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Rateable Values As A Guide To Fair Value

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As a prospective first time buyer i have read a lot on this site about rateable values from 2005 being a good guide to what is a perceived fair price for houses in the current market.

I can see that viewpoint having merit when it comes to properties in lets say a housing estate where you are comparing like with like. But does that also hold true for more unique properties. I mean it seems to me that rateable values does not seem to take account for things like location and desireability of a property. Or am i wrong.

There is a house i would put on offer in tomorrow if the price was right but its just way outside my budget. Its been on the market now for a year at a price of around 349,950. However, the 2005 rateable value is £ 210,000.

I could go to£ xxxxxbut would i get laughed out of town if i was to put in such an offer, citing the 2005 rateable value as the reason for my low offer. I am a first time buyer, with no chain as i presently rent and can put up about xx% of the price in cash.

I would value your opinion.

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This is the property in question. More generally its the kind of property i am seeking. Close to town but private with character.

My question is does rateable values apply as a rough guide for such properties which are somewhat unique in that they are one of a kind or does rateabke values just account for square footage.

MOD EDIT link removed at OP's request

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Hi there,

I like to compare other similar priced properties around the area and ask myself which offers the best value for money.

Unfortunately this is difficult when you don't know the area because you can't allow for local knowledge and price variations.

That said I was interested to see a further 4 properties listed at the bottom of the page link, all of which were similar in price and which I felt offered either bigger living areas or bigger plot sizes, or both.

Not being from the area I have no idea why that is, but if I was to draw up a list of the 5 properties I would price the others higher.

Any idea on sale prices in the area a couple of years back? All the news reports suggest the Irish market has dropped considerably the last few years. Do these price reflect these falls?

Best wishes

Edited by brotherjoe

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Go for it, whats the worst they can say? No?

Its obviously been on the market for a year with no movement for a reason, its overpriced.

Put a bid of £210k on it even if you feel they will laugh at it citing 2005 valuation as a more realistic price given the current market. Let them bid you up to £240k (your max bid). If they still don't bite, walk away and look at other properties. I would also play on the fact that you are not in a chain and have a substantial deposit.

On the flip side you could just play the waiting game. Do you know anything about the vendors situation? May be they have to sell due to needing to relocate, divorce etc. May have to reduce it at some point. Although I wouldn't hold your breath, lot of very stubborn sellers out there at the moment with their heads still stuck in the clouds.

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Have you considered building your own house?

The sort of money you are talking about offering, should be enough to buy a site and build a house.

Though be careful if you require further finance. I know that my bank will not lend to buy a site or build on an existing site.

Edited by Belfast Boy

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Good afternoon, and thank you everyone who kindly took the time to reply to my post. I tend to agree with all your comments. With something so important as buying a home its always good to have your own opinions backed up. Really appreciate all the advice.

I first joined this site several months ago but have only posted a few times due to having problems logging in. However, i often have a look at the site. I must say its been a great help and its very obvious a lot of people on here have very insightful and intelligent views.

With hindsight i was probably wrong to post such specific details. I thank Doccyboy for sending me an e-mail to point out my errant ways. When dealing with estate agents and sellers its best to keep your cards hidden and i flipped my cards over for all to see!!! If any moderator would like to remove the link i posted please do so with my permission and thanks.

A little bit about my situation as a way of an introduction. I am recently married and hope god willing to start a family soon. We presently rent and would like to buy a home but we are in no mad rush, at least until such times as sellers get realistic about prices.

At the moment it seems there are no genuine market forces and underlying economics determining what a fair price is for property with sellers stubbornly lagging behind reality.

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The more general question i would value opinions on relate to rateable values from 2005.

Everyones idea of their ideal home is different and from my own point of view its things like location, character and garden which are important. Can i ask if those things are taken into account when assessing rateable value or is it done mainly on square footage.

I could buy the house i am presently renting for close to rateable value but our ideal house would be a lot different in character and when i look at houses in this category they are never in the same ball park as rateable value. I am assuming this is because they have appeals to them which are not included in rateable values. Or am i mistaken?

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At the moment it seems there are no genuine market forces and underlying economics determining what a fair price is for property with sellers stubbornly lagging behind reality.

In normal economic times we have the three Ds to correct any overvalued housing market. They are death, divorce and debt (I think we may also see downsizing as a force in the years to come as boomers retire). These are not normal economic times. The banks have managed to get the government to transfer their bad debts to the UK PLC. However, if you look at what has happened to Ireland you can see how big a risk this is.

The latest Nationwide report shows that house prices in Northern Ireland continue to fall. And that is before we have any of the real austerity cuts, expected in 2011. The cuts will most likely effect our public sector proportionally more than any other region. It looks to me like it is still worth waiting to buy a house.

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The rateable valve or Domestic Capital Value is only an estimated value at a fixed point in time. It is common for people to not tell the council that they have added living space which would result in a higher DCV and higher rates, this is usually the reason I find for large differences in DCV (to asking price), but you can also use it as a negotiation tactic to say that the DCV is incorrect and you will have to pay higher rates once they find out (assuming there has been an extension).

The DCV also does not reflect condition or decoration so if these are above average then prices can be justified higher. Although it is a hangover from the boom that people think you can spend £50K on upgrades and charge £100K on the price. The reality is more the opposite, you don't get your money back unless prices are increasing.

Unfortunately there are still sellers who think they can set the price and wait for a buyer to pay it. These are the people that will have to declare bankruptcy when they realise they can't pay their debt's and their assets are worth mush less than they thought. The selling price represents what they think, and I would not waste stress and time putting in super low offers unless more casually testing the water with the EA. Personally I hate having offers rejected, its a lot of commitment on your side to decide to start the process, this is the problem with putting in low offers. We basically gave up and decided to wait until asking prices are lower. Renting is much cheaper in the meantime and throwing away less money than buying, even at DCV.

Edited by Ride_on

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Just adding to Ride_on's message above. Ratable Value is a very crude method of valuation using basically tfacts such as the gross external area, no of bedrooms and bathrooms. This is then applied to a general value for your area from an estimate of Jan 2005. Even if the measurements and table of values are close to accurate it takes little account for any individulalty of your property. For one offs in the country side there can be a big differance in value for properties of the same size. On some properties one could argue that the ratable value is not correct whilst on one nearby you could argue that the Ratable value is too much. It can only be one useful guide.

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The latest Nationwide report shows that house prices in Northern Ireland continue to fall. And that is before we have any of the real austerity cuts, expected in 2011. The cuts will most likely effect our public sector proportionally more than any other region. It looks to me like it is still worth waiting to buy a house.

It is worth noting that the latest Nationwide figures now show that the NI housing market fell 40.4% in value in the first 21 months from peak and have since falled a further 4.5% in the following 18 months. You could look at as roughly 90% of the falls in the first 21 months and 10% of the falls in the next 18 months. Whilst it is by no means over you can see there has been a dramatic differance in what is happening out there.

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Thank you to everyone who has contributed to my post. I find all the advice very good and helpful.

Doccyboy, i had a little juke at the archtects dream house you highlighted. I have to say it would not be to my tastes at all, even if i could afford the pricce, which i could not at any rate. If i won the lottery and had half a million to spend i think i would go for a house with more period style.

On a topic unrelated i have a big passion for architecure but when i see some of those big new build mock georgion style houses in the country side i just see a very cold and bland building without any character. If folk are going to spend a lot of money on such a big house at least they should have sash windows. I personally think they always add charm to a house.

I am not from Belfast but when i go there and see some of the new developments i am very disappointed, Belfast has some beautiful art deco style old buildings which would look splendid if they were brought back to life such as the old bank of ireland building close to castle court.

Back on topic, we probably will wait to the dust settles over the winter and reality bites more for the housing market until we decide to look into buying again. We are in a good position in that we have cash and can act quickly. We could buy the house we presently rent for a fair price but if we did it would probably only be an interim move. We would wish to move to a home more of our liking in the future. The problem would be that we would then be in a chain and we think its best not to give away the advantage we have at the moment where we are cash strong.

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Returning to the topic of rateable value and unreaslistic sellers i have a friend who is thinking about selling his house. Its a nice house but not out of the ordinary for the area. Rateable value is approx 215k which seems about fair to me in todays market. The biggest apeal with it however is the very big and private rear garden which i would value very highly but i dont think this is probably included in ratebble values because other houses a few doors away have a similar rateable value but without such an exclusive and private garden. I would value the garden alone at 50k.

However, to illustate how unrealistic some people are my friend wants 375k for the house. He owns the house more or less outright with not much of an existing mortgage but because it was valued on paper at 375k a few years ago he still thinks thats what it should be worth.

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Returning to the topic of rateable value and unreaslistic sellers i have a friend who is thinking about selling his house. Its a nice house but not out of the ordinary for the area. Rateable value is approx 215k which seems about fair to me in todays market. The biggest apeal with it however is the very big and private rear garden which i would value very highly but i dont think this is probably included in ratebble values because other houses a few doors away have a similar rateable value but without such an exclusive and private garden. I would value the garden alone at 50k.

However, to illustate how unrealistic some people are my friend wants 375k for the house. He owns the house more or less outright with not much of an existing mortgage but because it was valued on paper at 375k a few years ago he still thinks thats what it should be worth.

I agree that Ratable values dont reflect the differances in houses but I believe your value of £50k for a large rear garden is too high.

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I agree that Ratable values dont reflect the differances in houses but I believe your value of £50k for a large rear garden is too high.

... I agree. You can buy building sites for £50k these days.

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Unfortunately there are still sellers who think they can set the price and wait for a buyer to pay it. These are the people that will have to declare bankruptcy when they realise they can't pay their debt's and their assets are worth mush less than they thought.

It amazes me actually that ppl still believe that a 'recovery to 2006/2007 prices' is just around the corner. A 'recovery' in the housing market means further drops.

When interest rates rise again,alongside the continued rise of the cost of living there will so much pressure on some ppl that I am in no doubt that they will just decide to hand the keys back to the Bank, declare themselves bankrupt and say to hell with it. Why continue to pay a £250k MTG on a property that is worth half that or less.

If you look at the minutes of the Bank Of England Monetary Committee you will see that Andrew Sentance (member of the Committee) voted once again for the increase of the BOE Base rate to 0.75. This is a sign that things may change sooner than later.

http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2010/mpc1012.pdf

For those who dont understand the role of the MPC - basically interest rates are set by the Bank’s Monetary Policy Committee. The MPC sets an interest rate it judges will enable the inflation target to be met. The Bank's Monetary Policy Committee (MPC) is made up of nine members and it meets every month to set the interest rate. Interest rates have been at a record low of 0.5% and this has reduced many ppl's MTG's and is keeping many in their homes.

When interest rates are low this is great for ppl borrowing money but has knock on effects for the rest of the economy. The main purpose of the MPC is to keep inflation low (around 2%). Inflation = Cost of living. Inflation is expected to rise to 4% in the coming months (we are going to get less for our £'s) therefore the policy of keeping interest rates at a record low of 0.5% is not working and therefore could trigger sharp rises in interest rates in the future.

It will be an interesting few months ahead.

Edited by tinbin

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Belfast VI can I ask your opinion on the comments made in the Bel Tel about future drops in the housing market in NI

http://www.housepricecrash.co.uk/forum/index.php?showtopic=105924&view=findpost&p=2840548

This seems to be a cut and paste from some new Belfast company called monetary intel, who I know nothing about and comments from Ulster Bank's chief economist Richard Ramesy. Richard claims the prices have to fall at least another 5% to fully bottom out. He says this will take at least another 12 months. He may well be right and it can be hard to argue against this with the current negativity. I must remind you that both the UB and the BoI's economists must have been asleep at the wheel and happened to miss this crash coming. In fact, in the very month the houses in Northern Ireland stopped selling they placed an article in the BT boasting about the Malone house prices, how they were rising and were set to match the prices in the high end of the Dublin market. These guys, and their banks missed the top of the market and they may well have their blinkers on again.

A quote from a BOI chief Economist at a business seminar in April 2007

"Twenty-five years ago house prices were similar but the differential widened massively from the mid 1990s and peaked at 90% in favour of the Republic in 2003. Since then prices in Northern Ireland have risen faster closing the differential to 48% in 2006 - £169,000 in Northern Ireland and £250,000 in the Republic.

It looks set to close further in 2007 and 2008"...

"On the face of it the regional economy appears in rude health with sustained growth and record levels of employment in areas such as construction, retailing and business services - and the unprecedented boom in property prices. "My link

I can’t find the BT article, but I remember being totally astonished at it.

They were wrong then, badly wrong. I am not saying they are wrong now, but if they missed the idea that a correction/crash was coming, how much respect should we be giving them now.

Looking closer at monetary intel. All good stuff and quite an interesting angle to be selling advice from. I imagine this might actually work for him.

Some of his facts have been commented upon. NAMA is not a large owner of houses in Northern Ireland and is unlikely to become one. They do and will own plenty of undeveloped and partly developed development land, shopping centres and offices etc.

He also comments on the alarming growth in government borrowing in November. This also shocked me. However, he went on to explain how this showed the spending review, announced in the previous month had failed. Now I am no expert on these matters, but I know that The English, Scottish and Welsh did agree a budget to implement these spending reviews in December and our fools will eventually get around to it. The spending review is spread over 4 years which means most of it will occur in the last two years, well after the elections. This expert may well be right but I don’t know how he can draw on the increased spending in November as proof the review has failed.

However, I admire his approach. He may well replace FP on Nolan one day.

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I was just estimating the added value of the garden. Really no idea how to put a value on it. But the house in question is in a very desired area just two minutes from the town centre. The garden is actually the main selling point to the house. At least 20 metres wide by 50 metres long and totally private. Very rare to have such a garden for this type of house in the area.

Of course not everyone would put such a premium on a garden but for those who would the garden really is a one off.

I do agree with the last posters more pessimistic view about the housing market especially regarding interest rates. There are a lot of reasons why interest rates will probably stay very low and we probably wont see the final correction in house prices here until interest rates increase and that may be some time off.

At the moment it seems people who have saved sensibly and would would to buy a house are being hit twice. If they buy a house they are affectively paying for other folks recklessness while at the same time if they are seeing their savings eroded as interest rates are being kept low.

I am not seeking to cash in on other peoples misery when i do buy a house. I am not seeking a house as an investment - i want a house as a family home. I think the speculation element of housing needs to be ended and people can buy homes for a fair and reasonable price.

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I was just estimating the added value of the garden. Really no idea how to put a value on it. But the house in question is in a very desired area just two minutes from the town centre. The garden is actually the main selling point to the house. At least 20 metres wide by 50 metres long and totally private. Very rare to have such a garden for this type of house in the area.

Of course not everyone would put such a premium on a garden but for those who would the garden really is a one off.

I do agree with the last posters more pessimistic view about the housing market especially regarding interest rates. There are a lot of reasons why interest rates will probably stay very low and we probably wont see the final correction in house prices here until interest rates increase and that may be some time off.

At the moment it seems people who have saved sensibly and would would to buy a house are being hit twice. If they buy a house they are affectively paying for other folks recklessness while at the same time if they are seeing their savings eroded as interest rates are being kept low.

I am not seeking to cash in on other peoples misery when i do buy a house. I am not seeking a house as an investment - i want a house as a family home. I think the speculation element of housing needs to be ended and people can buy homes for a fair and reasonable price.

I think Belfast Boy is right. Very few building sites are fetching over £50k at the moment, never mind gardens. Whatever you value the house at is one think but £50k for 1/4 an acre is just too much.

Interest rates can only go up. The rise will be gradual and with bank house rates at 7x base rate there is quite a bit of float in there. Banks wouldnt be selling 5 year fixes at 4.5% if they thought otherwise. However, people will start moving to fixes. As soon as they get popular the banks will profiteer on them and will up the rates. In 2006 & 2007, when the prices were going mad the base rate was 5% and over. There is a lot to be said for buying now and fixing a 5 year or 10 year mortgage at a very good rate. But it can no way be the main reason for buying now.

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Don't accept the prices that the Sellers or Estate Agents are quoting.

If you hadn't worked out - nobody is buying in NI - nobody can afford to.

Prices don't just need to drop - they will drop.

Who in Belfast can actually afford to pay £300k + for a house?

What sort of money do you need to be on to afford that?

You are talking about the top maybe 1-5% of the population in terms of wages - and a lot of these guys will be losing their jobs when the cuts come.

Seriously - don't be afraid of offering very low compared to what the seller expects to get for the place.

How long have these places been on the market? Have you asked the EA how many viewings places are getting? How long is the queue of people outside the Estate Agents office?

Times have changed.

Good luck!

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Who in Belfast can actually afford to pay £300k + for a house?

It always puzzles me when people write something like this.

There are plenty of people who have paid off mortgages / inherited property / wealth / investments. Given that school fees are negligible in NI, there're probably more middle class people with spare cash knocking around than in most regions of the UK.

If you inherit an estate worth £150k, and you have equity of £50k, then you can probably afford a £300k property even if you're earning only £35k (which would be a fairly modest joint income, even now). Lots of people have windfalls from relatives dying, etc - it is a lot more common than you'd think (!), just ask any lawyer who deals with probate.

Of course things got out of hand, but don't forget the fundamentals that underpin property values in the long run. At the moment prices are are certainly heading downwards and I think the excess of supply will lead to some great property bargains, but eventually equilibrium will be restored. £300k for a middle class home in a middle class area will be not be unrealistic.

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Don't accept the prices that the Sellers or Estate Agents are quoting.

If you hadn't worked out - nobody is buying in NI - nobody can afford to.

Prices don't just need to drop - they will drop.

Who in Belfast can actually afford to pay £300k + for a house?

What sort of money do you need to be on to afford that?

You are talking about the top maybe 1-5% of the population in terms of wages - and a lot of these guys will be losing their jobs when the cuts come.

Seriously - don't be afraid of offering very low compared to what the seller expects to get for the place.

How long have these places been on the market? Have you asked the EA how many viewings places are getting? How long is the queue of people outside the Estate Agents office?

Times have changed.

In 2009 over 10,000 people purchased houses in NI (CML). In the first two quarters of 2010 this appeared to be at a similar rate of roughly 2,500 per quarter. Haven’t seen their figures for the next two quarters, but I expect them to be well down.

The latest Nationwide report puts the average price in Belfast as £197k and not £300k. This price would be greatly affected by south Belfast prices. The North and west of the city would be much closer to £100k, I would imagine.

The Average Belfast price of £197k, with a 20% deposit, can be affordable, under a borrowing ratio of 3.5x income to a household with £45k income. This roughly equates to two people on the average income. Whilst I know statistics don’t work out this way but its roughly 50% of the working couples (forgive me for switching the average with median and 40% is probably more accurate).

However a £300k property is hardly a first time buyer’s house and those buying a property of this value are likely to be selling a property. There are the odd, wealthy exceptions but most will be selling a property. Therefore they are judged, by the lender on the amount they are borrowing (assuming they are stepping up rather than down) rather that the actual price of the house.

Offer what you like for the property.

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I do agree with the last posters more pessimistic view about the housing market especially regarding interest rates. There are a lot of reasons why interest rates will probably stay very low and we probably wont see the final correction in house prices here until interest rates increase and that may be some time off.

Article in the Daily Mail ... interest rate rises may not be as far away as we all think. Interesting just how the next few months will pan out and if they do start to rise how this effects confidence in the market, as this alone (confidence) could have an impact on the housing market

Rate rise fears spark rush to remortgage as number switching loans to a rival jumps 42% Panicked homeowners are rushing to remortgage because they fear interest rates are about to rocket, experts said yesterday. Figures from the Bank of England revealed a 42 per cent jump in the number of people remortgaging, compared to the same month in 2009. In November, 34,262 switched their loan to a rival bank or building society, the highest number for two years. This figure compares to 23,973 in November 2009. The rush to remortgage is fuelled by growing fears that the Bank is finally on the verge of raising rates.

http://www.dailymail.co.uk/news/article-1344072/Remortgage-number-switching-loans-rival-jumps-42.html

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There is a lot to be said for buying now and fixing a 5 year or 10 year mortgage at a very good rate. But it can no way be the main reason for buying now.

This what i am aiming to do at the minute. 5 yr fix at 4.59%. New Build. Asking price of 160k and im aiming to go in at about 146k or so to test the water. As rates start to rise i think alot of the fixed deals will have higher rates even though historically they wouldnt have been so far above base that they are at the minute.

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  • 312 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% +
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