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Hopeful FTB

Who Decides That House Prices Go Up?!

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I know that this is a REALLY stupid question who decides that house prices go up?

How does the whole process start?

Is it based on estate agents valuing houses in one street and all out doing each other to make more money?

Who decided at the start of this boom that houses were suddenly going to go up by 8 times their value?

And can this concept apply in all areas, even the less desirable ones?

My sister went to view a house a few days ago in south wales- she said it was totally awful in a dreadful area on a rough estate and in terrible condition - she asked the estate agent how on earth it could be valued at the price it was when clearly there was nothing at all to justify the price- no local amenities, a horrible area, needed a total overhaul and it had been clearly bought years ago in the right to buy scheme for 20p - the estate agent had no answer apart from market conditions?!

I know I am being an idiot here- but it just seems based on estate agent opinion and who are they to decide that a 20p house is now worth 115k? On what basis exactly?

I am being a muppet right! :unsure:

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its a market, the price is determined by the buyers and who pays the most in agreement with the seller. Simple supply and demand. However the supply and demand is manipulated by fear, greed, and estate agents advertising things above the avarage selling price.

dont pay the asking price, the asking price is what the selling is after, the housing market isnt like going to a supermarket... Do you research first

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Pure cheek. If a seller has his valued at say 200k, its because a similar one next door sold for that much. So the seller decides he wants more than that and adds on 20k. If someone then buys it for 220k, hey presto, all houses similar are now 'worth' 220k, until someone decides theirs is 'worth' 230k, 240k and so on. So remember, a lifetimes debt is mainly down to cheeky b*stards, greed and total mugs.

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Prices are ultimately determined by buyers. Essentially the housing market is like an auction in slow motion where the lots are constantly being replenished. If something's bid up to a silly price at an auction we don't blame the auctioneer or the seller -- it's the buyer who's responsible.

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It does take two of course, theres no Parker's guide to house prices.. And on the way down, less & less people can afford to pay high prices, forcing people to knock more & more off what they're asking.. so when those places sell, the lower price sets a precedent for the rest of the street/town/county.. ie a buyers' market. In theory.

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Demand - AFAIK theres a shortage of housing because of Government building restrictions and landlords/second home owners leaving properties empty...

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I thought I'd throw this one in just to stimulate the debate.

It's the Bank of England who decides that house prices will go up.

The Bank of England buys some gilts (UK treasury bonds) for £100k, creating the money to buy them out of thin air.

The seller of the gilts gets a cheque for £100k which they deposit in a commercial bank.

The commercial bank has now increased its reserves by £100k which means it can go out and lend another £180k or so.

The commercial bank decides to lend the £180k to an FTB (previously considered a borderline risk).

Having the mortgage in place, the FTB bids £180k on a property, outbidding others who could only offer £170k.

Hey presto, house prices have gone up.

frugalista

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The other thing I'll add is that it takes ages in either direction, as home owners aren't giving it away. Also it doesn't help when all the papers are saying prices are still going up...

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  • 302 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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