't want the gravy to stop, hence if the voters stop voting for them policy rapidly changes...
Similarly the situation is made worse by current restrictive planning policy etc, but since they aren't millions of people living in tents, there can't be that much of a shortage - just a bit of misallocation.
Estate Agents are just opportunists, they don't help the situation but the main driver is the Government/BOE, Estate Agents haven't changed they want as much commission as possible like any sales person, but they need the sale to get it. They have always been this way.
If you want it to change, think carefully who you vote for as career politicians don't want the gravy to stop, hence if the voters stop voting for them policy rapidly changes...
PAULJ5555 said:
I live in a suburb of Cardiff and the 20year old estate I live in has 3 bed semis that all look the same. The price of these houses have stayed about the same for the last 8-10 years give or take 5-6k, one sold across the road last year for the same standard price.
Next door has come up for sale but at £60,000 more for the same house. Ok it has a slightly bigger garden but not much and also the inside is immaculate. Even if someone wanted £30k off the asking price its still £30K overpriced.
I was outside yesterday and got speaking to the estate agent as he gave me a leaflet. He was saying that as its a really nice area and not too many comes up for sale they were chancing their arm.
I know estate agents must act to get the best price for their client (and their commission)but no wonder people can't afford housing.
No. In short. Next door has come up for sale but at £60,000 more for the same house. Ok it has a slightly bigger garden but not much and also the inside is immaculate. Even if someone wanted £30k off the asking price its still £30K overpriced.
I was outside yesterday and got speaking to the estate agent as he gave me a leaflet. He was saying that as its a really nice area and not too many comes up for sale they were chancing their arm.
I know estate agents must act to get the best price for their client (and their commission)but no wonder people can't afford housing.
There is only one reason for an asset price to go beyond fair value and that is excess capital in the system. And the best way to get excess capital into the system is to increase debt.
Since the 80's the regulation that was in place to prevent such asset bubbles and the dangerous effects of excessive debt have been deliberately removed by successive governments. Their reason was to create artificial wealth. It has been the great social movement of the last few decades, the use of debt to increase consumption and to inflate asset values. It makes everyone feel rich and massively increases the tax take which means as a government everyone is happy and you can spend far more as not only has your tax receipts gone through the roof but as your nation's wealth has been artificially inflated then you can also borrow more.
It is the great ruse. If lenders still had their regulatory restrictions in place then there could not have been the house price inflation that we have witnessed. It has not been driven by cash but by debt. And now we have the issue of a generation that will never own their home, a nation in debt, the largest social divide since the Victorians, zero social mobility because of excess debt. The great social experiment that at no point in the history of civilisation has ever resulted in anything other than poverty and asset inflation. And we have seen it happen so rapidly between two living generations, the uber wealthy Boomers and the futureless Millenials. Which is nice.
So no, not the fault of the greasy, shiny suited home brokers but the direct result of the removal of banking regulation to deliberate stimulate asset inflation and the short term illusion of wealth.
monkfish1 said:
Supply and demand.
Limited supply, unlimited demand. Only on possible result. The one we have.
This is the answer.Limited supply, unlimited demand. Only on possible result. The one we have.
In certain area's have too many people chasing too few houses, so the demand is only capped by what people can pay/finance.
In area's where people don't want to live you can still buy cheap houses.
GrizzlyBear said:
House prices are dependant on the supply and demand of credit (if you can't borrow it, you can't buy), hence with the current easy credit, the lowest base rate ever, schemes like funding for lending to allow rates to be even lower and thus ruining savings rates (so people reallocate their money), printing money (shapes the yield curve). So the cause of the current extremely high house prices are the Government/Bank of England, the reason for this is anyone's guess.
As you say, house prices are basically down to credit availability. This includes credit for both owner occupiers and buy-to-let landlords. The odd thing is that the lending criteria for BTL uses rent-based calculations that result in higher loan limits than an owner occupier loan that uses income based calculations.The reason the Government likes high house prices is that it helps get them voted back in.
rotarymazda said:
As you say, house prices are basically down to credit availability. This includes credit for both owner occupiers and buy-to-let landlords. The odd thing is that the lending criteria for BTL uses rent-based calculations that result in higher loan limits than an owner occupier loan that uses income based calculations.
The reason the Government likes high house prices is that it helps get them voted back in.
BTL debt is viewed by the lender as lower risk as it is not underpinned by a single act of employment. Home owner debt is at risk of that individual losing their income and not necessarily being able to replace it. Conversely, BTL debt is covered by anyone with the ability to pay rent. If the tenant loses this ability then within a very pre-defined time range they will just be replaced by someone who has. In addition, for the lender it is much easier to deal with a defaulting landlord than home owner as there are fewer protections. The reason the Government likes high house prices is that it helps get them voted back in.
But ultimately it is all down to deliberate excessive debt.
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