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I moved to an area for a job and all was going swimmingly until some management changes, and now it's quite a harsh environment.
In the meantime I thought I'd buy a house here as it's near to a hospital and university.
Now I notice houses here have dropped about 15k after the rapid rise in the new year. My house went up 20k in a year.
I am only at the offer stage and getting hassled by the estate agents to finalise. I am at a dilemma wether to pull out or ask for quite a reduction to match others houses in the area.
If prices had risen would you offer to pay more? Buy a house cos you need somewhere to live.
Why not. You can always ask if you think the house isn't worth it. The vendors can either say yes or put the house back on the market. Nowt wrong with asking asap, or you could be a complete **** and ask on the day of exchange...
Where in the country are you? Housing markets differ nationally. There's sure to be someone on here with local knowledge.
If prices had risen would you offer to pay more?
Probably not, but someone might, or the vendor may ask for more...
Just tell them the mortgage valuation is down and the price won't work. Why would you pay 20k too much? It just means your more trapped selling than other people locally.
If prices had risen would you offer to pay more?
No, you'd get gazumped
House prices are on the fall, wait 18mths longer and they'll be 20% less.
I'll bet you £10 they won't
How do you know they have dropped in price?
I'll bet you a three bedroom semi that prices don't fall 🙂
Mines has dropped by about 25% theoretically
Realistically it's not 25% less house and still lost less than I would have paid in rent
Unless someone has built a nuclear power plant next door or it's actually on fire I doubt it's dropped 25%.
I doubt it's dropped 25%.
That would depend how over inflated it was before really.
e and still lost less than I would have paid in rent
Expect the parameters for that calculation to change going forward.
Which is why I said theoretically 😉
There are a lot of indicators that things might be peaking, a credit crunch can't be too far away...
BOE is getting concerned we're overreaching...
A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards.Second mortgages are widely seen as a signal of consumers taking on risky levels of debt that leave them vulnerable to a downturn in the economy.
It was the same before the last banking crash. Tens of thousands of households, many of them struggling to pay monthly mortgage payments, used second mortgages to bypass borrowing limits set by their mortgage lender.
The latest industry figures show the number of people opting to saddle themselves with a second mortgage leapt 22% in March to its highest level since 2008.
Been coming for a while, you're just too blind to see it ^^^
Give it 18mths, then decide.
I'll bet you £10 they won't
I'll take some of that bet too @bikebouy. My sister has offered on 4 houses in Hampshire (Salisbury/Winchester/Southampton area) and 3 of them have sold above the asking price. She is a cash buyer.
OP if you think you can get away with a lower offer price and won't lose the purchase then why not ? The most powerful evidence will be showing other similar properties for less.
I'll take some of that bet too @bikebouy. My sister has offered on 4 houses in Hampshire (Salisbury/Winchester/Southampton area) and 3 of them have sold above the asking price. She is a cash buyer.
That all depends how many buyers are out there though doesn't it. Can the housing market survive a small recession?
What happens to the ~3 million EU nationals living in the UK after Brexit - that's the house price gamble because they're all living in property.
That all depends how many buyers are out there though doesn't it. Can the housing market survive a small recession?
Round here the Pro's seem confident at least, there's four huge new estates going up within a stones throw! My only worry would be liquidity but with no plans to move in such a short term that's not a problem for us anyway.
yiman - Member
What happens to the ~3 million EU nationals living in the UK after Brexit - that's the house price gamble because they're all living in property.
Despite May's bluster they're going nowhere aren't they? Well unless Brexit Britain starts to look a bit 3rd world and we all move to Poland for jobs.
Despite May's bluster they're going nowhere aren't they?
Increased employment costs and taxes?
Round here the Pro's seem confident at least, there's four huge new estates going up within a stones throw!
That would be supply and demand, it doesn't address a lack of cash in the market.
It's not the nailed on certainty it was, the people saying that the most seem to have the most to loose from it 😉
That would be supply and demand, it doesn't address a lack of cash in the market.
It's not the nailed on certainty it was, the people saying that the most seem to have the most to loose from it
True, but given the shear scale of housebuilding locally from so may different developers, on top of a lot of commercial/office space being converted into housing, that's a lot of companies, all likely with their own economists checking the figures, it's a lot of people that would have to be getting it wrong.
And stuff is still selling as soon as it goes on the market.
To counter the "over offer bids" comments..
3 houses in Harrogate, all in the £320k bracket.. not sold after 7mths and offers now £280k.
You pay your money and you take [i]your[/i] choice.
I'm just pointing out the obvious, but feel free to ignore industry warnings.
Ta, ta.
How do you know they have dropped in price?
It's not a secret:
That would be supply and demand, it doesn't address a lack of cash in the market.
It's not the nailed on certainty it was, the people saying that the most seem to have the most to loose from it
Here on Surrey/Hants/Sussex borders there is a dearth of properties coming to the market. Those that do are optimistically priced and stay unsold. There is an increase in ex BTL stuff being sold by disillusioned "landlords" even before the new legislation starts to bite. When it does, and [i]if[/i] there's a rise in the interest rate, that trickle will become a stampede. Until then, buyers seem to be sitting pat.
My sister has offered on 4 houses in Hampshire (Salisbury/Winchester/Southampton area) and 3 of them have sold above the asking price. She is a cash buyer.
Did she get the asking price for the barns in Devon?
True, but given the shear scale of housebuilding locally from so may different developers, on top of a lot of commercial/office space being converted into housing, that's a lot of companies, all likely with their own economists checking the figures, it's a lot of people that would have to be getting it wrong.
You can look at all the empty new builds in Ireland that were built in the "wrong" place to see how good the builders economists are...
You can look at all the empty new builds in Ireland that were built in the "wrong" place to see how good the builders economists are...
Or you could look at the places that have sold every house before the builders have even put the cabins on site to start groundwork.
How do you know they have dropped in price?
Plus, as I know where TR actually lives, I know that the market has been impacted by the loss in O&G jobs (which was driving up the cost for housing locally beyond 'normal' people's means). For a while it seemed everybody was after a house that cost north of £0.5mil... which certainly isn't sustainable in a non O&G driven market.
Hasn't stopped builders pushing ahead with 3-5 bed house developments when they're having difficulty disposing of existing sites... They're having to give sweeteners & incentives to make them more attractive than 'old' houses which in turn drives down the old house values. I've a mate that has given up trying to sell his house after 20 months for this exact reason... Whether it's 25% I don't know, but it's certainly on the downward trajectory in the NE of Scotland at present.
You can look at all the empty new builds in Ireland that were built in the "wrong" place to see how good the builders economists are...Or you could look at the places that have sold every house before the builders have even put the cabins on site to start groundwork.
Agreed, both are examples of poor forecasting.
You can look at all the empty new builds in Ireland that were built in the "wrong" place to see how good the builders economists are...
I'll make a poor argument (whataboutism) and point out that in every houseprice discussion since about '95 there's someone saying "give it 6/12/18 months and we'll all be taking our wages home in wheelbarrows and 3 beds in Surrey will be cheaper than a Gregs pasty".
Even the financial crisis didn't have that much of an impact on prices. Within a couple of years it was business as usual again and any losses reversed.
3 houses in Harrogate, all in the £320k bracket.. not sold after 7mths and offers now £280k.
Which means nothing. Speculative prices don't get a buyer; this isn't an indication of anything. What did they last sell for? If they are new build then the developer has badly misunderstood the market. What are the facts behind this assertion?
As TINAS points out, the worst financial crisis in the last 80 years did virtually nothing to house prices. An actual drop of 25% just won't happen.
I've got my tenner on it; come on BB, take my money you financial wiz you.
As TINAS points out, the worst financial crisis in the last 80 years did virtually nothing to house prices. An actual drop of 25% just won't happen.
But you're not comparing like with like.
UK house prices have gone up like a rocket (in London and SE for several reasons which weren't present in 2008)
1. Tidal wave of speculative money coming from foreign investors (much of it criminal money being laundered)
2. Massive stimulus from BoE (super low base rate + billons upon billions of QE + Funding For Lending Scheme
3. Help To Buy - government using taxpayers money to subsidise the housing market
4. Hyperinflation in London (10%+ YOY since 2013
5. In 2008, London was still affordable to people on average and good salaries, now its not. In SE26 you could get a 2-bed flat for £250-£300K and now they're £400k+ - yet real wages are lower than 2007
6. Affordability is way off long term norms (6x salary). London is now c12x, Oxford and Cambridge are c14x so potential for 50% drops which didn't exist in 2008 as prices weren't so far from wages.
7. Big push into BTL since 2008 - which is now reversing following government intervention
8. London and SE, massive amounts of building. Unprecedented in my experience, having lived there since 2000.
9. In London at least they're building flats for speculative punts, not flats which match the wages and needs of the local workers (even the wealthy ones). Battersea currently not selling... because the demand is simply not there to match the scale at which they're building. 10 years' supply of flats over £1m coming on to the market over the next few years... not smart...
10. Bubbles also in USA (San Fran + NYC), Canada, Australia, New Zealand - not present in 2008. Once sentiment starts to fall these bubbles which infect each other.
11. High rents and mortgage payments for new buyers and massive deposits needed are strangling the real economy of badly needed consumer spending power (FTBs saving or spanking money in rent and not spending the money more widely across the economy) - again a factor not present in 2008 to the same extremes or extent. UK GDP is 70% consumer spending so go figure whether government need to change this or sustain it?
12. BoE now warning on debt levels - both mortgage and loans/credit cards. This time, however, banks are better capitalised and stress tested for a 35% fall in prices so BoE more confident house prices can be deflated without causing the same amount of damage to the broader economy.
13. Speculative on my part but Tories are now losing influence as homeowning voters tend to vote Tory - home ownership now in decline so they will want to change this. The Social Care change looks like it may well be designed to get the oldies to downsize en masse and pass the cash on to their kids now to save the whole lot going on their social care... That'll release a shed load of family homes onto the market... big jump in supply
It's simply not the same situation in any way at all... far worse now in many ways.
The idea that because prices of an asset have recently seen inflation means they'll rise for ever is a well-known financial psychological error and is what sits behind every market bust since ever... overconfidence in prices remaining high is what causes the bust as it leads to excessive speculation and overpaying out of line with fundamentals.
We bought our first house in 1981 for £16,000. sold it in 1987 for £64,000. The buyers sold it four years later for £42,000. Today it's north of £250,000. If you're speculating on property it's best to think long term, or get your timing right 😀
brooess - I'm trying to draw BB into putting his case forward, but he's just nodding sagely and saying " You'll see...
Any property value requires specifics. Are we talking average price? Or the price of a 3 bed semi in Croydon? A drop in value needs a start point for reference, there's no sign of that. So it's all hyperbole.
That long shopping list of ills is mainly irrelevent. Nearly all the domestic references are for London - the most overheated and top heavy property market ever.
It does need a reset; folk are doind daft things out of desperation. Not realising their desperation is fuelling the problem.
Nearly all the domestic references are for London
But the effects fan out for anwhere within a 2 hour train journey, which covers a large chunk of the South East....
@brooes, London house prices were not affordable in 2008 either, and the global housing bubble was already well developed by then.
The roots of this particular crisis go back to 2000 and the dot-com crash. The FED and B of E panicked and dropped rates; governments were happy with this as house price inflation gets them re-elected.
Of course, re-inflation of the bubble by the B of E since then has been on a massive scale.
1. Tidal wave of speculative money coming from foreign investors (much of it criminal money being laundered)
Firstly, it's not speculative. Prices are continuing to rise in London and other major cities. Therefore property is a fairly reliable long term investment.
Secondly, whilst I understand your point, the idea that 'much of this investment' is criminal money is quite ludicrous.
Have you totted up how much of someone elses mortgage you have paid in the last 5.5 years waiting for prices to come down in that there London.
Secondly, whilst I understand your point, the idea that 'much of this investment' is criminal money is quite ludicrous.
Smarter and better-informed people than you or me support this view. Do you really think £170bn is a fair fight to people earning an average of £28k a year? (UK median income)... Ask yourself just why a foreign resident would buy property in a country they don't actually live in if it's not for speculation or laundering?
More than £170bn of UK property is now held overseas. Much of that is in London, where unprecedented house price inflation has transformed homes into highly profitable investments for asset speculators. Nearly one in 10 of the 31,000 tax haven companies that own British property are linked to Mossack Fonseca.
[url= https://www.theguardian.com/news/2016/apr/05/panama-papers-world-leaders-tycoons-secret-property-empires ]Panama Papers[/url]
“We think it very likely that the influx of corrupt money into the housing market has pushed up prices,” said Rachel Davies, senior advocacy manager at Transparency International. Donald Toon, head of the National Crime Agency, has gone further, saying last year that “the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK”.Since 2004 £180m of UK property has been subject to criminal investigation as suspected proceeds of corruption, according to Transparency International data from 2015. Yet this probably represented “only a small proportion of the total”, added the campaign group.
[url= https://www.ft.com/content/f454e3ec-fc02-11e5-b5f5-070dca6d0a0d ]FT.com[/url]
Either way, I know it's no use explaining to people 'winning' from this crisis that it's a) wrecking the economy b) a bad thing for those of us excluded from buying so there's probably no point even putting up this kind of evidence. Those that are quite happy with the current situation will just argue against it... happens on these threads every time...
Slightly different perspective on this, I own a couple of small flats that I rent out. For the past five years I have had no problems at all; when someone vacates I generally have a tenant by word of mouth without even advertising, mostly the tenants have been Polish or,on a couple of occasions Italian.
One them has now sat empty for six weeks, its not overpriced and its in good condition. Fortunately for me they were both inherited so no mortgages to worry about.
Ultimately I will need to drop the price to get it earning money again.
But it seems to indicate to me the EU workers are beginning to drift away from the UK.
Last time there was a serious house price revision was in 88 when it went tits up until around 93 when it started to regain previous levels (SE)
I think stamp duty has had a big impact on the £1.5m plus houses already, so can't see any real drop in the coming years. Everything sub £1m is very buoyant.
Either way, I know it's no use explaining to people 'winning' from this crisis that it's a) wrecking the economy b) a bad thing for those of us excluded from buying so there's probably no point even putting up this kind of evidence.
Not like you can do much about it anyway, even if you are 'winning' from it. Until we start a massive social house building program, nothing will change. We would need a Labour government for a start.
The idea that because prices of an asset have recently seen inflation means they'll rise for ever is a well-known financial psychological error and is what sits behind every market bust since ever
Or it's just regression to a mean.
London's had a few 'good' years, so maybe it's due a few poor years, that doesn't make it a full blown crash.
If London does have a significant correction it'll knock some people on the backs. Quite a number of my colleagues have substantial mortgages - many over £500k, and including the gang of +/-30ish year olds who've bought flats at £400-500k. They'll be heavily bruised by even a relatively small fall, and even worse hit when interest rates finally start increasing.
trail_rat - Member
Mines has dropped by about 25% theoreticallyRealistically it's not 25% less house and still lost less than I would have paid in rent
How much have you paid in interest or lost out on a potential return from investing in the stock market?
If London does have a significant correction it'll knock some people on the backs. Quite a number of my colleagues have substantial mortgages - many over £500k, and including the gang of +/-30ish year olds who've bought flats at £400-500k. They'll be heavily bruised by even a relatively small fall, and even worse hit when interest rates finally start increasing.
Why will their house prices falling 'knock them on their back'?
Yes, I agree interest rates might affect them (unless fixed over a certain time) but house price drops don't make a h'penny of difference to mortgage costs, etc. - unless they we're thinking of buying for a short time then selling up for a cheeky 'profit' then I could see maybe (though various costs/stamp duties would eat significantly into that anyway).
Why will their house prices falling 'knock them on their back'?Yes, I agree interest rates might affect them (unless fixed over a certain time) but house price drops don't make a h'penny of difference to mortgage costs, etc. - unless they we're thinking of buying for a short time then selling up for a cheeky 'profit' then I could see maybe (though various costs/stamp duties would eat significantly into that anyway).
Buy a flat at 80% LTV, wait a few years, price drops by 25%, you now have no equity so the bank won't lend you money. The mortgage then expires and you jump from the 2% rate you did have onto the standard variable which is 5%, doubling your mortgage repayments, so you decide to cut your losses and sell up, only to find that everyone else in the block is in the same position. Liquidity issues then kick in on top of structural price falls and you have a crash.
Can I live in a stock portfolio ?
Does it give me security of not having rent increases or my land lord deciding to sell up or taking exception To my car or having to put up with his godawful wallpaper....
Better paying my own interest than the landlords surely ?
If London does have a significant correction it'll knock some people on the backs. Quite a number of my colleagues have substantial mortgages - many over £500k, and including the gang of +/-30ish year olds who've bought flats at £400-500k. They'll be heavily bruised by even a relatively small fall, and even worse hit when interest rates finally start increasing.
These sorts of statements pretty much sum up the problem with the UK housing economy, this isn't a go at you AP.
In the UK we expect, nay demand that house prices only go up, and we cheer when they go up far beyond the rate of inflation or average wages - what do we all 'win' from this? Well the era of the Single working parent supporting their family is largely over, we all live in smaller, less nice places than our parents did, unless we managed to massively out-do them in the 'getting a job' stakes.
We've reached a point now where the numbers of 'have nots' are catching up with the number of haves, so there’s talk of new housing being built on a grand scale, and not just pokey flats for the 'haves' to buy to rent out to the 'have nots' and heaven forbid, before Brexit ****ed it all up, interest rate increased which might have, shock and horror, slowed the market, or even worse - the unthinkable, let prices fall, a tiny bit...
Well, we can't have that, Mr. London Flat Owner who bought his place for £400k might find it's only worth £390k in 3 years time, maybe he won't be able to get a 0.5% over base mortgage when it's time to renew... well we can't have that can we, it's only his right to 'make' twice his salary in asset appreciation every year. Unthinkable.
On the other hand, generation rent faces a 15% year on year rent increase on top of 3% inflation coupled with a 1% pay rise, if they're lucky - but that's only fair because they're lazy or stupid and didn't jump on the 100% guaranteed, no lose, easy money road to riches UK house market.
Only there's no more cards to play is there? Interest rates are a close to 0% as they can get, 'help to buy' is gone, The Banks, by law, and good business cannot lend more than 95% of value - and most importantly - Lloyds is all but private again, and massive fines and PPI (which is ending) aside RBS is profitable again, so we don't need to prop up the market any more, the correction has already started, don't believe the Nationwide, they couldn't lay straight in bed when it comes to house prices and frankly "asking price" based indicators might as well be plucked from thin air for what they're worth - 2% increase in values based on 'asking price' don't make me laugh - in 2006 people were selling at 110% of asking price simply because of the number of offers, nowadays the only things selling quickly are probate sales when the seller will take 90% for the sake of being free of it - and 2% increase is credible? Yeah, course it is.
Yes, finally, the haves might have to lose some imgainary money they never earned or had in the first place and they won't be happy, especially the sort of ones who acutally care about it, and yes some real people who have real houses and mortages are going to lose for real - there will be a small number of people who will be 'stuck' in negative equity, they'll have to take whatever their mortgage company gives them and most shocking of all, just perhaps live in their home for a few years. A tiny number of people who borrowed too much, will, faced with increased payments thay cannot pay - will lose their homes, which is sad and maybe, just maybe for the first time in decades, the young and the have-nots, might just win, a tiny bit.
Buy a flat at 80% LTV, wait a few years, price drops by 25%, you now have no equity so the bank won't lend you money.
But in those 5(ish) years of your 2% interest rate, you've made repayments on your mortgage and the balance is now £335K.
You now need LTV of 83.8%, which isn't ideal, but you're not in negative equity.
Can I live in a stock portfolio ?Does it give me security of not having rent increases or my land lord deciding to sell up or taking exception To my car or having to put up with his godawful wallpaper....
Better paying my own interest than the landlords surely ?
My point is people don't appreciate the costs of owning, if rent is equal to interest paid (and lost on capital tied up in the property) then there is a zero gain assuming prices don't change. If they go up, as is assumed, then there's a nice profit - not least as most borrow so are heavily geared. But the flip-side to this is it's easy to be wiped out as some BTLers found out following the banking crisis.
Just for the record - I bought in 1996 which was at the bottom of the market following the late 80s/early 90s slump, borrowing heavily as was sure prices would rise, carried on with a move to London and rode that wave pretty well though got of too early 10 years ago, from an financial PoV, as moved out to a nice Surrey village which hasn't done nearly as well since.
Totally see your point
But there are other reasons besides financial why one would want to buy over rent. And there are reasons other than financial why one would want to rent rather than buy.
For me it was about stability. Had enough of moving every year when land lord decided to sell house or wanted to hike 10-15% onto the price.
A very , very hefty overseas buyers tax would help.
When my brother bought his first house back in the 80s as our parents were both Tandridge Council rates payers they got a sizeable discount on the purchase price.
It was a new build.
+1 on pjays comments re asking prices, i know of two local houses on at £775k and £675k when local actual selling prices of similar builds are £450k - seemingly the owners think that one extra bedroom or a log cabin in the garden are worth the extra £225k to £325k 😯
Me I'd be happy with 50% downturn in the market but unlike other "investments" people need their houses to live in so unless interest rates are hiked up massively and selling up is forced people will just sit tight and ride the on paper loss rather than actually sell at a loss.