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House Price Crash Forum


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About WatchingFromTheHills

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  1. I wonder if there's a new dynamic at play in the current housing market. In the various areas I keep an eye on, I see properties come on at eye-watering prices - significantly above previous peaks - and launched with great fanfare by agents and vendors. Then they stick on the market for a few weeks before they're reduced in price a few times, at which point they go under offer. A good few then come back onto the market, almost certainly because the buyer hasn't been able to secure a mortgage (of which more later ... ) I suspect what's happening is that vendors are still in the mind-set of sky-high and rising prices. Deep down, they know they're unlikely to get that price, but you never know, and in any case, it's better to start high and come down than start low and hope people will bid the price up. On the other hand, some properties start low and go under offer very quickly. They also seem to stay under offer, which suggests lenders are happy with the prices being paid. I suspect this is the way the market may work in the future. There'll be a tacit understanding that properties go on the market high, but end up low. Everyone will know it happens, and only those who need to sell quickly, or who can't be bothered with the aggro of keeping a house on the market for months on end will sell at a sensible price in the first place. The point is, everything ends up in much the same place, it's just that the journey there takes a different route. I think the point about "perfect" houses is also relevant. The gap in price between an unextended house in poor condition and an extended house in good condition is currently much more than the cost of getting from the first to the second. It's just that people don't want the aggro of doing the work themselves. On the issue of mortgage offers falling through, I was talking to an estate agent a couple of weeks ago who I regard as relatively sensible and realistic (in fact, very sensible and realistic). This is in suburban London, but I think what he says counts elsewhere too. First of all, he thinks estate agency as we know it now has about five years to run before it's overtaken by technology and big players who use economies of scale to do the job for a fraction of what's normal now. He also subscribes to the view that agents have increasingly exaggerated the value of properties to get business. They convince a vendor their house is worth much more than other agents are suggesting. They get the business. Then they start discounting. They don't care if they lose a few hundred pounds in commission. It's all about volume for them. For a while, their job was made easier because buyers were paying those crazy prices. Fear of missing out, greed at the prospect of making more money and access to easy credit fuelled the boom. What's changed, he says, is people's ability to borrow very large amounts of money from enthusiastic lenders. Eighteen months ago, buyers were coming to him wanting to upsize from a two bedroom flat to a four bedroom house. They might have sold their flat for £350k. They might even have paid off the mortgage on the flat and have nothing left against it. But they were still buying £1m houses, and therefore looking at mortgages of at least £700k, including stamp duty and expenses. These were people on very decent salaries - often £100k as a joint income. But they were still borrowing up to seven times their annual income. Lenders were OK with that kind of advance, but MMR seems to have put an end to that. People are still coming in, still wanting to upsize, still offering £1m plus for houses, but coming unstuck when they apply for mortgages. As I say, I think there are two processes taking place in the market today. One is for public consumption, which still clings to the idea of house prices perpetually rising and everything being worth whatever any vendor wants to ask for it. The other is what really happens, a market where property is sold for relatively realistic prices (still mad, of course, but not quite as mad as it was a while ago), and sold quickly.
  2. Agreed. I know the area well and it's bang on an A-road. The traffic doesn't move particularly quickly, but there's a lot of it, including buses and HGVs going to the industrial estate down the road. Prepared to be proved wrong, but can't quite see who's going to pay £750k for something like that, in a location like that. For another £50k you could get somewhere in the same area, similar in size, in a much quieter location.
  3. Not sure if anyone else has noticed this - or if it's a well-known phenomenon and I've just missed it - but there seem to be a lot of "instant" sold listings going up on Rightmove. I see quite a few properties coming up on my alerts as "new", but when I look at them, they're Under Offer or SSTC. I suspect this is a marketing tool by agents trying to big up what they can do for potential vendors - "Look! We sold this house without even trying! Come join us!" However, what I also notice is that these properties are often relatively reasonably priced - even if they're still very expensive and a bit mad. At least one I've seen in SW London is around £250k "cheaper" than a comparable property still on the market. Is this a process of correction on the part of the agents? Are they using these posting to nudge existing and potential vendors into being more realistic about asking prices? "Look! This house sold instantly. Yours has been on the market for months. Can you spot the difference?" Generally, agents just want to sell houses. If they don't, they don't get paid. A £250k drop is significant for a vendor, but much less so for an agent who takes a fraction of that in commission and would rather get paid something, whatever it is, than nothing. I think there's definitely a sense of entitlement from vendors out there. It said in the newspaper that prices were going up. Where's my million quid?
  4. To be clear, 60% falls would be fine with me. Just passing on some information and observations, not endorsing them ...
  5. The whole thing is somewhat baffling. Some indexes are up. Some are down. Some are up a lot. Some are down a lot. I suspect the only way to find out what the market is doing is to actually test it. If it helps, I spoke to an agent in SW a few days ago about a house he was marketing. Unusually for an agent, he's pretty straightforward and tends not to make things up to suit whoever he's talking to. For that reason, I listen to what he says. He's adamant that there's a sense of realism creeping into the market now. We'd like to buy back in London in the next twelve months, and his advice is not to panic, decide what you're prepared to pay for a house, put in a bid and see where you get to. To a certain extent, sellers are still in denial over prices, he thinks. No-one really thinks they're going to get top money any more, but they're unwilling to give up on the idea just yet - hence some eye-watering APs. What tends to happen is that they then accept £40k, £50k, £60k less and are relatively happy. Good stock, reasonably priced, sells quite quickly. Not so good stock, and kite-flyers stick. Maybe there's a slow letting-out of air going on, with people quietly doing deals which are relatively sensible in the context of last year's madness, but obviously still very expensive in the wider, longer scheme of things. Maybe there is a crash going on, but soundlessly and without anyone really wanting to call it that. That might not be a bad thing. I suspect that if prices started spiralling rapidly downwards, the clamour for intervention would grow and someone might feel obliged to use even more public money do something about it. And no-one wants that.
  6. Is the discrepancy because it's a 22% drop from last year's peak, rather than an monthly, quarterly or annual measurement?
  7. Horrible. Wonder if it's true. Or EAs doing what comes naturally? Buy now to avoid disappointment.
  8. Today's Halifax figures are confusing. I think all house price indexes are flawed in some way. To be fair, that's usually flagged up by whoever's producing them, but the cumulative effect is that it's very, very difficult to form an opinion on what's actually happening. That confusion seems to be reflected on the ground. I posted something last week about an agent in SW London not letting me see a property because I wasn't a cash buyer - or at least "unencumbered", as he put it. According to him, the market was roaring away and the vendors didn't want to waste their time with anyone who couldn't move quickly. Lo and behold, he phoned me back this week to ask if I was still looking. The house I was interested in is under offer - he says - although it doesn't say that on his website. And I suspect he was also trying to flog me a mortgage. He couldn't make my postcode work in his "system" (bit of paper he'd found on the floor) so hopefully I won't get pestered by "consultants". It's all a bit tiring. And baffling. A lot has come onto the market in the areas we're interested in - all of it at mad, bubble prices. So maybe that's the newly rising market we've heard about in the last few weeks. But there are lots of properties that came on last winter, autumn or even summer and haven't shifted. They're taking a long time to be reduced in price, but they're beginning to be - some significantly, although that's from mad, kite-flying levels. So I wonder if the poor quality of price index research, the fact that a very few sales can skew figures dramatically, and an HPI-friendly, HPC-denying state of mind is what's going on right now.
  9. London not crashing. London going great guns according to the EA who won't let me view a house there because I haven't sold mine. I asked what would happen if no-one let anyone see any houses unless they'd already sold theirs, but it didn't make any difference. I'm still not allowed to look.
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