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Father Fred

Debunking Hpc Website Myths.

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Let me get a number of things off my chest…

Estate Agents

(1) Estate agents are not all evil and in a huge conspiracy to push prices up. Many agents (as is the case in many low paid jobs for which you do not need qualifications) are young and can’t get on the ladder themselves. Agents do make more money the higher the price but any agent would happily trade higher volume for lower price levels.

(2) Estate agents are used by the vast majority of vendors because for 1 or 2% you get someone to do a lot of the work for you and get a better price than if you tried to sell privately. (Not in all cases but generally true)

(3) Rightmove are not estate agents – they are a very good website that many estate agents advertise on.

(4) They are not all going to go out of business next year. Cars are a great example. Why do second hand car yards exist? There is no reason for them to - you can sell on Ebay or local paper, and why buy from a car yard when you can get cheaper elsewhere? Because they provide a service which people are prepared to pay for. Not everyone, but many people who buy a car are happy to pay a little more for the convenience and people who sell are prepared to get a little less by selling to a dealer. Not an exact comparison as agents don’t trade the properties they are selling, they merely act for the vendor but I’m sure you can see the parallels.

(5) If they lie report them to trading standards. But if they point out that a room has 4 power point and a telephone socket don’t criticise them – they’ve probably got some muppet vendor on their back telling them to put all these things on the details or they’ll get disinstructed. (In the past, when I worked for a high street agent, I’ve had people demanding that a property is advertised as being in a good area when it is in fact over the border in a slightly worse one, or insisting on a loft being called a room despite not having a window and being accessed by a ladder. You can’t bow to these people but you do have to bow to the one’s who insist that their amazing floral wallpaper is a selling point and must be on the details – no business can say to it’s client that they’re completely stupid)

(6) While we’re on the subject – we’re here to act for the vendor not the buyer. The buyer is not our client and so long as we don’t lie that is our duty satisfied. You have a surveyor, a bank and a solicitor to fight your corner.

Future House Prices

(1) They look to be coming down, and this is quite possibly the start of a crash. BUT assume nothing apart from the fact that there are bound to be some surprises along the way. Nothing is certain, assumption is the mother of all ******-ups etc etc

(2) Property may not be the best way of investing in the future but long term, or so I believe [can anyone prove me wrong?] they are a good way of tying part of your wealth to the level of wealth in the country – much as investing in the FTSE is. For unsophisticated investors, potential owner-occupiers and people who take and interest in property and can ‘beat the market’ it is a very attractive investment.

(3) Even if we see huge falls across the country some areas will do better than others, maybe not falling at all and even if they do fall meaning that selling and buying back is not worth it financialy and certainly not when you take into account hassle and risk of getting the timing wrong.

Capitalism

We live in a capitalist country. Yes we can tweak the edges and get a better system but broadly speaking it’s not a bad system. I am certain that many posters on this site are capitalists, but whose posts do not imply that. Think before you post

Vested Interests

Yes, many are irresponsible, foolish, bordering on evil. BUT, for God’s sake accept that they have a job to do and let the good one’s get on with it. No agent can turn round and say "all properties on my books are 20% overpriced" – they’d be committing financial suicide. And don’t expect banks to place adverts reminding people of the last HPC and dangers of negative equity. Yes some are irresponsible and this should be pointed out but you can hardly blame them for sitting on the fence a bit (especially when NO-ONE can predict the future with certainty).

Economists

Get things wrong most of the time as no-one can predict the future perfectly (anyone made spot on predictions about this cycle yet – didn’t think so).

As fort he BoE, they’re not perfect either, things’ll go tits up sooner or later, but I pretty confident that there’s not a single poster on this board who would do a better job than the MPC.

Also see the VI section for a hint at why the one’s employed by banks don’t go round claiming 50% falls.

Landlords

(1) Genereally speaking landlords are people who want a better life for themselves either now or in the future and use the purchase and renting out of property as a way of doing this (often alongside methods that you might use such as working, running a business or investing in a pension fund). To criticise them en masse is only acceptable if you believe that all housing should be owner occupied or provided by the state and are prepared to campaign for that. I do not believe anyone on this site thinks that and if they do they are absolute morons.

(2) They are not all going to go out of business even if rents fall 25% and prices fall 50% (which is about the worst case scenario that I am prepared to even entertain over the next 5-10 years). Many bought years ago at very good yields with long term fixed rates. They are not all stupid – though many more recent investors could be in trouble.

Morality

Mocking someones blatant stupidity is IMHO acceptable. So is mocking the greedy. Delighting in the misfortune of people whose sin is to want to sell their house for the maximum price is quite frankly pathetic and disgusting. Do you take the first offer that comes along when you put your car in the local paper or do you haggle until you get a price that you want or think is fair?

Take a Look at yourselves

There seem to be many on this site who are very confused. They hate homeowners despite wanting to be one one day. They hate landlords but are happy to rent a property from one. They are angry that VIs talk the market up while being sure that it won’t do any good. They hate estate agents but will almost certainly use one to buy if and when prices fall enough. They hate banks but use them for current accounts and will do for a mortgage one day.

Finally, pride comes before a fall – I believe much of what is posted on this site is sensible, but there is a prevailing attitude that you’re part of an exclusive club that knows something that the rest of the world has missed. It’s not quite that clear cut.

Rant over

FF

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Are you an EA?

Yes and No.

I was until about 10 days ago when I left a high street agency. But I do still work part time for myself doing sales, lettings and property management and will continue to do so.

Anything else relevent? I am a homeowner and a landlord. I am starting a (full time, property related) masters in September. I thought prices were peaking 4 years ago and am convinced that prices are currently over-valued. This does not mean that I am certain they will fall, though my best current guess is that London is likely to see 20% real falls in the next 5 years (10% nominal). It could be much worse.

FF

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Dear FF

I work for an estate agent and as people my lot are fine. I am in regular contact with members and rival firms and they are fine.

There are some though who are proactive in giving the industry a bad name. For instance we have one in Brighton who seems to delight in fly posting sold and for sale boards. Another who in the last bubble were telling vendors to add thousands on the asking price and sit and wait for the mugs.

Your other points I have read with interest.

As taking a look at myself I do this when I’m shaving, I won’t describe it though it’s not the Rocky Horror Show

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Father Fred,

An excellent post. I agree with you on almost every point.

I beg to differ on your point about morality. Home sellers with unrealistic expectations are fair game for ridicule. Of course every home seller wants to get the most they can for their home but too many think that their home is in some way special and show a real distain for their potential buyers. Sellers want to get as much as they can for their property, buyers want to pay as little as possible. The final price is decided by the market and as we keep being told, we have moved from a sellers market to a buyers market.

You sound like you are or were an EA. What is happening to the market in your area?

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Let me get a number of things off my chest…

Estate Agents

Yes, many are irresponsible, foolish, bordering on evil.  BUT, for God’s sake accept that they have a job to do and let the good one’s get on with it.  No agent can turn round and say "all properties on my books are 20% overpriced" – they’d be committing financial suicide. 

FF

Good post, things do seem to get a bit petty here sometimes. The problem is you have a number of EA's that make the whole process of Buying or Selling horrible. I'm sure there are rational intellegent ones out there but I have yet to deal with one but I look forward to the day I do.

To pick up on your point "all properties on my books are 20% overpriced" – they’d be committing financial suicide. I did actaully have an agent in London say "we add 10% on the valuation" to see who will bite. Though like you say, the vendor is client and it's in their interests. One good thing about a HPC is it would get rid of the cowboy EA's and sort the wheat from the chaff.

Richard.

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there is a prevailing attitude that you’re part of an exclusive club that knows something that the rest of the world has missed.

Maybe. I've been priced out of home ownership, and priced out of having a normal existance (if there is such a thing). This is the only club to which I belong.

Many people here belong to a club that's been shafted sensless by HPI, it's about time the markets moved in our favour for a change - and it seems they are. Great!

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father fred

excellent post

i agree it is wrong to single out EA's for the recent housing bubble.

EA's simply contributed part of the oxygen that allowed the fire to roar up.

at some point , when the dust has settled , some wise people will try and rationalise how it all hapened. they will probably aportion the blame unfairly.

it is wrong to hate EA's valuers, solicitors., rightmove etc as they have all done their job. if they have made good money in the last few years- good luck. they may need good cash reserves to see out the coming lean years.

personally i think it would have been better for the average individual if the HPI had not happened- but so be it.

goood luck with your new situation.

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Seeing as most of the replies so far have verged on the sycophantic, a good juncture perhaps for something a little more robust:

Cars are a great example. Why do second hand car yards exist?

There are fewer and fewer of these small independents about as the car supermarkets and websites take over. IMO this is the way that estate agency is headed. Was there not an article a few weeks ago hinting that Tesco was looking to muscle in on the EA business?

No agent can turn round and say "all properties on my books are 20% overpriced" – they’d be committing financial suicide.

Why? Because their "clients" would immediately disinstruct them?

don’t expect banks to place adverts reminding people of the last HPC and dangers of negative equity.

I don't think anyone here is naive enough to expect that. However, a little more awareness amongst the general population of what, after all, is relatively recent UK history would not go amiss.

Mocking someones blatant stupidity is IMHO acceptable. So is mocking the greedy. Delighting in the misfortune of people whose sin is to want to sell their house for the maximum price is quite frankly pathetic and disgusting.

Hang on, so mocking the greedy is OK, but mocking vendors who are asking ridiculous amounts for their decrepit shacks is not? What's the difference?

As for your little tour de force on how 'confused' we are, this is frankly a straw man argument. Those who hold the first view in your little rundown of contradictory positions very seldom hold or fulfil the second, and the minority who do hold such views must inevitably experience no small amount of 'cognitive dissonance'.

They hate homeowners despite wanting to be one one day.

I do not hate present homeowners. Greedy vendors, however, are a different story.

They hate landlords but are happy to rent a property from one.

I have no problems with landlords as long as they do not steal tenants' money, allow their properties to fall into disrepair, and/or neglect their statutory duties to maintain their properties promptly and diligently.

They are angry that VIs talk the market up while being sure that it won’t do any good.

Of course VI ramping will 'do some good' (ie have some effect) on the more easily-led sections of the population. That is why we are angry about it.

They hate estate agents but will almost certainly use one to buy if and when prices fall enough.

If the house you want to buy is being sold through an estate agent, what choice do you have?

They hate banks but use them for current accounts and will do for a mortgage one day.

This is the most harebrained claim of all. Banks and mortgage lenders in particular have certainly been responsible for this property bubble in the sense that they have stretched lending criteria to breaking point in an effort to offload the huge amounts of money washing about in the financial system onto consumers, but we have to question where this enormous liquidity came from in the first place. Step forward, Alan Greenspan.

Also, even if one did hate banks,

1 ) what could one possibly hope to achieve by one person not banking with them out of their 8 trillion customers?

2 ) what else is one supposed to do with one's money? Stuff it under the mattress?

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Yes and No.

I was until about 10 days ago when I left a high street agency.  But I do still work part time for myself doing sales, lettings and property management and will continue to do so.

Anything else relevent?  I am a homeowner and a landlord.  I am starting a (full time, property related) masters in September.  I thought prices were peaking 4 years ago and am convinced that prices are currently over-valued.  This does not mean that I am certain they will fall, though my best current guess is that London is likely to see 20% real falls in the next 5 years (10% nominal).  It could be much worse.

FF

What area do you cover FF?

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Guest Charlie The Tramp
It’s not quite that clear cut.

Nothing ever is, but having observed the UK economy for forty years and the housing market for thirty five years, I would say with the increase in debt which has more than doubled in the past eight years when it took six hundred years of the banking system to reach half a trillion pounds, then IMHO it is clear cut that there is going to be one almighty bang. <_<

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FF

Very good post.

I would suggest that buying / selling a house is a very stressful undertaking, because it is, by nature, a confrontational process. I suspect that a lot of the rants etc on this site and other sites (who rant equally in the opposite direction) reflect the high levels of uncertainty we all face at this time.

Sadly, I think it will get much worse before it gets better.

I am hoping for a HPC, not because I want to see others get hurt, but simply because I want to live in a nice house for a fair price. I do not want to put my future at risk in these dangerous times and risk everthing I have worked for ofther the last 20 years or so. Waiting is stressful in itself, made more so by so called VI's saying trying to talk the market up. I understand why they do it, because no one wants to by the person who gets accused to starting a HPC!

Telling the future is virtually impossible to do in detail, but I am a techie analyst by profession and house market data is just another set of numbers, and boy does it look set to repeat previous events!

My advice, hunker down, save against a rainy day and hope it does get as bad as it could!

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FF : An excellent post...however something I would like to point out :

Estate agents are salesmen of items (they usually do not own or produce) and their target punter is like no other. How many people have in your experience come back to you because you sold them such a great house. In all likely hood most estate agents are going to sell a house to a person and never see that person again.

Therefore estate agents have no accountability. Add to this estate agents are self regulated at best and require no formal qualifications or training.

If estate agents don't want such a bad rap they have to look at the whole business model and not just try to push the blame onto a few black sheep (of which there is more than just a few)

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again, a good post but a couple of points:

it is fair to deride house proud vendors who are totally unrealistic - the forums on C4, ex-pats and fluffy handbag are full of them - the world doesn't owe them a living

i have a nice car - one of the reasons i bought it was because at the time the depreciation was very low - unfotunately for me, that has changed in the last 6 months and my car is worth £5k less than i expected - i can keep it forever and live in denial believing it is still worth that extra £5k, hoping that it will go back up in value or i can get on with it and take the market price - i think i am realistic enough to know which to do

the majority of EAs are human - however, i know a few and out of those i can honestly say that in my opinion a couple are arrogant scum - now, i am sure this reflects a %age of the population as a whole but i'm afraid i hold that small %age of EAs to blame for a significant part in the current bubble through their constant ramping of prices - the bit i really can't understand is that rather than de-ramping the prices when there are no sellers, they would rather go out of business

finally, i would like to own a house again but have no intention of paying grossly over the odds for one - in 1991 i bought my first house for £36k, putting down a £2k deposit and borrowing 3x my income - that seemed a fair deal at the time and still does now - if i really liked somewhere i migt stretch to 4x income, but with prices as they are, to get an equivalent property to what i could have 6 years ago i would have to go nearer 7x income and i just won't do that

as charlie says above, there's going to be one almighty bang

cheers

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FF

Enjoyed reading your post and you make a lot of fair points. On the Estate Agent issue, I think my man source of resentment is the amount of commission charged by some Agents. E.g. 2% on a £500,000 property equals £10,000 on just one sale!

Certainly when properties were selling fast last year it seemed like certain agents were raking it in. Where do you find the most profitable area of work to be now (i.e. lettings or sales?)

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Guest Charlie The Tramp

When I sold my cottage in Norfolk the ES had to attend for 25 viewings each one a round trip of 30 miles, the same for three surveyors, had a lot of aggrevation all for the sum of £800. :(

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Estate agents

Many are bad. The NAEA (not a perfect organisation) is trying to force regualtion (for the benefit of it’s members who are better than average but still include some rogues.) The problem is that Trading Standards do nothing (flyboarding is a bug bear of mine as well). Hopefully any downturn/ crash will get rid of some bad ones (there are too many around and that drives down fees which inevitably drives down service. If they go out of business the ones left will charge more!) The industry is in for big changes due to govt legislation (Home Information Packs), price falls, volume falls and technology.

Homesellers who are unrealistic and feel it is their right to make 250% profit in 7 years have none of my symapthy – especially if they have made decent returns even at a fire-sale price. People who worked hard and saved hard believing property would see them right in the end, who find themselves bemused and chasing down a falling market I feel sorry for.

My area is quietening a little after a mini boost (Olympics, Stratford East London)

MrB

I truly believe that if you work and save hard you’ll get a chance sometime to own a place, and when you do it will be a sensible personal decision and a sensible business one too. Prices will fall in real terms, make sure you do everything in your power to make sure you’re in the right place at the right time to capitalise.

Govt and the media should educate the public better in personal finance. I am not sure it is the job of EAs or Banks. I am happy to pay higher taxes to increase education in personal finance.

FF

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Guest Charlie The Tramp
I am happy to pay higher taxes to increase education in personal finance.

Well that would be a waste of money. The lemming`s brains are in lock mode.

Edited by Charlie The Tramp

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Father Fred

THanks for a real common sense post.

I hope that the heavyweights here will honour your realism and not flame you..too much.

Goddam why not move over here, I'll buy a house off you in a couple of years.

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Well said, FF.

I stay clear of all the angry postings on here, although I must say they make for diverting reading at times.

I'd like to add to your post that I'm often bothered (but mostly amused) at the angry diatribes made by some HPCers against different generations. Not all Baby Boomers are sitting in their large, half-empty, massively-appreciated houses and scheming about how they can pull up the economic ladder behind them. Nor are all people in their 20s lazy, materialistic, culture-less high-spenders.

Here in the States, one way that the powers-that-be get people's attention away from their own graft and greed is to pit groups lower on the economic ladder against each other.

We are all in this together! Many of us (mostly liberals, I would guess) who through hard work or plain luck have acquired property, money, and the "good life" want to see others do the same. I know I do. A strong economy (and reasonable house prices) raises all boats.

I've grown quite fond of some of the young posters on this forum. I believe that behind their occassional (and often ill-advised) bouts of anger and frustration are decent souls. I'm rooting for them.

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  • 302 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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