How far will house prices fall [volume 5]

How far will house prices fall [volume 5]

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Discussion

Sheepshanks

21,251 posts

76 months

Monday 10th August
quotequote all
1974nc said:
I’ve been watching house prices intently as me and my partner are considering moving in together.
Prices had been stagnant for some time in South Yorkshire however I’ve noticed some London type pricing emerging which prompts me to check back in the last sold register.

Some are asking over double their last purchase price from 5 years ago while having done either little improvement, none at all or in some cases making it worse than the last sold photos.

It makes me extremely wary and out of the affordability boundary of buying a house that in my opinion should be worth about 250k based on watching the market for over 12 months and now it’s up for 425k!
Looking at how the market is going at the moment they probably think it's worth a punt - it's become ridiculous where we are (West Cheshire) and it seems to be especially so in the £400's which would get you a pretty bog-standard 4 bed detached or a good semi with the open-plan kitchen/diner and bi-fold doors etc in most parts of the area.

There's an agent in our village who hardly has anything that isn't sold.

Sheepshanks

21,251 posts

76 months

Monday 10th August
quotequote all
surveyor said:
When I have had these discussions as a valuer I have always been happy to consider any additional comparable that I had not been aware of providing it was good evidence (as in a sold property - not just on the market!).
Certainly on the house we just sold, the EA mentioned the mortgage valuation issue if the price goes too far above comparables - it went for £20K higher than the last sale and she said they could justify that (so seemed to anticipate being involved) but any more could cause difficulty.

As it happens it went to a cash buyer and they didn't have any kind of survey.

surveyor

14,731 posts

141 months

Monday 10th August
quotequote all
Sheepshanks said:
surveyor said:
When I have had these discussions as a valuer I have always been happy to consider any additional comparable that I had not been aware of providing it was good evidence (as in a sold property - not just on the market!).
Certainly on the house we just sold, the EA mentioned the mortgage valuation issue if the price goes too far above comparables - it went for £20K higher than the last sale and she said they could justify that (so seemed to anticipate being involved) but any more could cause difficulty.

As it happens it went to a cash buyer and they didn't have any kind of survey.
The good agents anticipate any problems and put together a little pack with 'useful comparables'. It did use to set of my alarm bells rather though, even if it was useful.

princeperch

6,442 posts

204 months

Monday 10th August
quotequote all
surveyor said:
That's the valuers 'bracket' not the purchasers 'leeway'. It's nice to see a purchaser taking note, and asking the agent for comparables to justify why the surveyor is wrong is exactly the right thing to do.

When I have had these discussions as a valuer I have always been happy to consider any additional comparable that I had not been aware of providing it was good evidence (as in a sold property - not just on the market!).
Doesn't it really just boil down to whether it's your PI insurance on the line or whether you are an employee on someone else's coverage?

I bet 9/10 times If you get a valuer who isn't on his own PI insurance if it's a borderline valuation he'd say fk it and sign it off, where as if it's your own insurance youd say not worth the risk?

Leicester Loyal

2,215 posts

79 months

Monday 10th August
quotequote all
MattS5 said:
Are you having to find another £10k to progress as the LTV is marginal ?

If it isn’t the case then if it’s a great house, then don’t be too hasty (albeit depends if it’s £10k extra on £100k or a £300k asking price) with walking away.
I can just get a lower LTV deal if I wanted, but obviously I'd be purchasing something for 10k less than it's worth on record. The new LTV deal is about 0.4% worse than the one I've been offered. It is a nice house and I really do like it, but if they aren't willing to change on the price (even meeting me halfway) then I've not really got much choice other than to pull out. Every 4 weeks I save another 1% LTV, so I'll just hold out for another property.


princeperch said:
Iirc the surveyor has a 5pc tolerance (i.e he shouldn't get the valuation wrong but if he does he can be 5pc out before he can be sued for negligence). So he really must be convinced that the house is worth 10k less than you've offered if he's downvalued it. And if the estate agent actually knows what she's doing she would have given him the comparables before he went over to value it. So I'd be telling the estate agent to get fked if I were you .
Yeah I told her to please present them evidence if it's worth the original asking price, I'm more than happy to pay it if it is indeed valued at that, but she now claims it isn't her job to (which is fine, but don't expect me to pay the original asking price). Yeah I have done, but obviously in more pleasant terms, so hopefully she'll come back to me and say they want to negotiate the price a little. If not, then I'll move on and find somewhere else, I'm in no rush as said above, I'm saving a lot every payday.


Edited by Leicester Loyal on Monday 10th August 18:54

1974nc

1,342 posts

119 months

Monday 10th August
quotequote all
Sheepshanks said:
Looking at how the market is going at the moment they probably think it's worth a punt - it's become ridiculous where we are (West Cheshire) and it seems to be especially so in the £400's which would get you a pretty bog-standard 4 bed detached or a good semi with the open-plan kitchen/diner and bi-fold doors etc in most parts of the area.

There's an agent in our village who hardly has anything that isn't sold.
I’m very cautious if this is some kind of lightning bubble that has struck.
If you were to pay 425k for a house you believed to be only worth 250ish and then the market crashes at Christmas back to that value or below, you could be stuffed for a decade.

surveyor

14,731 posts

141 months

Monday 10th August
quotequote all
princeperch said:
surveyor said:
That's the valuers 'bracket' not the purchasers 'leeway'. It's nice to see a purchaser taking note, and asking the agent for comparables to justify why the surveyor is wrong is exactly the right thing to do.

When I have had these discussions as a valuer I have always been happy to consider any additional comparable that I had not been aware of providing it was good evidence (as in a sold property - not just on the market!).
Doesn't it really just boil down to whether it's your PI insurance on the line or whether you are an employee on someone else's coverage?

I bet 9/10 times If you get a valuer who isn't on his own PI insurance if it's a borderline valuation he'd say fk it and sign it off, where as if it's your own insurance youd say not worth the risk?
I stepped away from valuation work a few years ago - I don't enjoy it and I don't like have a target painted on my back..

But back in 2007 I was doing some work from one of the major panel valuers on a consultancy basis, so with my own PI. I went to value a new house, and was given a 'valuer pack'. The selling price was £1,000 per sq m over the nearest comparable. I was not convinced and down valued.

I then had the builder on my back, the lender on my back and the purchaser on my back. I was a tad pissed off.

A colleague went to do a survey on the same estate - he was employed. I asked what he had done. He said he had valued up as he had seen what a pain the arse it had been when I had down valued.

Cheers mate!

marky911

3,888 posts

176 months

Monday 10th August
quotequote all
1974nc said:
Sheepshanks said:
Looking at how the market is going at the moment they probably think it's worth a punt - it's become ridiculous where we are (West Cheshire) and it seems to be especially so in the £400's which would get you a pretty bog-standard 4 bed detached or a good semi with the open-plan kitchen/diner and bi-fold doors etc in most parts of the area.

There's an agent in our village who hardly has anything that isn't sold.
I’m very cautious if this is some kind of lightning bubble that has struck.
If you were to pay 425k for a house you believed to be only worth 250ish and then the market crashes at Christmas back to that value or below, you could be stuffed for a decade.
Same up here. It’s silly season out there.
Sold in July and thought we’d rent for 6 months to see what happens.

I’m starting to wonder if things will actually drop at all. Lots and lots of folk carrying on as normal.
We haven’t seen anything like the amount of redundancies I thought we might (I know the furlough scheme hasn’t ended yet mind). The retailer thread on here reports most of them and it’s certainly not armageddon, although I fully understand how terrible it is for those concerned.

My wife is getting restless as she likes her security and we’ve never rented before so we have viewed one or two houses up here.
They’ve sold immediately though for more than we offered or would offer.

Crazy times but as I say to my wife, we need to be patient as when everyone is rushing in, that’s the time to take a step back.
I’d rather rent for another year. Worst case we’ll have to pay today’s prices, best case we’ll save a fair old chunk if things do tank.

Strange times though.
We are also looking at 4 or 5 more BTLs and the market for those is nuts. Some of the prices folk are paying make it seem pointless to do, given the return they’ll get.
£110k house that earns £495 month before mortgage, tax and expenses. Again it’s frustrating having to hold off as I want to get them up and running ASAP, but it just doesn’t make sense so why bother.







Edited by marky911 on Monday 10th August 21:26

Mojooo

10,986 posts

137 months

Tuesday 11th August
quotequote all
If there are mass redundancies will that show up in a house price reduction straight away?

Would prices fall because of confidence or because of banks taking houses back. I presume the latter would take a while.

marky911

3,888 posts

176 months

Tuesday 11th August
quotequote all
Confidence is what drives everything, so as soon as the beeb (who I try not watch) report something like “Recession staring to bite” etc and the confidence goes, that’s when this mini-boom we are seeing will come to an abrupt end.

As you say if we are waiting for repossessions we’ll be waiting a long time, as already discussed in this thread, banks are very reluctant to snatch back homes.

I was fully subscribed to a seeing turbulent year next year but so far we are seeing the opposite.

However history has given us enough examples of what to expect next that we’d be mad to ignore it.
Who has it wrong? Me? Or all the people carrying on as normal?
Time will tell I guess.


Mojooo

10,986 posts

137 months

Tuesday 11th August
quotequote all
Lets see what happens with Brexit!

V6Alfisti

3,056 posts

184 months

Tuesday 11th August
quotequote all
Mojooo said:
If there are mass redundancies will that show up in a house price reduction straight away?

Would prices fall because of confidence or because of banks taking houses back. I presume the latter would take a while.
Nope realistically but it will depend on area/how long it has been marketed imo

e.g.

Someone recently listing will still be hoping that someone will bite and so it will take time to change the price to reflect the market at that time, also they won't be immediately understand this until delayed sales values start to come through/or their property doesn't sell. It is human nature that you will want the most for what you have, these sellers may get lucky or equally keep chasing the market down...

On the opposing side, If someone has had a property on a market for ages and not had a bite during the silly season, then they may chip it to get rid to avoid the chasing down of the market.

Equally - if there is a forced sale, then this could change the price rather quickly

The general point being, the whole market rarely reacts instantly but there will be cases within, that does.

Shnozz

21,959 posts

228 months

Tuesday 11th August
quotequote all
marky911 said:
However history has given us enough examples of what to expect next that we’d be mad to ignore it.
Who has it wrong? Me? Or all the people carrying on as normal?
Time will tell I guess.
In 2008 I had a short on the FTSE that remained stubbornly high despite already having seen the run on Northern Rock, the collapse of Bear Stearns and I wondered what the fook was going on as the market stayed level whilst the TV showed not just anticipated upheaval, but actual financial chaos. It simply made no sense at all in my eyes.

To be fair, house prices can be artificially supported to a greater extent than the FTSE, as of course debated here regularly. However, my point is simply that even when the news is more than rumours, and sat staring people in the face, the reluctance to head for the exits is rife. I think the prospect of a depreciating market in any asset is far harder to accept and, as a result, people see it as a greater risk than being among the many who remain defiant. It feels somehow safer, and with a (primary) home, to some extent it is.

survivalist

1,870 posts

147 months

Tuesday 11th August
quotequote all
V6Alfisti said:
Mojooo said:
If there are mass redundancies will that show up in a house price reduction straight away?

Would prices fall because of confidence or because of banks taking houses back. I presume the latter would take a while.
Nope realistically but it will depend on area/how long it has been marketed imo

e.g.

Someone recently listing will still be hoping that someone will bite and so it will take time to change the price to reflect the market at that time, also they won't be immediately understand this until delayed sales values start to come through/or their property doesn't sell. It is human nature that you will want the most for what you have, these sellers may get lucky or equally keep chasing the market down...

On the opposing side, If someone has had a property on a market for ages and not had a bite during the silly season, then they may chip it to get rid to avoid the chasing down of the market.

Equally - if there is a forced sale, then this could change the price rather quickly

The general point being, the whole market rarely reacts instantly but there will be cases within, that does.
Unless people get to a point where they absolutely can’t afford their mortgage, you won’t see large numbers of forced sales. What you will see is a stagnant market, where everyone clings on to their homes. Especially in the south east, where many households are dual income.

Given historically low interest rates the cost of people keeping their homes in difficult times is low. Plenty of fat can be trimmed elsewhere - expensive car payments, foreign holidays and (in the case of job loss) child care costs.

The affordability measures that came in post 2008 also mean that the number of people who are over-leveraged (in terms of mortgage, not necessarily other debt) isn’t as high as it might seem.

Anecdotally, where I live is seeing huge interested from Londoners looking to move to a commuter town (Hertfordshire, 28 mins from Kings Cross). Speaking to local agents everything between 600-900k is seeing multiple offers within days of being put on the market.

Now, whether any of these chains complete is another matter. If everyone is moving out of the London suburbs, they need to find buyers for their homes.

1974nc

1,342 posts

119 months

Wednesday 12th August
quotequote all
1974nc said:
I’ve been watching house prices intently as me and my partner are considering moving in together.
Prices had been stagnant for some time in South Yorkshire however I’ve noticed some London type pricing emerging which prompts me to check back in the last sold register.

Some are asking over double their last purchase price from 5 years ago while having done either little improvement, none at all or in some cases making it worse than the last sold photos.

It makes me extremely wary and out of the affordability boundary of buying a house that in my opinion should be worth about 250k based on watching the market for over 12 months and now it’s up for 425k!
The 425k house has sold within 3 days!!!
Mental. Properties on rightmove are going hand over fist for anything decent. Price doesn’t seem to matter.
It seems to me like the days of the mid 2000s

p1stonhead

23,014 posts

124 months

Wednesday 12th August
quotequote all
1974nc said:
1974nc said:
I’ve been watching house prices intently as me and my partner are considering moving in together.
Prices had been stagnant for some time in South Yorkshire however I’ve noticed some London type pricing emerging which prompts me to check back in the last sold register.

Some are asking over double their last purchase price from 5 years ago while having done either little improvement, none at all or in some cases making it worse than the last sold photos.

It makes me extremely wary and out of the affordability boundary of buying a house that in my opinion should be worth about 250k based on watching the market for over 12 months and now it’s up for 425k!
The 425k house has sold within 3 days!!!
Mental. Properties on rightmove are going hand over fist for anything decent. Price doesn’t seem to matter.
It seems to me like the days of the mid 2000s
Three houses in my village that have been in my opinion, very overpriced for the last year, have sold. Will be very interested to see what they actually went for when the info filters through.

number2

1,130 posts

144 months

Wednesday 12th August
quotequote all
1974nc said:
1974nc said:
I’ve been watching house prices intently as me and my partner are considering moving in together.
Prices had been stagnant for some time in South Yorkshire however I’ve noticed some London type pricing emerging which prompts me to check back in the last sold register.

Some are asking over double their last purchase price from 5 years ago while having done either little improvement, none at all or in some cases making it worse than the last sold photos.

It makes me extremely wary and out of the affordability boundary of buying a house that in my opinion should be worth about 250k based on watching the market for over 12 months and now it’s up for 425k!
The 425k house has sold within 3 days!!!
Mental. Properties on rightmove are going hand over fist for anything decent. Price doesn’t seem to matter.
It seems to me like the days of the mid 2000s
There's quite a gap between your estimate of £250k and the actual market value (well, it did sell...) of £450k - the market really has just moved on beyond your expectations. Be interested to see a link if you don't mind sharing, just as I'm curious!

1974nc

1,342 posts

119 months

Wednesday 12th August
quotequote all
number2 said:
There's quite a gap between your estimate of £250k and the actual market value (well, it did sell...) of £450k - the market really has just moved on beyond your expectations. Be interested to see a link if you don't mind sharing, just as I'm curious!
https://www.rightmove.co.uk/property-for-sale/property-83139964.html

Apologies it took 5 days to sell

Beat in mind if you’re from down south it’ll seem poverty prices but for round here it’s bloody expensive


Welshbeef

41,265 posts

155 months

Wednesday 12th August
quotequote all

number2

1,130 posts

144 months

Wednesday 12th August
quotequote all
1974nc said:
number2 said:
There's quite a gap between your estimate of £250k and the actual market value (well, it did sell...) of £450k - the market really has just moved on beyond your expectations. Be interested to see a link if you don't mind sharing, just as I'm curious!
https://www.rightmove.co.uk/property-for-sale/property-83139964.html

Apologies it took 5 days to sell

Beat in mind if you’re from down south it’ll seem poverty prices but for round here it’s bloody expensive
Sure, I'm not comparing prices across regions.

Like you say, certainly a hike from 200k in 2014 to asking of 425k in 2020. Complete refurb fair enough, but still.

A cursory glance show that a few properties in the area have had similar growth (to current asking). Any idea where the people are coming in from spending that money? Asking because as you say, there's been quite a hike in prices.