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Sentiment Change - Get Out Now ?

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I know someone who has been trying to sell his house for 16 months. It's a one bedroom, single-storey maisonette worth about 50k today. It was put on for about 145k and then tweaked down by a few percent to today's asking price of 137k. And this is someone who seriously needs to move.

If only.

Had he really needed to move he'd have sold it and taken the hit - he'd have had no choice.

This is the problem - not enough forced sellers with such low IRs.

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If only.

Had he really needed to move he'd have sold it and taken the hit - he'd have had no choice.

This is the problem - not enough forced sellers with such low IRs.

Resulting in a very slow sluggish decline, but that only gives us more time to accumulate ;)

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OK, here's latest anecdotal on the ground here in London N2:

We're now registered with all EAs in the area. They all say more properties coming on - they've had more valuations, etc. and that we should see boost in supply in next couple of months.

Great.

Problem?

I suspect an awful lot will again be those who don't have to move, and the asking prices will be circa 2007.

If they don't get what they want, their denial will kick in and they'll withdraw from market as they have done for the past two years.

There simply aren't enough forced sellers.

Relying on sentiment alone in an affluent area of London means we're in for a long drawn-out affair...

Unless IRs rise, it's going to take a looooong time, I fear.

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Resulting in a very slow sluggish decline, but that only gives us more time to accumulate ;)

sadly, time isn't on my side...

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Seems like this thread might be a good place for this little snippet

Gazundering on the rise as house prices fall

Figures from the Halifax show that UK house prices have continued to slip, falling 1.3% in December from the previous month. With agents desperate to keep buyers on board it is not surprising that gazundering - where buyers come in at the last minute requesting a price reduction for no reason - has become common place.

Commenting, David Knapp, partner, residential property department, at Hart Brown, said: “This is no surprise, as the last 2 or 3 months have seen pressure on prices. Clients of ours who sold in the late summer, only to lose their buyers and to resell in November and December, are having to take a reduced offer to resell.

“Gazundering is commonplace but does not seem to receive the press coverage expressing the outrage that accompanies the opposite, gazumping, when a seller ups the price at the last minute. Interestingly gazundering is seen as fair game but gazumping as abhorrent.”

http://www.mortgageintroducer.com/mortgages/239317/4/Daily_news/Gazundering_on_the_rise_as_house_prices_fall.htm

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Get out now? How? It's done. Too late now. Getting out now is not possible for those that don't know what is going on, because these people will not accept a price they will be able to sell at. And if they understood the situation they wouldn't be in the position they are in. They are the ones left holding the can, it's done. We have to wait now, a couple of years probably. But the bust is baked in.

I would like to agree with this, however, there are still just a few "foolish buyers" who are still willing to pay overinflated prices. Not many, just a few.

But it is these few that are stopping the indices from showing bigger falls.

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I would like to agree with this, however, there are still just a few "foolish buyers" who are still willing to pay overinflated prices. Not many, just a few.

But it is these few that are stopping the indices from showing bigger falls.

The foolish buyers were the ones buying 3 years ago.

Where i live in east yorkshire a house that sold for 110k is now around 80k. These houses are selling and are reflected in the indices.They might drop to 60 or 70k but at those levels i expect the pro landlords will be snapping them up , there is loads of low paid seasonal work round here and the rental market is very strong.

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I would like to agree with this, however, there are still just a few "foolish buyers" who are still willing to pay overinflated prices. Not many, just a few.

But it is these few that are stopping the indices from showing bigger falls.

We (me included) keep forgetting that this crash is happening at a very different speed and intensity in different regions of the country and type of property/buyer. This crash's timing is completely different. In London and parts of the south-east prices are still near 2007 peak, whilst in many other regions we already had corrections of 20% or even 30%.

I wonder if the recent worsening sentiment could trigger the correction in London and the SE.

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...the way to 'lock in' profit is to sell, rent and get back in later.

So I guess it depends just how deeply that mentality of housing as speculative asset has been embedded.

A lot of people have done that and are still waiting to get back in. In our corner of the world, 2007 prices are still the benchmark. They did drop a little in 2008, but last year there was no difference from the peak. Scarcity of 3 bed/4 bed familiy homes means that as soon as any decent ones come up for sale, they are snapped up within a week.

Only when people are forced to sell, will the fall in prices start. That said, once it starts, it could drop very deep and very quickly. I would say that if you are not resident in your property, now would be the time to sell.

But if it's your main residence and you are paying less than 3% on your motgage, then the cost of renting may not compensate for the drop in the next 12 months. I spent about 12 months looking for a place and couldn't find one. It's hard to find a decent 4 bed semi for sale.

Edited by arrgee1991

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I know someone who has been trying to sell his house for 16 months. It's a one bedroom, single-storey maisonette worth about 50k today. It was put on for about 145k and then tweaked down by a few percent to today's asking price of 137k. And this is someone who seriously needs to move.

so.. if they seriously need to move and their property is over priced they will not move...if their property falls to a reasonable price, a price to sell, it will sell....so..the next house they buy should then also be a reasonable lower price.

To move you have to consider the moving costs that are HIGH...so that is why people extend on what they have if they can, or sit tight until things improve.

The only losers when prices fall are the multiple home owners that paid a high price, or those want to move to an area where prices are not falling as fast,but then you have to question your judgement as to why you are moving ...a house is a home not an investment.....the investments are falling and any net income on it is not guaranteed. ;)

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Once the market bottoms out, a large proportion of renters (like me) will finally be able to buy somewhere. The sudden drop in demand for rental properties will leave BTLers with no rent, and a house worth far less than they paid. They'll have no choice then but to sell... especially if the banks calls in the BTL mortgage.

A sensible BTLer would try and sell now.... but many will sit it out (stupidly). That's fine by me :)

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Once the market bottoms out, a large proportion of renters (like me) will finally be able to buy somewhere. The sudden drop in demand for rental properties will leave BTLers with no rent, and a house worth far less than they paid. They'll have no choice then but to sell... especially if the banks calls in the BTL mortgage.

A sensible BTLer would try and sell now.... but many will sit it out (stupidly). That's fine by me :)

Who would the BTLer sell to? The person renting? But if they keep renting until the market collapses the BTLer still has their income.

And if the BTLers sell, what happens to those who rent off them? They get thrown out and then become more likely to buy.

The thing that is keeping prices high in some areas is scarcity. It is hard to find decent property to buy or rent.

In London & SE prices are holding in good areas as occupancy is close to 100%. It is easy to rent out property. I worked in Dubln last year and you could see why the prices collapsed there. Vast swathes of houses unoccupied.

And when the market bottoms it won't be a free for all for prospective buyers. In all likelihood, we will get there because no one can buy because of high interest rates and unemployment and sellers will be desperate. People may find they are still unable to buy. Back in 1992, I bought as I had returned from working in Europe with a big bag of cash (metaphorically) when there were repossessions galore and no one buying in a low market due to high interest rates and unemployment.

The fall is coming, and if I was a sensible BTLer, I'd be looking to sell. But when the markets bottoms out, the sensible BTLers who sell now will be in a better position to buy than tenants.

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(...)

The fall is coming, and if I was a sensible BTLer, I'd be looking to sell. But when the markets bottoms out, the sensible BTLers who sell now will be in a better position to buy than tenants.

Possibly. On the other hand, when the markets bottoms out banks will probably start to lend 90% LTV, removing the main obstacle for FTBers. And IRs will probably be higher than now, reducing BTLers yields.

I am not sure this environment would favour BTLers. I think it will favour all those that can spot/call the bottom, as it happens.

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  • 314 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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