Wednesday, June 22, 2011

Good news

House prices: four in five homes worth less than five years ago

The majority of homes bought in Britain are worth less now than they were five years ago, new research suggests. Some 3.5 million properties, or 80pc, bought since 2006 are said to be "underwater", or worth less than their purchase price, according to a study by Zoopla.co.uk. But many owners are unwilling to lose money on their original purchases and are setting unrealistic asking prices, the property website said, resulting in them being "stuck" with their homes. People who bought at the peak of the market between 2007 and 2008 are the worst affected, with 93.2pc and 88.9pc respectively of homes bought during this period worth less now. However, London has proved more resilient, with fewer than half (46pc) of homes in the capital worth less now than in 2006.

Posted by drewster @ 08:52 AM (4779 views)
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19 thoughts on “Good news

  • I suppose I should feel lucky I live in an area where peak prices are being achieved.

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  • “Property prices in London, particularly at the top end of the market, have proven somewhat immune to the economic forces that have deflated prices further down the chain.’

    That must be good for the Oligarchs then, but how many terraced and semi’s do they buy?

    Down here in Devon, I have heard many vendors talk of selling to an Oligarch or senior banker and that’s why their asking prices are set so high. LOL>

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  • stillthinking says:

    Good thing they didn’t value savings against foreign currencies, that really would have been depressing.

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  • So, back to reality. In non London locations I am seeing many 4/5 bed 250k+ properties coming onto the market and very fewer <150k terrace and semi detached properties. Is anyone else noticing this?

    My thoughts were that people who own cheaper houses often have less equity (FTB's) or earn less and simply can't afford to even think of moving. The 4/5 bed+ detached houses are owned by people 'up the ladder' who have say 50%+ equity and a relatively large mortgages. It is this group wanting to downsize and pay-off some of there debts. This group will not be able to sell because there is simply no up movement because no one can afford to take on greater debt.

    Your thoughts please?

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  • @Khards

    Yes. Seeing exactly the same in our area of the East Midlands. Most of the houses coming up for sale are 4 bed detached at around £240k+

    These are also the houses that are not selling and are sitting around on the market for many months before the ‘for sale’ board mysteriously disappears.

    I have very recently (in the last two weeks) seen some reductions in prices however these reductions are from a grossly inflated starting point. Still hugely overvalued e.g. £30/40k above peak asking prices.

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  • mark wadsworth says:

    Rather amazingly, most cars, fridges, TV sets, whatever which were bought five or more years ago are also worth a lot less now. Why is this such a big deal, just because the same applies to houses?

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  • happy mondays says:

    Here in the Brighton area, asking prices are still shamefully way too high,& looks like it could well be a long time drifting down. unless the classic side punch comes out of no where to put the housing market on the floor..

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  • cornishtinmine says:

    @Kards

    There is barely anything priced below £250k here in Buckinghamshire but that only gets you a small maisonette or 2 bed cottage requiring totally refurb…

    There are many more houses on the market in the £250k-£350k price bracket – but many of these are not selling… not much competition from BTL investors as a £300k place only lets for a little over £1000 pcm … there are very few houses on the market between £500k and £800k (which gets you a 3-4 bed house on an estate) – these seem to be selling more quickly and I’ve noticed prices edging up over the last few months as all the estate agents in town are competing for instructions – but if they are two ambitious they then hang around until they are reduced – some are now selling for more that in 2007/08. Houses around £1m seem to be selling too, so clearly high income earners with large deposits are moving whilst those at the bottom end are struggling…

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  • The wages in Buckinghamshire must buck the national trend as you would need to be earning £150k+ to buy a family home.

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  • Cornishtinmine says:

    @ Khards

    apparently there are lots of BA pilots living in the area (commutable to Heathrow) who earn around £100k. but I still cannot understand how people can afford to buy here – and if I was fortunate enough to be earning half that I would not want to buy a tiny maisonette anyway – the area is nice but not THAT fantastic – still takes over an hour on the train to London…

    Maybe I’m just getting fussy in my old age but there are very few places where I’d want to live in this country – for the price you have to pay – think I might emigrate!

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  • cornishtinmine says:

    @ Khards

    apparently there are lots of BA pilots living in the area (commutable to Heathrow) who earn around £100k. but I still cannot understand how people can afford to buy here – and if I was fortunate enough to be earning half that I would not want to buy a tiny maisonette anyway – the area is nice but not THAT fantastic – still takes over an hour on the train to London…

    Maybe I’m just getting fussy in my old age but there are very few places where I’d want to live in this country – for the price you have to pay – think I might emigrate!

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  • there is an awful lot of land listed for sale, i assume this will start the price drops, the more land available the lower prices go and houses will follow

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  • cornishtinmine… “but I still cannot understand how people can afford to buy here” That’s the point, the only people that can afford it, only can because they bought so long ago. And because they’ve either MEW’d too much or don’t want to give up their gains, the market is stuck. The exceptions to this are so few that they alone can’t get the market moving, except for at the very top end where it’s all monopoly money anyway.

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  • Some 3.5 million properties, or 80pc, bought since 2006 are said to be “underwater”, or worth less than their purchase price, according to a study by Zoopla.co.uk.

    Just to clear up a misconception being perpetrated by Zoopla here. The building (I’m sick of the use of the word ‘property’) is only underwater when the realisable value of the asset (in the market) is less than an outstanding amount owing for the procurement of it. The purchase price was their folly. The debt is their responsibility.

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  • mark wadsworth says:

    Dill: “The building (I’m sick of the use of the word ‘property’)”

    I heartily agree! As far as possible I try to say land, or land and buildings, or a home, or a house or flat, or a factory or commercial premises or whatever is appropriate to the discussion in hand.

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  • The stamp duty has an effect too on property worth between 250K and 350k. The jump from 1 to 3% is quite substantial. For most people struggling to get enough deposit, the cost of stamp duty is not something negligible especially when buyers know that what they bought may not go up in price for quite a while.

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  • hash browne says:

    @11.

    Unfortunately this is a misconception. House prices determine the price of land rather than the other way round.

    Land price is determined by the price a developer could achieve for the completed house (or other development) built on it, minus the building costs, admin & professional fees, etc.

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  • looking around at land there are plenty of decent plots for around 60k which have been reduced from near 100k if these plots get cheaper then house prices will have to follow at some stage, i have noticed most of the land appearing is due to builders going bust

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  • Forced sales will drive the market lower. People dying, moving into care homes, or divorcing. Forced sales are probably less than we would like because of rock bottom interest rates.

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