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Kent Ambitions

The airbnb effect (or: how my attempt to buy a house descended into misery)

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Hello - long time lurker and first time poster here.

Like many of you I have been willing a HPC to happen for a long time now, marveling at the pure insanity of price-to-earning ratios and the crazy re-bound in prices which occured from 2014 onwards, completely detached from any affordability metrics I could find.

How could this happen? I asked myself. Well, through bitter experience, I think I have now found out - although my findings only apply to cities/areas frequented by tourists - London, Oxford, Cambridge, Winchester, Canterbury, Bath, etc. These are also the places where the biggest price rises have occurred, and I don't think that's a co-incidence.

My own experience

Due to a fortunate change in my financial circumstances (cashing in some share options) I am now, at the ripe old age of 38, ready to buy my first property. I have a decent budget for a first-time buyer of 400k, and consider myself in a good and fortunate position. I am looking to buy in Canterbury, where my family are based, and my requirements are modest - 2 bedrooms, a period property, in the city centre.

Given my reasonable budget and modest requirements, I thought this would be a simple process given how 'over-inflated' Canterbury asking prices were relative to economic fundamentals (i.e. average salary of 24k in the local area). 

Well, I have never been more wrong about anything in my life.

I started off the process by confidently offering 20% under asking price and immediately losing out to cash 'investors'. So I then started offering asking price, and still lost out to 'cash investors'. For one particularly handsome Georgian property, I offered 20k OVER the asking price, and still lost out....to cash 'investors'. These were NOT the kind of properties where you'd get a decent rental return, and they were on for a premium because of the fact they were lovely period houses. What the hell was going on?

Well, after numerous conversations with local agents, I am informed that it is the 'airbnb effect' - the type of property I am looking to buy in Canterbury can be let for 80% of the year at £120 a night, which makes for a collossal return on investment if you can be bothered to actively manage it.

Of course, thrown into this mix are the fortunate end of FTB's like myself, BTL landlords, regular house movers etc - all competing over the same properties. It is savage. 

While unattractive edge-of-city modern houses may sit on the market and be discounted, anywhere that people might actually want to live is racing up in price, and I see no end to this. Unless legistlation is brought in nationwide to curb short-term holiday lets, then attractive areas/cities will fall victim to this.

And even if you're a fortunate FTB'er with 400k to spend on a two bedroom place in a relatively inexpensive city, you're in for a rough time. And given these factors, I have lost hope of there being a HPC any time soon in places where people actually want to live.

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Very interesting.  I have noticed how Bath has rocketed recently and thought it must be people moving out of London having made a killing by selling there but you have got me thinking and I think you are onto something.:mellow:There's no hope for us mere mortals who don't want to rent out property either as BTL or holiday accommodation.

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On 3/2/2017 at 11:29 AM, Kent Ambitions said:

I started off the process by confidently offering 20% under asking price and immediately losing out to cash 'investors'. So I then started offering asking price, and still lost out to 'cash investors'. For one particularly handsome Georgian property, I offered 20k OVER the asking price, and still lost out....to cash 'investors'. These were NOT the kind of properties where you'd get a decent rental return, and they were on for a premium because of the fact they were lovely period houses. What the hell was going on?

I've been through all that for the better part of the past two-three years.

It's ended now (found something, made an offer, was accepted, exchange done, completion in a few days), but your experiences sound all too familiar to me.

We've made common sense offers 8 times already - 6 were rejected. For one property, we offered 15k above the asking price, only to be beaten to it by a BTL buyer who offered 50k above the asking price. How do you compete with that...?

At some point, we were trying to get the EAs to tell us what it would take (in pounds) to get the property. We failed to get any useful information, of course, the arrogant pricks just kept repeating "offers over" or "make your best offer" or some other robotic bullsh!t. 

As much as I hate the idea of being in debt, thank f*** that's over. A few more rejected offers and I'd need some pills...

Edited by flb

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