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Great Anecdote

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Just moved into my fantastic new house!! Don't yell at me, hear my story first:

Three years ago we had to move – to get into school catchment (person who bought my house did not get in to this school, so right thing to do). Became a forced STR. Paid up a repayment mortgage that we had at the time.

Continually peeved off as house prices rose and rose, even though the house we had sold had already doubled in the seven years we owned it, and netted us a tidy profit. Looked like we would be STR forever, and were pedalling backwards. However, the rental house was massive, yet very cheap – landlord had owned it for years, and didn't have a mortgage on it, so accepted a low offer (35% under asking rent.). The mortgage would have been double this cost if we bought it – we had it valued. So, peeved at living in someone else's nice house, but had spare money to spend. Went on excellent holidays, four per year, and bought a new car, no loan outstanding – all with money “saved” by getting a suitable house “below market value”. The downside was there was no way we could ever afford to get back into the housing market, as we were spending our saving on rent over mortgage. What a lifestyle though.

Two years passed, and we watched the market rise, resigning ourselves to be forever renters. I was ready to buy any old property but hubby refused. Till last August when I had a call from my good friend who happens to be an estate agent. There is a road that I have always wanted to live in, but has always been out of my price range, and once people buy there they tend to stay forever. Houses rarely come on the market. However, after five years of no properties available, three were coming onto the market at once, and my estate agent was called in to value them. The owners had all been there for over 20 years and were downsizing. Second call, with valuations – well over my limit, bollo**s, as I had expected. Called the bank, no chance if I wanted to sleep at night, but could do if we followed everyone else and self certify, borrow 7 times income, add on extras etc. No way. Hubby and I settled back into our cheap, large rented house, and planned our next holidays. Learnt to surf at Fistral, and snorkled the Caribbean.

BUT: Aug 04. All three houses valued the same, 750, 800, if market keeps rising. All came on the market at the same price, 750K, and were expecting a feeding frenzy, with sealed bids etc, and to get about 800K each. Offers arrived, but not as expected. First one to accept went for 710K (A)(thanks nethouseprices). Other two turned this down. B and C dropped price December 04, to 700K, both turned down 675K offers (I have friends in the street who feed me the gossip). Both dropped to 675K in Feb, turned down 650K. (Typical chasing down a market). Finally B dropped to 650K, C is now “offers invited”.

I have just moved into B and paid 625K. – distressed sellers, had no option but to sell to proceed able buyers, of which there are few.

Forget the statistics, in the home counties the crash is happening. From 800K potential, to 710K actual to 625k actual. That is a drop of 22% over expected greedy price, and 12% drop over actual price in just 12 months. Find me a Haliwide that shows a drop of 12% actual or 22% asking in 12 months. This is crash city.

Will it drop more? I expect so. But, this is not my investment property, this is my home. This is the price I am happy to pay for my forever house. I will be here, job willing, for 30 years or more. This is my dream house, which I thought I would never get. How did we afford it, with all those holidays?

TIMING. Buck the trend.

The proceeds of the house we sold, 200K, which we did not have to earn, was deposited in ING initially, and then invested through fidelity for 12 months. This was short term for investments, but whilst everyone in the country was purchasing their buy to late, and slagging of pensions the stockmarket had some fab results. We made a big return, which enabled us to get a big enough deposit to buy this house.

We judged the 1989 crash perfectly, by default, but learnt an important fact – do the opposite of the masses. We came back from overseas in 1991, and bought a house. Everyone had cottoned onto the housing crash and begged us not to buy, but we did, we paid 93K for a four bed house that had been bought by the seller at the bargain price of 140K. (neighbour paid 160K). We sold for same four years later, the market was flat. Bought our next house in 1995 for 150K sold three years ago for 350K. STR. Invested the 200K profit wisely.

When everyone was saying you can't go wrong with property, then this is the wrong time to buy. When everyone is saying whoops, looks like the market has stalled/is falling, then this is the right time to buy, grab a bargain. Find that distressed seller, there are a few out there. This is not the bottom of the market, it will drop more and quietly until the statistics finally admit it is falling. Once it is widely acknowledged, the bottom will have already been reached months before.

My 625K “bargain”? I think we would be lucky to get that in five years time. Do not buy an investment property in the home counties now, the price falls are in crash city, and after a crash is a long period of flat. Do buy a home, from a distressed seller, if you will not require a profit when you sell in the short term. Just hang in there, you will get that 22% asking drop or 12% actual drop with the right timing or seller, butb these bargains are available now.

The price has dropped, by my calculation, to the 2002 price, when we STR. But in the past three years we have spent money on lifestyle which we would have had to put to the mortgage if we had bought in 2002, and have been able to invest the capital and now buy a bigger house than we would have at the time.

One very happy SC, whose husband now has a big mortgage to pay off (incidentally, 15 year fix, repayment, that is another thread). (how much sex has that cost me?) I jest, I do work too, but am civil service, term time only, no guesses where I work or what I do, I was offered a “key worker” flat!!!!

Summary: first ever mortgage was repayment when all brokers were pushing endowments, Called the 1989 crash, profited from the 1995-2002 doubling in house prices, betted the 2004/2005 stock market and won, STR by default, thought we had lost, but came up trumps, just bought during the 2005 crash, way below price falls statistics would have us believe, but not yet at the bottom. Dont forget, this is home counties, the ripple affect would not have reached the outer rings yet.

Take the peak asking price, offer 22% under, which is now achievable, and extrapolate that forward. I would advise offering 30% under peak, (Aug 04 in Berkshire, later in other regions). You can increase your offer, to 22% under peak. Do not buy an investment property, but do buy a home, at a discount, inline with above. Actually, these decisions are mainly my husbands. I just wanted a home rather than a house, and take no notice of the financial markets and trends. But listening to him, I now own the house of my dreams, and will live happily ever after with my fab hubby and our kids with our memories of those surfing days and Caribbean nights, paid for by our landlord!!!!!!!!! Toast to TMF, take credit for my happiness, house of my dreams, otherwise unachievable. Do the same, or better. You all made me trust in the crash, made me save my deposit, grabbed a bargain, and now have the house of my dreams - thanks to all the bears, just dont miss the boat, and leave the last few percent to the next man.



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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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