How far will house prices fall [volume 5]
Discussion
p1stonhead said:
Would you be accepting a lower offer if their stamp duty bill went up?
Depends whether it's their stamp duty or stamp duty for any buyerIf stamp duty goes up across the board, the value of the property declines and if your buyer walks you should expect to get lower offers in future. Therefore, in that situation if the buyer came back with a reasonable ask I would think about it very carefully before telling them to go away.
NickCQ said:
Market price is determined by average tax incidence, which depends on the mix of buyers looking at a particular property.
Absolutely. In addition, a lot of buyers seem to prefer to pay more for the property and less tax even if the total is the same, because the amount paid for the property is the 'investment' that will appreciate in value where as the tax is a one-off fixed cost.Most ignore the fact that once stamp duty returns to normal, so does the property value (everything else being equal)
NickCQ said:
Fundamentally I do not believe that the c. £15k windfall should accrue 100% to the buyer.
I think that the traditional view is that the seller gets their windfall the they buy the next property up the chain, and so on until the seller at the very top of the chain who is the only one who gets nothing. In practice, that isn't how it works because lots of people will be selling BTLs and second homes so will not necessarily be the case.
Ultimately, this is a measure to support he market and increase house prices. If you hadn't already agreed a sale before it happened, you'd have asked more for your flat, and probably got it.
As it is, you may struggle a bit more on a previously agreed price, and particularly if the buyer has already been moaning about tax. It sounds as though you are in a strong position though, so I'd definitely give it a go.
NickCQ said:
AyBee said:
It's not a £15k uplift in value if it only lasts until March next year!
Yes it is - their anticipated exit price is the same as if the cut never happened, so the fact that it is temporary doesn't matter.Simply put, let's say market price is £520 and it costs £535 to buy in normal stamp duty environment. Buyer can pay £535 (to me) and no stamp duty and be in the same place (i.e. selling for £520 at some point in the future)
NickCQ said:
Mortgage payment as a % of pay isn't really the issue given low interest rates. The issue is deposit requirement versus pay, or number of years of saving and % of income needed to be saved to put down 5-10%.
This was briefly papered over prior to 2007 with 100%+ LTV mortgages but we know how that turned out.
100% mortgages aren’t a problem. Prices are only going one way, remember? This was briefly papered over prior to 2007 with 100%+ LTV mortgages but we know how that turned out.
Self-cert interest-only 100% loans were perhaps risky, but how many actually turned bad?As you say, access to capital is the critical problem for many. Wages are low, family wealth shouldn’t be an assumption upon which to base policy. You can’t just keep papering over the cracks with ever-greater HTB / shared ownership / etc.
The stamp duty cut is awful IMHO - it is the wrong stimulus for the wrong part of the economy at the wrong time. If housing is unaffordable, it is wages and/or house prices that need fixing.
NickCQ said:
I think the government's incentive is as much to stimulate all the ancillary economic activity that goes with house moves rather than to pump up prices.
We will see whether I can get my hands on any of the discount.
Wow. Are you always this stingy? We will see whether I can get my hands on any of the discount.
Currently selling a house myself and wouldn't dream of asking our buyer for any more money due to the change, I would like to think our vendor wouldn't ask me either.
I hope your buyers tell you to f
k off, I certainly would! skwdenyer said:
The stamp duty cut is awful IMHO - it is the wrong stimulus for the wrong part of the economy at the wrong time. If housing is unaffordable, it is wages and/or house prices that need fixing.
I share that view entirely. Bizarre choice in my eyes. I also think it’s a very risky move as March/April 2021 is when I think the beginnings of the enormity will start to truly be seen. Add to that the very real prospect of a wash out of brexit deals (not helped by Covid distraction but it is what it is) and I think the U.K. s
t storm will start to look very bleak from about Q2 2021. When this scheme comes to an abrupt end, after a period I don’t consider it needed, I’m concerned for what might occur. AyBee said:
NickCQ said:
AyBee said:
It's not a £15k uplift in value if it only lasts until March next year!
Yes it is - their anticipated exit price is the same as if the cut never happened, so the fact that it is temporary doesn't matter.Simply put, let's say market price is £520 and it costs £535 to buy in normal stamp duty environment. Buyer can pay £535 (to me) and no stamp duty and be in the same place (i.e. selling for £520 at some point in the future)
It is worth what anyone will pay for it at any given time. It is no more worth £520k than it is £200k or £1m. There's very little intrinsic value in UK housing (given how terrible the buildings mostly are); it is all simply supply and demand.Shnozz said:
I share that view entirely. Bizarre choice in my eyes.
I also think it’s a very risky move as March/April 2021 is when I think the beginnings of the enormity will start to truly be seen. Add to that the very real prospect of a wash out of brexit deals (not helped by Covid distraction but it is what it is) and I think the U.K. st storm will start to look very bleak from about Q2 2021. When this scheme comes to an abrupt end, after a period I don’t consider it needed, I’m concerned for what might occur.
Agree, that's when the full impact will be seen.I also think it’s a very risky move as March/April 2021 is when I think the beginnings of the enormity will start to truly be seen. Add to that the very real prospect of a wash out of brexit deals (not helped by Covid distraction but it is what it is) and I think the U.K. s
t storm will start to look very bleak from about Q2 2021. When this scheme comes to an abrupt end, after a period I don’t consider it needed, I’m concerned for what might occur. The stamp duty move looks to be typical gov positioning i.e they will claim anything sold from 8th July as the positive stimulus that the initiative brought, rather than the reality that many of these deals were already well within the works.
Not to say it won't bring welcome relief to those who have to move/buying at a lower value, those already in the process, but it takes a brave/extreme optimist to jump now if they don't need to do so. (However depends on area, value, street ....) my views are mainly based on higher value greater London.
Although it seemingly will have other unintended consequences apart from the likely expected things of maintaining house prices where £15k is material vs the value of the property, based on recent replies on here, and increasing the supply of larger family homes as the elderly downgrade (welcomed!) ...it could even be a deal breaker as sellers look to benefit from the buyers tax savings. Sorry Nick, I would be equally robust in my reply to that ask, although I get the concept.
One of my friends still can't get the required mortgage with all the recent new mortgage restrictions (i.e not counting maternity leave, bonus e.t.c), so is going back with a £50k reduction ask (below agreed price in Feb) on a near £1m property . He can't wait as he is currently living with family and has a third child on the way.
Edited by V6Alfisti on Wednesday 8th July 19:27
number2 said:
Maybe he should buy a property he can afford
(Alfa's mate)
He could comfortably before they pulled recognition of his wife's salary (pre maternity) and his bonus, as such he was getting mortgage offers easily in Feb.(Alfa's mate)
He is putting in more than a 1/3rd as a deposit into a sub 1m house. However mortgage companies just aren't recognising what they used to.
Just a bit of a rubbish situation, when the rug gets pulled from you.
Edited by V6Alfisti on Wednesday 8th July 20:26
p1stonhead said:
NickCQ said:
caymanbill said:
Wow. Are you always this stingy?
I am clearly not as rich as you. £15k is real money to me.Edited by p1stonhead on Wednesday 8th July 20:24
If you find out your buyer has received a pay rise, will you try and rinse him for some of that too?
Edited by andyeds1234 on Wednesday 8th July 20:38
p1stonhead said:
It’s not your money in any way shape or form. I hope your buyers tell you to go jump. I would.
It would not be a rational response for the buyers to pull out when offered the same asset at a lower overall cost.But there is a lot of irrational emotion in house buying, as this thread demonstrates.
NickCQ said:
p1stonhead said:
It’s not your money in any way shape or form. I hope your buyers tell you to go jump. I would.
It would not be a rational response for the buyers to pull out when offered the same asset at a lower overall cost.But there is a lot of irrational emotion in house buying, as this thread demonstrates.
All you have done is shown that you are not a person to trust or do business with. You deserve to lose the sale.
NickCQ said:
andyeds1234 said:
+1
If you find out your buyer has received a pay rise, will you try and rinse him for some of that too?
One buyer's earnings do not change the value of the property. A 3% change in transaction taxes for all buyers clearly does.If you find out your buyer has received a pay rise, will you try and rinse him for some of that too?
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff