Are house prices going to go down in 2012?

[Deadsouls]

Hello,

As the title says, anyone know anything about these things. We live in West London, where prices on 3 bed houses have gone up by about £50,000 in 1 year, so prices seem high.

We think we are going to buy, a little out of our ideal area, because we can't afford our area. But it seems so crazy that prices are going up and up and up....so the dilemma we are in is that soon if prices do keep going up we won't be able to make the jump from flat to house (that is in the rough area we are in near DCs school).

OR are we buying at a peak and are prices going to go down...do we wait? Clueless about these matters, who can I ask, estate agent??

We get that too Jasmine.

I wonder if it is real. Ie not EA's spin. We do live on an increasingly desirable road but I assumed it was bumf all EAs were using to try and get things going.

A lovely friend's dh is staying in middle of Kens because it's a faster international market. They could have a huge house in expensive SW. I see his point.

Also worth making the point that the rise of homeworking and, eventually, Crossrail, means people will no longer be prepared to pay a premium to live so close to work.

Sorry OP, none of us are helping you with all this theorising, are we?! Again, I'd reiterate that you prioritise affordability and the needs of your family ahead of second guessing the market. We all need a home and it costs what we can borrow for most of us.

I agree the school thing affects desirability but if computer says no to the funds required then it's no. Fwiw the Brighton house bubble related to schools has really slowed as the prices are just out of hand. The good ones near goodcstate schools never used to reach the Market they were just snapped up! Now there are dozens. people who overstretched for schools will suffer

We are looking to buy ATM but looking for a bargain no longer bound by schools thank god! The agents are such liars and keep telling us how buoyant things but almost everything we viewed which then sold has fallen through and been offered to us reduced. I give it 6 months to really start

Marsha

I find the best way to keep tabs on real local sales and not "EA spin" is the Land Registry. You can subscribe through Zoopla for updates on your selected postcodes.

When I was looking to buy, I would get floorplans off Rightmove, and then use a price-per-square foot calculation to keep tabs on price movement.

The "brand new ceiling price" being achieved was invariably the result of a house being extended into the loft or side return - it wasn't the result of a booming housing market. This in a West London suburb that benefited from a new rail station, Westfield, and the supposed "affordability exodus" from Prime Central London.

It was also a great technique for discovering which estate agents routinely lied. SO many would tell me, "xxx sold at asking price." Updates on the LR would later show that "sold at asking price" involved sales at 10-12% under asking!

Thanks Thomas.

I had been casually throwing the we have buyers waiting letters away. We do need more space soon. But maybe this spot is quite desirable.

I checked Zoopla the other day, it's up. But then so is everything else in our road so not much use as we would prefer to stay on same street.

I agree with you that we need to look at house purchases in a different light. And Noddy that btl dropping out is v interesting.

An "outstanding" school is only as good as the teachers - and more importantly the head teacher. A change of the person in charge soon changes things on the ground.

Marsha, the algorithm Zoopla uses for their estimated pricing is very unreliable.

TBH there are too few sales to make it accurate at present, and it's got no sensitivity to things that have a dramatic effect on price, such as ceiling height (v important in a loft extension as a mortgage valuation will only accept a certain height whilst an estate agent will quote the full surface area), or an East-West orientation.

The actual sold prices on the LR are the only reliable figures at the end of the day, but it's deeply frustrating as they can take months to update. If you can find yourself a friend who is an estate agent, they have access to a database called LonRes which is updated daily and is very enlightening

Tbh I was pretty vague about what I was looking at. I pretty much ignored the predicted value, but looked at last sold at. I'm not sure Zoopla even has that figure!

Ooh thanks for LonRes tip.

Zoopla is hopeless.
I was quite shocked to find that I had sold my flat in 2001 (or something) for X amount, when I hadn't sold it, and the amount was all wonky as well.

Does it have last sold at or am I imagining things?

I thought I saw the neighbour's place and the year of sale. Ok it's one place I know.

We're half heartedly considering our options. Maybe do a valuation (eek!)

Yes, it has last sold prices from the LR. But, as I say, takes months to update which is no use if you're buying.

Make friends with an agent (some are actually quite nice!) and get them to look on LonRes for you.

OR if you're serious about selling, get your own structural and valuation survey done by an independent surveyor (not your bank's) before you approach any estate agents. Something property professionals do as a matter of course (also means you can put everything right before a prospective buyer comes round and overestimates the cost of repairs).

Zoopla calculates using whole host of indices; Rightmove's price index is based on asking prices, for example, so it inflates the prices on Zoopla.

Even though - as we've all agreed on this thread - asking prices mean bog all at the moment given how few actual completions there have been.

Thanks Thomas. Funnily enough the EA nearby I know (nice one!) just moved.

I don't want to sell really, not emotionally at all, but more space would be good.

How are you feeling about it all op?

Zoopla also applies national statistics to local markets - this is its biggest failing, IMO.

It's still a very useful tool and I'd much rather have it than not. I'm finding agents and surveyors are increasingly taking it into account when estimating.

Is there no way you can extend, Marsha?

The thing that really skews purchase calculations is the stamp duty - so frustrating that it's not a stepped tax.

Hmm no. The neighbour once made noises about selling however! That would be great, but I bet he's changed his mind now. I would.

I think we'll try as much as possible to move as little distance we can. Across the road would be amazing.

This has helped as has made me realise that I'm emotionally tied to where I am and has an impact on everyday happiness.

I sometimes describe myself as a property semi-professional - I'm a serial renovator and a residential landlord, and accidentally had to learn a lot about the market when I bought twice and sold three times in the period 2007-2011.

I can't emphasise enough how important it is to be happy in your home.

We rented for two years in a stunning house, but with an awful letting agent. It made us miserable. We paid £70k in rent in that time. We thought we were being terribly clever as the rent was the same as our interest payments on the lump sum from our previous sale.

Then interest rates dived to their lowest level in 300 years, and our rent went up. Then our landlord returned unexpectedly to the UK and we faced being homeless.

As things have worked out (and this is accident rather than luck) we were able to buy our present house for £100k less than it would have cost in 2007. But once you factor in stamp duty and plain old personal distress and anxiety, I'd sooner have paid the £100k extra back in 2007, and just got on with my life.

"Accident rather than intention". Duh. Must preview before posting.

Please don't ask the estate agent or your IFA / mortgage broker - that's basically the equivalent of asking a hairdresser if you need a haircut. Of course they are going to tell you it's a good time to give them your own business. Do your own research - this could be one of the biggest decisions of your life.

I would generally agree that if you are looking for a long term home then where we are in the price cycle / bubble is less important. SO LONG as you are NOT buying using a mortgage. Otherwise you could find yourself in the position that a lot of MNers seem to be at the moment where the banks are refusing to remortgage due to insufficient LTV and you end up on a very uncompetitive product with sky high interest rates. Remember also that for every £100k you borrow, you will repay £192k. So for every £1 off the asking price you can achieve - you save yourself £2.

We've just been discussing this whole topic on another thread for over 20 pages - so to avoid repetition - can I just suggest you read the thread:

www.mumsnet.com/Talk/am_i_being_unreasonable/1449496-to-feel-seething-resentment-towards-those-who-profited-from-the-house-price-bubble-and-hot-anger-at-the-Governments-who-allowed-it-to-happen

thomas you sound like me! 12 houses in 10 years and lived in 7 of them during works! Now can't find anywhere and stuck in a very grotty rental where the letting agent has upped sticks and disappeared and the owners are in Thailand with their heads in the sand! Looking for a home is a lot trickier than looking for a project

Sensible advice above. Also remember that the rough rule above about £1 borrowed turns into nearly £2 to repay over the course of the mortgage, comes out of your after tax income. So if you borrow £100k, you might need to devote headline earnings of £225k to repay it over the term, or £9k/year gross.

Whatever house you view, check the last sold price here:

www.houseprices.co.uk

Consider how much a rental costs in relation to an equivalent house, it's not necessarily what you want to do, but if the price gap is large then it might be worth considering. You may find that your money goes much further with a rental than buying, and it may allow you to live in the area you want to rather than buying in a place you're forced to via high prices. You also remove the risk of capital loss, liability of maintenance etc.

If you can only make the mortage finances work by going 'interest-only', you ought to consider very carefully how you will repay the loan at the end of term, or be happy to hand the keys in, and be liable for any shortfall.

Good luck.

Noddy, I read your posts regularly and aspire to be like you .

In many ways I'm still so inexperienced. I started out as an accidental landlord and then re-entered the BTL market because - like so many others in the same boat - I'm self-employed and my private pension is underperforming so badly.

Everyone has an agenda in the property market, so it's hard to know who to believe. But I do think it's revealing when people with more exposure to the property market than most are pessimistic about its future.

I had a bit of a mentor when I started in a financial journo who worked at the telegraph. He is long retired but we still keep in touch and he ahs never been wrong!