How far will house prices fall [volume 5]

[okgo]

stuckmojo said:

My house sold in February within 1 day - first viewer. He was (is?) aware that I haven't found anything to buy - made a couple of offers and nothing happened and I'm now expecting him to drop out. I would not blame him.

The market has but died up here (North East) and I can't see anything moving for months, then a lot of forced sales.

There's only two scenarios in which this is a good time to buy:

- found the dream home and one is resilient to imminent financial shocks
- one takes a big gamble on inflation taking off after central banks' mega intervention and buys at today's prices.

Otherwise it'll be very slow market at potentially still bubble prices - no transactions prevent price discovery - then potential massive bust.

Due to exchange this week, quite a big jump in mortgage etc, does leave me a bit worried. But have a kid inbound so need the space, and think we got lucky with our asking price buyers (on a toppy valuation), so going to roll with it as I need somewhere to live.

[156651]

stuckmojo said:

My house sold in February within 1 day - first viewer. He was (is?) aware that I haven't found anything to buy - made a couple of offers and nothing happened and I'm now expecting him to drop out. I would not blame him.

The market has but died up here (North East) and I can't see anything moving for months, then a lot of forced sales.

There's only two scenarios in which this is a good time to buy:

- found the dream home and one is resilient to imminent financial shocks
- one takes a big gamble on inflation taking off after central banks' mega intervention and buys at today's prices.

Otherwise it'll be very slow market at potentially still bubble prices - no transactions prevent price discovery - then potential massive bust.

People still need somewhere to live.

[Zonergem]

But they need to be able to pay for it, by having a job and through access to credit.

Neither of these are going to be particularly certain over the next 12-24 months.

[matrignano]

Never seen anything like this, and I worked (and still do) in finance in 2008...

Not sure what's gonna happen with my ongoing purchase.

Bank is doing a valuation survey on Friday. That's taken a month since application.

Lawyers are still going through searches and management packs. That's also taken a month so far.

Then I will want to do my own bulding survey, but if we go on lockdown I don't know if any surveyor will actually agree to get out of self-isolation to carry out the survey?

Ideally I'd want to postpone the purchase by at least a couple of months. I wonder if it's reasonable to ask in a few weeks...

Seller inherited the flat unexpectedly therefore (I assume) they are in no rush to sell.

[princeperch]

I cant say i am feeling very optimistic about the outlook generally in the south east and london.

out where my parents live in hertford(shire) ex local authority/council (semi detached) houses in less than ideal locations are going up for sale for 550/600k. anything halfway decent as a modest family house 3/4 beds is 650 plus.

where i live in east london things have cooled a bit but semis in leytonstone that were 450/500k in 2012/2013 are now up for 850/900 after a bit of work.

i've been aggressively de-leveraging over the past 7/8 years and my mortgage will be done by next June. Its meant going on holiday in turkey and driving a dacia logan for the past couple of year, which is hardly ideal, but I would not want a large debt hanging over me in the short to medium term.

people are still out there blightly spending money from what i can see. slightly o/t , but there are plenty of new cars out on the road and you dont see many bangers these days. I happened to speak to an elderly neighbour the other day who takes in my parcels. shes lived in my road and in the same house for 65 years. anyway she said that she purchased her nephew a new car the other day. we had a little chat and she ended up telling me that her nephew is 25 years old, works part time in the harvester restaurant up the road, and she just purchased him a 69 plate bmw 5 series for 38k.

Edited by princeperch on Tuesday 17th March 16:11

[kingston12]

princeperch said:

people are still out there blightly spending money from what i can see. slightly o/t , but there are plenty of new cars out on the road and you dont see many bangers these days. I happened to speak to an elderly neighbour the other day who takes in my parcels. shes lived in my road and in the same house for 65 years. anyway she said that she purchased her nephew a new car the other day. we had a little chat and she ended up telling me that her nephew is 25 years old, works part time in the harvester restaurant up the road, and she just purchased him a 69 plate bmw 5 series for 38k.

That's pretty crazy! I've always assumed that the reason for seeing so many new cars is that people now get them on what used to be called 'the never never' but is now the de facto way of getting one.

I wonder how widespread parents or grandparents buying kids cars that are worth well in excess of their annual earnings actually is? Mind boggling.

I also wonder where she got the money from? I'd expect that to be a reasonable proportion of her savings unless she has released equity from the house.

[anonymous-user]

Judging by anecdote generational wealth handouts accounts for about 30% of house prices. It's why HPC crowds can't get their head around how people can afford big houses. It's silent wealth.

[kingston12]

Sambucket said:

Judging by anecdote generational wealth handouts accounts for about 30% of house prices. It's why HPC crowds can't get their head around how people can afford big houses. It's silent wealth.

Absolutely, I've heard of much higher examples as well. It's the only way it's possible now that lenders aren't doing such extreme income multiples and high LTVs as before.

The reason I was surprised at the example princeperch cites is that it sounds as though this is an older working-class lady who probably never earned much (or felt well-off) so probably has very little cash, just a lot of equity in housing.

Also, buying a car rather than funding a house deposit is more unusual. The perception seems to be that a car will halve in value over three years where as a house will double in value in not much longer. The latter has not been true for a while of course, but I can understand the perception from someone who has seen property prices rise so much.

[Sheepshanks]

princeperch said:

I happened to speak to an elderly neighbour the other day who takes in my parcels. shes lived in my road and in the same house for 65 years. anyway she said that she purchased her nephew a new car the other day. we had a little chat and she ended up telling me that her nephew is 25 years old, works part time in the harvester restaurant up the road, and she just purchased him a 69 plate bmw 5 series for 38k.

I wonder if she's seen the car or has she been scammed out of £38K? Wouldn't the insurance premium be pretty huge for the area / age / car?

Bearing in mind she'll have paid about a grand for her house, maybe she's stashed away a lot of money over life's work in London and perhaps has a decent final slary pension. My Mum was always tight with money and I expected her to have £15-20K stashed away. I was utterly gobsmacked that she had well into 6 figures. There's no way she'd have spent it on me or her grandkids though, much less a nephew.

[princeperch]

Sheepshanks said:

princeperch said:

I happened to speak to an elderly neighbour the other day who takes in my parcels. shes lived in my road and in the same house for 65 years. anyway she said that she purchased her nephew a new car the other day. we had a little chat and she ended up telling me that her nephew is 25 years old, works part time in the harvester restaurant up the road, and she just purchased him a 69 plate bmw 5 series for 38k.

I wonder if she's seen the car or has she been scammed out of £38K? Wouldn't the insurance premium be pretty huge for the area / age / car?

Bearing in mind she'll have paid about a grand for her house, maybe she's stashed away a lot of money over life's work in London and perhaps has a decent final slary pension. My Mum was always tight with money and I expected her to have £15-20K stashed away. I was utterly gobsmacked that she had well into 6 figures. There's no way she'd have spent it on me or her grandkids though, much less a nephew.

She is quite close to the nephew as I don't think her sister is around anymore. I didn't ask too many questions I was struggling to pick my jaw up off the floor.

The insurance was 2k with a tracker I do remember her saying that. I suspect she's got hundreds of thousands stashed away, it was her parents house, she never left, she worked in the city doing an admin type job for 30 years, never married or had kids. She's probably got half a million quid just sitting there. But I don't see the nephew all that often. Maybe he's maxing out the overtime at the harvester to pay for tyres on the 5.

Edited by princeperch on Tuesday 17th March 18:11

[Sheepshanks]

princeperch said:

Maybe he's maxing out the overtime at the harvester to pay for tyres on the 5.

errr...have you seen the news recently?

[princeperch]

We went out to Prezzo the other day for a quick lunch and I've never seen it so busy.

[stuckmojo]

princeperch said:

We went out to Prezzo the other day for a quick lunch and I've never seen it so busy.

errr, so from that specific observation you conclude that - in the middle of the biggest global crisis since WW2 - house prices are then unaffected?

Or am I due a galactic star destroyer sized parrot?

[princeperch]

Yeh go get the parrot. (My comment about Prezzo was in reply to Sheepshanks but perhaps you hadn't troubled to read the exchange above).

[stuckmojo]

Could be true. Walked past the worst bars in Liverpool and I could swear they are busier than normal. Not that it would affect house prices, mind.

[matrignano]

For what it’s worth, I have never seen Soho in London as empty as today. Restaurants with literally 2 people in, many closed.

Sounds like Bojo’s new advice has worked, at least in Central London.

[anonymous-user]

What's the least laggy report to follow, to see early signs of softening of nationwide house prices?

[Sheepshanks]

matrignano said:

For what it’s worth, I have never seen Soho in London as empty as today. Restaurants with literally 2 people in, many closed.

Sounds like Bojo’s new advice has worked, at least in Central London.

Yes - comments above were, I think, based on a few days ago. My point was that things have changed dramatically since then.

[MG CHRIS]

Tbh I was looking at buying a house this year I have the money there however with potential lock down around the corner cant see anything happening for a while. Might be a good thing to hold off and wait for prices to drop or as soon as the worst is over just jump in. Interesting times ahead.

[Taylor James]

I'd far rather own property outright than have cash in the bank now. Anything can happen to that cash, protection schemes for £85K or not. An unencumbered property is a far safer bet. A run on the banks can't be ruled out.