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Viterbi

What Exactly Can Maintain High House Prices?

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The VIs try their hardest to ramp up house prices and always tell you that now is the best time to buy. What they never tell you is that a house is only worth as much as somebody is willing to pay for it. If a house is overpriced for what it is then it simply will not find a buyer. Like a hot air balloon, house prices naturally fall under their own weight adjusting for general inflation. A hot air balloon will only rise if the flame is turned on. It also takes a smaller or intermittant flame to keep the balloon at a constant height. House prices only rise - factoring out general inflation - if a buyer is willing to pay more than the asking price, or if a seller inflates the price and a buyer is prepared or pressured into paying the inflated price.

Now the question is, what exactly can maintain house prices at their current level or cause them to rise?

Don't say it needs 15% interest rates to force house prices down. This scenario is akin to ripping a hole in a hot air balloon. The same balloon will eventually fall to the ground if the flame is turned off for long enough.

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The VIs try their hardest to ramp up house prices and always tell you that now is the best time to buy. What they never tell you is that a house is only worth as much as somebody is willing to pay for it. If a house is overpriced for what it is then it simply will not find a buyer. Like a hot air balloon, house prices naturally fall under their own weight adjusting for general inflation. A hot air balloon will only rise if the flame is turned on. It also takes a smaller or intermittant flame to keep the balloon at a constant height. House prices only rise - factoring out general inflation - if a buyer is willing to pay more than the asking price, or if a seller inflates the price and a buyer is prepared or pressured into paying the inflated price.

Now the question is, what exactly can maintain house prices at their current level or cause them to rise?

Don't say it needs 15% interest rates to force house prices down. This scenario is akin to ripping a hole in a hot air balloon. The same balloon will eventually fall to the ground if the flame is turned off for long enough.

Good post - I like the hot-air balloon analogy.

Seeing another balloon with "Stocks" emblazoned on its sides ascending rapidly to your becalmed basket and thriving on its far more solid reliable explicable fuel might also make you feel quite airsick.

The Fox.

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In the last 7 years the buyer has been persuaded to pay in some cases 300% more for a home.

You would have thought it would have been hard to convince the buyer that they would need to..

Turns out it wasn't..

Very weird.

No wonder the bulls think it is christmas..

perhaps money is easier to get hold of.. but why would you pay more if that is the case.

It was not driven by shortage as the housing stock outwieghs customers by more then in any time of history.

It was all driven by speculation, people wanting part of the action. and people happy to pay. Weird that they are so happy to pay..

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What might keep house prices high? (IMO)

1. Government legislation interference, favouring business over individuals.

2. Low interest rates. (but only for so long?)

What I don’t believe will keep house prices high.

1. Spin / Lies.

2. Short supply, (We’ve always had a shortage of housing).

3. High employment. (unless there’s high wage inflation).

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What might keep house prices high? (IMO)

1. Government legislation interference, favouring business over individuals.

2. Low interest rates. (but only for so long?)

What I don’t believe will keep house prices high.

1. Spin / Lies.

2. Short supply, (We’ve always had a shortage of housing).

3. High employment. (unless there’s high wage inflation).

Reckon it would actually have to be LOWER interest rates to keep it high. You have to keep administering monetary ECT to keep it twitching. Eventually you give up (bit like trying to support a currency - ultimately fruitless and expensive) and let nature take its course. "Time of death.....

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The VIs try their hardest to ramp up house prices and always tell you that now is the best time to buy. What Now the question is, what exactly can maintain house prices at their current level or cause them to rise?

House prices keep house prices afloat i.e. people sell each other their houses (keeping out ftb's) at ever- higher amounts.

Aka - the pepetual motion machine

you can't get something for nothing

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House prices keep house prices afloat i.e. people sell each other their houses (keeping out ftb's) at ever- higher amounts.

Not true. Homeowners have difficulty moving up the ladder as rising prices equates to a greater difference in prices between differently sized houses in the same area. A certain town that had 2 bed terraces for 50k and 3 bed semis for 75k five years ago now has 2 bed terraces for 100k and 3 bed semis for 150k. The price differential has gone from 25k to 50k.

We are in a denial stage where homeowners stubbornly and steadfastly refuse to lower their prices no matter what type of property they own or where it is located. This explains why house sales have reached rock bottom

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the market will stay high because of Stubborness, time and people who dont need to sell...

the market will fall because of lack of buyers and forced seller, deaths, my grans house is still on the market after 1 and a half years, eventually my parents and uncle will drop the price because they wont want to have it empty for ever....

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the market will fall because of lack of buyers and forced seller, deaths, my grans house is still on the market after 1 and a half years, eventually my parents and uncle will drop the price because they wont want to have it empty for ever....

Its taken them 18 months to realise the price is too high!!!??

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Its all about confidence in the market. Even now I think the majority view is that prices are still rising albeit slowly, although there has been a marked shift of opinion to a perception of flat prices. As soon as that weight of opinion shifts to view prices as falling, the wheels come off the whole thing and prices will decline steeply. It just needs a couple of consecutive negative yoy figures to be reported in the 'independent' media.

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Its taken them 18 months to realise the price is too high!!!??

A universal thought on this site I should imagine.

To be cheeky, it's probably "worth" it.

Like each of the rest of the few tens of thousands of £ of building materials and all marsquerading as the wealth repository of this country.

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Mildura, as an honest EA ( <_<:blink: ) please give us some anecdotes. :)

Here's a good one for you!

House comes onto market Feb 05 - price 950k

Price reduced to 850k in summer

price reduced to 750k in November

Sale agreed at 735k

1 week later buyer asks to reduce price by 30k - no real reason!

Seller agrees.

Don't think the market has 'fallen' by 250k for this house, it was just never worth that much in the first place. I haven't seen much change in price in the last couple of years but asking prices seem to keep getting higher without much evidence of sales been achieved at the higher levels, so asking prices often have to come down to what they really should have been originally.

These people had to sell as its a probate sale.

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Its taken them 18 months to realise the price is too high!!!??

They still havent, my dad still says they will get within 10% of the asking price, my aunt needs the money and wont drop the price. Its in very nice leeds commuter village, boston spa

Edited by moosetea

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They still havent, my dad still says they will get within 10% of the asking price, my aunt needs the money and wont drop the price. Its in very nice leeds commuter village, boston spa

Your aunt can't need the money that badly - she's been waiting 18 months already!!

If a house doesn't sell, 9 times out of 10 its because its on for too much money.

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Mildura

Your anecdotes are very interesting.

Would be very interested to know how many unconditional STR type cash buyers you have registered and what is their attitude towards purchasing is at the moment.

SCB

Not sure how many exactly but have had a quick look through and at a guess i reckon about 15-20% are buyers in rented. There seem to be a good number of active buyers around, but these days (compared to say 5 years ago) many are much better informed/researched and therefore buyers are able to identify the houses that are on for too much money. If you have a decent house at a sensible price its not unusual to have 2/3 people interested. If the price is too high you're lucky if you get any viewings.

Of course there will always be variations. A house is only worth what someone is prepared to pay for it.

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  • 301 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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