shavedchimp Posted January 9, 2019 Share Posted January 9, 2019 This might be a long shot, but what I'd find really useful is a calculator that could provide a ball-park estimate as to what the price of a house should be. It could incorporate last known sold price, historical inflation/interest rates, income multiples, sq m floor space, a dollop of reality, and a ruthless helping of cheek. If such a tool/app existed (maybe it does already?) - then it might become a popular bargaining lever/informer for buyers, and could usher in a house price correction. Does anybody here know how to approach this (perhaps you clever Property Log people?) I'm looking at a place for sale now that last sold in 2003. It's current asking price has, unsurprisingly, more than doubled. I'd be interested to know what a reasonable price for it would be, based on reality, rather than speculation in a distorted market. Thoughts? Quote Link to comment Share on other sites More sharing options...
Maximus Skepticus Posted January 9, 2019 Share Posted January 9, 2019 A linear regression....take all the values its sold for up to 2003.....put a straight line through all the points (plot it on excel)....take the equation and forward calculate x number of years (i.e. 16 now). Clearly you should have a minimum of 3 points Everything in a bubble wont be on a linear trendline...especially in London. I did this for a gf's place....the market distortion is horrendous. I would've thought its a fair model, as the mean should be fair value, and reversion to teh mean etc etc blah blah...:-) Just my thought for a simple calculator, nothing fancy, simple is best Quote Link to comment Share on other sites More sharing options...
Freki Posted January 9, 2019 Share Posted January 9, 2019 Land registry does not disclose much of the information needed to infer a price. I suspect Zoopla has it's own database with loads of features for each listing and how they provide an estimate. Look at https://houseprices.io/ and enter the postcode, you'll see what has been achieved there, and you can look around as well. Hope this helps. Quote Link to comment Share on other sites More sharing options...
shavedchimp Posted January 9, 2019 Author Share Posted January 9, 2019 Thanks, I'll give the linear regression a go if I can get hold of the Pre-2003 prices. I'm aware of houseprices.io but I'm looking more at what a realistic price should be, rather than the madness that prevails Quote Link to comment Share on other sites More sharing options...
happyguy Posted January 9, 2019 Share Posted January 9, 2019 You could do this for so many things. Look at the price of a ticket for a sport event such as a premier football match or international, a cricket test match (£75+ - Ashes test £100 plus) England New Zealand rugby international (£195 corporate package £795) I am sure this is way above prices of 10 years ago plus inflation. The price of concerts for certain bands/singers is way above the price 10 years ago and current pricing. I am sure that these prices bear no correlation to the price of say 10-20 years ago. I regularly pay more than the price 10-20 years ago to watch Premiership rugby and test cricket. If I do not I sit at home and watch on TV and miss the atmosphere, having a beer before and after with good friends which I would not get at home with she who must be obeyed! Train fares constantly go up by more than inflation and numbers of rail travellers still increases. Any property calculator will in any event not account for other variables such as Help-to-Buy, changes in lenders criteria, Freedom of Movement, general immigration, localised changes such as the expansion of science and technology estates in places like Bristol and Littlemore in Oxfordshire all of which change the market. Prices for any commodity in any market be they go down or go up will be dictated purely by the level of supply and demand. Quote Link to comment Share on other sites More sharing options...
crazypabs Posted January 9, 2019 Share Posted January 9, 2019 Zoopla house prices divided by 2 Quote Link to comment Share on other sites More sharing options...
Fromage Frais Posted January 9, 2019 Share Posted January 9, 2019 For a house at current interest rates. circa one years rent x 20. I always have to move with work so I always have to consider I may have to rent the house out eventually. A decent area around here 1200-1400 for a family house near a good school = 288k-336000 They sell for 350-450 so not a million miles away 20% correction and its on track. This would have to be amended if rates go plus 5% again down the road. Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted January 9, 2019 Share Posted January 9, 2019 The Acadata one seems to give the lowest prices. Quote Link to comment Share on other sites More sharing options...
Houdini Posted January 9, 2019 Share Posted January 9, 2019 3 hours ago, shavedchimp said: Thanks, I'll give the linear regression a go if I can get hold of the Pre-2003 prices. I'm aware of houseprices.io but I'm looking more at what a realistic price should be, rather than the madness that prevails You want a similar price from 1998 or so. Double that should give you the going rate up North for a property at the end of 2004 - and also the price they sell for now. Mind you the monthly LHA rate for a 3 bedroom property up north is £464.14 so there is little upward pressure on rents with subsequently little upward pressure on prices as there is a lot of new property being built.. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 9, 2019 Share Posted January 9, 2019 3 hours ago, happyguy said: Prices for any commodity in any market be they go down or go up will be dictated purely by the level of supply and demand. And what of speculation, hedging, hoarding, distress selling, monopoly/monopsony? Quote Link to comment Share on other sites More sharing options...
LondonBound Posted January 9, 2019 Share Posted January 9, 2019 Value it like you would a commercial property. Take the annual rent and subtract voids/ownership/tax costs and then divide through by your required rate of return. To get the max value for this exercise you can assume zero costs/voids/tax and use a BTL IO mortgage rate. That should be an upper bound of the value. Of course the lower bound could be significantly lower!! Quote Link to comment Share on other sites More sharing options...
Freki Posted January 9, 2019 Share Posted January 9, 2019 2 hours ago, LondonBound said: Value it like you would a commercial property. Take the annual rent and subtract voids/ownership/tax costs and then divide through by your required rate of return. To get the max value for this exercise you can assume zero costs/voids/tax and use a BTL IO mortgage rate. That should be an upper bound of the value. Of course the lower bound could be significantly lower!! BS, what about piece of mind of being sheltered from S21? What about feeling of belonging to your local community? Where is the price tag? Your house is not a commercial property. Quote Link to comment Share on other sites More sharing options...
bushblairandbrown Posted January 9, 2019 Share Posted January 9, 2019 When you start making offers and they get refused for being too low, you will quickly discover there is not a well defined value so much as a price you are willing to bear in order to get on with your life in the most suitable house you've viewed in the last year. I honestly think this is less a science than an art. Donald Trump is probably thick as it gets but I reckon he'd get a much better deal than someone pissing about talking about the fair value based on their latest regression. Quote Link to comment Share on other sites More sharing options...
user not found Posted January 9, 2019 Share Posted January 9, 2019 I wonder whether you could work out the lifecycle of a homeowner with age/salary/deposit. E.g first attempt might be... 18yr old: 3.5x sole salary + 5% deposit = 1 bed flat 24yr old: 3.5x joint salary + 10% deposit/equity = 2 bed flat 30: 15% deposit/equity ... 2 bed terrace 36: 20%... 3 bed semi 42: 25%... 4 bed detached Use local average salaries for typical role at each age. E.g. I'm 42... Wife works 0.5 of full time. Kids 5 & 7. Our household income is £60k ... 4 bed detached should be £280k. They're about £350k at the mo... So 20% overpriced. Hope that makes sense. Quote Link to comment Share on other sites More sharing options...
Tes Tickle Posted January 9, 2019 Share Posted January 9, 2019 (edited) Zoopla gives a reaonable estimate, basically the previous selling price adjusted for HPI since. If you're wanting a different opinion then exactly what factors are you disregarding? If you want to totally ignore speculation then you just need to calculate the number of bricks, multiply by about 80p, do the same with the pre-metre price of timber etc etc, add on the labour cost. Actually it's much simpler, houses cost about £1000 per square metre to build. The land price is 100% based upon speculation. So to remove speculation just disregard the land price. So a reaonable 3-bed house is £100k. Everything between this £100k and whatever a 100sqm house sells for in your area is the speculation premium. There isn't any agreed definition of what a "fair" house price should be. It's somewhere between the build cost and current selling prices, but everyone's opinion is different and equally valid or invalid, so it couldn't be calculated by a computer. Edited January 9, 2019 by Tes Tickle Quote Link to comment Share on other sites More sharing options...
Orb Posted January 10, 2019 Share Posted January 10, 2019 What house prices should be? Rather depressingly, I use an inflation calculator. Perhaps my reasoning is flawed and ignorant, I don't know. example, my parents' house was £16k in 1980. An inflation calculator shows £16k in 1980 is equal to £68k in 2019. But their house is now worth triple that at £210k. To my mind, £68k is what it should be. Quote Link to comment Share on other sites More sharing options...
LondonBound Posted January 10, 2019 Share Posted January 10, 2019 10 hours ago, Freki said: BS, what about piece of mind of being sheltered from S21? What about feeling of belonging to your local community? Where is the price tag? Your house is not a commercial property. Do I have to own my house to be a part of the community? As a tennant do you think I’m some inferior person worth less to the community than you? The point I was trying to make is that owning is a close substitute for renting. Cost for each should be similar (but not identical for many reasons as outlined). If that is true (it is) then a buyer should pay a similar (but not identical!) price for a house as a landlord (ie commercial buyer). Quote Link to comment Share on other sites More sharing options...
Freki Posted January 10, 2019 Share Posted January 10, 2019 Well I disagree strongly. Renters don't have the same feeling of belonging, they don't have a stake in it, and don't know if/when they will have to change to a new community. Studies corroborates that I believe. Good for you if you don't feel it. Quote Link to comment Share on other sites More sharing options...
happyguy Posted January 10, 2019 Share Posted January 10, 2019 17 hours ago, zugzwang said: And what of speculation, hedging, hoarding, distress selling, monopoly/monopsony? I agree of of these factors affect demand which cannot be factored into a spreadsheet Quote Link to comment Share on other sites More sharing options...
happyguy Posted January 10, 2019 Share Posted January 10, 2019 17 hours ago, zugzwang said: And what of speculation, hedging, hoarding, distress selling, monopoly/monopsony? Agreed 100% - all of these affect supply and demand and therefore price which cannot be put into an excel speadsheet 14 hours ago, Freki said: 17 hours ago, LondonBound said: Value it like you would a commercial property. Take the annual rent and subtract voids/ownership/tax costs and then divide through by your required rate of return. To get the max value for this exercise you can assume zero costs/voids/tax and use a BTL IO mortgage rate. That should be an upper bound of the value. Of course the lower bound could be significantly lower!! BS, what about piece of mind of being sheltered from S21? What about feeling of belonging to your local community? Where is the price tag? Your house is not a commercial property. We can do all the calculation we want to do and come up with any number we want but the determining factor will always be what a willing and able buyer is prepared to pay 14 hours ago, bushblairandbrown said: When you start making offers and they get refused for being too low, you will quickly discover there is not a well defined value so much as a price you are willing to bear in order to get on with your life in the most suitable house you've viewed in the last year. Agreed 14 hours ago, Tes Tickle said: There isn't any agreed definition of what a "fair" house price should be. It's somewhere between the build cost and current selling prices, but everyone's opinion is different and equally valid or invalid, so it couldn't be calculated by a computer. Agreed again any product or service is worth what someone is willing to pay 4 hours ago, LondonBound said: Do I have to own my house to be a part of the community? As a tennant do you think I’m some inferior person worth less to the community than you? Certainly not 9 hours ago, Orb said: What house prices should be? Rather depressingly, I use an inflation calculator. Perhaps my reasoning is flawed and ignorant, I don't know. example, my parents' house was £16k in 1980. An inflation calculator shows £16k in 1980 is equal to £68k in 2019. But their house is now worth triple that at £210k. To my mind, £68k is what it should be. Ignorant no. Flawed certainly the fact that your parent's house is worth as you suggest 210k and not 68k according to a calculation demonstrates that I guess Quote Link to comment Share on other sites More sharing options...
Tes Tickle Posted January 10, 2019 Share Posted January 10, 2019 Adjusting anything according to inflation is bound to be wrong, as the official inflation figures are complete rubbish. The simple fact is that people have got poorer in real terms over the last 25 years or so, so everything will be more expensive, with the exception of Chinese plastic goods. Quote Link to comment Share on other sites More sharing options...
maffo in oxford Posted January 10, 2019 Share Posted January 10, 2019 There will be no such thing as a realistic house price when there is unrealistic amounts of credit being lent by banks, what with them suffering practically zero consequences of doing so. Quote Link to comment Share on other sites More sharing options...
shavedchimp Posted January 14, 2019 Author Share Posted January 14, 2019 What's wrong with me using an Inflation Calculator to work out a realistic house price on which to base an offer? The Bank of England have one: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator I don't know if goods and services includes housing, but this gives a ball park average rate of inflation over the period I'm looking at of 3%. That makes the house I'm looking at, other factors ignored, about 30% over-valued. I'd be quite happy to start putting in offers of 30% below asking, citing this as my reason. Whaddyathink? Shoot this down in flames, go on.... Quote Link to comment Share on other sites More sharing options...
Fromage Frais Posted January 14, 2019 Share Posted January 14, 2019 13 minutes ago, shavedchimp said: What's wrong with me using an Inflation Calculator to work out a realistic house price on which to base an offer? The Bank of England have one: https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator I don't know if goods and services includes housing, but this gives a ball park average rate of inflation over the period I'm looking at of 3%. That makes the house I'm looking at, other factors ignored, about 30% over-valued. I'd be quite happy to start putting in offers of 30% below asking, citing this as my reason. Whaddyathink? Shoot this down in flames, go on.... Does not sound to far out to me in Norwich for houses 1200£ pm x 12 x 20 = £288,000 + 30% = circa £380,000+ which is actually pretty close to current asking prices. 850£ pcm x 12 x 20 = £204,000 + 30% = circa £265,000 The cheaper houses are definitely falling especially in BTL or "liquid areas" like estates where there are a number of samey properties. In dussingdale for example the asking prices are 10-20% of what i would deem "ok" value but only the smaller units. That 30% figure keeps jumping out you saw it there and Carney said thats the no deal brexit fall % circa. Quote Link to comment Share on other sites More sharing options...
rockerboy Posted January 14, 2019 Share Posted January 14, 2019 I think people are trying to tell you something..... On 09/01/2019 at 13:02, Freki said: I suspect Zoopla has it's own database with loads of features for each listing and how they provide an estimate. On 09/01/2019 at 16:08, crazypabs said: Zoopla house prices divided by 2 On 09/01/2019 at 21:48, Tes Tickle said: Zoopla gives a reaonable estimate, basically the previous selling price adjusted for HPI since. Quote Link to comment Share on other sites More sharing options...
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