How far will house prices fall [volume 4]

[kingston12]

Jobbo said:

ow 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.

I'd expect them to start very low indeed. They may very rarely pay asking price on a house where they have got a buyer in place and there is competition from the normal market, but I bet it doesn't happen very often!

[Sheepshanks]

kingston12 said:

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 think there's quite a lot of people who aim to die penniless. It's my FIL's often stated aim, for example (he is pretty generous, I have to say).

kingston12 said:

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

If it becomes an issue there will no doubt be some reversion to the value of the previous house sold (as this scheme is aimed at people down-sizing) and questions about where the money has gone.

[SilverSixer]

kingston12 said:

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.

The odd thing is that most of the properties HomeWise seem to be plugging round my way are large, detached, family homes. Not the kind of thing a downsizer would be after.

[p1stonhead]

SilverSixer said:

kingston12 said:

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.

The odd thing is that most of the properties HomeWise seem to be plugging round my way are large, detached, family homes. Not the kind of thing a downsizer would be after.

Yeah same they are almost always houses that are probably just out of reach to many (say £600-900k) and so people can get them for £400-600k with the discount which a lot of people with a bit of equity and still working can afford.

[Sheepshanks]

SilverSixer said:

The odd thing is that most of the properties HomeWise seem to be plugging round my way are large, detached, family homes. Not the kind of thing a downsizer would be after.

I think the point is people can buy the same size house for less money. Although it's not obvious why you simply wouldn't equity release on your current property.

anonymous said:

[redacted]

That is an issue if, like us, you've raised your family in a home "efficiently" sized! Now the "kids" are married with their own kids it's a bit of a squash when they come and stay.

[Fastpedeller]

Just looks like another scheme to artificially inflate the prices/profit to me.

[scenario8]

Fastpedeller said:

Just looks like another scheme to artificially inflate the prices/profit to me.

Could you expand, please?

Which price? The omv? Whose profit?

[DoubleSix]

kingston12 said:

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.

There are a lot of people out there that have no one. No kids, next of kin etc

It makes little difference to them where their estate goes, it's all about the here and now.

[Coolbanana]

Just sold my house in South Buckinghamshire.

Bought it in a new Development at the time in 2008 which was a bad time to buy but went ahead anyway and immediately faced the prospect of negative equity. In 2014 the house across the road from ours was sold for the same price it was purchased for in 2008.
But in 2015 a valuation offered the prospect of a £80k-£90k uplift on mine, admittedly a very different home to the one across the road.

Put it on the Market last week, sold in 3 days, £141k uplift. Very nearly got our full asking price which I thought was Dreamland and would never happen!

[superlightr]

Coolbanana said:

Just sold my house in South Buckinghamshire.

Bought it in a new Development at the time in 2008 which was a bad time to buy but went ahead anyway and immediately faced the prospect of negative equity. In 2014 the house across the road from ours was sold for the same price it was purchased for in 2008.
But in 2015 a valuation offered the prospect of a £80k-£90k uplift on mine, admittedly a very different home to the one across the road.

Put it on the Market last week, sold in 3 days, £141k uplift. Very nearly got our full asking price which I thought was Dreamland and would never happen!

did you use a real estate agent or a online shadow?

[mike74]

Coolbanana said:

Just sold my house in South Buckinghamshire.

Bought it in a new Development at the time in 2008 which was a bad time to buy but went ahead anyway and immediately faced the prospect of negative equity. In 2014 the house across the road from ours was sold for the same price it was purchased for in 2008.
But in 2015 a valuation offered the prospect of a £80k-£90k uplift on mine, admittedly a very different home to the one across the road.

Put it on the Market last week, sold in 3 days, £141k uplift. Very nearly got our full asking price which I thought was Dreamland and would never happen!

And unless you're planning on massively downsizing (to a tent perhaps?) and/or moving to an entirely different part of the country where prices are much lower, then that 'uplift' is of no benefit to you what so ever and has possibly resulted in you being worse off if you're looking to buy a bigger property in the same location.

[jonny70]

mike74 said:

And unless you're planning on massively downsizing (to a tent perhaps?) and/or moving to an entirely different part of the country where prices are much lower, then that 'uplift' is of no benefit to you what so ever and has possibly resulted in you being worse off if you're looking to buy a bigger property in the same location.

I personally don't understand the obsession with ever increasingly house prices , it's not making us richer (well maybe in the short term it is ) but how is it a sustainable economoy to have house prices increase well above wage inflation ?
Surely house prices increasing at 9% per year (as in recent years) whilst wage inflation lingers below 2 percent makes us all poorer in the long term .

Think about it :How much did your house go up last year and what % ur salary (excluding promotions ) ?

[DoubleSix]

jonny70 said:

mike74 said:

And unless you're planning on massively downsizing (to a tent perhaps?) and/or moving to an entirely different part of the country where prices are much lower, then that 'uplift' is of no benefit to you what so ever and has possibly resulted in you being worse off if you're looking to buy a bigger property in the same location.

I personally don't understand the obsession with ever increasingly house prices , it's not making us richer (well maybe in the short term it is ) but how is it a sustainable economoy to have house prices increase well above wage inflation ?
Surely house prices increasing at 9% per year (as in recent years) whilst wage inflation lingers below 2 percent makes us all poorer in the long term .

Think about it :How much did your house go up last year and what % ur salary (excluding promotions ) ?

Perhaps he intends to use the equity in a different, uncorrellated asset class?

[BlueFiestaST]

I was walking the dog last night and noticed this house which has been on the market for a while
http://www.rightmove.co.uk/property-for-sale/prope...

Out of curiosity I thought i'd see how much it was up for and it is is £127k. I thought it had been for sale a year or so ago too so I checked.
It sold for £80k last June.

There are a couple of others that sold for around £80k before the EU referendum too.
http://www.rightmove.co.uk/house-prices/L35/Ash-Gr...

Was the referendum really a huge factor in house prices in that price range?

There is a £45k difference in the space of 12 months.

The houses are probably worth around that although I wouldn't pay that for the area but for them to sell at £80k last year is quite good value. They're not bad houses and new ones are being built in the area and starting at £150k so can see them rising even more so.

[Sheepshanks]

BlueFiestaST said:

There is a £45k difference in the space of 12 months.

It's not as good as no. 21 - sold for £50K in Mar 16 then £118K in Oct.

The house you linked to has already been on the market for 3 months so it must be considered too expensive.

[menousername]

BlueFiestaST said:

I was walking the dog last night and noticed this house which has been on the market for a while
http://www.rightmove.co.uk/property-for-sale/prope...

Out of curiosity I thought i'd see how much it was up for and it is is £127k. I thought it had been for sale a year or so ago too so I checked.
It sold for £80k last June.

There are a couple of others that sold for around £80k before the EU referendum too.
http://www.rightmove.co.uk/house-prices/L35/Ash-Gr...

Was the referendum really a huge factor in house prices in that price range?

There is a £45k difference in the space of 12 months.

The houses are probably worth around that although I wouldn't pay that for the area but for them to sell at £80k last year is quite good value. They're not bad houses and new ones are being built in the area and starting at £150k so can see them rising even more so.

There are different types of profit takers. You have the house renovators who throw in new worktops, mow the grass repaint the livingroom then try to flip it. You have the buy-to-letters. Then you have, and I am seeing this also more and more, people who buy a house, do nothing to it, then try to flip it a year later and bag 80k.

I saw one in my area recently that i recognized. It was on the market Last year and sold for £215k in Mar 2016. Now its back on, no changes at all, for offers in excess of £270k. Thats a 25% annual increase being asked for in return for the exact same house in the exact same condition.

I also watched four new builds go up recently. They tore down either what looked like two semis or two sets of 2 floor flats to build them. That road is all big old double-fronted terraced and semis with big rooms and gardens that have been approx £280-350k depending on condition for as long as I can remember. Whatever it was they tore down, the four new builds basically occupy the same space as two standard houses in that street. They are so narrow they had to make the 3rd / master bedroom a loft conversion. the usual modern house where the drive is barely big enough for one car.

Those sold in the region of £370/380k each. So yes, they are new builds, but they are roughly half the footprint of all the other houses in the street but sold for the top end of the price range of those other houses. And they sold quick.

[kingston12]

jonny70 said:

I personally don't understand the obsession with ever increasingly house prices , it's not making us richer (well maybe in the short term it is ) but how is it a sustainable economoy to have house prices increase well above wage inflation ?
Surely house prices increasing at 9% per year (as in recent years) whilst wage inflation lingers below 2 percent makes us all poorer in the long term .

Think about it :How much did your house go up last year and what % ur salary (excluding promotions ) ?

Government policy has a lot to do with it. Successive Governments have decided that ever-increasing house prices are a good thing, and have legislated to suit. It is a safe route in that it makes a good proportion of the voting public feel richer and insulated from all of the bad things going on in the economy.

So now we are left with ultra low mortgage rates, lending at income multiples that would have been totally unrealistic a few years ago, fractional 'ownership', buy-to-let as a mass investment model, 'Bank of Mum and Dad' etc, etc.

This has been going on for so long that a whole generation has grown up seeing only massive house price growth in some parts of the country. The desire to get onto the 'ladder' and share in some of these riches is high and why wouldn't it be? There is no visible downside.

I look at it more like you do. High house prices are a bad thing for the majority of people. Speculators benefit of course, as do downsizers and other groups but it is all at the expense of people buying at the bottom of the market making it a massive drag when trying to create economic growth.

[kingston12]

menousername said:

There are different types of profit takers. You have the house renovators who throw in new worktops, mow the grass repaint the livingroom then try to flip it. You have the buy-to-letters. Then you have, and I am seeing this also more and more, people who buy a house, do nothing to it, then try to flip it a year later and bag 80k.

During the boom times in the London market in the past few years, doing virtually nothing seemed like the right thing to do. If someone spent £500k on a house, £100k renovating it and sold it for £750k that set the new standard price for the road and unmodernised houses would start to fetch almost the same sum in a lot of cases.

I bet that there are quite a lot of people who spent big money on renovating/extending houses and would probably have walked away with a very similar level of profit without the spend and hassle.

Whether that will keep happening in a tighter market going forward remains to be seen.

[Berz]

turbobloke said:

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.

Perhaps they should have bought a house before starting a family. I know it will vary a bit from lender to lender but it'd be interesting to know how much having dependents affects your affordability. E.g. "We would lend you £100k but you have 2 children so we can only lend you £80k."

[SunsetZed]

Berz said:

turbobloke said:

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.

Perhaps they should have bought a house before starting a family. I know it will vary a bit from lender to lender but it'd be interesting to know how much having dependents affects your affordability. E.g. "We would lend you £100k but you have 2 children so we can only lend you £80k."

A lot, and rightly so with the cost of childcare if you're applying on behalf of both parents. Some of the online lenders basic calculators include this to give you an idea, I know HSBC's does.