How far will house prices fall [volume 4]

[kingston12]

brickwall said:

I'm in exactly this situation.

Bought first house 2.5 years ago. A combination of some value-adding refurbishment, pay-down on the mortgage, saving, and pay rises means my 'war-chest' if I were to go house-shopping now would be up to current value of house + £250k.

Great, you think.

Until you realise that
a) £250k extra really doesn't move me into anything that I'd be especially excited to buy. Certainly nothing I know I'd stay in for the long term.
b) The whole moving and transaction process would cost me at least £30k

So I sit tight in the current place, keep paying down the mortgage and adding to the savings account. Given the transaction costs, I think I'll only move if either
a) Life forces me to. Maybe I need to move for a job, or for someone special
b) I find myself in the lucky financial position to significantly upgrade, with the expectation that I'd stay in the new place a long while.

I wonder how many people are in a similar situation.

In my area, £250k is the cost of upgrading from a decent 2 bed flat to a small 2 bed house. You don't get much extra space for your £250k, but it does give you the option to convert the loft or extend at extra cost still.

You get a bit more if you are prepared to move further out, but it is still questionable if it is worth the £250k for a lot of people, so a lot just aren't moving.

The financial I ncentive to do so seems to be fading as well. Clearly it is much better to be earning 10% free money from house price growth on a £750k property than a £500k one, but if the growth slows there is less urgency to upgrade from the financial perspective.

[turbobloke]

As covered by radio and news bulletins recently, home ownership for young families has halved in West Yorkshire, Greater Manchester and Outer London since the 1990s.

http://www.resolutionfoundation.org/media/press-re...

Resolution Foundation said:

Getting on the housing ladder is a thing of the past for many young families across the country, with home ownership halving among this group between 1994 and 2016 in areas such as West Yorkshire, Greater Manchester and Outer London, new analysis by the Resolution Foundation has found.

This new research counters the popular perception that the struggle to get on the housing ladder is largely confined to London and the South East. While Outer London has seen a big drop in home ownership for young families aged 25-34 (falling by 63 per cent between 1994 and 2016), West Yorkshire (-52 per cent) and Greater Manchester (-51 per cent) have also seen home ownership halving.

[p1stonhead]

Kinda ridiculous when you think 'oh that's close to reasonable value but still quite pricey' and then you realise that one is the 40% off homewise over 60's version and the real price is also advertised....

[kingston12]

p1stonhead said:

Kinda ridiculous when you think 'oh that's close to reasonable value but still quite pricey' and then you realise that one is the 40% off homewise over 60's version and the real price is also advertised....

I have done that quite a few times. It usually happens when I am browsing an unfamiliar area, I am surprised by how expensive it has become and then realise the real price is much more still.

[SilverSixer]

p1stonhead said:

Kinda ridiculous when you think 'oh that's close to reasonable value but still quite pricey' and then you realise that one is the 40% off homewise over 60's version and the real price is also advertised....

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

[TheLordJohn]

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

It'll either currently be housing association who are offering it as shared ownership, or the housing association will be putting whatever % you don't want when you buy it.

[kingston12]

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

[SilverSixer]

kingston12 said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

Sorry to be a plank, but who owns the house in the first place to be able to sell it at a discount?

[p1stonhead]

SilverSixer said:

kingston12 said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

Sorry to be a plank, but who owns the house in the first place to be able to sell it at a discount?

The vendor gets full price but 40% of the money comes from the over 60's company and 60' comes from the person buying. Hence for their 40% they get the house in say 20 years. I think this is how it works anyway.

[Sheepshanks]

TheLordJohn said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

It'll either currently be housing association who are offering it as shared ownership, or the housing association will be putting whatever % you don't want when you buy it.

It's equity release really. Note that to achieve the £600K house above for £400K there is NOTHING left when you die.

I didn't realise HomeWise advertised houses themselves though, so not sure how that occurs.

[SilverSixer]

p1stonhead said:

SilverSixer said:

kingston12 said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

Sorry to be a plank, but who owns the house in the first place to be able to sell it at a discount?

The vendor gets full price but 40% of the money comes from the over 60's company and 60' comes from the person buying. Hence for their 40% they get the house in say 20 years. I think this is how it works anyway.

Ah right. Just out of interest, who initiates this? The person selling the house? Or do this HomeWise mob randomly contact people selling houses and offer their "services"?

[p1stonhead]

Sheepshanks said:

TheLordJohn said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

It'll either currently be housing association who are offering it as shared ownership, or the housing association will be putting whatever % you don't want when you buy it.

It's equity release really. Note that to achieve the £600K house above for £400K there is NOTHING left when you die.

I didn't realise HomeWise advertised houses themselves though, so not sure how that occurs.

Every other bloody house round my way is on homewise. Gives you a false sense of pricing as they come up in the lower search values even though they are not strictly that price.

[SilverSixer]

p1stonhead said:

Sheepshanks said:

TheLordJohn said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

It'll either currently be housing association who are offering it as shared ownership, or the housing association will be putting whatever % you don't want when you buy it.

It's equity release really. Note that to achieve the £600K house above for £400K there is NOTHING left when you die.

I didn't realise HomeWise advertised houses themselves though, so not sure how that occurs.

Every other bloody house round my way is on homewise. Gives you a false sense of pricing as they come up in the lower search values even though they are not strictly that price.

Yes, it has been annoying me recently, until I worked out how to get rid of the listings when searching Rightmove.

[p1stonhead]

SilverSixer said:

p1stonhead said:

SilverSixer said:

kingston12 said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

Sorry to be a plank, but who owns the house in the first place to be able to sell it at a discount?

The vendor gets full price but 40% of the money comes from the over 60's company and 60' comes from the person buying. Hence for their 40% they get the house in say 20 years. I think this is how it works anyway.

Ah right. Just out of interest, who initiates this? The person selling the house? Or do this HomeWise mob randomly contact people selling houses and offer their "services"?

I assume estate agents tell people it's an option for their sale. No loss to the vendor in theory and potentially gives them a market who otherwise couldn't afford such a house. I can't fathom the type of person who ever go through with it though and be left with nothing when they die.

[Sheepshanks]

p1stonhead said:

Every other bloody house round my way is on homewise. Gives you a false sense of pricing as they come up in the lower search values even though they are not strictly that price.

I just had a quick look at their website and they do have a 'we buy any house' type of thing, but hard to imagine there would be many takers. If you're seeing a lot then I wonder if they're just picking houses for sale and listing them randomly?

[kingston12]

SilverSixer said:

kingston12 said:

SilverSixer said:

I have been wondering about this lately - what is this HomeWise thing and how does it work? Obviously the homeowner selling the property isn't offering their home at a discount out of the kindness of their heart so what's going on?

If you are over 60 you can buy the house at a discount, live in it until you die, then the house belongs to Homewise rather than your children!

Sorry to be a plank, but who owns the house in the first place to be able to sell it at a discount?

Homewise buy the house from the vendor at the full price, then 'sell' (I guess on a lifetime lease) to the new purchaser for 60% of the cost.

When the person dies, the house reverts back to 100% ownership by Homewise.

I can't understand why anyone would enter in to this type of agreement and still pay 60% of the value of house. It could work out well if there was a truly monumental house price crash, but otherwise they will always lose out.

Even if someone ends up living for 40 years or more after they buy it, it would still make sense to buy 100% of a smaller house and have it to leave to their children when they die.

I suppose it gets around the Tories proposals if they need to go into care!

[kingston12]

Sheepshanks said:

I just had a quick look at their website and they do have a 'we buy any house' type of thing, but hard to imagine there would be many takers. If you're seeing a lot then I wonder if they're just picking houses for sale and listing them randomly?

I assume that they have to get agreement from the Estate Agent and/or vendor to place a listing on Rightmove. It has an impact on the way the property is marketed apart from anything else.

They have very few listings in my area but looking a bit further out shows a much higher percentage. Either they are targeting certain areas, or certain Estate Agents in those areas are more pro-Homewise than others.

[p1stonhead]

kingston12 said:

Sheepshanks said:

I just had a quick look at their website and they do have a 'we buy any house' type of thing, but hard to imagine there would be many takers. If you're seeing a lot then I wonder if they're just picking houses for sale and listing them randomly?

I assume that they have to get agreement from the Estate Agent and/or vendor to place a listing on Rightmove. It has an impact on the way the property is marketed apart from anything else.

They have very few listings in my area but looking a bit further out shows a much higher percentage. Either they are targeting certain areas, or certain Estate Agents in those areas are more pro-Homewise than others.

My area is full of old people and generally very expensive so it makes sense there would be more round here. If anyone goes for it, these companies must be laughing. They also get capital appreciation in their deal.

[Jobbo]

kingston12 said:

Homewise buy the house from the vendor at the full price, then 'sell' (I guess on a lifetime lease) to the new purchaser for 60% of the cost.

How much do Homewise actually buy for, though? Where I've been looking recently it seems one particular agent has an arrangement with Homewise to switch to marketing as a Homewise deal as well after the property has been on for a little while unsold. I have wondered what sort of deal you can ever strike with a vendor in those circumstances (as a straight purchase), when they've no doubt been sold the idea that they'll get the asking price from Homewise.

[kingston12]

p1stonhead said:

My area is full of old people and generally very expensive so it makes sense there would be more round here. If anyone goes for it, these companies must be laughing. They also get capital appreciation in their deal.

I suppose if you can buy a £500k house for £300k and it is your dream to live in that house rather than a cheaper one then it might sway the deal, but:

1. You'd assume anyone who actually sits about it would walk (or run) away once the impact became clear.

2. Most people in that age group would be downsizing rather than upsizing so it should be a limited potential audience to start with.

I can't see any other reasons. If the market keeps growing anything like how it has for the last 20 years, Homewise make a fortune on every deal.