It's all gone mad...

[Ignorantbliss]

On 27/08/2021 at 18:31, Pmax2020 said:

Things have gone mad.

I think houses build post-2000 are a good metric for analysing prices because you have good sample sizes when dealing with estates and you can compare location/size more readily. 

In 2016 you could get a ‘budget’ detached house in a less desirable location in central Scotland for about 180-200k. Bigger 4-beds in nicer areas pushed that up to 250-280k, with really nice ‘executive’ detached newer builds with the 5-beds and double garages about £325-350k.

Now any detached house, irrespective of it being in crap town with crap schools seems to be 300k. Generic new-towns in the commuter belt between Glasgow and Edinburgh, with very average schools and amenities, are regularly asking 350k for a generic detached house overlooked by 6 neighbours. 

If you look at the more desirable semi-rural places like Kinross, all the big detached houses are now £450k. 

Going by my solicitor prices have stopped falling around Aberdeen, and that with a dying oil industry and naff all else in terms of major employment opportunities.

Got talking with a local (blue) councillor over the weekend, and to try and keep the local economy afloat, they are musing in the background about the idea of advertising in SE England for people to move up here. 

The logic is that people from there can sell their house for twice the price of a house round here.  Being pioneering entrepreneurs they will apparently then use that spare cash to set up new businesses and create new jobs here.

I then asked "What about the locals who cannot afford housing as it is, won't that just price even more people out of the market" (still well over the scottish average).  "Doesn't matter, if they can't afford a house now, they're of limited use to the economy anyway".

Still trying to compute all the conflicting messages in that, and I thought the westminster lot were callous.  Just hope the council goes ahead with the plan as it will be a PR disaster for them, especially with the council elections next year.  Can you imagine posters on the London Tube along these lines (head north, land aplenty and opportunities abound)!

 

[Twenty Something]

On 29/08/2021 at 11:57, Kosmin said:

Could this have been because at lower prices, buyers are more likely to be constrained by deposits? This increases the budget by more than the stamp duty saving.

 

Assuming that the over whelming majority of people buy the biggest and best property that they can afford, a poorer person will have a smaller deposit, but it will match their smaller buying power / aspirations. Taking a 10% deposit on a 100k versus 1 million pound property, it's a 10k deposit versus 100k, but the person buying the 100k property was never looking to buy a 1 million pound one anyway, so both buyers are constrained by their deposit, it's just the more affluent buyer can get a bigger mortgage and therefore bigger property. To that end, pretty much everyone buying a property is constrained by their deposit, and I wouldn't say it is relevant only to a certain populous. To argue that the deposit constrains poorer people more, you would need to assume that more wealthy buyers don't want to max their purchasing power, when in reality I would say that most do other than specific subsets such as downsizers and those going into retirement flats while gifting their grandkids a few hundred grand. 

If we do agree with your question, then it in my view lends more of an argument to the fact that the SDLT holiday had no / little impact upon affordability as poorer purchasers would never have paid it anyway, therefore the holiday made no difference. I remember when this was announced as we were concluding our purchase in 2020, and I agreed with the sentiment here that it was largely a tax break for the wealthy as opposed to the poor. We personally saved a substantial amount on our purchase which will shortly be put towards a new kitchen / extension, but had the stamp duty holiday not happened it wouldn't have made any difference to us buying our house, it would have just put our renovations back a few years. 

 

 

[Kosmin]

22 minutes ago, Twenty Something said:

Taking a 10% deposit on a 100k versus 1 million pound property, it's a 10k deposit versus 100k, but the person buying the 100k property was never looking to buy a 1 million pound one anyway, so both buyers are constrained by their deposit, it's just the more affluent buyer can get a bigger mortgage and therefore bigger property. To that end, pretty much everyone buying a property is constrained by their deposit, 

Perhaps I should have phrased it differently. It's not buyers who are constrained by their deposits, it's buyers whose borrowing is constrained by their deposit.

For example, if you earn £100k you could borrow £500k, but only if you have a big enough deposit. If your deposit is a lot smaller than required, not paying saving stamp duty will allow you to increase your deposit and borrow a lot more. 

On the other hand, if your deposit or housing equity is above a certain threshold (it will depend on the LTV of mortgages available), the stamp duty saving does not allow you to borrow more. Your budget could increase by up to £15k, but the amount the bank will lend the same amount as before.

 

Buyers of cheaper properties are more likely to be in the first category. First time buyers, younger, less time to have saved, maybe only recently started working, or recently given a big pay rise, so relatively high income, but little wealth.

Buyers of more expensive properties are more likely to be in the second category. Have previously owned a property, built up a lot of housing equity, also older, so have had more time to save (probably not earning a lot more, but have had more years to save whilst earning at that level).

1 hour ago, Twenty Something said:

and I wouldn't say it is relevant only to a certain populous.

If FTBs and other less wealthy buyers are unable to borrow as much, for a given salary, then the stamp duty holiday allows them to borrow a lot more than their stamp duty saving, which could easily increase their budget by 50-100k. Wealthier buyers can only have their budget increased by the amount of the stamp duty saving. It is not only relevant to the less wealthy buyers, but it is more relevant to them.

[Pmax2020]

5 hours ago, Ignorantbliss said:

Got talking with a local (blue) councillor over the weekend, and to try and keep the local economy afloat, they are musing in the background about the idea of advertising in SE England for people to move up here. 

 

Er… that’s nothing new nor anything to do with boosting the economy. It’s about suppressing a pro-independence movement that’s gathering momentum.

No one in my local B&Q is even Scottish… it’s quite clear what’s happening!!

Edited August 30, 2021 by Pmax2020

[Dorkins]

1 minute ago, Pmax2020 said:

Er… that’s nothing new nor anything to do with boosting the economy. It’s about suppressing a pro-independence movement that’s gathering momentum.

No one in my local B&Q is even Scottish… it’s quite clear what’s happening!!

Seems risky if that is the plan, no guarantee that the new arrivals would be anti-independence as they are likely to be young and less small c conservative than older English people. I'm English and moving to Scotland later this year, if there was an independence referendum in which I had a vote I would vote yes.

[Pop321]

46 minutes ago, Dorkins said:

Seems risky if that is the plan, no guarantee that the new arrivals would be anti-independence as they are likely to be young and less small c conservative than older English people. I'm English and moving to Scotland later this year, if there was an independence referendum in which I had a vote I would vote yes.

They could ask all the English to vote (still living in England)…it would be a comfortable yes 😆😆

[BobbyZZZ]

On 22/08/2021 at 20:53, TheCountOfNowhere said:

Dunno what to make of it all... 

 

Been out and about last couple of weeks and everyone is talking about houses

 

 

I've witnessed a friend in the South West selling their crappy terrace house in Bristol for 400k only to buy an even crappier house in Shepton mallet for £500,000. Nether of them worth 50,000.

 

Salary of the buyer, 35k.

 

Mobile phone salesman, Northampton, sold crappy 3 bed house 400,000 in one day, now buying 800k thatched cottage. 

 

Salary unknown, wife unemployed 

 

Family friend, offered accepted on £3.5n house in Surrey. Waiting to sell theur house bough in 2009 for 800k for £2m.

 

Salary 150k, got mortgage offer that'd too good to refuse 

 

This is something else that I am witnessing

 

20 years watching this lunacy and I've never seen anything like it. 

 

Is it time to panic? 

 

Have people lost their minds? 

 

P.S one other, mate of mine been watching a house in Spain, Ameria region, for 2 year thinking they fancied a holiday home. Just spend £300 of flights to view it... Sold today. 

 

Can't even buy a shit hole in Spain at the mo. 

 

 

I believe a paper has been passed in Spain about repossessing homes due to "covid"  I would not be buying in Europe, in fact I am trying to sell my holiday home in Europe 

[BobbyZZZ]

On 22/08/2021 at 22:13, TheCountOfNowhere said:

Of course, they can flag them as market value prices on their balance sheet and look solvent instead of having to sell them off at real world prices. Worse, the boe might well asset purchase them wirg magicked up (stolen) cash 

 

Its a rigged criminal scam. 

 

2000 to 2007 was something mad but this, what we are watching now, is systematic, corrupt, wealth redistribution and outright enslavement of a nation. 

you will own nothing and by happy...coming to a country/town near you 

[Twenty Something]

2 hours ago, Kosmin said:

Perhaps I should have phrased it differently. It's not buyers who are constrained by their deposits, it's buyers whose borrowing is constrained by their deposit.

For example, if you earn £100k you could borrow £500k, but only if you have a big enough deposit. If your deposit is a lot smaller than required, not paying saving stamp duty will allow you to increase your deposit and borrow a lot more. 

On the other hand, if your deposit or housing equity is above a certain threshold (it will depend on the LTV of mortgages available), the stamp duty saving does not allow you to borrow more. Your budget could increase by up to £15k, but the amount the bank will lend the same amount as before.

 

Buyers of cheaper properties are more likely to be in the first category. First time buyers, younger, less time to have saved, maybe only recently started working, or recently given a big pay rise, so relatively high income, but little wealth.

Buyers of more expensive properties are more likely to be in the second category. Have previously owned a property, built up a lot of housing equity, also older, so have had more time to save (probably not earning a lot more, but have had more years to save whilst earning at that level).

If FTBs and other less wealthy buyers are unable to borrow as much, for a given salary, then the stamp duty holiday allows them to borrow a lot more than their stamp duty saving, which could easily increase their budget by 50-100k. Wealthier buyers can only have their budget increased by the amount of the stamp duty saving. It is not only relevant to the less wealthy buyers, but it is more relevant to them.

I think you seem in a round about way to be agreeing with the article I published in that you would expect to see the biggest increase in sales in the higher end of the market as that is where the largest savings are to be had, or indeed, where the deposit may be bolstered more through not paying up to 15k of SDLT. You mention that FTB's and other less wealthy buyers are afforded more borrowing through their stamp duty saving, but in order for them to have been paying any stamp duty at all they would need to have been buying something worth more than 500k. Not sure how the budget of someone buying a property for under 500k is increased by 50 - 100k as they are not paying any SDLT in the first place? Someone buying a 100k property and someone buying a 500k property (assuming nil other owned properties) would have paid the exact same amount of SDLT - £0. 

So it still remains interesting to me that if the SDLT holiday has supposedly created a mad rush to buy (which I agree it did seem to), then why? In the case of what I think you are arguing in that those buying properties at the lower end of the old rates had their deposits increased, it would have been by not a huge amount. Taking a £250k property, it used to be SDLT free on the first £125k, then 2% on the other £125k. That would have saved the person £2500 in tax, or as you argue, given them an extra £2500 of deposit which to my mind would have made very little if any difference to their borrowing ability - the amounts are just too small. Given mortgage multiples are based on earnings not deposit, having an extra £2.5k in the above instance would give you precisely another £2.5k as opposed to a multiple of that. 

[Kosmin]

19 minutes ago, Twenty Something said:

Not sure how the budget of someone buying a property for under 500k is increased by 50 - 100k as they are not paying any SDLT in the first place?

I was comparing the difference made by the stamp duty holiday. Before the stamp duty holiday FTBs paid stamp duty above 300k and others above 125k.

Consider a FTB who earns 100k before the stamp duty holiday. The bank says we will lend you up to 500k, subject to you putting down a 10% deposit.

The FTB has total savings of 50k. His budget is 400k:

5k is required for conveyancing, mortgage, survey etc.

At 400k, he paid 5k stamp duty. That leaves 40k, which is 10% of 400k.

 

During the stamp duty holiday, his deposit has increased by 5k, to 45k, so now the bank will lend him 450k. That is an increase of 50k.

Does this make sense, or have I made a mistake?

 

I'm not sure how significant this is. That's why I asked whether it could be explained by this, rather than asserting that it could be.

I assume it's fairly significant.

Stamp duty has been changed several times (e.g. before recent changes to FTBs, it was changed from a slab tax to a marginal tax, which cut the amount payable above thresholds) and people noted that these changes were likely to allow some buyers to borrow much more for than reason I have pointed out.

This might not just be a factor for FTBs. Another group might be those who want a BTL, but were a little short of the required deposit.

 

19 minutes ago, Twenty Something said:

I think you seem in a round about way to be agreeing with the article I published in that you would expect to see the biggest increase in sales in the higher end of the market as that is where the largest savings are to be had, or indeed, where the deposit may be bolstered more through not paying up to 15k of SDLT.

Why would you expect the biggest increase in price where the sale is greatest? If everyone paid with cash that would be the case. If everyone had no trouble putting down a big deposit in order to borrow the maximum income multiple that would be the case.

Buyers who are saving 15k are more likely to be second steppers, who have significant housing equity. Most people who have bought a house years ago will have seen their wealth grow faster than their income, so they are less likely to be constrained by an inability to put down a big enough deposit.

[Insane]

2 hours ago, Pop321 said:

They could ask all the English to vote (still living in England)…it would be a comfortable yes

Lol. 

[Twenty Something]

3 hours ago, Kosmin said:

I was comparing the difference made by the stamp duty holiday. Before the stamp duty holiday FTBs paid stamp duty above 300k and others above 125k.

Consider a FTB who earns 100k before the stamp duty holiday. The bank says we will lend you up to 500k, subject to you putting down a 10% deposit.

The FTB has total savings of 50k. His budget is 400k:

5k is required for conveyancing, mortgage, survey etc.

At 400k, he paid 5k stamp duty. That leaves 40k, which is 10% of 400k.

 

During the stamp duty holiday, his deposit has increased by 5k, to 45k, so now the bank will lend him 450k. That is an increase of 50k.

Does this make sense, or have I made a mistake?

 

I'm not sure how significant this is. That's why I asked whether it could be explained by this, rather than asserting that it could be.

I assume it's fairly significant.

Stamp duty has been changed several times (e.g. before recent changes to FTBs, it was changed from a slab tax to a marginal tax, which cut the amount payable above thresholds) and people noted that these changes were likely to allow some buyers to borrow much more for than reason I have pointed out.

This might not just be a factor for FTBs. Another group might be those who want a BTL, but were a little short of the required deposit.

 

Why would you expect the biggest increase in price where the sale is greatest? If everyone paid with cash that would be the case. If everyone had no trouble putting down a big deposit in order to borrow the maximum income multiple that would be the case.

Buyers who are saving 15k are more likely to be second steppers, who have significant housing equity. Most people who have bought a house years ago will have seen their wealth grow faster than their income, so they are less likely to be constrained by an inability to put down a big enough deposit.

I think you have made a mistake yes. Increasing the deposit of your FTB from 40 - 45k will not result in the bank lending an extra 50k. The multiplier of 4.5 x is that of income, not of deposit, so regardless of deposit, the bank will only lend 4.5 x 100k in your example, or 450k. I think you have got muddled up with deposit and lending multiples which relates to earnings. So, to do the maths:

0% up to 125k £0
2% 125k to 250k £2500
5% on the remaining 250k £12,500

Total SDLT payable before holiday £15,000

So in essence in your example, the buying power of the FTB has increased by the £15k of the stamp duty saving only. If their salary doesn't change then regardless of deposit amount they can borrow £450k as long as they meet minimum LTV requirements, which before the pandemic were at 95%. Maybe the holiday allowed for some people who had say a 3% deposit together to get to that 5% number, but unless you can present any figures then I would suggest that this would have been a very small percentage of purchasers. 

To move on, I would also say that your example of an FTB having half a million quid to spend is not a typical FTB. I agree that those saving the full 15k (as in the above example) are more likely to be second / third steppers, but that backs up what I / the article I posted is saying in that if those who stand to gain the biggest savings are those buying the more expensive properties, then why is it that the biggest increases have been in poorer parts of the country / less expensive property? If the stamp duty saving has driven demand based purely on financials, then why have the quickest accelerations in prices been for the cheaper end of the market? Surely you would expect very small increases in cheap properties, and for those 500k and up to have been booming? However, properties that would have attracted no stamp duty anyway have seen prices rises 10 - 15% in a year which leads me to conclude that it can't be financially driven, and actually more of a sentiment / good feeling within the market. It's why I believe that the removal of the stamp duty holiday is going to have little to no downward pressure on prices as it didn't impact them in the first place. Really what it did was concentrate two years worth of demand into a little over one, and that has then caused a rapid acceleration in prices as supply cannot keep up. 

Now that the holiday is being tapered / removed, sure there will be a slowing of year on year growth as the market returns to a normal rhythm, and we are seeing that presently, but this isn't going to create the cliff edge crash that many on here are praying for. Ditto with the ending of furlough whilst we're on it. There is so much demand for labour - lorry drivers, amazon drivers, bar staff, waiters and so on that again I fail to see the cliff edge crash in the economy that people post endlessly about here. It's not to say there won't be a recession and a house price correction in the future, I am certain there will be, but as per previous replies, I am planning my life for that event in 5 - 10 years from now.

[Si1]

9 hours ago, Twenty Something said:

I think you have made a mistake yes. Increasing the deposit of your FTB from 40 - 45k will not result in the bank lending an extra 50k. The multiplier of 4.5 x is that of income, not of deposit, 

Blabla.

Second order thinking dude.

[TheCountOfNowhere]

15 hours ago, BobbyZZZ said:

you will own nothing and by happy be a slave...coming to a country/town near you  already here.

 

[TheCountOfNowhere]

15 hours ago, BobbyZZZ said:

I believe a paper has been passed in Spain about repossessing homes due to "covid"  I would not be buying in Europe, in fact I am trying to sell my holiday home in Europe 

interesting BobbyZZZ

[TheCountOfNowhere]

On 28/08/2021 at 14:15, Kosmin said:

Earnings fell a lot in 2020 and rose a lot in 2021. I think this is mostly due to the number of people working falling in 2020 and increasing in 2021. I don't think this statistic means the average person will receive an 8% pay rise.

 

I've see a lot of contractors now talking full time jobs or within IR35 contractors, which means they all look like they've had a massive pay rise  

 

I suspect a lot of that 8% is down to that.  The contract rates, when I had a look, looked like they'd gone down

[Twenty Something]

7 minutes ago, Si1 said:

Blabla.

Second order thinking dude.

Does this come with any elaboration as I don’t get your point. 

[TheCountOfNowhere]

On 27/08/2021 at 18:49, Si1 said:

I'm in a similar state to CoN so this could be true.

 

[12345]

4 minutes ago, Twenty Something said:

Does this come with any elaboration as I don’t get your point. 

If I may;

Let’s use an example someone with a £100,000 income, able to borrow at 4.5x income, so £450,000.

They have a £40,000 deposit after stamp duty, but the bank will only lend at 90% LTV, so the max they can spend on a house is £400,000, with a £360,000 mortgage. (Stamp Duty is £10,000)

When you scrap stamp duty, you increase their deposit after stamp duty to £50,000 et voila! They can now spend £500,000 on a house with a £450,000 mortgage - a 25% increase.

[Kosmin]

10 hours ago, Twenty Something said:

Surely you would expect very small increases in cheap properties, and for those 500k and up to have been booming? However, properties that would have attracted no stamp duty anyway have seen prices rises 10 - 15% in a year which leads me to conclude that it can't be financially driven, and actually more of a sentiment / good feeling within the market.

If there was "sentiment / good feeling," did it vary by place and region, or does some other factor explain the differences? If there isn't a theory for why sentiment varied from place to place, do we even know that positive sentiment was significant at all in some places? 

10 hours ago, Twenty Something said:

If the stamp duty saving has driven demand based purely on financials, then why have the quickest accelerations in prices been for the cheaper end of the market?

Is it actually true that prices have increased more in the cheaper end of the market? Cheaper areas may have increased faster, but I am sceptical that this is true of cheaper properties as well.

Aren't flats the cheapest properties? Is it really the case that the biggest price increases are for flats in cheap areas? I would have thought it more plausible that houses are driving the increases in cheaper areas and flats are dragging down the price increases in expensive areas. 

[Twenty Something]

1 hour ago, 12345 said:

If I may;

Let’s use an example someone with a £100,000 income, able to borrow at 4.5x income, so £450,000.

They have a £40,000 deposit after stamp duty, but the bank will only lend at 90% LTV, so the max they can spend on a house is £400,000, with a £360,000 mortgage. (Stamp Duty is £10,000)

When you scrap stamp duty, you increase their deposit after stamp duty to £50,000 et voila! They can now spend £500,000 on a house with a £450,000 mortgage - a 25% increase.

Surely this is a binary can / can’t borrow example though? You have 100k salary so you can theoretically borrow 4.5 x that, so 450k. That doesn’t change whether you have a 40 or a 50 grand deposit. I get what you’re getting at, and as per my above post, the stamp duty saving may have enabled some to buy who had say a 3% deposit saved that is now 5% (or in your example an 8% deposit that is now 10%), but I was of the opinion that this wasn’t wide spread unless anyone can provide numbers to the contrary? It has pushed forward people’s ability to buy in some instances, hence the buying frenzy as people have a bit more cash. 
 

However, this isn’t really the discussion. It’s more why have prices accelerated more in poorer areas where stamp duty was never a consideration anyway? The biggest gaining regions are outside of London / the south east, therefore the assertion is that the stamp duty saving itself has had little impact financially and has been more of a sentiment builder saying hey, the government has your back here. 

Edited August 31, 2021 by Twenty Something
Phone auto correct madness

[Twenty Something]

1 hour ago, Kosmin said:

If there was "sentiment / good feeling," did it vary by place and region, or does some other factor explain the differences? If there isn't a theory for why sentiment varied from place to place, do we even know that positive sentiment was significant at all in some places? 

Is it actually true that prices have increased more in the cheaper end of the market? Cheaper areas may have increased faster, but I am sceptical that this is true of cheaper properties as well.

Aren't flats the cheapest properties? Is it really the case that the biggest price increases are for flats in cheap areas? I would have thought it more plausible that houses are driving the increases in cheaper areas and flats are dragging down the price increases in expensive areas. 

My gut instinct is that sentiment didn’t vary by region, but the richer end of the market isn’t bothered by 15k in the context of half million pound properties upwards. It would be nice to have the cash back of course, but people with access to large amounts of cash / borrowing are going to be less impacted by a few grand here and there. I’m not sure other than anecdote we can possibly measure positive sentiment nationally? Certainly not on a large scale, though there are some on this forum who would profess to know the thoughts of everyone around the country. The RICS state of the market summaries spring to mind, but that of course will have accusations of bias thrown at it. 
 

In terms of are poorer areas leading the way, this has been widely observed over the past couple of years. London has fallen back and Wales, the north of England and so on have pushed on as people supposedly seek more space and greenery. 
 

https://www.buyassociation.co.uk/2021/07/02/uk-house-prices-are-rising-the-fastest-in-the-most-affordable-markets/

 

Flats aren’t always the cheapest properties. Depends what you’re looking at I guess, though the cladding issues will have made an impact on many. You could extrapolate I guess that London has more flats per square mile than a small town in north Wales, so perhaps weakness in flat sales is pulling down the increases. However, the cost to buy anything in London is going to put flats, houses and so on into the richer end of the scale, therefore to my mind it still doesn’t explain the large growth in the cheaper end of the market. A small flat anywhere in or around central London is going to be 500k upwards, therefore it’s not really dragging the region down to 80k flat in Greater Manchester levels. 

[Kosmin]

39 minutes ago, Twenty Something said:

Surely this is a binary can / can’t borrow example though? You have 100k salary so you can theoretically borrow 4.5 x that, so 450k. That doesn’t change whether you have a 40 or a 50 grand deposit. I get what you’re getting at, and as per my above post, the stamp duty saving may have enabled some to buy who had say a 3% deposit saved that is now 5% (or in your example an 8% deposit that is now 10%), but I was of the opinion that this wasn’t wide spread unless anyone can provide numbers to the contrary?

Hasn't this been the central feature of the housing market and FTBs for many years? A lot of people could afford the repayments on a mortgage ("my mortgage payment would be less than my rent") but aren't able to put down a significant deposit, so they aren't able to buy.

Help to buy was introduced to alleviate this problem, so it is clearly significant.

There are a lot of renters who earn a lot, but say they can't afford to buy. Either they are lying, or they aren't able to put down a deposit.

 

42 minutes ago, Twenty Something said:

However, this isn’t really the discussion. It’s more why have prices accelerated more in poorer areas where stamp duty was never a consideration anyway?

I think a similar argument could explain those increases. For example, somebody wants to buy a 100k house, and the bank would lend 90k, but only if they have a 10k deposit. In 2019 they didn't have 10k, but by 2021 they did, so they could buy.

I just wasn't sure whether this sector of the market was significant. Stamp duty is paid on moderately expensive and expensive properties in cheap areas and cheap and moderately expensive properties in expensive areas. I assume this makes up a significant part of the market.

37 minutes ago, Twenty Something said:

Flats aren’t always the cheapest properties.

If flats aren't the cheapest, would it be small terraced houses (with not much space, inside or out)? It's hard to see them increasing in value faster than semi detached and detached houses as part of the "race for space."

39 minutes ago, Twenty Something said:

You could extrapolate I guess that London has more flats per square mile than a small town in north Wales, so perhaps weakness in flat sales is pulling down the increases. However, the cost to buy anything in London is going to put flats, houses and so on into the richer end of the scale, therefore to my mind it still doesn’t explain the large growth in the cheaper end of the market. A small flat anywhere in or around central London is going to be 500k upwards, therefore it’s not really dragging the region down to 80k flat in Greater Manchester levels. 

Flats per square mile is irrelevant and I wasn't claiming that flats in London would collapse in value so they are cheaper than in Manchester!

In expensive areas (such as London) a much higher proportions of properties are flats. A lot of houses have been converted to flats and there are lots of blocks of flats. Flats have certainly increased in value significantly less than houses. This is a factor which will have caused expensive areas to increase less than cheaper areas.

[Twenty Something]

36 minutes ago, Kosmin said:

Hasn't this been the central feature of the housing market and FTBs for many years? A lot of people could afford the repayments on a mortgage ("my mortgage payment would be less than my rent") but aren't able to put down a significant deposit, so they aren't able to buy.

Help to buy was introduced to alleviate this problem, so it is clearly significant.

There are a lot of renters who earn a lot, but say they can't afford to buy. Either they are lying, or they aren't able to put down a deposit.

 

I think a similar argument could explain those increases. For example, somebody wants to buy a 100k house, and the bank would lend 90k, but only if they have a 10k deposit. In 2019 they didn't have 10k, but by 2021 they did, so they could buy.

I just wasn't sure whether this sector of the market was significant. Stamp duty is paid on moderately expensive and expensive properties in cheap areas and cheap and moderately expensive properties in expensive areas. I assume this makes up a significant part of the market.

If flats aren't the cheapest, would it be small terraced houses (with not much space, inside or out)? It's hard to see them increasing in value faster than semi detached and detached houses as part of the "race for space."

Flats per square mile is irrelevant and I wasn't claiming that flats in London would collapse in value so they are cheaper than in Manchester!

In expensive areas (such as London) a much higher proportions of properties are flats. A lot of houses have been converted to flats and there are lots of blocks of flats. Flats have certainly increased in value significantly less than houses. This is a factor which will have caused expensive areas to increase less than cheaper areas.

To try and unpick the above, I have searched for the stats on high LTV mortgages. The best I can find is from Q1 2021, so pretty recent, and certainly covers the pandemic period. The FCA state that the share of the market for mortgages over 90% is 1.1%. This is down from 5.7% in Q4 2019 (chart 3 of the below link)

https://www.fca.org.uk/data/commentary-mortgage-lending-statistics-q1-2021
 

So to directly answer your question, no, it would not appear that extrapolating for the above a large volume of people suddenly became able to buy secondary to SDLT savings. Those in higher LTV bands wouldn’t have been so constrained as if you can access 60% LTV then you would just drop to 65% if you had to. Many already do this of course to fund extensions and the such.

For the second part, I think you misunderstood the point I was making. If I am saying that cheap property has increased quicker than expensive, the point is that cheap property as compared to national averages doesn’t exist in London. Therefore whatever flats and houses are doing in London, they will always be expensive. Therefore the ‘cheaper’ flats in London don’t accelerate in price as they aren’t cheap. It is all just expensive fullstop. Thus, the type of property has no bearing on the original article I posted which purports that cheaper properties have seen the greatest increases - I.e 80k flats in Greater Manchester. 

Take the two graphs below which show a five year period for Wandsworth in SW London versus Manchester. Manchester has outperformed Wandsworth on every property type, and in terms of overall growth in average price, by 30 times as much (30% vs 1%). Again, cheaper areas are absolutely flying as compared to more expensive across all property types. Indeed, this has been going on far longer than the stamp duty holiday, therefore has it really made any difference at all? 

[BobbyZZZ]

4 hours ago, TheCountOfNowhere said:

 

Very true