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Umbongo

How Much To Fall/discount ?

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I'm a bear who STR mid/late last year - been happily renting since, enjoying a change of scene and monitoring the movement of the market.

Family circumstances now mean that I would like to get into a house of my own again, but am no means being forced into it. I just don't believe that there will be a big, sudden crash, too many people are aware of the possibility and too many people are emotionally tied into the homes that they own. I do feel that a lot of people who paid top dollar in the last 12months will be burned but ho-hum dont really care :rolleyes: and not convinced its enough to bring houses down more than about 10% on average.

I'm lucky to have a well paid job and some cash from my previous sale - am aware of the risks and even expect to make a small loss in the short term but some other issues trade that off suitably. My home is going to be my home and not my pension.

So when I am viewing houses and thinking of making offers I have to think "what is the price drop going to be on this house ?"

So opinions please to help build in some slack before offers go in ...

1. What is the average sale price vs asking price ? I remember hearing 93% bandied about.

2. How far did prices fall in the last crash ? Again I heard 10% average with higher on questionable properties.

3. How much do you think current prices will fall if any kind of crash actually does come along (dont care when).

4. How much discount does cash bring to this ? - not being in a chain could really help out someone about to lose the home they want.

5. So how much under asking, on a house that is priced with the market is reasonable ? Throw in sticky houses with a seller who needs to get out and this shifts I know but what about someone who has been on the market for 2 months and is just starting to get twitchy ?

I think 15% is about the most realistic drop that we would see accepted on most houses and only then after a little bit of work to get the vendor's expectations into line.

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So opinions please to help build in some slack before offers go in ...

1. What is the average sale price vs asking price ? I remember hearing 93% bandied about.

2. How far did prices fall in the last crash ? Again I heard 10% average with higher on questionable properties.

3. How much do you think current prices will fall if any kind of crash actually does come along (dont care when).

4. How much discount does cash bring to this ? - not being in a chain could really help out someone about to lose the home they want.

5. So how much under asking, on a house that is priced with the market is reasonable ? Throw in sticky houses with a seller who needs to get out and this shifts I know but what about someone who has been on the market for 2 months and is just starting to get twitchy ?

I think 15% is about the most realistic drop that we would see accepted on most houses and only then after a little bit of work to get the vendor's expectations into line.

I was around for the last crash. I bougHT A 3 Bed terrace in Greenwich For £81k in 1987, I got it valued at the end og 1988 and it was worth £105k I turned down an offer of £98k out of greed. Within 2 years it was only worth £70k and stayed around there for 7 years until Greenwich got the millenium dome. I sold in 2000 for £119k. It is now worth about £250k.(poor condition) Ask yourself this When prices do start to go down how far do you think they will fall. I wouldn't be surprised and it would follow trend for this house in Greenwich to drop back to £150k.

In my opinion you would be netter renting than going back in just yet

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I checked on the last crash recently (the figures are on this site somewhere). As I recall prices fell between 17-21% and 37% in real terms (after inflation) between 1989 and 1995. I believe the average selling price is 93% of asking price but of course it could be a lot more or a lot less - you really have to have your wits about you to get a good deal, but it is very much a buyer's market. If I was buying now I'd look at the peak selling price in the area (not asking price) for the type of property (which could have peaked any time between 2003 and now) and look for at least a 25% reduction. You may find prices have already dropped 10% or more against peak. If you don't get that kind of deal you should seriously think about holding on.

That's my advice, for what it's worth. Good luck.

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2. How far did prices fall in the last crash ? Again I heard 10% average with higher on questionable properties.

3. How much do you think current prices will fall if any kind of crash actually does come along (dont care when).

The vast majority will be surprised how far prices can fall. An accurate prediction of how far prices will fall would be ridiculed today. So there is not much point speculating convincingly on the extent of the fall when most people do not believe a crash will happen anyway.

Edited by onionpie

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IIRC, the last boom / crash (87-94) did not affect different areas of the UK in the same way.

The boom was mostly concentrated in the south of England, which therefore also saw the worst falls during the crash.

This means that the size of the crash in terms of the national average underestimates the southern crash and overestimates the northern crash.

This time, the boom has taken in the whole of the UK, although the north boomed later than the south. This could mean that the crash takes in all regions.

frugalista

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My parents bought in Cambridgeshire in 1988. By 1992 their house had dropped in value by almost 30%; it was not until 2001 that the price of their house (in real trems) had reverted to the purchase price.

People forget the lessons of history.

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Guest Alright Jack

IIRC, the last boom / crash (87-94) did not affect different areas of the UK in the same way.

The boom was mostly concentrated in the south of England, which therefore also saw the worst falls during the crash.

This means that the size of the crash in terms of the national average underestimates the southern crash and overestimates the northern crash.

This time, the boom has taken in the whole of the UK, although the north boomed later than the south. This could mean that the crash takes in all regions.

frugalista

ha! i think i know who you are.

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My parents bought in Cambridgeshire in 1988. By 1992 their house had dropped in value by almost 30%; it was not until 2001 that the price of their house (in real trems) had reverted to the purchase price.

People forget the lessons of history.

I recall nominal drops of around 25% in the last crash - a mate who bought for £40K could only sell for £30K when his job relocated. A 10K loss is not nice but was less than a years salary back then. A similar %age fall today might equate to 2 years salary for many. So what does that mean?. I recommend that everybody reads this :

http://www.economics.ox.ac.uk/members/andr...t1UKHousing.pdf

If nothing else, read box 1 on page 3 which describes how to measure your wealth in terms of living expenses, and how a small fall in nominal house prices can have a dis-proportionate impact on your net wealth, particularly if you are heavily geared!

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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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