Properties relisted at pre-COVID prices - are sellers in cuckoo land?

[househunter2020]

Started property search in February (London) and saw various properties quickly sold, obviously riding on post election bounce. We did not put in offer for any. Now we are seeing from this week properties that were sold get relisted at previous asking price (Jan/ Feb time). Are sellers in cuckoo land?

Just spoke to one agent about one relisting and asked if seller is reducing the price and was told oh that one was priced very well already and sold straight away last time it was listed, only now the buyer pulled out due to work problems... Of course it was February or a century ago...

I would expect about 5% reduction from previous listing. What do you think?

I think any fall in house prices that might come will start to be noticeable a few months down the line, when the furlough scheme ends and we learn just how many people have lost their jobs and how many businesses are folding. Right now, very little has changed.

Also, Zoopla is rubbish as a price estimator (at least in my experience) always seem to be way out around here.

@househunter2020 I was in a similar situation as yourself. We actually made an offer 10% below asking (we researched extensively) in Feb for a house in Finchley and it was rejected as they got a buyer at asking.

A few weeks ago, the estate agent called us and said the buyer pulled out and the sellers were now happy to accept out offer. We politely declined as we knew the house was over priced to begin with and in this economic climate, the price we had offered earlier no longer reflected value.

We're holding out till 12-18 months down the road and I'd advise you do so as well. What we're seeing now is over-optimistic pricing and people actually increasing the price they put their house on the market for as they're expecting buyers to offer 10 - 15% less.

Interest rates are not going to rise for at least another 5 years. BOE is more likely to cut them again. Banks would be looking to lend but there won't be many looking to borrow as they have no job, reduced income etc.

@walkingchuckydoll "if the interest starts to rise, the mortgages will be more expensive and..."

If interest rates rise, house prices will fall. The BoE modelled in 2019 that for if rates rise by 1%, house prices will fall by 20%. A 2% rise would lead to a house price drop of 33%.

We have just sold and are now buying through the same agent.
He has his head in the sand about it all which has been really frustrating. I think that the EA will keep listing at pre Covid prices but as previous posters have said it'll be the evidence of actual sales that show the real picture in 6+ months time...

Our EA was so desperate for the sale to go through he completely lost his sh1t with us.....

What we're seeing now is over-optimistic pricing and people actually increasing the price they put their house on the market for as they're expecting buyers to offer 10 - 15% less.

Ah, that would make sense- I have wondered this week why a number houses up for sale in the area I'm looking in have gone up in price at what seems like an odd time for that to happen, but that's a good explanation.

Interestingly I have had an offer within striking distance of the asking price and another viewer booked in for tomorrow

I think the big reason is that the fundamentals of the housing market have not changed. There are very few properties for sale and lots of demand.

There are also increasingly market commentators not expecting a drop. Time will tell. vendors can simply decide to hold on and not sell at a reduced level.

I was re-mortgaging during the lockdown.
The valuation survey for the mortgage company was done before lockdown, but I only just completed yesterday.
The mortgage was for the absolute maximum I could borrow as I want to build an extension this year.
The mortgage company didn't ask for another valuation or change my LTV, so I assume they think my house is worth the same.

My DH is an independent mortgage broker at the start of this we furloughed our admin staff may well have to get them back soon because he hasn't stopped working
We thought there may be a total drop off but he seems busier than ever

There are very few properties for sale and lots of demand.

It's not just demand that drives prices, it's what the banks are willing to lend. There might be high demand but if banks didn't lend money and people could only buy with savings, house prices wouldn't even reach triple figures. Banks have already made it clear they are not willing to lend at lower LTVs during corona, or to people with unstable jobs.

It's not just those in bar and hospitality work getting furloughed - remember each of these companies in trouble also has a head office, most of whom will be furloughed. Lots of service businesses now have no income, like companies who sell software/marketing/PR and whose main clients are travel, retail or hospitality. People are even getting furloughed in pharma industry as lots of non-Covid clinical trials are getting paused as they can't safely get patients in. This will hit a lot of people and will ripple out slowly, especially once furlough is over and mass redundancies start. I've seen lots of Sold STC properties go back on the market where I live, and lots disappearing completely. Some are going back up at the price they were before, which just seems bonkers. But I guess the listing price doesn't mean it will actually sell for that much - maybe they are pricing in lowball offers as well.

*higher LTVs even

Supply and demand. People will still want/need to move for various reasons. If you live in a desirable area with excellent a schools etc it will always be a desirable area. I’m not sure the bottom will fall off. There will always be regional variations and contributing factors. Where we live I really don’t think there will be a huge drop in prices.

There are very few properties for sale and lots of demand. or supply and demand or some version of I've read something somewhere and I think I understand economics

Access to capital (loans), barriers to entry (stamp duty etc.) and a multitude of factors affect house prices. The one thing that all of these factors have in common is how they relate to the wider economy. Please be my guest and make the biggest financial decision of your life based on emotion (It's a "forever home", desirable etc.) but I'll sit this one out thank you.

Houses have come on here late last week and sold this week at Pre COVID prices (South East)

Same here (SW) @StarintheMorning

YABU because you want a bargain. The world hasn't fundamentally shifted re: this, just paused. People will still want a good deal on their end. Good luck in your search.

It feels like a huge gamble. One guy I know, who has made a lot of money on property is buying at asking price because he says that prices were tracking up at the start of the year because people have been holding off buying because of brexit, and he expects them to bounce up if/when a vaccine is announced. But I don’t like gambling! It’s a nightmare.

One thing is for certain. If prices do drop they always always bounce back!! Every data point in house price history proves that!

How old are you @mumdone?
The 80s crash left many in negative equity until mid 90s. Posters often talk about those years here.
So your point is largely right - as long as you don't need to sell before the market recovers.

Old enough remember the 80’s crash and also old enough to know if you can ride it out you will often come out unscathed. I’ve bought and sold in booms and crashes...it all pitas out. Thanks for asking!

I dont buy the covid crash, not in the south east bubble at least. Might be really wrong about that but the underlying fundamentals of the housing market haven't changed here. Low supply; high demand. Simple economics.

It was a friendly comment @mumdone
We are discussing houses after all so nothing too contentious.

Negative interest rates on 3 year gov debt today. Unusual times.. If you have spare money, putting it into housing doesn't seem stupid now.

Obviously nothing at all to worry about with the economy folks, nothing to see, move along now! ............Comedy Gold.