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Is There A Supply Problem?


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Like many things, price of property is largely regulated by the forces of demand and supply. You will some from other posts that I work for an EA (cue abuse!) From my experience where I am based there are a very large number of people who are hoping to move home but are reluctant to place their own properties on the market. This results in supply not being at the level it could be and has the effect of keeping prices high. I have seen postings on here referring to the huge numbers of property currently on the market unsold – whilst this may be true in some areas, where I am supply of decent houses for sale is the problem, there are plenty of people who want to buy and I regularly have 2 or more offers on the good properties. Just so you don’t think I’m completely mad we also have a number of homes on our books that are not selling due to seller’s unrealistic expectations. But good houses at the right price sell no problem. My point is if all those who wanted to move home (and currently own a property) were to go onto the market rather than looking to try and find first, as many do, supply levels would be increased and prices would soften. I don’t foresee a sudden crash but if what I have outlined occurred we would almost certainly see prices lower. From my perspective, I would rather have lower prices, fewer EA’s and increased transactions instead of v. high prices and low transaction levels. A company I worked for years ago expanded massively between 1990 -95 when the market was perceived to be very poor, but were able to make a very healthy profit as transaction levels were good. Good EA’s (there are some!) will always do business, bad ones disappear when the going gets tough.

I hope people will see some logic in this argument and realise that EA’s are not all intent on pushing prices higher.

Mildura

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From my experience where I am based there are a very large number of people who are hoping to move home but are reluctant to place their own properties on the market.

My point is if all those who wanted to move home (and currently own a property) were to go onto the market rather than looking to try and find first, as many do, supply levels would be increased and prices would soften.

Why do you think this is happening?

Are you sure that the people you are talking about want to trade up or are they looking for a second home, a new BTL or are they just looking out of interest to see what the market is like (as many on here have done)?

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Why do you think this is happening?

Are you sure that the people you are talking about want to trade up or are they looking for a second home, a new BTL or are they just looking out of interest to see what the market is like (as many on here have done)?

The vast majority are people looking to sell their own and trade up, but don't have a fixed timescale to move in, so start by looking out of interest searching for the "right thing" Don't really have a very active BTL market where i am, from what i can see.

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My point is if all those who wanted to move home (and currently own a property) were to go onto the market rather than looking to try and find first, as many do, supply levels would be increased and prices would soften.

I think this will happen, but not because they decide to sell, but because debt will force them to.

I hope you don't get too much abuse for your post. I'd like to see far more opinions from the "enemy" and abuse just makes people like you reluctant to post your views which is counterproductive for this forum.

Thanks for your post.

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I think this will happen, but not because they decide to sell, but because debt will force them to.

Good point - if this happens its likely to take a while for it to kick in though. Lots of people i see have quite large equity levels (at current prices) so if interest rates shift up a bit, the job isn't as secure anymore and house prices come down a bit the situation looks quite different.

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My view is that there never was a supply problem.

House prices have risen massively since 1995 because of a demand problem.

The prospect of easy money from owning multiple properties created massive speculative demand, which is now drying up.

The fact is there is more than enough property in this country for everyone to own one who wants one. However, there will never be enough if everyone also wants two, three or ten for speculative purposes.

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There is a definite shortage of the best homes.

There is also an over-supply of certain types of run of the mill rubbish in various areas.

Best quality property is a sure fire winner in the medium to long term.

Rubbish quality homes (by any criteria you chose) must not be bought at the moment.

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I think thats why BTLs dumping properties will be a critical part of a crash unfolding.

And second home owners.

As it becomes more expensive to own/service a second property, or as BTLs realise just how expensive it can get subsidising tenants when IRs rise I'm sure we'll see more portfolios/second homes coming onto the market.

A particular development of luxury flats near me went up and was completed about a year ago.

2 beds were starting from £325K+ (in South West England ????, not in a city BTW)

Most were sold to developers and a glut of them are always available to rent.

Initially the rents started at about £850+ per month.... now you can rent one for about £700 per month or less if you negotiate.

Many are now for sale below £200K..... seems like that investment didn't really work out then :lol:

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i dont think there is a supply problem where i live (NW england). Had a drive round a new build estate this afternoon and there are a lot of properties standing empty, but when the developer is asking 130k for a 2 bedroom flat im not surprised they arn't selling. I think things have got so bad for this said developer that they have halted phases 3 and 4 of this estate. This is just one of 4 new build estates and i have heard the other 3 are stopping building future planned phases.

The simple fact is there is no supply problem just highly inflated prices due to peoples greed and stubborness to reduce to a price that is acceptable

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My view is that there never was a supply problem.

House prices have risen massively since 1995 because of a demand problem.

The prospect of easy money from owning multiple properties created massive speculative demand, which is now drying up.

The fact is there is more than enough property in this country for everyone to own one who wants one. However, there will never be enough if everyone also wants two, three or ten for speculative purposes.

With 25 million properties and 45 million adults, roughly speaking, this seems unlikely. Who wouldn't want to own a property, if the price was right? Even if you live with someone, if you could pick up a nice holiday cottage or pied a terre in London for £100, you probably would. And so you have a shortfall of 20 million properties, which sounds like a pretty big supply problem to me.

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Like many things, price of property is largely regulated by the forces of demand and supply. You will some from other posts that I work for an EA (cue abuse!) From my experience where I am based there are a very large number of people who are hoping to move home but are reluctant to place their own properties on the market. This results in supply not being at the level it could be and has the effect of keeping prices high. I have seen postings on here referring to the huge numbers of property currently on the market unsold – whilst this may be true in some areas, where I am supply of decent houses for sale is the problem, there are plenty of people who want to buy and I regularly have 2 or more offers on the good properties. Just so you don’t think I’m completely mad we also have a number of homes on our books that are not selling due to seller’s unrealistic expectations. But good houses at the right price sell no problem. My point is if all those who wanted to move home (and currently own a property) were to go onto the market rather than looking to try and find first, as many do, supply levels would be increased and prices would soften. I don’t foresee a sudden crash but if what I have outlined occurred we would almost certainly see prices lower. From my perspective, I would rather have lower prices, fewer EA’s and increased transactions instead of v. high prices and low transaction levels. A company I worked for years ago expanded massively between 1990 -95 when the market was perceived to be very poor, but were able to make a very healthy profit as transaction levels were good. Good EA’s (there are some!) will always do business, bad ones disappear when the going gets tough.

I hope people will see some logic in this argument and realise that EA’s are not all intent on pushing prices higher.

Mildura

As a FTB I see exactly this is Manchester. There are some over priced properties that are not selling, but any half decent property that comes onto the market is getting snapped up straight away. I fear it is a supply problem, and the lack of good houses available could potentially keep house prices at this ridiculous level for the forseeable future.

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As a FTB I see exactly this is Manchester. There are some over priced properties that are not selling, but any half decent property that comes onto the market is getting snapped up straight away. I fear it is a supply problem, and the lack of good houses available could potentially keep house prices at this ridiculous level for the forseeable future.

I should mention that I'm referring to houses in S Manchester suburbs, not town centre new build flats etc.

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I should mention that I'm referring to houses in S Manchester suburbs, not town centre new build flats etc.

The lack of "good" houses dosen't make a huge amount of sesne when you consider the amount of property improvement going on over the last 5 to 10 years.

The average house quality has surely risen. (This is one reason house prices have risen).

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I agree I think there is a massive shortage in London of decent property under £150,000.

OMG - property under £150K in london!

you're joking surely..... For this much you would be hard pressed to find a crummy one bed flat within the M25, let alone a decent property! Where i live in london a typical one bed flat is about £220-230K!

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With 25 million properties and 45 million adults, roughly speaking, this seems unlikely. Who wouldn't want to own a property, if the price was right? Even if you live with someone, if you could pick up a nice holiday cottage or pied a terre in London for £100, you probably would. And so you have a shortfall of 20 million properties, which sounds like a pretty big supply problem to me.

The size and make-up of the population hasn't changed much in the past 10 years, yet property prices have trebled in that time. If there was a supply problem then the same supply problem would have existed in 1995.

The problem has been one of excessive demand for multiple properties, compounded by over-exhuberent lending.

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Like many things, price of property is largely regulated by the forces of demand and supply.

However supply is very highly price inelastic to the extent that it is virtually fixed. Accordingly the price of properties is almost entirely determined by demand.

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Get it into you head - There is NO shortage of property in the UK. There is no hesitancy from people to move up, down or sideways on the ladder other than it is now too prohibitive cost wise to move.

Everyone who has owned a home for 5 years or longer seems to laugh at FTBs waiting to buy but they forget that they themselves are trapped as stamp duty, unless they are down-sizing, is a real burden for everyone.

When are people who work in EAs going to learn some fundamentals about the propery market and economics other than "Oh, interest rates are low," "Unemployment is low" and "It is god that house prices are rising".

We are within 5 years of the biggest global recession since 1929. T

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Like many things, price of property is largely regulated by the forces of demand and supply. You will some from other posts that I work for an EA (cue abuse!) From my experience where I am based there are a very large number of people who are hoping to move home but are reluctant to place their own properties on the market. This results in supply not being at the level it could be and has the effect of keeping prices high. I have seen postings on here referring to the huge numbers of property currently on the market unsold – whilst this may be true in some areas, where I am supply of decent houses for sale is the problem, there are plenty of people who want to buy and I regularly have 2 or more offers on the good properties. Just so you don’t think I’m completely mad we also have a number of homes on our books that are not selling due to seller’s unrealistic expectations. But good houses at the right price sell no problem. My point is if all those who wanted to move home (and currently own a property) were to go onto the market rather than looking to try and find first, as many do, supply levels would be increased and prices would soften. I don’t foresee a sudden crash but if what I have outlined occurred we would almost certainly see prices lower. From my perspective, I would rather have lower prices, fewer EA’s and increased transactions instead of v. high prices and low transaction levels. A company I worked for years ago expanded massively between 1990 -95 when the market was perceived to be very poor, but were able to make a very healthy profit as transaction levels were good. Good EA’s (there are some!) will always do business, bad ones disappear when the going gets tough.

I hope people will see some logic in this argument and realise that EA’s are not all intent on pushing prices higher.

Mildura

Though on the face of it you come across as a reasonable person, of course you must know that the statement: "I hope people will see some logic in this argument and realise that EA’s are not all intent on pushing prices higher." is one made at the very point where to say the opposite would be truly suicidal (for you!).

Mmm, did you ever post anywhere when prices were sky high and increasing by a grand a week that you thought this might be a bad idea in the long term? Do you actually have a "position" on what prices should be, or are you merely reacting to personal circumstances and being the nice guy because the chips are down?

Sorry for coming over as a bit suspicious here, but you EA's have made a mountain of cash when the going was good, and I do not recall much respect, or interest, in the average BUYER when it was a SELLER'S market.

No business eloquently expresses the sheer Machiavellian aspect of society more than an EA attempting to be "reasonable" when the going gets tough. Suddenly you are all becoming soft and cuddly. I don't buy it. Sorry. I do recognise that some EA's are themselves the victim of the price hype they have all promote ruthlessly for the last decade or so. But....

It's a bit like France after the Nazi's left. The "sensible" few are now jockying for position and announcing "we were only acting under orders". Not that I wish EA's to be tarred and feathered. I just wish they would have in the first place conducted their businesses with some insight into the damage they have in the long term cause by their greed to cash in while the going was good.

There is nothing more obvious than an EA who is one moment the greedy seller's friend and then next the buyer's mate. One day you will all wake up and see what you actually do for a living: Put a few ads in the paper, take a tape measure around, drive your cars and be smarmy to people for a sale. That's IT! And for all this fluff you get a whacking commission, purely because the average person cannot be bothered to challenge your absurd hold on the market.

You sound a bit different from the norm, so I apologise for taking this out on you. But if you are the sensitive, intellegent person you appear to be, why not go the whole hog and do something stimulating and useful in life. You sound too sussed to really believe a career as an EA is other than a smarmy suit and that silly voice you all use when answering the phone.

(Yes, I know, how dare I etc etc.....but you know it's true!)

VP

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I travel up to one of the most deprived areas in N England regularly for work. The local population is shrinking and you regularly see houses boarded up. But prices are - guess what? - still going up. Sharply. In fact, the difference between these prices and where I live in a prosperous part of the south are no longer that great. This isn't due to a sudden lack of housing in the North-East!

Also... HPI is an (almost) global phenomenon which is hitting plenty of countries with plenty of building land and a stable population.

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I travel up to one of the most deprived areas in N England regularly for work. The local population is shrinking and you regularly see houses boarded up. But prices are - guess what? - still going up. Sharply. In fact, the difference between these prices and where I live in a prosperous part of the south are no longer that great. This isn't due to a sudden lack of housing in the North-East!

It's due to a lot of well-paid government jobs being moved North to reward Labour voters, and the nightlife in Newcastle is excellent.

(Also, white flight, but it's not a good idea to discuss race in a country without free speech).

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Though on the face of it you come across as a reasonable person, of course you must know that the statement: "I hope people will see some logic in this argument and realise that EA’s are not all intent on pushing prices higher." is one made at the very point where to say the opposite would be truly suicidal (for you!).

Mmm, did you ever post anywhere when prices were sky high and increasing by a grand a week that you thought this might be a bad idea in the long term? Do you actually have a "position" on what prices should be, or are you merely reacting to personal circumstances and being the nice guy because the chips are down?

Sorry for coming over as a bit suspicious here, but you EA's have made a mountain of cash when the going was good, and I do not recall much respect, or interest, in the average BUYER when it was a SELLER'S market.

No business eloquently expresses the sheer Machiavellian aspect of society more than an EA attempting to be "reasonable" when the going gets tough. Suddenly you are all becoming soft and cuddly. I don't buy it. Sorry. I do recognise that some EA's are themselves the victim of the price hype they have all promote ruthlessly for the last decade or so. But....

It's a bit like France after the Nazi's left. The "sensible" few are now jockying for position and announcing "we were only acting under orders". Not that I wish EA's to be tarred and feathered. I just wish they would have in the first place conducted their businesses with some insight into the damage they have in the long term cause by their greed to cash in while the going was good.

There is nothing more obvious than an EA who is one moment the greedy seller's friend and then next the buyer's mate. One day you will all wake up and see what you actually do for a living: Put a few ads in the paper, take a tape measure around, drive your cars and be smarmy to people for a sale. That's IT! And for all this fluff you get a whacking commission, purely because the average person cannot be bothered to challenge your absurd hold on the market.

You sound a bit different from the norm, so I apologise for taking this out on you. But if you are the sensitive, intellegent person you appear to be, why not go the whole hog and do something stimulating and useful in life. You sound too sussed to really believe a career as an EA is other than a smarmy suit and that silly voice you all use when answering the phone.

(Yes, I know, how dare I etc etc.....but you know it's true!)

VP

By visiting this site I naturally expected a bit of suspicion/hostility. I’ve only come across this site in the past few months and have seen some genuinely interesting opinions. I would like to think I am able to contribute something to the debate whilst learning from others. However, if we’ve already adopted the position that all EA’s are lying, greedy cheats in shiny suits with white socks and spiky hair then there’s not much point is there?

Anyway, to respond to your points. How can anyone determine where prices “should” be? We can all have an opinion on where we would like them to be or where we think they will be but it’s often said a house is worth what someone is prepared to pay for it. I assume that when you say “the chips are down” you’re implying that business is not good. The chances are you won’t believe me but sales are fine, similar levels to the last couple of years and as I said in my original post we could do with more decent houses as there a plenty of buyers waiting. To answer the question before anyone asks – it’s now the middle of Nov and the market is going quiet for Christmas, so I can spend a bit of time on here as there aren’t many new houses coming on.

Let me give an example. An EA is asked out to give a seller a suggested selling price (normally along with 2/3 other EA’s) Assessing what someone will pay for a house is all down to opinion and so most will give the seller more than 1 figure, i.e.:

£200k if you need to sell quickly

£210k if you are not in a mad hurry but don’t want to overprice

£220k if you are in no rush and want to try a speculative figure.

A common scenario is then for the seller to then ring up and say “I’ve found somewhere I want to buy so need to sell quickly but I need to sell at £220k to afford the place I want to buy”

So what do you do? You could stick to your principles and tell the seller that for a quick sale they should ask no more than 200-210k at which point the seller vanishes to the EA next door who agree to put it on the market for 225k. After 4 weeks no offers are received so seller reduces price to 210k and then gets an offer of 205k a couple of weeks later through second agent. So agent 1 has given the correct advice but has been ignored and not been paid a penny while agent 2 who was not as professional and just did what the seller told them gets the fee. A popular phrase is: “do you want to win the argument, and lose the sale?” Is this an EA hyping the prices or a greedy seller?

EA fees are a lot of money. But, that doesn’t mean all EA’s are Armani suited Porsche 911 drivers. Always remember that fees are on a no sale, no fee arrangement. We often go to the expense of producing photos, floor plans, brochures, advertising etc only for the potential seller to tell us they’ve “changed their minds” these expenses have to be covered and therefore when you pay your fee when you sell your home you are subsidising the timewasters. Hopefully when these home information packs arrive in about 18 months we will see less people coming to the market who aren’t fully serious about selling and fees will change accordingly.

There are some sh:t EA’s out there and I bet I’ve dealt with more than most, but there are also some good ones who are knowledgeable and give honest advice. As far as the likes of Foxtons are concerned they are widely disliked within the industry and appear to stand for everything that is distasteful about the job. So why do people continue to use them? Have you personally had a bad experience while buying/selling?

I have managed to develop a thick skin over the years so won’t take any of it personally, but am genuinely interested in what people’s thoughts are.

Mildura

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  • 439 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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