How far will house prices fall [volume 5]

[number2]

Earthdweller said:

Andy20vt said:

UpBeats said:

Andy20vt said:

. . . . and BOOM, exactly as I mentioned a few weeks ago. Great news the the UK Government are doing the right thing.

https://www.bbc.co.uk/news/uk-politics-53246899

I wonder though where all these people are going to live? Even high end London property will seem cheap for these guys where the average house price (mostly apartments) in Hong Kong hit $1.2 million last year.

Thats all we need. 300k chinese. BJ has lost the plot. Hopefully the HK govt will stop them leaving with assets.

You've never been to Hong Kong then I take it? Great place and it's people are polite, well educated, commerce focused and would fit in well with the UK way of life.

A lot of them are Anglo-Chinese rather than ethnic Chinese and up until the early 80’s had full British passports until HMG changed their status

Many are very seriously wealthy, entrepreneurial and industrious

They would be an asset to the U.K. which had in many ways abandoned them

Send a plane and bring them all over 1st class.

[number2]

A few props that have been on the market here in my commuter belt since last year at 7 figs have gone SSTC.

I'll check the sold prices in 6 months, if they make it to the end.

There's always people with money who want to get on with their lives. Short term doesn't mean much in prop. especially given its heterogeneity making price difficult to track. I'm not seeing real capital growth over the next 5 years but interest rates have been one of the key drivers for capital growth and there's no widespread crash in nominal values while they're low. (I've definitely said it before and I'm sticking to it... for now )

[menousername]

whatleytom said:

Why do have a fascination with dividing these numbers by other entirely irrelevant numbers? £25bn is a record-breaking level by multiples.

Of those UK adults, only 33 million are actually employed (pre lockdown) for starters, if the average salary in the UK is £28k that's on average folk saving 41% of their take-home.

Partly because the original figures when they first started coming out were per household

Partly because disposable vs debt ratios are usually per household

But mostly because it gives some kind of understanding to the big headline figure. 25 billion sounds enormous. However, even by 33 million employed adults its still less than £800

If the headline read - average person had £800 more in the bank at end of May compared to end of April - it wouldn’t be so impressive.

If it also read - average person saved £800 by taking a mortgage holiday - its less impressive still.

[KrisP]

having not been in the price bracket before, what sort of offer should I be making on an asking price circa 1.35M? I'm in Surrey if that makes any difference

[caymanbill]

KrisP said:

having not been in the price bracket before, what sort of offer should I be making on an asking price circa 1.35M? I'm in Surrey if that makes any difference

I'd like to know the same for an 850K place that's been on the market for 3 months.

[spikeyhead]

UpBeats said:

What is anglo chinese? They are ethnically chinese or anglo saxon which is it? If they were white they would have uk passports

Are you commenting as a pure bred Anglo Saxon?

[NickCQ]

KrisP said:

having not been in the price bracket before, what sort of offer should I be making on an asking price circa 1.35M? I'm in Surrey if that makes any difference

Need to do your own research as to whether that asking price is correct or not.
Having read the experience of long time poster tonker in that price bracket and area, the answer to your question seems to vary wildly.

[Thankyou4calling]

KrisP said:

having not been in the price bracket before, what sort of offer should I be making on an asking price circa 1.35M? I'm in Surrey if that makes any difference

What do you want to pay?

Realistically

[skwdenyer]

NickCQ said:

KrisP said:

having not been in the price bracket before, what sort of offer should I be making on an asking price circa 1.35M? I'm in Surrey if that makes any difference

Need to do your own research as to whether that asking price is correct or not.
Having read the experience of long time poster tonker in that price bracket and area, the answer to your question seems to vary wildly.

There is no "correct" price; there is what any given seller is prepared to accept.

You need to do your research and try to understand the context of the sale. Is the seller divorcing? Lost their job? Wanting to make a once-in-a-lifetime move to a particular dream home? How long can they wait? Which way is the market moving? Are *you* prepared to forego this particular house, or are you set on it?

How long do properties typically take to sell in that area and price point? Where I am in the Yorkshire dales, a year isn't unusual. In parts of London it is odd for a property to hang about for more than a couple of weeks.

How rational is the buyer? Are there factors that mark the price down? Work that needs doing? Un-regularised historical building works? Something odd with the boundaries?

Frankly, the list is endless. Sometimes you just need to find out as much as possible and trust your gut

[KrisP]

Well, I bought my current place for a 4% discount back in 2013, and I was happy with this. The house I have my eye on is up for sale for a 3rd time, but it has had 100k chopped off already. It needs double glazing (30’s property) and some modernisation inside - kitchen and bathrooms are good, but the rest of the house needs work.

My research would indicate that the original price was ambitious, and a sense of realism has come about from the owners, but the 100k reduction still doesn’t put it where I believe it needs to be. I think I could comfortably sink 150k inc windows, but I sense that any owner would be reluctant to have 250k knocked off their original asking.
I believe the owners are relocating & maybe downsizing, the kids have long since flown the nest

[SteadyAsSheGoes]

Regarding buying schemes including Help To Buy and shared ownership, I've heard it mentioned numerous times in this thread that these schemes only benefit house builders, and that new builds are overpriced, inferior to existing housing stock, etc. I have to disagree with that consensus, I have experience of these schemes benefitting me personally and helped me move up the housing ladder.

About 10 years ago I was privately renting (ex council house), and was able to not spend anything and save up enough to buy a shared ownership 2 bed semi off-plan new build via the local housing association. Beside the fact the I made some equity via price inflation, it was quite significantly cheaper than renting on the private market so I was able to continue saving as well. Several years later I was able to sell my share and use the proceeds to buy a Help To Buy 4 bed detached off plan new build with my then partner. Due to us spliting I then sold this 11 months later (at an increase of £32.5k on the purchase price) to solely own a 150 year old "doer-upper" 2 bed cottage in a village (had a decent plot with a large detached garage). Then last year I sold this and bought a 4 bed detached in a somewhat cheaper area, I now have a decent amount of equity.

I've heard some say that these schemes help to prop up an over-inflated housing market, but I think prices are what they are, there is a lot of money out there. With couples now generally both working, lending multiples being what they are, and rock bottom interest rates, I don't see there being any significant crash in house prices. Yes a recession is bound to impact jobs and demand but as long as many people have decent jobs and it looks cheaper than renting long term then people will continue to be able to afford to buy at current levels or close to.

[NickCQ]

SteadyAsSheGoes said:

I have experience of these schemes benefitting me personally and helped me move up the housing ladder.

That's not in question but I think the thrust of this thread is that granting random people random windfalls through the property market is not an ideal way to run things. Same with the 'right to buy' for council homes - there's no doubt that individual people who bought their homes at discounts did very well, but there's an element of zero sum about it, as the next generation suffer.

Maybe a bit of a macro perspective is needed?

[untakenname]

SteadyAsSheGoes said:

I've heard some say that these schemes help to prop up an over-inflated housing market, but I think prices are what they are, there is a lot of money out there. With couples now generally both working, lending multiples being what they are, and rock bottom interest rates, I don't see there being any significant crash in house prices. Yes a recession is bound to impact jobs and demand but as long as many people have decent jobs and it looks cheaper than renting long term then people will continue to be able to afford to buy at current levels or close to.

I'm guessing you got in at the start of the help to buy scheme so house prices have appreciated across the board, anyone late 2015 onwards is going to most likely be in negative equity and with both couples needing to be in work to afford the mortgage it makes it even more precarious when one (or both) is made unemployed.

Help to buy also enabled those who couldn't save/budget or afford the property to get on the ladder, people are having trouble just paying the interest on the 20% (or 40% in London) that kicks in five years into scheme.
The fact that it tracks RPI means it can fluctuate massively, it's at one percent now but was four percent in 2018 and will rise again once the world gets back to normal.

[Shnozz]

NickCQ said:

SteadyAsSheGoes said:

I have experience of these schemes benefitting me personally and helped me move up the housing ladder.

That's not in question but I think the thrust of this thread is that granting random people random windfalls through the property market is not an ideal way to run things. Same with the 'right to buy' for council homes - there's no doubt that individual people who bought their homes at discounts did very well, but there's an element of zero sum about it, as the next generation suffer.

Maybe a bit of a macro perspective is needed?

I would agree. For me the sad part is house prices have become a political concern that garners far too much attention as a result. The natural equilibrium of the market is distorted massively by whatever schemes and tricks that are being introduced for political reasons rather than for a longer term market.

You only need look at a (non) news story suggesting a 0.1% decline in house prices being in the BBC top 10 most read for the day to see what a dramatic piece of "news" this is. For reasons already discussed on here, it's nonsense as it doesn't take into account the inability to have a free moving market in lockdown, regional variations etc etc. Yet even with such a tiny figure people flock to the story and with that level of interest, of course politicians are going to look to offer the majority of the electorate policies that appeal to their interests, or they will if they want to remain in power. And that majority, for the most part of anyone below 25, feel all warm and fluffy when prices stay where they are or climb, even if it shouldn't matter one iota.

[kingston12]

SteadyAsSheGoes said:

Regarding buying schemes including Help To Buy and shared ownership, I've heard it mentioned numerous times in this thread that these schemes only benefit house builders, and that new builds are overpriced, inferior to existing housing stock, etc. I have to disagree with that consensus, I have experience of these schemes benefitting me personally and helped me move up the housing ladder.

It’s good to hear that it has worked for you.

There are two factors that are key to HTB working for buyers in my opinion:

1. House prices must rise sharply throughout the period of the initial loan.

2. The developer has to have asking prices at near to the underlying market level for existing equivalent housing stock, not just 20/40% higher because of the HTB bung.

In my area neither of these things have happened and HTB will be a time bomb for a lot of buyers.

HTB is just like any housing market stimulus, it will work for so long to increase prices, but then more will be required if we want prices to keep rising.

[UpBeats]

SteadyAsSheGoes said:

Regarding buying schemes including Help To Buy and shared ownership, I've heard it mentioned numerous times in this thread that these schemes only benefit house builders, and that new builds are overpriced, inferior to existing housing stock, etc. I have to disagree with that consensus, I have experience of these schemes benefitting me personally and helped me move up the housing ladder.

About 10 years ago I was privately renting (ex council house), and was able to not spend anything and save up enough to buy a shared ownership 2 bed semi off-plan new build via the local housing association. Beside the fact the I made some equity via price inflation, it was quite significantly cheaper than renting on the private market so I was able to continue saving as well. Several years later I was able to sell my share and use the proceeds to buy a Help To Buy 4 bed detached off plan new build with my then partner. Due to us spliting I then sold this 11 months later (at an increase of £32.5k on the purchase price) to solely own a 150 year old "doer-upper" 2 bed cottage in a village (had a decent plot with a large detached garage). Then last year I sold this and bought a 4 bed detached in a somewhat cheaper area, I now have a decent amount of equity.

I've heard some say that these schemes help to prop up an over-inflated housing market, but I think prices are what they are, there is a lot of money out there. With couples now generally both working, lending multiples being what they are, and rock bottom interest rates, I don't see there being any significant crash in house prices. Yes a recession is bound to impact jobs and demand but as long as many people have decent jobs and it looks cheaper than renting long term then people will continue to be able to afford to buy at current levels or close to.

You just described a pyramid scheme. You were lucky that it had longer to run. Those joining now will be pissed in a few years. The Govt cannot make what happened to you go on forever unless we go hyper inflation.

[kingston12]

UpBeats said:

You just described a pyramid scheme. You were lucky that it had longer to run. Those joining now will be pissed in a few years. The Govt cannot make what happened to you go on forever unless we go hyper inflation.

It’s true this can’t go on forever, but I think that it could be some time before it is wound down.

It’s effectively just the government stepping in to increase the amount buyers can borrow.

People like SteadyAsSheGoes who have benefitted from the scheme would have benefitted similarly if the banks had allowed him to borrow 8x his annual salary as a mortgage rather than 5x.

[princeperch]

okgo said:

Good cycling out that way though, I rode through Hertford, and it felt a bit 'weird' - it was the only time on the 90 mile ride (which went through many places) that I could smell peoples aftershave as I cycled through.

Get yourself a place in Much Haddam, that was about the most pleasant village I've been through of late on the same ride.

if you can get this under a million then it's about a solid a bet you can get in Hertford. Good road and 5 mins to Hertford north.

https://www.rightmove.co.uk/property-for-sale/prop...

[kingston12]

SteadyAsSheGoes said:

I've heard some say that these schemes help to prop up an over-inflated housing market, but I think prices are what they are, there is a lot of money out there.

Genuine question then. If house prices are high because ‘there is a lot of money out there’, what effect do you think that the government pumping extra billions into the market will do to those prices?

[ooid]

princeperch said:

if you can get this under a million then it's about a solid a bet you can get in Hertford. Good road and 5 mins to Hertford north.

https://www.rightmove.co.uk/property-for-sale/prop...

That's really lovely.