Interview With The Estate Agent

[juvenal]

Where are the first time buyers getting the money from?

Answer - they can't. Until they can, there is no stopping this crash.

Some can. Mum or Dad is retiring, and picking up a 25% tax free lump sum. Comfortably off couples often give/lend this one-off lump of dough as deposit to the young 'un. Get them on the ladder.

A £200,000 pension pot, or a long-service final salary pension will produce the sum in question. So will severance deals for the over 55's - increasingly common as firms want to get rid of older, expensive employees. I took one such deal myself.

People retire every single day of the week....

There aren't huge numbers of FTB's with access to this sort of cash, but there are more than you think.

Edited January 23, 2009 by juvenal

[needle]

'Bitch-slapped' aint the word for it... The OP, in fact all of you, need to read these 2 posts

The Accidental Landlord

Housing and "Ghost Inventory"

We are still 12-18 months behind the US; its all coming our way.

[chelston]

This crash like 1929 will sucker people in all the way to the bottom, and the bottom could be much lower than most people believe possible, both in shares and property. The goverment in the U.S and here are making big mistakes, trying to reflate this bubble, with more money which we don't have. It will make the eventual outcome much worst.

[Mr Nice]

Just to add, that surviving EAs will see an increase in business, even at these low levels....cos the remaining business is handled by fewer.

I think this can't be emphasised enough.

with all of the EA's going to the wall, the ones left standing are automatically going to have increased business.

a doubling of sales sounds impressive until you realize there are only half as many EA's.

[Bloo Loo]

Some can. Mum or Dad is retiring, and picking up a 25% tax free lump sum. Comfortably off couples often give/lend this one-off lump of dough as deposit to the young 'un. Get them on the ladder.

A £200,000 pension pot, or a long-service final salary pension will produce the sum in question. So will severance deals for the over 55's - increasingly common as firms want to get rid of older, expensive employees. I took one such deal myself.

People retire every single day of the week....

There aren't huge numbers of FTB's with access to this sort of cash, but there are more than you think.

these FTBs are what? 40 years old???30 years old?

[juvenal]

Think about divorces, remarriage, new families, women having children later .....

Nothing unusual about male retirees having kids from 20 years old upwards.

[Sjaakie]

Yesterday I popped into the E A that I worked for until 2005. Much of the following information is based on actual evidence that I saw yesterday rather than hearsay. For this reason I cannot identify the agent other than to say it operates in the Oxford mid market.

1. Buyers are coming back to the market. These are often cash / investment buyers, with FTBs still in fairly short supply. The reason cited is that cash in the bank is earning little interest and is considered by some as no safer than cash invested in property.

2. The level of sales has picked up dramatically since last year and seems to be around three or four a week. This is an order of magnitude higher than what the RICS has been reporting recently.

3. Supply of new instructions (except flats) is low, and inventories are shrinking. I don't have figures on this, but the above level of sales is not sustainable if the trend continues. That (amazingly) would put an upwards pressure on prices. However:

4. Current sale prices are way down. In the range 20 –25% off peak. While prices seem to be stabilising at this level, these falls are not yet showing up in the indexes, particularly in Oxford so further reported falls can be expected. Some of the fall in prices is visible as asking price reductions, but offers of 15% below already reduced asking prices are being treated seriously, both by EAs and vendors.

Looking beneath the surface, the underlying issue is low interest rates, both because they are driving money out of savings, and because variable rate mortgages are so low there are few people being forced to sell. New mortgages are also relatively affordable now compared to renting. It therefore seems to me that whilst the pressure on prices is still down, low interest rates are lending real support to the market in this area. Of course, if rates go up again for any reason, the market will take another (and very sharp) step downwards.

Please note, all of the above is what I saw yesterday in one office and will, even if replicated across the country, not show up in the figures for a while. If it is replicated, I would expect to see the price indexes continue to show substantial falls over the next quarter, while transaction levels pick up, possibly dramatically. Also, mortgage advance figures may be less important for a while, as a fair amount of the activity seems to be coming from cash buyers.

I am trying to buy in Oxfordshire and just made an offer on a house. There are indeed more people that want to buy now.

Prices are 15 to 20% off-peak. Not that the asking prices are lower, just that sellers now regularly seem to accept a 15% discount. This said, it did not work for us on the house we wanted.... The seller accepted an offer at -11% from the asking price from another buyer.

Edited January 25, 2009 by Sjaakie

[happy_renting]

2. The level of sales has picked up dramatically since last year and seems to be around three or four a week.

4. Current sale prices are way down. In the range 20 –25% off peak.

In a couple of months time you will be able to look at the Land Registry for the statistics and home.co.uk for a breakdown of sales in your locale.

It may allow you to gauge how truthful the EA is (retrospectively), or at least whether what the EA claims is representative of the market as a whole. Sales tend to pick up in the New year anyway.

20-% 25% drop is a lot (so far ), but that may be from asking prices that were overinflated even for the peak price.

[The Masked Tulip]

Don't forget, all those unemployed bw ankers in the City will now be putting their zillion pound houses on the market and no doubt looking at 'cheaper' property in the hope of selling their own property and downsizing.

So, for example, a town like Oxford might now be seeing an increase in people looking at 500K houses but that might simply be people hoping to flog their million pound house.