Inflated "Covid" House Prices - Is anyone experiencing this?

[Cranton]

Hope you are all well.

So DP and I are looking to buy a house in St. Albans at c.£900k-1m. We have sold our previous property late last year and are chain free (in rented . Rather frustratingly, a number of houses that would ordinarily be in our price bracket (based on historic sales information) are coming onto the market asking 10-20% over what they realistically should be taking into account the usual fundamentals, e.g. floorspace, orientation, spec, etc. I would expect more reasonable asking prices in these turbulent times!

At our budget, that means something worth £850-950k asking for £1-1.1m and we don't even want to entertain those ridiculous mark-ups. We're also concerned with the stamp duty holidays that this practice would continue to persist.

I appreciate guide / asking prices are always going to be on the optimistic side but the examples I have seen are just too extreme to be taken seriously, e.g. new property came on at £1.1m: no house has ever sold above £1m on the same street / comparable property few doors down sold at 880k in 2018.

Would be grateful for anyone else's comments on whether they are experiencing the same and how price negotiations are being dealt with!

In my example, do I even bother to go and see the house asking £1.1m when I know it is worth much less?!

Yes go and see the house asking £1.1m, then you can 'watch it' until it's been reduced to your estimate, or if it sells you can understand what's specifically happening to the market, in the area you want to live.
FWIW I have a property for sale with an 'online' estimated value which doesn't take into account the full refurbishment (previously no bathroom at all in the cottage) or that the floor size has increased by 30%.

Also large (£1m - £3m) houses which have sat on the market for almost 2 years, are now under offer since lockdown ended (countryside London commuter belt).

We are also experiencing this (looking near you in Elstree and Mill Hill) and the prices are just stupid atm. Properties are inflated by at least 10-20% compared to pre-Covid. Think there was a massive flux of buyers immediately following Covid so people thought they'd take advantage - I've even seen houses that were on the market for months being relisted at higher!

But things have just massively slowed down compared to a couple of weeks ago. i think people are realising that the sellers are taking the P* and biding their time now.

We decided to wait a few weeks and see what they come down to

I think the money is moving out of London and the gap is being closed up rather rapidly. The stamp duty cut will speed things up too. The question is, is it sustainable?

St Albans is now more desirable than ever as more people want to leave London. It's many people's first choice when looking at commuter towns so I'm not surprised the property prices are booming.

You never know what will happen, vendors circumstances may have changed and may benefit you. Don't forget you are chain free which is a big plus.
I say go and view it.

@Didyousaysomethingdarling Thank you for your thoughts. My concern is that if every buyer under the sun shows a demonstrable level of interest in properties such as these, that will only delude the vendor into thinking their crazy asking price is justified.

@Bells3032 I thought I wasn't going mad and agree that sitting tight and letting the market come to you is the right approach. If it doesn't, then you don't want to be a part of that market.

I think the best time to buy will be later this year so will spend the next few months monitoring and getting more up to speed with the pricing levels.

@IlanaWexler I agree with you - we are after all one of those (leaving Islington to Hertfordshire is a well tread path)! However, I will monitor the market actively and be ready to move when it turns later this year. Mortgage products decreasing from 95%LTV to 85%LTV is just the start in my humble opinion!

A colleague of mine who's looking at the moment, had an offer accepted at 12% less than asking last week. As she was looking, she said several agents encouraged her that the sellers are "open to offers" which clearly shows that the 10%+ markup was done to prevent a 10%+ drop in prices once things got underway!

I'm willing to bet that in 6 - 8 months from now when we examine the difference between the prices on at the moment and actual sold price recorded, it will be at most, par with pre-Covid level.

St Albans is v expensive and over the years prices have gone up. It may be a fair whack more than a house in that street sold for 2 years ago, but that was 2 years ago

What does Zoopla say it's worth

St Albans is nice but there are other really nice places in the area that are worth looking at. U get a lot more for your money!

Yup, doesn't apply to all properties but right after the lockdown was lifted I saw lots of houses overpriced by 10-20%. My theory is that agents are trying to be "smart" and have leeway for reductions to make it look like someone is getting a better deal than they actually are.

@PrayingandHoping I agree. Does it have to be St Albans? You’ve got Harpenden just next door as well as Berkhamsted, Tring etc not far. Might be worth having a nose in those areas too to get a sense of what your budget will get you.

@Cranton we are in exactly the same situation to you sold up end of last year and have been looking in Marlow. We are really struggling to find anything in the similar price bracket all the houses pre covid have been snapped up. We are being told by EA that people are looking to leave London so houses being snapped up. Doesn’t look like there is much negotiation going on. I really understand your frustration it is so disheartening.

@Cranton

"My concern is that if every buyer under the sun shows a demonstrable level of interest in properties such as these, that will only delude the vendor into thinking their crazy asking price is justified."

If the vendor is getting a good deal of interest then their "crazy price" is fully justified. The oft stated line that something is only worth what someone will pay remains true.

A house is worth what someone will pay for it and areas like St Albans will be if anything more desirable since lockdown (more space, commute not such an issue). We accepted an offer on our street just before lockdown which broke the ceiling price- someone has to. Best thing to do is to keep an eye on the houses you think are overpriced both by doing a proper viewing and online- as others have said, they may be reduced if they don’t sell and then you’ll want to act quickly. If they sell at the current level then you’ll know that prices have risen. I wouldn’t necessarily bank on a massive slump this year which affects good houses in a nice area- people will always pay for those.

@Sim7 again u are looking in a v expensive and sought after area....

selling and go to rental property, could go either way,no chain,strong position, less stress ..etc or priced out and lose big on rent money.

We’re trying to buy in zone 2 London and are experiencing the same. We had an offer accepted back in February but the sellers pulled out in March. We had a call from the agent asking if we’re still interested but they’re relisting at 150k more than last time (and are massive time wasting tossers) so that was a firm no. We’re not in a huge rush so are deciding to sit tight for a while and hopefully the market will de-froth.

Jesus, this morning I got all excited by an alert of something in my price range. it was a house i had seen months ago but decided it was too small even at that price. This morning it's listed at £30k more.

Another one I liked and had hoped it would come down in price as it's been on since feb has also been relisted at £50k more than before.

I am also looking North London/Herts borders and finding the same. We see houses in less desirable areas try to get the prices of their nicer area neighbours - and then see subsequent price drops as no-one views - and we also see a 20% post Covid premium too. I told an estate agent that we wouldn't look at a house as it was 15% above the top of our range and she seemed quite shocked by that.
Yet many houses are languishing on the market for a year..
If it's a strategy, I think it's one that might backfire.

I was also told before viewing a property that a buyer wouldn't accept an offer as we weren't cash buyers. We hadn't even seen it.
It went after a week on the market @ £1.8M. Who had that type of money in cash??!

I spoke to the estate agent this morning about the one that was listed higher (they're the same company) she just said they wanted it listed at this price. Think people are just taking the P*. Most people look online and see what house prices have sold over the last couple of year. Bar the first week after lock down virtually nothing has come off. People are also aware we are about to hit the worst recession of a lifetime and not wanting to overpay.

Even our mortgage broker said sit tight til October. Not only will stuff start dropping you'll see stuff that have gone off the market come back on as people lose their jobs sadly

Things are worth what people are willing to pay for them. If people are willing to pay "crazy prices" then they aren't crazy any more

@NewHouseNewMe I've never got the cash buyer thing? Why does it matter whether someone's got cash or a mortgage to the seller. Maybe just one less visit. Chain free i get - chains are a pain. But's it isn't like you get out of tax or anything if someone pays in cash.

There is only one issue where cash is better which my best friend is having in flats in medium to high rise buildings that haven't had their cladding checked yet. Mortgage companies require a particular form and there's a backlog of people needing it. So she accepted a lower offer from a cash buyer. Now he's come back and said he needs a massive mortgage and she's peeved off.

People lie

I've never got the cash buyer thing? Why does it matter whether someone's got cash or a mortgage to the seller. Maybe just one less visit. Chain free i get - chains are a pain.

I believe it's mainly because taking a Mortgage provider out of the equation removes some of the risks of delays or it falling through e.g. no mortgage valuation which could come in lower and prompt requests for reductions, no mortgage offers expiring, no AIPs not translating to actual mortgages due to underwriting being required etc