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How Much Of House Price Inflation Is Due To Home Improvement?


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My friend bought this house in early 2002 for around £160k.

http://www.homes-on-line.com/essex/valerie.../f313_wb637.htm

At the time this was cheap. An old lady had lived on her own there and it was a mess. The garden was totally overgrown with brmbles etc. He has also extended the property to add another 2 bedrooms (4 now). There is a new kitchen and bathroom....extensive re-flooring with tiles, new driveway etc etc.....a complete makeover basically.

Thing is, when (if) he sells it the price rise wont reflect any changes....the inflation figures will just show x% per year increase.

Anyone got any idea how we factor this in?

How about this....if you took the turnover of all DIY stores and home improvement builders during the 95/96 years as a baseline, you would probably get the amount spent each year to keep properties in the same condition. Sub this fugure from current spending rates and you get the amount of improvement added to all the properties.

Not sure practically how you would go about getting this data though.

BTW he's had 6 viewings and no offers.

J.

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My friend bought this house in early 2002 for around £160k.

http://www.homes-on-line.com/essex/valerie.../f313_wb637.htm

At the time this was cheap. An old lady had lived on her own there and it was a mess. The garden was totally overgrown with brmbles etc. He has also extended the property to add another 2 bedrooms (4 now). There is a new kitchen and bathroom....extensive re-flooring with tiles, new driveway etc etc.....a complete makeover basically.

Thing is, when (if) he sells it the price rise wont reflect any changes....the inflation figures will just show x% per year increase.

Anyone got any idea how we factor this in?

How about this....if you took the turnover of all DIY stores and home improvement builders during the 95/96 years as a baseline, you would probably get the amount spent each year to keep properties in the same condition. Sub this fugure from current spending rates and you get the amount of improvement added to all the properties.

Not sure practically how you would go about getting this data though.

BTW he's had 6 viewings and no offers.

J.

It isn't factored in and it probably accounts for half the increase in HPI.Take that away and investment in houses is just not there.I have covered this point on the Life in The trough thread today.House bought for 192k Dec 03 spent 30K now up for 200k.might get 185K.(house I viewed weekend)

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We put in an offer a few days ago, for £30k less than asking price to which they came back with if we put in a new kitchen would you pay the asking price. WTF ?

Will it be a £30k kitchen, would i spend £30k on a kitchen anyway - no, will it be to my taste. And yet they genuinely believe a new MFI kitchen costing £6k would add £30k to their

property. So many muppets around.

Your friend has a lovely house though btw

Edited by terrified
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It's played a minor role on hpi imo. Property prices have been going up in the SE just because they are in the SE. Any work undertaken will increase the hpi further.

Also, having an influx of new build apartments has made buyers realise that they can get a 3 bed semi for simlar prices I believe this has pushed prices up of houses. Houses that were often below the £200k mark are now always above £215k and sometimes as much as £250k.

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I think it plays a massive role in giving the appearance of inflation. Lots of house are sold in my area by old poeple and then fixed up bu yuppies adding extensions etc. When they are sold it looks like the HPI in the area is very high.

Another thing is that in theory a lot of improved houses should fall into a higher tax bracket.

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I think it plays a massive role in giving the appearance of inflation. Lots of house are sold in my area by old poeple and then fixed up bu yuppies adding extensions etc. When they are sold it looks like the HPI in the area is very high.

Another thing is that in theory a lot of improved houses should fall into a higher tax bracket.

Why is someone who does a house up a yuppie (which is let's face it, a mildly derogatory term) - why could it not be hard up families who are stretching themselves and can't afford a house that's done and can see a window of opportunity..... - if they just buy, do up and sell, they are developers, same as they have always been - not yuppies....

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I think it plays a massive role in giving the appearance of inflation. Lots of house are sold in my area by old poeple and then fixed up bu yuppies adding extensions etc. When they are sold it looks like the HPI in the area is very high.

Another thing is that in theory a lot of improved houses should fall into a higher tax bracket.

They do fall into the higher tax bracket since house improvements are classed by the IR as property development and not property investment, one way around this is to shelter the property(ies) inside a property company, no 40% income tax incurred

Edited by Lorian
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Guest Charlie The Tramp

Many Home Owners can`t afford to move up the ladder and are extending their present homes.

TheMail

People are living in their homes for longer because of the huge expense of buying a new house, new research reveals.

Rising house prices and extra costs like stamp duty mean homeowners are putting off moving to a new house - and are improving their old one instead.

A comment on the Article.

You will be getting extra taxed even if you don't move, because the re-valuations (especially after improvements) are putting houses in higher council tax bands. OK it's not going direct to Gordon, but it means he can make council grants smaller because of their extra income.

- Davep, Birmingham, England

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Is this what a 'flipper' does? I think this has had a massive effect on house prices in my area. Going from the fact that I know alot of people who do this I would say that this has had by far the biggest effect of all. These people have of course used the increased equity to buy bigger houses so hopefully if there is a downturn then I will get to dance on their graves.

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Is this what a 'flipper' does? I think this has had a massive effect on house prices in my area. Going from the fact that I know alot of people who do this I would say that this has had by far the biggest effect of all. These people have of course used the increased equity to buy bigger houses so hopefully if there is a downturn then I will get to dance on their graves.

I agree with you there Als, but I have seen them flip, on my estate and as soon as the new buyer moves in, they start knocking the place about again replacing the bathroom and kitchen. There is no limit to the madness in this market.

Edited for missing words not spelling this time

Edited by wheresmyfoxhole
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"The second con is the idea of “Fixing Up”. I am a professional in the maintenance trade and can do ALL the work myself, except of course for a few jobs that require special equipment or occasionally a second pair of hands. It is NOT easy work and anybody who tells you you can do “Quick and Easy” fix ups to fool a professional surveyor is either a liar or as stupid as you are to fall for it. You may fool a private buyer and even I can get fooled sometimes, but not over several things in the same house. I am not the least bit surprised that Casey got bigger bills for work done than he expected, this is because “Certified” people cannot afford to do “Quick and Easy”, it simply does not work that way.

What this means is that a cheap house is cheap for a valid reason in most cases, someone who thinks thay can buy it and do cheap fix ups on it is in for one of two things, either a lot of hard work themselves or a lot of money to contractors. If a fix costs $5000 it is unlikely to add that much value to the property. I once won a competition (In the UK) which got my house with rotten old windows replaced with brand new thernally efficient double glazed units. This would have cost me if I’d been paying for them about $30,000 so I called the lender to see what their estimate of equity gain might be. They said maybe a couple of thousand, well maybe $5000 because people nowadays expected double glazing and in any case would “See” the value of the windows but “Not see” the labor costs. They were right, when I sold the place it actually cost me a little money because the housing bubble had already “Burst”. In my case the damage was minimal but had I owned several like it as Casey does the damage would have been considerable, although the amounts would have been smaller."

http://iamfacingforeclosure.com/1/why-i-am...ng-foreclosure/

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I agree with you there Als, but I have seen them flip, on my estate and as soon as the new buyer moves in, they start knocking the place about again replacing the bathroom and kitchen. There is no limit to the madness in this market.

Edited for missing words not spelling this time

Sooner or later it will all wear itself out. The hardest thing is to sit and wait.

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  • 439 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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