To think current home sellers are living in a fantasy world?

[CanStopWillStop]

We are looking for a new home (out of necessity unfortunately!) so I am now deeply buried in Rightmove.

The most significant pattern I'm noticing is that dozens of sellers, who according to Land Registry bought their properties in 2019/2020, are listing their homes at £100-200k more than they paid two years ago.

Considering the current dire outlook for mortgages &cost of living etc, AIBU to think that this is absolutely ludicrous money they are chasing?

I understand some people may have remortgaged or are looking to upgrade but a £100,000 mark up on a 3-bed bungalow you've lived in for a couple of years is mind-blowing to me. What's happening here? Greed? Desperation? Do they really think people can actually get mortgages on overvalued properties? AIBU?

Where I am looking this is all about demand exceeding supply, so it makes sense to me that prices are very high.
If you want to move to this location you either bid high on one of the tiny number of places that come up or have no chance of buying. A lot of people are moving there from London so are going to a cheaper place and can bid up as they have the cash to do that.

Mortgages are obviously going up but it's still nothing like it was when buyers had 100% mortgages. Interest rates are still very low. Most people will be able to hold on. Most people won't sell at the moment because of the chaos which means that those that do will be in demand. I definitely don't think prices will rise by very much at all, they will stagnate and properties will take ages to sell (my last one during a slowdown took a year!) but I stand by my theory of no crash! Hope I'm right ! We should bump this thread in the spring and see where we are , it'll be interesting .

I had mine valued this week , I'm chuffed with the value ! Why shouldn't I put it up for the most I can ?

Unless you're downsizing or relocating most people who are moving & find their house has increased in value will be paying more for what they buy next as that will have gone up similar % so more cash.

A falling market would encourage me to sell as what i'm buying next would be cheaper but I have a good LTV so it depends on individual circumstances.

I think it depends on the area. I have sold a property and I am now looking to buy and many of the houses I am interested in on Rightmove have been reduced in the past month.

Estate agents often give unrealistic valuations to get the seller to sign up with them and they end up having to revise the prices down a few weeks later.

I think sellers are about to get a reality check. Hardly anyone is going to be able to take high mortgages at the moment to buy their over-priced renovation.

@PermanentTemporary , estate agents have been overvaluing for years, in order to get the business. Not a new thing at all. They know all too well that if someone asks say 3 EAs for valuations, most of them will go with whoever quotes the highest - or the ‘most optimistic’ price.

So many EAs are very young and so will never have known anything but rapidly rising prices.

It depends on the area. We're in a naice village in an area where you wouldn't want to live if you were commuting into London daily but it's fine if it's a couple of time a week which means it's perfect for those now hybrid working.
We were a bit surprised recently to be told by a neighbour that they were moving having not see a for sale sign or it being on Rightmove. The reason was that the wife mentioned that they were thinking of moving to a friend who is an estate agent who, within an hour, had arranged 4 viewings to take place in the next 48 hours and they all made an offer! The house is a bit tired but was also the only 4 bed house in the village to have been on the market in the past 6 months. That is the level of demand and means that house prices are continuing to rise. Around us, 4 bed houses go for around £850k - £1m. If you're moving out of London, that may decrease the size of your mortgage rather than increase it. Or you may be able to port your mortgage rather than apply for a new one at the current rates .The cost of living crisis does not mean everyone is struggling.

I have noticed this. Thank goodness I am not trying to buy atm.

OP if it is any consolation my guess is that it is the older/much older generation with plenty of equity who are looking to "downsize" who are going for these properties simply because they are smaller than the [enormous] properties they are selling in order to purchase. And anyone else who might otherwise have been interested will now be heavily tempered by their capacity to get a mortgage and whether the bank they are borrowing from is also impressed by the painted navy walls and panels which have been put in in the last 18 months to justify their extra £150K asking price lol!

I can't see how prices can't be impacted but it will take some years for it all to filter through & I don't see rates going below 5% for sometime. Arguably it's better for the economy that we aren't on emergency rates.

LY a 400k mortgage would cost you approx 1.5k a month, now it could be 2.3k. That's 48k extra just on interest for a 5 yr fix. 48k that you could have previously overpaid with.
Equity has fuelled so much of the market but having to pay more interest & prices stagnating will mean a lot less equity which makes buying the next house far harder.

I think the 3 bed average homes will hold the value the most. Families & downsizers will be competing for them.

Sorry OP. I think it’s you who are living in a fantasy land. Or a land of hope.You want to buy so of course are hoping and praying for a crash.Its not going to happen. Not for the vast majority of the UK esp the south.There are too many people and too few houses

The supply and demand justification is trotted out so much but with a very basic misunderstanding.

Demand is only possible when finances make it possible. Generally, the finances of the country are in the process of going down the shitter. CoL, mortgage rates, tightening criteria etc. It will have a massive effect. Absolutely massive.

I'm not buying or selling so I have no horse in this race at the moment. If I had to put my money on it though I reckon there's going to be a crash of monumental proportions in the next few years. And if I had any money invested in house builders and the like I'd be pulling my money or diversifying sharpish.

This is also part of the repricing. Unless someone is confident prices will carry on upwards, no one wants to feel suckered. The prices that climbed in lockdown now look ridiculous, even that wasn’t cemented in with a sale, people won’t pay it with inflation and interest rates hitting.

Landlordism and building a false economy on ever-increasing property prices is a Ponzi scheme and diverts capital to unproductive ultimately empty economic activity. Worse it disenfranchises a vast swathe of the younger population from home ownership whilst encouraging greed and speculation. Since 2008 and the financial crash ultra low-interest rates and QE have put this 'one way bet' on steroids. That's coming to an end globally now and a crash is inevitable and needed.

The first step is to squeeze the BTL landlords out through policy changes. That has already started with taking away of mortgage interest relief and banning no-fault evictions. We can add to that rent control, limiting AirBnB and other restrictions such as increasing CGT on more than one property and enforcing minimum EPC energy banding on rental properties. This will never come from the Tories though and Sir Keir has made it a cornerstone of Labour policy.

“I’ve seen home ownership rise almost my entire life – it’s the bedrock of security and aspiration. That pebble-dashed semi meant everything to my family. But now, under the Tories, the dream of owning your own home is slipping away for too many.
“And that’s a political choice. Because if you keep inflating demand without increasing supply house prices will only rise. And homes become less affordable for working people.
“So, we will set a new target – 70% home ownership and we will meet it with a new set of political choices. A Labour set of political choices.
“No more buy-to-let landlords or second homeowners getting in first. We will back working people’s aspiration. Help real first-time buyers onto the ladder with a new mortgage guarantee scheme. Reform planning so speculators can’t stop communities getting shovels in the ground.”

The supply and demand justification is trotted out so much but with a very basic misunderstanding.

I don't get the narrative that it's all to do with supply & demand. Access to cheap money makes a big difference.

How does that work then?

Buyers will only pay what they think a house is worth and houses will only sell at that price. A little bit on top to allow for offers is normal and has always happened in my experience. The house still only sells for what it's worth.

Yes, that’s demand.

ALL economics breaks down to supply and demand eventually.

You've confused me because I was referring to the notion of supply & demand with regards to housing stock available.

Eg retired couple sell London house for £1M. House has no mortgage as is true for 50% of owned houses.

Couple look to move to seaside town.
The kind of house they would like cost £500k two years ago. Same house on market now for £700k. Only one suitable house is on the market and there are multiple people who want it so it sells for £750k.

Retired couple are happy as this is their dream forever home and they also now have £250k in the bank.

I thought it was a 3rd of houses didn't have a mortgage & only about 3% of stock is worth 1m or more.

Won't the retired couple find it harder to sell the 1m home now than they would last year? Where I live there are reductions of 100k plus on some houses since the summer.

This would be prime house in the area & sold for 2.5m all the way back in 2012. Stamp duty alone would be 200k not too mention expensive renovations & it's been reduced by 300k already.

www.zoopla.co.uk/for-sale/details/60956541/?search_identifier=40bbc7c10d08bf3bc3da376a1fbae49d

36% or 6.8 million homes are mortgage free.

Happy for you buttons, just to clarify I'm not suggesting sellers can't price their properties for what they feel its worth.

I'm just very surprised at the valuations and seemingly unjustified increases in the past couple of years considering the economic climate (30% increase in 1-2 year is mental) and I am anticipating that we will reach a point where the housing market will stall/crash because of overinflation and lack of mortgage affordability.

Valued by who?

In my area the bank is valuing properties at about 15% less than estate agents and lots of deals falling through

The market is ridiculous at the moment. After reading this thread last night, I went on and had a look at prices in my town. Wow! How my teens will ever be able to afford to buy a property I don’t know. My house has more than doubled in price in 17 years and it was overpriced when I bought it.

i still think property is the best investment out there though tbh and over time you won’t loose money.