How far will house prices fall [volume 5]

[NickCQ]

Sheepshanks said:

So the point is that a lot of property is going to be unaffected.

That's true, but only 5% of the housing stock changes hands in any one year, and that's what the price indices are based on. So you can see how distress in small pockets is amplified in the numbers.

[Sheepshanks]

NickCQ said:

That's true, but only 5% of the housing stock changes hands in any one year,

I'd no idea it was that low - I recall it being said the average person moves every 7 years.

I just Googled it and first hit says it was 8yrs in the 80's and now it's 23yrs - that's a pretty incredible change.

[NickCQ]

Sheepshanks said:

I'd no idea it was that low - I recall it being said the average person moves every 7 years.
I just Googled it and first hit says it was 8yrs in the 80's and now it's 23yrs - that's a pretty incredible change.

Agree, I was surprised too but it's something like 1 million annual transactions versus 20+ million dwellings. Not sure whether that includes new builds or not. Increasing life expectancy in retirement must be driving quite a bit of that, particularly given the home ownership rates of that demographic?

[anonymous-user]

NickCQ said:

Agree, I was surprised too but it's something like 1 million annual transactions versus 20+ million dwellings. Not sure whether that includes new builds or not. Increasing life expectancy in retirement must be driving quite a bit of that, particularly given the home ownership rates of that demographic?

The offerings are hardly attractive to move for the elderly either, when my old man lost some mobility the only assisted thing they could find were these awful pokey flats, they spent a bit of cash on adapting the house and managed to keep their nice big garden, driveway etc

[tim0409]

spreadsheet monkey said:

Algarve said:

tim0409 said:

We are in a real quandary at the moment; we built our house 10 years ago in a beautiful coastal conservation village 20 miles from Edinburgh. We had to pay quite a bit for the land, and I did the vast majority of the building work (assisted by my wife) and were lucky to end up with a lovely house.

Unfortunately our plans for a family didn't work out, so we don't really need a four bedroom house. Just before lockdown we decided to put in on the market with a view to moving to rental accommodation for 6-12 months whilst I found another project

Its one of the biggest decisions you'll likely ever have to make.... I wouldn't feel like I had to rush a decision just for an agents convenience. Take as long as you need.

I'd say there's a good argument for selling ASAP, if the plan is to move into rented.

New job cuts are being announced every day, nobody knows the full impact of the furlough scheme ending in October... sell it for a decent price before the market gets spooked.

Edited by spreadsheet monkey on Monday 13th July 14:23

Today was our closing date and we have good news, which made the decision a lot easier...! The house was on the market for offers over £480k (Scotland) with a home report valuation of £490k, and the highest bidder came in at £560,850; we had three offers in total. The buyer is an older lady who is a cash buyer and thankfully is happy with a late move in date as my wife is having a big operation in August. Without going into too much detail we haven't had a great deal of luck recently so this is very welcome.

We plan on renting until we find land to build again.

[Bullet-Proof_Biscuit]

tim0409 said:

spreadsheet monkey said:

Algarve said:

tim0409 said:

We are in a real quandary at the moment; we built our house 10 years ago in a beautiful coastal conservation village 20 miles from Edinburgh. We had to pay quite a bit for the land, and I did the vast majority of the building work (assisted by my wife) and were lucky to end up with a lovely house.

Unfortunately our plans for a family didn't work out, so we don't really need a four bedroom house. Just before lockdown we decided to put in on the market with a view to moving to rental accommodation for 6-12 months whilst I found another project

Its one of the biggest decisions you'll likely ever have to make.... I wouldn't feel like I had to rush a decision just for an agents convenience. Take as long as you need.

I'd say there's a good argument for selling ASAP, if the plan is to move into rented.

New job cuts are being announced every day, nobody knows the full impact of the furlough scheme ending in October... sell it for a decent price before the market gets spooked.

Edited by spreadsheet monkey on Monday 13th July 14:23

Today was our closing date and we have good news, which made the decision a lot easier...! The house was on the market for offers over £480k (Scotland) with a home report valuation of £490k, and the highest bidder came in at £560,850; we had three offers in total. The buyer is an older lady who is a cash buyer and thankfully is happy with a late move in date as my wife is having a big operation in August. Without going into too much detail we haven't had a great deal of luck recently so this is very welcome.

We plan on renting until we find land to build again.

Good stuff, hope all is well. And that's a hell of a pot for the next project!!

[JQ]

tim0409 said:

Today was our closing date and we have good news, which made the decision a lot easier...! The house was on the market for offers over £480k (Scotland) with a home report valuation of £490k, and the highest bidder came in at £560,850; we had three offers in total. The buyer is an older lady who is a cash buyer and thankfully is happy with a late move in date as my wife is having a big operation in August. Without going into too much detail we haven't had a great deal of luck recently so this is very welcome.

We plan on renting until we find land to build again.

It'll put you in a great position when you do find the land. Well done and all the very best for the land hunt and the operation.

[anonymous-user]

anonymous said:

[redacted]

It seems to that the really nice older houses in the nice roads very rarely come up for sale. I do wonder if nice houses are just kept within families and not sold, just passed on.

I would imagine a large percentage of the 1 million annual transactions are flats and newish build houses with plasterboard walls, noisy staircases, tiny gardens and squeaky chipboard floors.

[NickCQ]

Joey Deacon said:

I do wonder if nice houses are just kept within families and not sold, just passed on.

Some fiddling around IHT to do that I would guess.

I agree that the duration of stay depends on the phase of life. The starter home / flat gets sold as soon as you can afford move on, but by the time the kids are into double figures, moving seems like such a hassle that you stick around and you still need the space long after they have technically moved out?

For example, my parents moved every 5 years or so in the 1980s pre-kids but have had their current place since 1995.

[Bullet-Proof_Biscuit]

Another statistic; My broker just told me he is convinced I can borrow £280k if I put 10% down (62k basic paye).
Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!

[AyBee]

red_slr said:

dan98 said:

I purchased in 2007 - within 6 months the property had lost between 1/4 and 1/3rd of it's value.
Over the next few years it was impossible to sell and when I needed to move I was forced to rent it out and become a landlord, which was a total nightmare.
It eventually returned to it's previous value, but I never want to go through that again.

Thats kind of what happened to us.

Bought 2005 for 180k
Wanted to sell around 2008 but was told it was worth 150k.
Finally around 2015 the market seemed to be moving again and bought a new place and rented out the old place.
It was not till 2019 that the house was worth somewhat more than we paid, sold it for £220k.

So 15 years and we went from 180k to 220k but if you adjust for inflation it actually lost 20k!!!

The only saving grace was in the 3 years we rented it out we probably made that £20k. So we broke even.

Except you have to live somewhere, so in those 15 years, you would have paid £180k in rent...now take that into your calculations...

[loafer123]

UpBeats said:

Houseprices will implode. We will have 5 years of record unemployment. Very few will be buying houses. Lots will have to sell if have no children to get the bennies.

If I might say so, you have a very ironic username.

As for house prices, unless interest rates go up (which they won’t) affordability (other than crazy London) will be fine and that is what drives house prices.

[ben5575]

Newky Brown said:

We've just had a full offer on our place after less than a day on the market! Apparently the buyers were talking to the estate agent of making an offer even before coming to see it.

Houses around here, just north of Nottingham are selling like hot cakes. We went to see a new build on a large estate near us and they've never known it so busy. We had to wait a week for an appointment.

Trouble is now, do we bank the money and rent for a while??

Just to add to this in the NE, agents are reporting the best 6/7 weeks they I've had in 30 years. Relatively young staff who have never experienced anything like it before (as in mid 2000's).

Properties across the range and across buyers. Admittedly we're talking in the £100k-£450k region not London prices but even a couple of 7 figure properties have completed.

Properties coming to market with five viewings and two offers at or above asking within a week is normal at the moment.

Who knows if it will last beyond October, but the snowball of the chains means that it it will continue a pace for a good few months yet.

Development finance is beginning to stir again, as is equity as they emerge from furlow and realise they need some new business.

Different dynamics to the markets some of you boys operate in, but for us round here it's quite unusual.

[red_slr]

AyBee said:

red_slr said:

dan98 said:

I purchased in 2007 - within 6 months the property had lost between 1/4 and 1/3rd of it's value.
Over the next few years it was impossible to sell and when I needed to move I was forced to rent it out and become a landlord, which was a total nightmare.
It eventually returned to it's previous value, but I never want to go through that again.

Thats kind of what happened to us.

Bought 2005 for 180k
Wanted to sell around 2008 but was told it was worth 150k.
Finally around 2015 the market seemed to be moving again and bought a new place and rented out the old place.
It was not till 2019 that the house was worth somewhat more than we paid, sold it for £220k.

So 15 years and we went from 180k to 220k but if you adjust for inflation it actually lost 20k!!!

The only saving grace was in the 3 years we rented it out we probably made that £20k. So we broke even.

Except you have to live somewhere, so in those 15 years, you would have paid £180k in rent...now take that into your calculations...

I get that, but I am just saying some places have seen very little to no growth.

[dan98]

AyBee said:

Except you have to live somewhere, so in those 15 years, you would have paid £180k in rent...now take that into your calculations...

I'm not a financial expert but I remember most of my monthly outgoings were being thrown away in mortgage interest. Not quite as much as rent would have, but adding all the fees around the purchase I suspect it was similar.
Therefore your argument about rent is moot, in my case and I suspect many others.

Also don't forget the interest which the deposit could have been earning over the years had it not been stuck uselessly in the property.

Edited by dan98 on Tuesday 21st July 19:28

[kingston12]

loafer123 said:

If I might say so, you have a very ironic username.

As for house prices, unless interest rates go up (which they won’t) affordability (other than crazy London) will be fine and that is what drives house prices.

Well, there are a few other factors. Heavily increased unemployment would cause affordability problems and could generate more forced sales. As discussed earlier in the thread, the banks won't be in a hurry to repossess anything, but if this downturn lasts a while, who knows?

The other factors are less likely to happen - the withdrawal of market props that were originally supposed to be temporary, but the market came to rely upon, namely HTB and the stamp duty holiday. My bet would be both of those will be extended significantly rather than withdrawn though.

[Mining Subsidence Man]

All of this free money will end up in asset prices/values.

[foxbody-87]

We will be looking to buy somewhere else next year (early to mid). If the economy goes tits up post COVID and property prices plummet I’m guessing our choices will be stay put or rent out the current house until the markets bounce back? Currently in a 3 bed semi in a town just on edge of Lake District but looking for something a bit more rural.

[Flooble]

Bullet-Proof_Biscuit said:

Another statistic; My broker just told me he is convinced I can borrow £280k if I put 10% down (62k basic paye).
Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!

This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.

So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.

So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?

[anonymous-user]

Flooble said:

This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.

So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.

So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?

Not sure wages are as important as made out.

1/3 of houses are paid with cash? Then there is BOMOD, inheritence etc.