Jump to content
House Price Crash Forum
Sign in to follow this  
catmandu

Reflection On My Local Market

Recommended Posts

Edinburgh. 3% stamp duty threshold

Been taking stock recently as I recently purchased a house but remain interested in the market in general and the damage the government is doing to the system (help to sell)

House I had on my watch list sold recently - finally checked out the selling price and it was the same or less (can't quite remember) as the offer I'd put in about a year ago. That was just a first offer - if they'd come back to me I might have increased slightly, but they just rejected it outright saying the vendor was seeking much more. So that vendor waited a year and lost in the region of 5-15k. Actually a lot more than that as they bought at peak. I like to think that my offer helped pave the way for the new buyers.

In addition there is another house nearby asking more than 100k more - it's a larger house but with other major downsides. I also expressed an interest in that house, but the vendor would not entertain the amount I was thinking of so I refused to view it. (in reality my offer would have been less).

Now the asking price has come down in price to a level that the best they could possibly hope for is the price I was considering. But in reality with this new sale going through at 100k less, looks like they are going to have to shave another 10-15% at least off the price. Judging by their recent form - it'll take them about 5 more years to reduce to that level.

There's some false optimism around at present but the above helps form my opinion that all remains very unwell in the market - particularly as this is desirable property in Scotland's capital. It is evident that people are most certainly losing money by holding out. It is also clear that patience and playing hardball remain the best buyer strategy for many. It's certainly healthy for the market to see the more unreasonable vendors losing out.

Random additional thought:

- When I come to sell there is no way I'll be using a "proper" EA - as a buyer I found them to be completely unnecessary (remember this is the Scottish system). I found them all happy to sit back and rely on the portals to do all the hard work for them.

Share this post


Link to post
Share on other sites

There's some false optimism around at present but the above helps form my opinion that all remains very unwell in the market - particularly as this is desirable property in Scotland's capital.

Amen to that. For me the reality check is that despite:

  • Quantitative Easing (£375bn and counting) pushing down gilts and thus holding down mortgage rates

  • Funding for Lending Scheme enabling banks to borrow from their creditors as if they were able to keep their promises, holding down mortgage rates

  • Help to Buy allowing borrowers to borrow as if they had a 20% deposit that they don't have

we are still seeing

  • flat national aggregates

  • London rising but London fringe flat and falls in most of the rest of the UK

The state is leaning hard into the wind and achieving very little. Perhaps a time will come when they stop leaning into the wind. The headwinds will be getting stronger - cue shameless reference to own old thread, Fsa Announce Inevitable Crash By 2031.

io%2Btimebonb.png

Compared to the world's banks competing with each other to shovel the cash arising from global imbalances down the necks of willing idiots so the idiots can try to get rich punting on houses, some light hearted shennanigans from the Bank of England and the Treasury can temporarily manipulate perception, but it doesn't look like it can move mountains.

Oddly, it looks like we are going to get the first 5 years of our hpc in real terms only. The great unwashed are going to be allowed to hold onto their nominal gains at the cost of having the real values of their gains and the real value of their wages seriously undermined - and that's just the costs of trying to hold onto the nominal gains in the aggregate stats when really the nominal gains should have been acknowledged as fantasy and wiped away quick smart.

Share this post


Link to post
Share on other sites

The great unwashed are going to be allowed to hold onto their nominal gains at the cost of having the real values of their gains and the real value of their wages seriously undermined

And they will be pleased about it

Share this post


Link to post
Share on other sites

And they will be pleased about it

Absolutely - but not everybody has skin in the game. How many others are disadvantaged when incomes are attacked so that house prices can be defended? When do enough of these people wake up and smell the coffee? Or does some external monster turn up and solve their problem before they realise that it needs to be solved?

Edited by ChairmanOfTheBored

Share this post


Link to post
Share on other sites

Oddly, it looks like we are going to get the first 5 years of our hpc in real terms only. The great unwashed are going to be allowed to hold onto their nominal gains at the cost of having the real values of their gains and the real value of their wages seriously undermined - and that's just the costs of trying to hold onto the nominal gains in the aggregate stats when really the nominal gains should have been acknowledged as fantasy and wiped away quick smart.

Just raise wages and it'll all be fixed, innit?

http://www.guardian.co.uk/commentisfree/2013/jul/01/boost-wages-uk-economic-crisis

Then homeowners and workers will be rich. Not.

Share this post


Link to post
Share on other sites

Question:

Person wants to buy £300k property.....they have £150k cash deposit to put down and they work part-time earning £15k pa?

The falls will come not because of the amount of money people have, but more because the proven amount of money they earn, and their ability to repay taking into consideration the high cost of living

In answer to the above......no, imo a person earning £15k should not be able to borrow £150k, how much cash deposit they have is irrelevant......some don't see it that way.....do the lenders see it that way? if not they should. ;)

Share this post


Link to post
Share on other sites

Edinburgh. 3% stamp duty threshold

Been taking stock recently as I recently purchased a house but remain interested in the market in general and the damage the government is doing to the system (help to sell)

House I had on my watch list sold recently - finally checked out the selling price and it was the same or less (can't quite remember) as the

I think low interest rate also cause people to hoard houses - saw in the other HPC thread yesterday that an old lady who downsize then use the proceed to buy a place AND a BTL because cash earns nothing.

The seller also know that if they holds out long enough, they will eventually gets the nominal sum due to the marginal buyers who just have to buy at any price (and taking on more mortgage then they want/can really afford). In the mean time, they can collect a 4-5% rent - there is no hurry.

Share this post


Link to post
Share on other sites

Question:

Person wants to buy £300k property.....they have £150k cash deposit to put down and they work part-time earning £15k pa?

The falls will come not because of the amount of money people have, but more because the proven amount of money they earn, and their ability to repay taking into consideration the high cost of living

In answer to the above......no, imo a person earning £15k should not be able to borrow £150k, how much cash deposit they have is irrelevant......some don't see it that way.....do the lenders see it that way? if not they should. ;)

There is another way to do this.. An investor buys it and then have it shared with 4 x £15k earner, giving a £60k earning power and a potential rent of maybe £20k or 6.67% yield. Investor passes most of the 'rent' back to the bank and keep some crump. Of course, if he can squeeze 5 x £15k in then it might just give a bit of a return.

The thing is that people higher and higher up the earning scale (or people with high combined income) just got squeeze into smaller and smaller space.

Edited by easy2012

Share this post


Link to post
Share on other sites

I think low interest rate also cause people to hoard houses - saw in the other HPC thread yesterday that an old lady who downsize then use the proceed to buy a place AND a BTL because cash earns nothing.

The seller also know that if they holds out long enough, they will eventually gets the nominal sum due to the marginal buyers who just have to buy at any price (and taking on more mortgage then they want/can really afford). In the mean time, they can collect a 4-5% rent - there is no hurry.

So going back to my 'question'..........what do the bankers care how much the buyers affordability is if 50% equity is provided.....the property is theirs anyway, they are getting some going rate return anyway, they could add the costs onto the loan anyway, the asset would have to fall a substantial amount before they lose their interest in it......making money from nothing but still holding an asset on their balance sheet. ;)

Share this post


Link to post
Share on other sites

Amen to that. For me the reality check is that despite:

  • Quantitative Easing (£375bn and counting) pushing down gilts and thus holding down mortgage rates

  • Funding for Lending Scheme enabling banks to borrow from their creditors as if they were able to keep their promises, holding down mortgage rates

  • Help to Buy allowing borrowers to borrow as if they had a 20% deposit that they don't have

we are still seeing

  • flat national aggregates

  • London rising but London fringe flat and falls in most of the rest of the UK

The real Help to Bail Banks hasn't started yet though. I seem to be seeing a few SSTC come back on the market. I wonder if Mr Bank has decided to only lend to rock solid borrowers this year. After all from Jan 1st he can lend to anyone knowing it needs a -26% price drop before he incurs any losses. He even gets paid for a repossession expenses. So why risk lending this year? Just wait for next year and let the taxpayers cover any potential losses.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 238 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.