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?

Of course the economy as a whole is struggling right now, @DeadHouseBounce, but I dont believe that that will translate across to a universal price crash. Stand to be proved wrong but really cannot see it

Property is one of the safest investments you can make, generally.

Interest rates are very low, and there's a lot of pent up demand because of Brexit - the housing market has been stagnating for a long time here (London).

However a lot of people have just lost their jobs, so that's going to affect affordability (so demand) for a large section of the population for a couple of years at least. In addition the ratio of income to house price is still very high, so there may be a way to go down on that.

I do think prices will go down, but not as much as some people seem to be saying. Depending on how quickly a vaccine or treatment for CV-19 is found I think the economy and housing market may bounce back in a couple of years (much longer if we don't have a vaccine quickly though).

@mumdone "If prices do drop they always always bounce back!! Every data point in house price history proves that!"

So do equities, gold etc. Your logic is seriously flawed: "please buy at the top end of the market that is about to drop precipitously because, in the future, you will definitely make a profit"

@NOTANUM "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."

Actually it seems extremely stupid. When investors are happy to pay the government, the safest debtor, to hold their money in the short term, be very very scared. This is a clear sign that money is flowing out of other investments due to falling confidence and into gilts.

The thing is prices surely don’t drop straight away in situations like this? The markets have only just started back up, we are only just seeing a lack of mortgages for first time buyers and what is currently on the market is the dregs anyway that nobody has wanted/overpriced anyway or sales that have fallen through. I think it will be a good couple of months before the true effect of everything starts to be felt.

*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%.*

@thequantofmontecarlo

That didn't happen in previous recessions, so I call bullshit. People are simply not going to sell their houss for too little, then they just stay put.

You're right @walkingchuckydoll . What was I thinking? I'm sure you know better than the BoE. Would you like to be my financial advisor?

Look at properties advertised in your price
Range instead of moaning about properties that are too expensive for you.

People are simply not going to sell their houss for too little, then they just stay put

Normally about 50% of the market are selling because they have to sell (e.g. death, divorce, moving for a job, moving for schools, BTL landlords who have to dispose of property etc). So you'd only ever have a maximum of 50% of the market who can decide to stay put.

Well you can but a house on for what ever you like!! Does not mean you will even get anyone to come and view it !! Never mind but a offer in, of course as a buyer you can put in a offer for what ever you would like to offer.

But if any one thinks that the country is not in for a rough couple of years is a fool!!

Lots of people are going to lose there jobs !!

@thequantofmontecarlo

RE: "@mumdone "If prices do drop they always always bounce back!! Every data point in house price history proves that!"

"So do equities, gold etc. Your logic is seriously flawed: "please buy at the top end of the market that is about to drop precipitously because, in the future, you will definitely make a profit" grin"

I see what you mean, but the difference between equities, gold etc vs. housing is that the latter serves a more base purpose (shelter, Maslow's hierarchy of needs etc.). So, I see what people mean when they suggest that housing is a safer bet - it's because it's a need, whilst most people can live without gold etc.

It is a tough one to call. I have been reading this forum a bit and noticed that those renting and hoping to buy, but with well paid jobs (for now, anyway), are the ones who are more adamant that house prices are going to drop in the next 12 month or so. There's a bias and vested interest in those comments. So, I am now treating the statements with some scepticism, not much, but some.

The opposite is possibly true of homeowners - they are adamant that the housing market will be resilient. Again, they've got a vested interest and bias too. So, I am also treating those statements with some scepticism, not much, but some.

Posters who have commented about BTL landlords needing to sell up - yes, I probably agree with that. Those assessments seem to make the most sense. It will be interesting what happens there because a lot of ex BTL properties seem to be poorly maintained and are not very attractive to those looking to buy a home (unless they want a bargain doer upper).

As for the housing market as a whole - I think it's a hard one to call tbh. I also think Location is going to be key. Some areas are going to do worse/better than others. London might be the toughest housing market to call - lots of international investment there too.

@ChocoTrio don't lump all of us homeowners together. 😊

I think house prices should be lower for a number of reasons.

I would like them to drop to help me buy a bigger place & can take a hit because I have lots of equity & have never seen it as pension security but I'm younger & recognise that whilst Im lucky to have equity it's just on "paper" as the only way I can actually access it is selling & moving to the land of nowhere.

I think they will drop in my area of London because they have stagnated for years & affordability seems to be reached. I think wfh may have an impact because lots of higher paid jobs can be done from home. Who knows by how much.

I wonder if there might be less international investment in UK property in general, as a result of COVID? We’ve still got Brexit to get through..

Agree that with more home working, internal and garden space will be at a premium.

we are looking at moving out although we have a spare bedroom (now an office) & a garden. Just want more space & more for our money really.

I don't see why putting it on at pre- Covid price is delusional or in cuckoo-land. Unless you have to sell quickly, why would you do anything else? The only way we will find out what the drop in prices will be is by buyers making offers that they are prepared to pay, so why would a seller take the risk of guessing what the drop will be and maybe asking for less than they would actually get?

Not been keeping an eye on prices so can't comment on that but for what it's worth I think you might be overestimating the number of people who need to sell. Needing to sell is pretty rare really, isn't it? You only need to sell if you are moving into care, if you are moving for a job (even then, you might prefer to let it out until you roadtest the new area and position), or if you have desperately outgrown your current home (e.g. mum, dad toddler and newborn in a 1 bed flat).

In time I think some people will tire of waiting and sell at a reduced price (or even a loss if the economy is dire), but I think it will be a slow burn until we get there. Still, there will be those who just sit tight.

Pre-COVID but post-Brexit I had four friends (in London) trying to sell. They all had a price in mind, and none of them got it. In fact only one of them got an offer at all I think (which then fell through). None of them put the properties on speculatively, they all had good and genuine reasons for moving and really wanted to do so. 3 were growing families that wanted a house, not a flat, or a flat without stairs or at least a lift for the buggy. 1 wanted to liquidate cash for an investment. None of them reduced the price, they all just made alternative arrangements. For two of them, that was letting the property out and renting somewhere bigger, and for two of them it involved staying put and saving up some more.

Most people just won't sell unless they get the price they want, and I'm no economist but if everyone holds firm, I wonder if, in time, certain buyers will start paying closer to asking prices, the other buyers will see this, sense competition, pannick and get back in the ring.

Obviously it depends on how long you want to stay on the market but I think it's better to price sensibly as opposed to having to make lots of reductions. As a buyer if a property has been reduced multiple times it puts me off.

Take this place as an (extreme) example

www.zoopla.co.uk/new-homes/details/45195763?search_identifier=b48fb5c936afed7ab155197efa16d732

this has been reduced from 5m to 3.3m, do you think anyone will be offering 3.3m?

@DexyMidnight

Needing to sell

You have completely disregarded a massive demographic.
There are 2.5million BTL landlords in this country (59% 55 and over) owning 5.45million properties.

These will be the largest forced sellers when mass unemployment happens after furlough. Month after month of voids, AirBnBs empty will see you that. S24 signalled the death knell on the future BTL market and COVID-19 will be the final nail in the coffin.

It will be this and the banks not lending that will dictate the market. Certainly not kite-flying sellers like the people you mention who can’t fathom why they can’t sell their properties.

@dunnybum. RE: "@ChocoTrio don't lump all of us homeowners together. 😊"

Agreed. Hence, why I qualified it as "possibly". On a balance of probability, it's more likely than not that homeowners will want/hope that the housing market is resilient - and it makes sense - it's because there's a bias and vested interest there.

I agree with you about it being reasonable for house prices to go down. It's a base need (shelter) and there is a serious problem when highly qualified and hard working individuals struggle to get on the property ladder. Sometimes the housing market and people's situation on it can also boil down to luck, as arbitrary and unreliable as luck may seem.

When people start losing their jobs in large numbers some house will probably go down in value. There are always people with cash looking for investment opportunities however especially from abroad

@leckford - hmm maybe manage expectations with regards to "people with cash" - because they may have been unexpectedly stung by the unprecedented covid situation too. The stock market crashed too and will take a while to recover if investors choose to sit tight, for example.

Also,the "people with cash" are probably in the same league as the BTL landlords who are expected to want to sell up as a result of all of this.

As for "from abroad" - covid is a global problem and had financial repercussions pretty much everywhere. Britain is in a weird (vulnerable) position because of Brexit - what bizarre timing for covid to happen for the country?!

“Everyone thought that Brexit was the big deal for sterling this year but . . . the currency has been completely overwhelmed by the coronavirus,” said Richard Benson, co-chief investment officer at Millennium Global Investments in London."

[[https://www.ft.com/content/40272e84-68ff-11ea-a3c9-1fe6fedcca75 Pound sinks below $1.15 in deepening coronavirus market crisis]]

Sorry that didn't post properly - the source was this from the Financial Times:

www.ft.com/content/40272e84-68ff-11ea-a3c9-1fe6fedcca75

@ChocoTrio sorry I missed the possibly. I would argue that most homeowners aren't against lower house prices. It's more beneficial for the economy.
I think the ones on these threads who deny any impact tend to be property developers or landlords or who perhaps face the possibility of negative equity or are relying on it for a pension.

Lots of people in expensive areas are actually stuck on the ladder despite hefty equity & good jobs. There was a good article in the FT about it.

@dunnybum

RE: "Lots of people in expensive areas are actually stuck on the ladder despite hefty equity & good jobs. There was a good article in the FT about it."

That's really interesting. Do you have a link?

It makes sense - status anxiety and keeping up with the Joneses is a real thing, but not necessarily wise because it can mean continuously chasing one's own tail (always bigger house, better car, higher salary etc.) and ending up in a rut. I am totally guilty of having felt status anxiety - but I also learned to prioritise the important things that actually matter far more to me and my family.