Vendors Have The Upper Hand

[Smell the Fear]

Observing the current market it seems to be working approximately as follows:

There are probably 10 times as many sellers as buyers, but crucially they are not yielding very much to the market. There is a large demand to buy if they accept offers around 30% below asking price, but most are not interested in selling more than 10% below asking. So we have a considerable number of frustrated buyers and a large number of frustrated sellers. Sales are only taking place when they can agree - more often than not I suspect this is when a buyer cracks and offers within 10% of asking rather than sellers dropping by 20-30%.

There is a definite air of "recovery is coming", "this is the bottom", "good time to buy". A greaser EA actually said the words "don't miss the boat" to me recently, whilst trying to single-handedly whip the market into a 06-07 style frenzy.

Now I'm pretty confident that we have another 30% to come off current prices (to give a roughly 60% drop from peak in nominal terms, maybe 70% real terms). But it will be a fairly long and slow slide to the bottom from here. Personally I'm finding this very frustrating and would love the market to just bite the bullet. Unfortunately convincing people that honestly, really, those heady days are NOT COMING BACK any time soon is rather difficult. Only time will bring them round.

So what to do in the meantime? My landlord is thinking of selling and I can't say I relish the thought of moving again - looking at properties, paperwork, packing, shifting boxes, changing my address with dozens of organisations, mail redirects. It's a bloody nightmare to be honest, and comes with the threat of having to do the same in 6 months time when the next amateur landlord decides they can't bear to lose any more money.

Yesterday on BBC NI news I saw a piece about social housing. A young woman was explaining how thrilled she was to get her housing association house, safe in the knowledge that she wouldn't have to move again and happy to have a spacious new house for her small family.

I'd like a piece of that but unfortunately my hard work, qualifications and contribution to society only warrants a 6 month security of tenure.

How much would I be prepared to pay to end this scenario? Probably about £50k I think.

So if I think a house is 30% overpriced at £250k then it's worth £175k to me. If I'm prepared to pay £50k for security of tenure get on with my life then I should pay up to £225k. Which is probably achievable.....

Am I a fool to pay so much for the luxury of security of tenure? Subject to keeping up mortgage payments of course.

[polythene pam]

Is security of tenure worth 50k? Only if you are mortgage free. Otherwise your security of tenure is an illusion.

That's the problem with life - no certainties. If you rent, there's no certainty that you can stay as long as it suits you and if you buy there's no guarantee that you'll always be able to afford the repayments (interest rate rises would hammer you if you overstretched).

[bagsos]

Observing the current market it seems to be working approximately as follows:

There are probably 10 times as many sellers as buyers, but crucially they are not yielding very much to the market. There is a large demand to buy if they accept offers around 30% below asking price, but most are not interested in selling more than 10% below asking. So we have a considerable number of frustrated buyers and a large number of frustrated sellers. Sales are only taking place when they can agree - more often than not I suspect this is when a buyer cracks and offers within 10% of asking rather than sellers dropping by 20-30%.

There is a definite air of "recovery is coming", "this is the bottom", "good time to buy". A greaser EA actually said the words "don't miss the boat" to me recently, whilst trying to single-handedly whip the market into a 06-07 style frenzy.

Now I'm pretty confident that we have another 30% to come off current prices (to give a roughly 60% drop from peak in nominal terms, maybe 70% real terms). But it will be a fairly long and slow slide to the bottom from here. Personally I'm finding this very frustrating and would love the market to just bite the bullet. Unfortunately convincing people that honestly, really, those heady days are NOT COMING BACK any time soon is rather difficult. Only time will bring them round.

So what to do in the meantime? My landlord is thinking of selling and I can't say I relish the thought of moving again - looking at properties, paperwork, packing, shifting boxes, changing my address with dozens of organisations, mail redirects. It's a bloody nightmare to be honest, and comes with the threat of having to do the same in 6 months time when the next amateur landlord decides they can't bear to lose any more money.

Yesterday on BBC NI news I saw a piece about social housing. A young woman was explaining how thrilled she was to get her housing association house, safe in the knowledge that she wouldn't have to move again and happy to have a spacious new house for her small family.

I'd like a piece of that but unfortunately my hard work, qualifications and contribution to society only warrants a 6 month security of tenure.

How much would I be prepared to pay to end this scenario? Probably about £50k I think.

So if I think a house is 30% overpriced at £250k then it's worth £175k to me. If I'm prepared to pay £50k for security of tenure get on with my life then I should pay up to £225k. Which is probably achievable.....

Am I a fool to pay so much for the luxury of security of tenure? Subject to keeping up mortgage payments of course.

No not a fool - I reckon £50k is about the right number if you are talking housing a family for a price worth paying for security of tenure. I did the same in 2005/06 even though I knew the market was over the top. I just got totally fed up with renting and shelling out every 12 months for new credit checks, moving costs etc.

[24gray24]

No not a fool - I reckon £50k is about the right number if you are talking housing a family for a price worth paying for security of tenure. I did the same in 2005/06 even though I knew the market was over the top. I just got totally fed up with renting and shelling out every 12 months for new credit checks, moving costs etc.

50k if you are getting a mortgage, means you have to pay back over 100k in the end (including interest payments).

I'd call that being "the greater fool" the sellers are hoping for, myself. I can see the sellers popping champagne corks with relief when they sell to you! "Ha ha ha, he paid us 20% off peak when it was about to drop to 50% off peak, and all because he couldn't be bothered to pack a few boxes, what a ..."

Don't be that fool!

[Smell the Fear]

Is security of tenure worth 50k? Only if you are mortgage free. Otherwise your security of tenure is an illusion.

That's the problem with life - no certainties. If you rent, there's no certainty that you can stay as long as it suits you and if you buy there's no guarantee that you'll always be able to afford the repayments (interest rate rises would hammer you if you overstretched).

When I'm renting I have no problem paying the rent. The risk of me losing tenure for non-payment is very small. The risk of me losing security of tenure due to a unilateral decision by a landlord is high, probably 50/50 in this market.

If I buy the risk of me not paying the mortgage is small, just as it is with renting. The risk of the bank deciding to pull the rug is non-existent as there is no basis on which they could do this. The two scenarios present completely different risk profiles in terms of loss of tenure.

[Smell the Fear]

50k if you are getting a mortgage, means you have to pay back over 100k in the end (including interest payments).

I'd call that being "the greater fool" the sellers are hoping for, myself. I can see the sellers popping champagne corks with relief when they sell to you! "Ha ha ha, he paid us 20% off peak when it was about to drop to 50% off peak, and all because he couldn't be bothered to pack a few boxes, what a ..."

Don't be that fool!

Not sure where you are living but in NI prices are already down approx. 40%. I foresee a further 20-30% fall from this point to give a total nominal fall of around 60%.

Talking about repaying £100k is purely nominal, taking no account of inflation so not really relevant to financial decision making.

[Smell the Fear]

Are you trying to convince us or yourself? This is nowhere near the bottom IMHO and I'll just hang on. Try and get a 12 month lease if you are worried. I did. There are a lot of bulls on the main board trying to convince us out of our deposits. Thanks but no thanks - I worked for the money and I am not handing it over to a deluded vendor to fund his retirement.

If anyone I'm trying to convince myself. You seem to think I'm some sort of bull in bear's clothing, certainly not. I've been posting since 2005 so I spotted the issues early and have told everyone I know of my views since then. As I have said I expect a further 20-30% nominal falls in NI, but having to move when you have a very busy work life is a massive pain in the backside.

In the long run £50k is likely to be peanuts anyway. Do you think someone who paid 20% too much for a house in 1992 gives a damn? Does it keep them awake at night? I doubt it very much.

The thing is I think everyone here would place some value on owning over renting - if we didn't then we probably wouldn't be interested and posting here.

The question then is how much value do you place on owning over renting? Is it £0, £20, £1000, £10k, £20k?

How much do you foresee the market falling from peak Doccy? And how much from where we are now?

[Smell the Fear]

I am wary of posters saying that now is the time to buy. I think we have some way to go here. There is no manufacturing NI economy to support us only public sector. Unemployment will rise and green shoots will wither and die.

I think that although we are 39.2% off its mostly this is of estate new builds and lower end properties. Detached houses with land are still twice rateable value even though some have been on for well over a year. When they start to come down to rateable value then I will think about buying. When I see rents being closer to mortgage payments each month I will think about buying. When I see signs like the one in my avatar then I will know the bottom has been reached and I should be buying.

Could you post an example of the kind of place you would be interested in?

I'm seeing houses in my target areas in south belfast within 20% of rateable value, even one that is only 2% over RV.

I know someone who bought a country property for <50% of original asking price, although that seems like a particularly good deal from a distressed seller (the bank!). 3500 sq. ft within 20 mins of belfast for just over 300k.

[shipbuilder]

Observing the current market it seems to be working approximately as follows:

There are probably 10 times as many sellers as buyers, but crucially they are not yielding very much to the market. There is a large demand to buy if they accept offers around 30% below asking price, but most are not interested in selling more than 10% below asking. So we have a considerable number of frustrated buyers and a large number of frustrated sellers. Sales are only taking place when they can agree - more often than not I suspect this is when a buyer cracks and offers within 10% of asking rather than sellers dropping by 20-30%.

There is a definite air of "recovery is coming", "this is the bottom", "good time to buy". A greaser EA actually said the words "don't miss the boat" to me recently, whilst trying to single-handedly whip the market into a 06-07 style frenzy.

Now I'm pretty confident that we have another 30% to come off current prices (to give a roughly 60% drop from peak in nominal terms, maybe 70% real terms). But it will be a fairly long and slow slide to the bottom from here. Personally I'm finding this very frustrating and would love the market to just bite the bullet. Unfortunately convincing people that honestly, really, those heady days are NOT COMING BACK any time soon is rather difficult. Only time will bring them round.

Also, Doccyboy said -

I think that although we are 39.2% off its mostly this is of estate new builds and lower end properties. Detached houses with land are still twice rateable value even though some have been on for well over a year. When they start to come down to rateable value then I will think about buying.

Both are exactly the situation as I see it - i'm looking for a detached house, possibly with about 1 acre or more, just outside Belfast, for 50% off peak (about £250K). This just isn't achievable yet, even though £250K has been above RV in all the cases i've seriously looked at - others have come in with more, exactly as STF described. How much longer to wait? A bit more, I reckon, although i think there's always a risk that those who did well in the boom will queue up for the more 'desirable' properties and are prepared to take the hit. If we are here, probably 2 years after peak and detached houses are only starting to be dragged down now.....? Very frustrating. It just doesn't feel like a buyer's market for this type of house.

An example - what would you pay?

www.propertynews.com/p2wg

RV is £190K.

Edited April 22, 2009 by shipbuilder

[sophia]

An example - what would you pay?

www.propertynews.com/p2wg

RV is £190K.

Well it is a lovely house, 250k at max. My friend lives in Ravarnet and I've been to visit loads, it is handy to m1, Hillsborough, lisburn city, lovely quiet area .

[leftofcentre]

I can understand your frustration, but the guys are right, the only way if down for the next few years.

A good alternative is too go on a holiday for a year, come back buy the house and you will still have saved a packet.

It depends on what you earn and your personal circumstances, but by waiting you will save tens of thousands.

As for the green shots arguement, we are two years into a recession, I am betting we will have:

-2 more years of prices drops

-Stability for 2 years

-Small gradual rises after that

Renting can be a pain, but look at it this way, its never been a better time to rent, so why not treat yourself and rent some fancy spot you could never affoard to buy. Live like a king for a while and you will still save Vs buying a house now.

[getdoon_weebobby]

Renting can be a pain, but look at it this way, its never been a better time to rent, so why not treat yourself and rent some fancy spot you could never affoard to buy. Live like a king for a while and you will still save Vs buying a house now.

my thoughts exactly of late. rent a 500k+ place for £700 a month.

great value for renters

[Ride_on]

Could you post an example of the kind of place you would be interested in?

I'm seeing houses in my target areas in south belfast within 20% of rateable value, even one that is only 2% over RV.

I know someone who bought a country property for <50% of original asking price, although that seems like a particularly good deal from a distressed seller (the bank!). 3500 sq. ft within 20 mins of belfast for just over 300k.

I agree, N.Down/East Belfast prices are around 1.3xDCV mark, there is the odd one at 2x. Its still way too high, and there just isn't the money available to pay current prices, otherwise sales numbers would be back up to normal.

[Ride_on]

my thoughts exactly of late. rent a 500k+ place for £700 a month.

great value for renters

I'm in a similar boat, it makes up for the lack of ownership, accidental LL and pain of moving. The mortgage I was considering in 2008 is twice my rent for half the property (4 times cheaper). I though I may aswell treat myself for a while, its about the quality of live vs monthly cost. I'm very happy with my costs, but would like to do more long term investments in renewable heating etc.

[getdoon_weebobby]

I'm in a similar boat, it makes up for the lack of ownership, accidental LL and pain of moving. The mortgage I was considering in 2008 is twice my rent for half the property (4 times cheaper). I though I may aswell treat myself for a while, its about the quality of live vs monthly cost. I'm very happy with my costs, but would like to do more long term investments in renewable heating etc.

exactly. im really planning to push the boat out on my next rental as my lease is up at the end of this month , altho plan on getting a good bargain at same time.

the only concern i have is i have is im lucky to have a lot of savings (all in £) , so obviously cant wait to use against first house for me+girlfriend. however dont want to pay todays inflated prices, but dont want to be left with worthless paper in a hyper-inflation scenario!

[getdoon_weebobby]

exactly. im really planning to push the boat out on my next rental as my lease is up at the end of this month , altho plan on getting a good bargain at same time.

the only concern i have is i have is im lucky to have a lot of savings (all in £) , so obviously cant wait to use against first house for me+girlfriend. however dont want to pay todays inflated prices, but dont want to be left with worthless paper in a hyper-inflation scenario!

this might force me to buy a bit before i want to much as the OP might buy earlier than he wants for security of having your own place.

but for now i rent and enjoy value for money ;-)

[Ricky_FTB]

the only concern i have is i have is im lucky to have a lot of savings (all in £) , so obviously cant wait to use against first house for me+girlfriend. however dont want to pay todays inflated prices, but dont want to be left with worthless paper in a hyper-inflation scenario!

You and i are in a very similar position bobby. I am also lucky enough to have a substantial deposit, (and i think we are a similar age) but hyper-inflation and the fear of a bank collapse scares the hell out of me!

I wish this crash would hurry up so i could afford a nice home for me and my future wife!! In my area there are still people asking £170k for dingy mid terraces, so we still have a long way to go until i can get a reasonably priced semi or detached. I'm getting impatient!

[Nice Fud]

I've just recently completed buying my first property as I began to have the same feelings as the OP.

As I had just got engaged in 2006 we nearly jumped on the bangwagon and nearly bought a crap 3 bed semi for £180,000 in winter 2006. We had a small deposit and the mortgage was over £1000 per month lol!! After coming to my senses I pulled out of the deal after convincing the missus that house prices had to come down in the next few years.

We rented a quality place for the next 2 years whilst also saving for a deposit.

We have just bought a great semi for £145,000 having put down just over a 20% deposit. The house was on market for £175,000 could possibly have sold for around £250,000 in the peak of the madness. I do believe that house prices will continue to fall. The house I have bought could go as low as £120,000 if prices fall as far as I think they will. However as the govt seem determined to prop house prices up I believe it could take a year or two for prices to get this low. By this time I would have spent another £15,000 on 2 years rent.

I was also p1ssed of renting having spent £15,000 on rent for 2 years. The prospect of paying another £15,000 on rent until prices reach bottom didnt appeal to me. I also had problems with my amatuer LL.

I have no plans to move within 10 years so I dont care how much my house is worth in the near future. Im paying £170 per month less per month than I was renting and we are both in secure jobs. I dont believe that we will ever see interest rates in double digits so am not concerned by this.

I will be happy knowing that I no longer need to browse sites like this and property news on a daily basis. Im not worried that my house will lose value in the next year or so.

Originally I believed that a 3 bed semi could go as low as £90,000 but I now dont think this is possible. Too many people obsessed with making money from property in this country. They could go as low as £120,000 but I couldnt be bothered renting whilst waiting for this to happen.

Edited April 22, 2009 by Nice Fud

[JoeDavola]

I've just recently completed buying my first property as I began to have the same feelings as the OP.

As I had just got engaged in 2006 we nearly jumped on the bangwagon and nearly bought a crap 3 bed semi for £180,000 in winter 2006. We had a small deposit and the mortgage was over £1000 per month lol!! After coming to my senses I pulled out of the deal after convincing the missus that house prices had to come down in the next few years.

We rented a quality place for the next 2 years whilst also saving for a deposit.

We have just bought a great semi for £145,000 having put down just over a 20% deposit. The house was on market for £175,000 could possibly have sold for around £250,000 in the peak of the madness. I do believe that house prices will continue to fall. The house I have bought could go as low as £120,000 if prices fall as far as I think they will. However as the govt seem determined to prop house prices up I believe it could take a year or two for prices to get this low. By this time I would have spent another £15,000 on 2 years rent.

I was also p1ssed of renting having spent £15,000 on rent for 2 years. The prospect of paying another £15,000 on rent until prices reach bottom didnt appeal to me. I also had problems with my amatuer LL.

I have no plans to move within 10 years so I dont care how much my house is worth in the near future. Im paying £170 per month less per month than I was renting and we are both in secure jobs. I dont believe that we will ever see interest rates in double digits so am not concerned by this.

I will be happy knowing that I no longer need to browse sites like this and property news on a daily basis. Im not worried that my house will lose value in the next year or so.

Originally I believed that a 3 bed semi could go as low as £90,000 but I now dont think this is possible. Too many people obsessed with making money from property in this country. They could go as low as £120,000 but I couldnt be bothered renting whilst waiting for this to happen.

Congratulations, thats a good bit of haggling you did there. Is the semi in Belfast?

[Nice Fud]

Congratulations, thats a good bit of haggling you did there. Is the semi in Belfast?

Dundonald.

[Nice Fud]

Congratulations, thats a good bit of haggling you did there. Is the semi in Belfast?

Cheers. Its not great haggling in my eyes. The house was never worth £175,000. £145,000 is still too much for a 3 bed semi but as Ive already explained I couldnt care how much its valued at, as long as I can afford the monthly repayments. I have no plans to move in the near future so dont care if its valued at £100,000 or £250,000.

[JoeDavola]

The house was never worth £175,000. £145,000 is still too much

I agree totally. But I understand why you bought it, and if you can afford the repayments, and will be there for a while, you can just get on with your life. Life is too short to be worrying about house prices (something I should maybe tell myself more often ).

Out of interest, what's the rateable value of the house?

[mr slump]

Originally I believed that a 3 bed semi could go as low as £90,000 but I now dont think this is possible. Too many people obsessed with making money from property in this country. They could go as low as £120,000 but I couldnt be bothered renting whilst waiting for this to happen.

it is possible

I've seen a few go around the 110k mark already

certainly you can get a three bed in bangor in an ok area around 120k now

I certainly wouldn't advise anyone to buy yet

there are big falls to come

however like you

I have bought

because I bought for cash a property that needs some work (rules out most mortgages + all co-ownership)

I've been able to buy at -60% off peak - + more than -30% RV

(I've always said I'd buy at -60% off peak)

even at that + when I've done the improvements I expect it to be worth less in 2 years time

but the amount wouldn't much exceed a couple of years rent

and its time to get on with a better quality of life without the grief of landlords

we have the size of house we want in an area we really like

I get a decent sized office to work in and we're chuffed

I'm pretty sure this doesn't make me a bull now

I'm sure sooner rather than later all the good folks on here will find thier homes on the terms they require

and nice fud, enjoy your home

[shipbuilder]

That's good news, Mr Slump. Good luck.

[Rock-n-Roll]

I've just recently completed buying my first property as I began to have the same feelings as the OP.

As I had just got engaged in 2006 we nearly jumped on the bangwagon and nearly bought a crap 3 bed semi for £180,000 in winter 2006. We had a small deposit and the mortgage was over £1000 per month lol!! After coming to my senses I pulled out of the deal after convincing the missus that house prices had to come down in the next few years.

We rented a quality place for the next 2 years whilst also saving for a deposit.

We have just bought a great semi for £145,000 having put down just over a 20% deposit. The house was on market for £175,000 could possibly have sold for around £250,000 in the peak of the madness. I do believe that house prices will continue to fall. The house I have bought could go as low as £120,000 if prices fall as far as I think they will. However as the govt seem determined to prop house prices up I believe it could take a year or two for prices to get this low. By this time I would have spent another £15,000 on 2 years rent.

I was also p1ssed of renting having spent £15,000 on rent for 2 years. The prospect of paying another £15,000 on rent until prices reach bottom didnt appeal to me. I also had problems with my amatuer LL.

I have no plans to move within 10 years so I dont care how much my house is worth in the near future. Im paying £170 per month less per month than I was renting and we are both in secure jobs. I dont believe that we will ever see interest rates in double digits so am not concerned by this.

I will be happy knowing that I no longer need to browse sites like this and property news on a daily basis. Im not worried that my house will lose value in the next year or so.

Originally I believed that a 3 bed semi could go as low as £90,000 but I now dont think this is possible. Too many people obsessed with making money from property in this country. They could go as low as £120,000 but I couldnt be bothered renting whilst waiting for this to happen.

no double digit interest rates?

imho the ipod generation will be hit with a serious reality check

in the not too distant future!

rock on!