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House Price Crash Forum


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About edinburgh-fred

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  1. Yes, "worth" in the sense of will actually be sold! But unfortunately many sellers define "worth" as what they believe someone might someday pay for it based on the HR valuation. At least they do this temporarily (which can be for years!). And it's the difference between these two attitudes that I think is the problem being pointed out in this thread. HR valuations are part of the market economy. They can significantly influence the price discovery process by helping the seller believe that a better price is round the corner. This is a real practical issue because we are talking about homes (the place where we live, not just some commodity). Although I'd agree that market forces will out eventually, this can take years, and a tendency to "high" HR valuations (or perhaps a lack of clear articulation to sellers about what they really represent) might be slowing the process down even further. EF
  2. I see your point Catmandu. Given what we already know about most seller's attitudes then, I agree, the apparent value-at-max-achievable-price policy is extremely unhelpful. If you really are focused on one particular property, have you tried gathering some evidence of what other similar properties have gone for compared to HR valuations (from what I've seen most seem to go for some 10% below valuation, even recent valuations, but of course this will vary by property type) and sharing it with the sellers? I share your frustration though. I looked at a place last year that I felt was perfect for me but overpriced (and based on HR valuation). The estate agent told me they'd turned down an offer very close to the asking price so the owner would definitely only accept the asking price or more. I walked away frustrated but forcing myself to think "there'll be others". A year later, it's back on the market at circa 8% less... which is still too much in my view, especially because I think the market's moved down in the meantime! So good news: market realities assert themselves eventually. Bad news: it can take years!! EF
  3. I agree with the reservations regarding HR valuations. I notice that many HR valuations make reference to a value in 'current market conditions' and some just to a 'valuation' - I'm not sure whether this is significant. The lack of transparency about valuation 'semantics' has always bothered me - how much do they take into account 'current market conditions' and in what way, do they take account of seasonality, etc. Without making any accusations, the opaque valuation model and close relationships with estate agents does seem to make for a system vulnerable to all sorts of manipulation. I've suggested in a previous post that providing both a current and an additional historic valuation (eg, we think this property would have fetched £XX in 2008) would eliminate some of the "reading of the market" variables and also help in comparing to other properties sold in the past. But nobody else seemed to like this idea! In practice, I can see no alternative to just knowing the market well yourself - watching similar properties to see asked for and realised prices. And your solicitor should have access to good historical records - they can tell you the number of bedrooms etc of properties that have been sold in the past, so even if you haven't personally had the opportunity to watch the market for a while you should be able to get useful data points from a good solicitor. EF
  4. Your wait will depend of course on how much you're trying to sell for. I'd be interested to know what others think... but looks to me like those willing to accept 2006'ish prices are moving, those looking for 07/08 prices are not. Unless you are selling something quite unique I'd suspect it will be the same for you. I would ask your lawyer/estate agent what they think your propery might have fetches in 06/07/08 and compare to your expecations. EF
  5. One more thing... any surveyors out there reading these forums? Would be interested to hear from one. Is there some benefit to a survey report we're failing to understand? EF
  6. Your list looks good to me. Perhaps might be helpful to find a good general builder and have them in first so they could alert you to anything else you need to pay particular attention to. I suppose one difference, in theory at least, with a surveyor is that they have some kind of professional duty to find stuff and you may have some recourse against them if they miss something obvious. So there's an element of insurance about a survey. As a say... in theory! But for a basic survey, reports seem so vague I find it hard to imagine they would find something that a decent tradesman would fail to spot and point out. So, I guess the important thing would be to find tradesmen who you really trust to have a decent look even though they don't carry the same risk as a surveyor if they miss stuff. EF
  7. Quite interested in your scheme ccc... would you mind sharing which experts you'd have in mind for your 'survey' ? I'm constantly underwhelmed by the lack of detail and disclaimers in standard home report surveys... they're so vague and caveated that they seem almost information free. Also interested in the discussion on offers 'subject to survey'. This always seemed to be quite acceptable to sellers a few years back, even in a closing date situation. Does anyone have strong information that sellers no longer accept this? EF
  8. Not getting why a stamp duty threshhold would maintain prices up at 250k...what's to stop them dropping lower once they get there? Can see how it might tend to keep prices down towards 250k though. EF
  9. Yes ccc... ...but to (mis-)quote an old agage... "the market can remain irrational longer than you can remain solvent". I think we all largely agree on the end point - prices have to fall. My difficutly is that if they don't fall fast enough then the case for renting becomes uneconomic (the details depend on the sort of place you rent and the sort of place you buy, but you get the point). Can anyone give us reason to believe the correction we think is inevitable will happen within the next (say) 2 years, rather than taking 5 years??
  10. Well, I hope the original poster is right and we are in a crash, albeit a slow one. The comparison with the US is interesting because, IIRC, our market was at least as overpriced (based on 'averages' for whatever that's worth). But an important difference is that in the US I think it's normal practice to take out a long-term fixed-rate mortgage so the government does not have the same option of reducing everyone's mortgage payments. Hence more forced sales. Also, I believe it is easier to walk away from a mortgage in the US than in the UK. So my concern is that in the UK prices can be held 'articifically' high through interest rate policy and an agreement amongst banks+government to avoid an uncontrolled crash by exhibiting greater forbearance. Polictically expedient for the government and financially important for banks with large mortgage books that they can't afford to have collapse completely.... for the time being at least. That said, I think we are in a slow period of decline. Trouble is, it's so slow that the economics of renting may not add up - if you have to rent for 5 years you may well have spent the reduction in house price you get at the end of it And you've had the inconvenience of renting to boot! Can someone give me reasons to be more optimistic!!?
  11. And I'm not convinced that the demand side is what is sustaining the market - seems clear that demand is already down, even in the mid- and upper-tiers of market. But I do agree, it's hard to see demand increasing anytime soon. The problem I see is supply - the number of people actually willing to sell at below HR valuation (or even below 2007 peak valuations). This seems to be small because of the "stickiness" I described above. I guess most sellers in mid- and upper-tiers of market are not forced sellers (at least in the immediate term). Only the passage of time and/or a big turn in sentiment will change their minds. I guess one driver is that after being on the market for a while a seller would probably need to refresh the HR, presumably receiving a lower valuation, or risk looking very out of date. I don't think there's a legal requirement to do this if you stay on the market however (anyone know different?) Fred
  12. ccc, have followed your various debates with interest and share your contention that the mid- and upper-echelons of the market must eventually feel the effects of the decline in FTB market. However, as someone waiting on the 'renting' sideline in Edinburgh hoping to buy in that mid-tier, my biggest concern is how long this will take. Housing markets are "sticky on the way down" as they say, and I can see plenty of evidence of this. I see various mid-tier properties compromising on price - generally going for around 10% below 2011 HR values - but for each one of these I also see plenty sticking to their 'valuation' guns. How long can they wait?? Already longer than I hoped, but can they keep going? Personally, I'm hoping for a turn in sentiment. That once people start to believe that the only way is down in the forseeable future, they will stop holding out for a better price next year and decide to cut their losses now before they lose even more. I sense the beginnings of this sentiment in the press, but not yet on the street. What do others think about the timing of mid-tier declines? (to be more specific I'm thinking about 3-bed properties between 250-500k). What evidence do you see of declines today? Fred
  13. I'm sure you've been asked before but... any reason why we don't get data on sales volumes? F
  14. What's the story with ESPC not providing volumes? Seem to remember that they used to provide this info. Clearly the headline figure for Edinburgh - down 3.6% annually - is hugely influenced by the mix of properties sold. And I would strongly suspect that that mix has shifted upwards (ie, expensive properties now form a larger proportion of all sales) in the last few years. Not so sure it would have shifted since 2010 though? So without knowing the mix we don't know if we're comparing like with like, and the headline figure has little information in it. And, of course, even the sectoral numbers (3-bed semi, Bruntsfield/Marchmont, etc) are subject to the varying mix problem within their sector, and in general are much less meaningful if the market is very thinly traded. But still there's no sales volume information for them Or, have I misunderstood the ESPC figures? Is there someting smarter going on that I'm not aware of that makes the numbers more meaningful?
  15. Because an estimate from the past would go some way to eliminating one of the big variables - the surveyor's reading of the current market conditions. But it's not so much that I'd 'trust' it completely - I just think there might be more information in it. Well, I'm assuming that a valuation is more than just an opinion. Or at least it is an opinion formed by following certain rules and guidelines which attempt to bring some objectivity. Of course it's my decision at the end of the day and it's my money - that's understood. But I don't see it as black and white as just trusting a surveyor or not. There is some information in their valuations and I'd like to get the best understanding of that as part of my decision making. Would still like to know if anyone has some insight into surveyor valuation guidelines?
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