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?

Stamp duty is affecting our thoughts on offers as well, as we are looking at properties around the £500k jump.

It really seems to me that much of the confidence in the housing market over the last 10-15 years has been based on old and now redundant ideas about how it is made up. In the past the ftb at the bottom couldn't go anywhere but up (they were seen to be secure, employed, good credit, unlikely to just walk away) so confident was built in at each layer of ascendancy.

Have people forgotten the bottom rung has become distorted by the btl market of landlords who are mortgaging multiple properties to the unemployed/low wage/irregular work - from taxi driver to uber delivery- to European hospitality workers, etc?

That bottom layer can exit as it didn't have huge skin in the game compared to traditional ftbs - they will declare bankruptcy, exit as soon as they can, post the keys back, etc. It happened massively in 2008 in Ireland, and they were homeowners.

The commuting in London is another factor. There is only so far you can push people and expect them to pay for it. It was always tough but it has accelerated to a dangerous level now and crucially, the people doing it are not the people who expect to do this for a significant amount of time. Many are not Londoners and will just leave and say their quality of life is much better else where.

@OpthalmosVerde I am in in County Durham.

Oh, and we are not in a btl area. Very rural, so was expecting to have to wait a while for a buyer. Not expensive by London standards, we were on for a tad under 350k and achieved asking price.

Properties new and re-listed coming on the market in NE London and selling within the week, most priced at pre-COVID levels and a fair bit higher... I was surprised too but it’s the reality!

@WorryWartOne how are you getting the sale price information?

sorry that should be sold prices

Properties new and re-listed coming on the market in NE London and selling within the week, most priced at pre-COVID levels and a fair bit higher... I was surprised too but it’s the reality!

There seem to be two types of FTBs in London: 1. those who will now sit tight, believing they will capitalise by securing £££ off their dream property and 2. those that are worried that banks will impose lending restrictions, and want to quickly snap up a purchase, and stop throwing money away on rent.

I'd be in camp 2 personally, and my guessing is a fair few properties will be snapped up in the next 2-3 months, before any real effect is realised.

Unfortunately while the chancellor keeps announcing extensions to mortgage holiday payments, evictions and furlough, prices will remain the same, when the government stops interfering prices will likely come down considerably. The effect of all the job loses has yet to take effect and we are very likely to be in the worst recession we have ever seen according to the chancellor.

Good luck @Smallgoon

@WorryWartOne that's interesting. We are in NW area, zone 2. The new listed property price after lockdown here dropped 5-10% . We will complete on Monday, with an 8% drop of our agreed price pre lockdown.
If compared with the housing price in Hong Kong, housing price in London is very cheap though, feel lucky to have our own home now. I guess lots of rich Hong Kong people will run here and buy property soon

@KatyRyan - I remember you from the other thread! So, your vendors purchasing the new build agreed to the reduction?!

That's great news for you! 8% is a big difference!

Good luck for your new home!

@ChocoTrio , thank you!
Our seller is buying new build, but we don't know if they got any discount. It was only our guessing. As we asked for 8% discount, they just said Yes in half hour. Feels like we should have ask for more lol, while, we think 8% is fair, it means we can still afford it even if one of us lost our job in short term.

@KatyRyan - that's great! I remember you were going to ask for 10% off. 8% is fantastic though - especially if they agreed so quickly.

Think we discussed that it's unlikely the vendors would get a discount because with new builds it's often an exchange about 28 days after reservation.

Well congratulations on your new home! Exciting times :-)

@thequantofmontecarlo Good luck with what? I purchased 3 months ago, and I'm relieved it's out of the way, and I can get on with my life. I don't envy the anxiety that FTBs will no doubt be facing right now, not knowing what to do.

@ChocoTrio thank you
True, then maybe they didn't have any discount.
We are just so happy now, we finally have our own home in London, near school and my office

A house on our street sold just before covid and an identical one has just gone on the market for more. It is already STC and the buyers just relied on a video tour.

I think there are enough people to keep the market stable. Some have realised their homes now need to accommodate comfortable wfh as many companies are looking at this for the long term, so they are wanting to move and have the job security for the market to stay ok.

@Smallgoon Ah! I thought you were about to purchase recently at pre-Covid levels because you were so confident the market wouldn’t collapse.

Your post makes more sense now given the context: You bought before this crisis hit and the economy tanked and you’d now like other FTBs were in the same boat as yourself by buying properties at pre-Covid levels in the face of the worst economic event in 300 years.

Your post makes more sense now given the context: You bought before this crisis hit and the economy tanked and you’d now like other FTBs were in the same boat as yourself by buying properties at pre-Covid levels in the face of the worst economic event in 300 years.

Not sure if there's a typo in the above as I couldn't decipher the point you were trying to make.

The context is, I would be in the second camp because, from experience, FTBs are constantly faced with contradictory advice on whether they should/shouldn't buy in the current market - the risk averse will wait it out whereas those keen to just crack on will purchase. Individual circumstances count for a lot. Would I rather 'wait' and continue throwing money away paying somebody else's mortgage (whilst in a house-share) for the next 1-2 yrs, or would I want to finally put my hard-saved deposit into my first property, paying a mortgage cheaper than rent (on a fixed term deal with rock bottom interest) and have my own space? For me it would be the second option. There isn't a right or wrong. Just accept that people have differing circumstances from yours.

@Smallgoon
The only way FTB should be proceeding at the moment is with at least 10% off.
Even then it is a bit risky,who knows how much further it will drop.
Unless their jobs are rock solid and they have a massive deposit then no one wants to have lost tens of thousands overnight by buying at the top of the housing market and being stuck with all the problems that can bring.

I think you've missed the fact that the housing market and therefore prices is based on supply and demand, not a random idea that property prices should have dropped by 5% before we've even entered a recession officially! Demand is likely to be very high at the moment due to 2 month stop, and first time buyers mobilised by impracticality of lockdown with either parents or houseshares.

This will get the market moving at higher prices if anything if the demand is there, counterbalanced by obvious risk around mortgages/employment.

The only reason that property prices drop during a recession is because only the people who are desperate to sell, sell. And they have to accept whatever buyer there is. In 2008 of course there was also the problem of 100%+ mortgages, repossessions and banks going bust flooding the markets and contributing to a crash. None of that is occurring at the moment so it's just supply and demand, perhaps in a few months when demand decreases and jobs are lost there will be some impact, but you're being premature.

@Shinesweetfreedom Where have I suggested that FTBs should offer asking price? I purchased 3 months ago and got 10% off asking price. My point remains, FTBs will either go ahead and purchase a property at a price that they're happy to pay (should the vendor agree), or they will wait this out for the next 1-2yrs just to see how the 'property crash' plays out. As I've said, I'd be trying to purchase rather than playing a long waiting game.

@Tfoot75 Agree with this 100%.

@Tfoor75 @Smallgoon

Supply and demand is not the only factor. In fact, it has little bearing on a crash.

Such statements are Ill thought out and lead people into making bad financial decisions. Much like the mantra property prices will always rise!

A large percentage of people that bought at the peak during 2006-2008 will testify that the above is conditional.

One of the major conditions being whether you buy at the peak or not.

We're now at the peak, and Covid aside, we were on track for a global recession anyway. Add Brexit and Covid to the mix, it really does take a supreme amount of financial naivety/cognitive dissonance to convince yourself otherwise.

ALL economists are stating the same thing. The bloody chancellor, the BOE, the IMF! These bodies only speak when the evidence is undeniable. Literally.

Banks are using this same data to adapt their operations.

They are not lending at the same rate they were prepared to a few months back.

Why?

Because they need to make sure the value of houses will cover their investment if they need to repossess.

THIS is the most important factor. If supply and demand could have stopped a crash, why did the 2008 one even occur. Especially in London?