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?

@aboutanidiot right answer!

Bored?🙄

That was meant to be for Felicityflops. Honestly so pedantic. It's obvious what you meant OP.

But lots of things influence what a property is "worth". Its "worth" what they can get someone else to pay for it.

Houses where i live have gone up 200k in 2 years. Its due to increased demand from people leaving london wanting more space, shortage of local supply, changing statistics and perceptions of local schools, increasing work flexibility meaning wfh is more common so allowing local people to access higher wages through remote work.

Strange post. @aboutanidiot is saying something very different to Kwarteng's ridiculously unrealistic 'growth' forecasts not is she/he crashing the gilt market or causing a run on the £.

@rainingsnoring it was a joke, I called them Kwasi after they said maybe they are making a lot of their money from their insight, like Kwasi and gang could have done investing in the right areas prior to their shock budget that tanked the economy (again, just a joke!)

We purchased our home for £345,00 in 2019 and all we’ve done is paint the kitchen cupboards. It was valued at £450,000 - £475, 000 this summer and similar homes in our area have been selling for that. It’s bonkers!

Despite wanting to move to cut down on the OHs new commute we’ve decided to sit tight whilst things calm down. The BIL is meant to be moving into a new build but has had the chain collapse on his currently property twice in the last few months

Perhaps the way I framed my original question wasn't clear or maybe even too provocative, to the extent that people are missing my point.

I am questioning why there is a sharp increase in price valuations, and it seems the answers I've heard is "well that's the going rate now" or" everyone else is selling for that price" which of course is something I understand BUT my question is... WHY?

Why does everyone (home sellers, estate agents, buyers) believe their homes are all worth £100k more than they paid two years ago... and as an additional question, how long before the bubble pops?

Depends where you are, but I expect the bubble's already popped. People can't get mortgages.

There are houses going on for massive prices, but they are not selling.

Why does everyone (home sellers, estate agents, buyers) believe their homes are all worth £100k more than they paid two years ago... and as an additional question, how long before the bubble pops?

Because people were willing to pay it, that's how the market works, previous prices are irrelevant, it's what someone is willing to pay that day that matters and it's no secret after years of pent up demand following the 2016 vote then Covid meant there was a sudden influx and thus prices increased. I do think it's settling down now though, I've noticed lots of housing reducing in price where I am, but still substantially higher than 2020, for now at least. Estate agents and sellers will always try to get the best price, prices will adjust when buyers do, which yes I suspect is starting to happen now.

I think the question is why do people think that ever increasing house prices are a good thing. For most they aren't.

@toulet well we need them to keep increasing, but not to the extent they have been. I'm not an economist but I'm assuming if target inflation is 2% that we are always expecting successful economies to increase steadily so house prices would need to too, and wages of course! Stagnating wages have been as harmful as rising house prices.

Surely the price paid is irrelevant as the current price is based on the current market?

OMG.

I think the answer to the why is simply that people want to move and are willing to pay. I think things may stall over the next couple of months but there seems to be a shortage particularly in the south which might mean no bursting of bubbles.

Yup. It is. Based on desperate sellers and desperate buyers.

Have you thought about what is required in order to purchase a property?

I have thought about it, having moved 5 times in the last 15 years.

This is free market. Your house is worth as much as anyone is willing to pay for it. Prices are dictated purely by supply and demand. It’s the same for everything. 🙄

Or what the lender says it's worth.

SIL is selling MIL's house currently and has had to drop the agreed price by £25K as the lender has come back and won't lend for the original agreed price. I am guessing that is happening more and more since the mini-budget.

If you're dealing in cash?

If you're with mortgages? With rising interest rates? With inflation, sterling teetering, job security in jeopardy, the free market says that you stay in your little tent until you have actual money to buy or you have an asset that is not going to decline in value as collateral!!!!!!!!!!!!!!!!

Do people know that they don't BUY a house when they get a mortgage?

The bank loans them money which they will pay off over 20 or 30 years.

It's usually an appreciating asset. Until you buy at the top end of the market. which then crashes. Your asset doesn't cover your loan anymore. The bank call it in (your house is the collateral for the loan). The bank seizes your house.

I think it's a few versions of Liz we're talking to here! And I feel I'm Sunak!

I think you are correct! 😂