Market Gap 250/310k

[nordiclad]

As a very late 50 something, just wanting to settle down in his own house again, (sorry everyone, this renting thing is getting to me) I am finding a very strange gap in the market place. After hammering on EA’s doors and looking in windows, Devon area for the last month, I am finding a great lack of houses priced in the 250K to 310K range.

Any number of houses beating up against the 250K barrier, and then it starts to move again from 310K – real high number of 400K++ houses up for grabs (and being reduced, slowly), maybe the London crowd are selling up.

Could this be the effect of Mr Browns 1% / 250K stamp duty level, with people unwilling to enter the market between 250K and 310K fearing that they will get beaten down on the stamp duty at 3%.

Any one else seeing this in their area ??

Maybe the problem is I am just too picky, looking for a house with a big enough shed in the garden to put my model railway !!!

[Tempest]

The chasm effect you describe had been mentioned on HPC before and will have an effect when prices decline.

In SW London where I live back in 2000 I remember when 2 bed flats were pushing on the door of £250k for a long while - eventually they broke through and very quickly shot up to the £300k mark - to take them out of the negotiating territory for reductions at or around the stamp duty limit.

Similarly, when properties fall down from a higher level to £290/300k or so - a 10% lower offer or reduction in asking price takes you to "260/270k and then people will be less willing to incur the extra stamp duty hit and the price will slide to £250k.

I think this effect will preserve the denial phase for longer in sellers (who will know this will happen once prices start to drop) but then cause an apparent acceleration in price drops due to the distortions of the threshold.

[Blue Peter]

As a very late 50 something, just wanting to settle down in his own house again, (sorry everyone, this renting thing is getting to me) I am finding a very strange gap in the market place. After hammering on EA’s doors and looking in windows, Devon area for the last month, I am finding a great lack of houses priced in the 250K to 310K range.

Any number of houses beating up against the 250K barrier, and then it starts to move again from 310K – real high number of 400K++ houses up for grabs (and being reduced, slowly), maybe the London crowd are selling up.

Could this be the effect of Mr Browns 1% / 250K stamp duty level, with people unwilling to enter the market between 250K and 310K fearing that they will get beaten down on the stamp duty at 3%.

Any one else seeing this in their area ??

Maybe the problem is I am just too picky, looking for a house with a big enough shed in the garden to put my model railway !!!

Yes, it is a problem. It didn't use to extend out to 310K, but perhaps 280K. It's basically the question of what amount can a seller ask above 250 that buyers won't think have a right to push a seller down to 250 because of the jump in stamp duty.

For those trying to upgrade it also causes problems because it means that the house they are selling might not be valued at what it would "rationally be worth" (assuming a rational linear model of house prices).

Peter.

[large]

Yes, it is a problem. It didn't use to extend out to 310K, but perhaps 280K. It's basically the question of what amount can a seller ask above 250 that buyers won't think have a right to push a seller down to 250 because of the jump in stamp duty.

In a sellers market where people offer the asking price, 30k was seen as a sensible gap. Now, with buyers looking to knock k20-30 off they have to raise the bar.