Are prices shooting up where you are?

[Focusanddetermination]

Just that really. I'm in a small Midlands town, have a high amount of activity and prices shooting up in the past few weeks even.

I thought people would be more hesitant with a looming recession, but it's almost the opposite.

House prices were increasing when we bought ours, 18 months later and they're climbing again. Properties selling very quickly

I’ve not seen prices being over inflated where I am but in a sellers market it happens. It’s the flip side of buyers making low ball offers a few weeks ago and sellers holding firm. Ultimately each house finds its value.

Over inflated won’t sell and low ball offers won’t be accepted.

I don't think the prices are shooting up but anything nice is flying off the shelf

@Focusanddetermination

You will save upto £5k (2%) of a £250k house if you bought now during the stamp duty holiday. Or, you could wait for 12 months and save anywhere between £20k - £35k (8 - 15%). Ignore those who have bought recently as they're desperate to justify their decision and praying that they don't fall into negative equity.

The probability of house prices falling next 12 months is guaranteed. Anyone who tells you otherwise is clearly delusional. We're entering the greatest recession this country has seen in 300 years. It is easily an order of magnitude more severe than the last one that caused the average house price to fall by 15%.

No country on the planet has survived a 8+% drop in GDP without a significant drop in house prices. Ever. Banks are putting aside billions to cover impaired loans. Over 100,000 jobs have been cut thus far and the expectation is 30% of all furloughed jobs will disappear (3 million jobs).

@thequantofmontecarlo you are right. Agree that if you are cash rich waiting is a no brainer. But what about the people with 10% deposits (first time buyers). Just read that nationwide is giving out 90% mortgages as long as your job is secure and your term is 25 years. So those people have a chance.

In 12 months time, I am not sure if 90% mortgages would still be on the market. I am not sure if the fall in prices would mean you have an extra 10%. Even now, banks prefer 20% deposit So they could be completely blocked from the market. I mean I would be in negative equity if prices drop 15% but at least I can overpay the mortgage to make it smaller and negative equity less likely. As opposed to not being able to get a mortgage at all. I mean, it's not going to fall 20% overnight. From past recessions, it generally took at least a year for it to fall to that degree

@Desiringonlychild I disagree. I think I've mentioned this in another thread, but, essentially in that scenario (minimum deposit requirements becoming 20% or more), the prices will actually drop further till market reaches equilibrium (aka the same buyer will be able to afford a 20% deposit on the same house). Credit is a significant driver in house prices and access to cheaper and easier credit (lower interest rates, HTB etc.) were the reasons for the inflation in house prices in the last 7 years.

Yes I think they are. We've just had ours valued at higher than expected (in the South west) and are going on the market this week. Trouble is, the bigger houses that we would be looking at are getting snapped up soo quickly that I'm worried we wont be able to find anything now and it's making me hesitate. I dont work well under pressure 🙈

To be honest though, we are in no rush so I'm happy to let the madness die down a bit first.

chic and elsie thank you yes, I think it's a natural assumption but ultimately the advice is wrong.

I called the estate agent about the house that I really liked, and though they couldn't tell me exactly, it sounds like the offer accepted is below asking price, and the owner might therefore be open to me offering at asking price. I said I'd come back to them in the morning.

quanto now you are saying the opposite!

Prices are going up here. Lots of houses coming on compared to normal, I’m looking at small-med 2/3 beds mainly.

Why say put an offer in in the morning?

You should’ve done it now to gauge their stance, you aren’t committed until you sign

@Focusanddetermination

quanto now you are saying the opposite!

...And I've put my money where my mouth is - I'm a first time buyer as well, I've got a 15% deposit, AIP and I'm looking to buy in the £850k-ish range. I was happily looking for properties early Feb when Covid happened and now there's no way (despite a £15k stamp duty saving) that I'm about to buy a house in the next 12 - 18 months.

My day job is working as a quant (quantitative analyst - building financial models to predict equities prices etc.) at a global bank so I do have a very slightly more informed view.

Selfishly, I hope prices are remaining stable or increasing as we have a house to put on the market in September 🙏🏻

@thequantofmontecarlo You've just convinced me to hold off buying. We are also FTB and have been 50/50 as to whether to buy now or hold off and let the recession kick in.

Do you not think there will be a huge drop in people selling houses post March though? That's my only concern- that there is nothing to buy

@optimisticpessimist01 Do you not think there will be a huge drop in people selling houses post March though? That's my only concern- that there is nothing to buy

Don't be concerned. There's 3 factors at play here:

1. Around 3 million people are expected to become unemployed in the next 6 months. If at least 10% of that number to sell their house/downsize as a result, that's 300,000 houses entering the market around early next year (there's usually a 2-3 month lag).
2. Usually, when a market dips, a portion of investors will dump assets (houses) in order to "sell high and buy low". In this instance, it will be foreign buyers, BTL etc. This happened in the last house price crash and this will happen again once the market drops below 5%.
3. We haven't seen the effect of Brexit yet (at least not internally - externally, aka to foreign investors etc., in USD terms, house prices dropped 16% due to the exchange rate). Even Rishi Sunak couldn't tell you what the economic implications are going to be given we have no idea what the future relationship will look like but if it's in WTO terms, then, God help us all.

quanto you are really giving food for thought! I think given your line of work you may be the closest MN has to a crystal ball...

I will warn against what Quanto says,

Firstly he has no control over how Sunak, will manage the crisis going forward.

Following 2008 we saw QE, we've just had 300 Billion more QE, QE finds it way into assets. We will get much more and every central bank is at it, it likely to cause huge House price inflation over the next 2-5 years.

The BOE are considering negative rates, so interest rates are likely to remain low and possibly go negative.

Just be careful, as many people didn't buy following 2008, held out and now bitterly regret that decision.

When buying a home, you generally buy with the view of living within it for 5-10 years, mortgages are always cheaper than renting. It's not just a speculative asset, it's a home, where you can control and influence your surroundings.

Other historical pandemics, have lead to house prices increases, do your research.

Buying can be scary at any time, however just remember, a dip here or there long term, they have been a high performing asset.

However it's your choice, consider both sides of the coin.

I own a couple of properties, so a drop in property value does me no favours at all so hopefully my view is objective.

I agree wholeheartedly with Quanto, the UK is obsessed with property prices and many people have a vested interest in property prices rises, particularly estate agents. The thought of falling housing prices will put the fear of God into them as some will have to work for their money, as opposed to putting the ad on Rightmove and waiting for their 1.5% plus VAT a few weeks later. The problem with falling house prices is buyers sit back and wait and thus perpetuates further falls.

There is pent up demand in the market and also people have been spending lockdown thinking about a change in scenery, add into the mix a drop in stamp duty and the markets will get a very short lived surge.

I too work in finance and I know that mortgage lenders are getting extremely nervous about lending money and pulling high LTV deals. There will be 3 - 4.5m unemployed within 18 months which adds to the problems.

Estate agents are currently causing a feeding frenzy, there a many greedy sellers who are even increasing the cost of their properties by the stamp duty so they can pocket this. But when this honeymoon period is over then I feel we will see 20% - 30% house drops. This could be even worse in London with overpriced properties, many without gardens and people shunning mass transit.

Recently it has always been a gamble to delay buying house, now I feel its a massive gamble buying a house.......

@TheGuruishere Please don't mislead people if you do not fully understand economic concepts and what you understand is via folklore and anecodotes.

Following 2008 we saw QE, we've just had 300 Billion more QE, QE finds it way into assets. We will get much more and every central bank is at it, it likely to cause huge House price inflation over the next 2-5 years.

You are conflating two very different topics. QE does inflate the value of assets but the assets affected by QE are predominantly equities and bonds. The bulk of the QE after the financial crisis was between September 2009 and December 2010. This is why the market rebounded quickly after the last crisis. House price growth, however, was limited till the government introduced the "Help to Buy" scheme enabling anyone, not just first time buyers, to buy a house with 5% deposit. This led to a sudden flooding of credit into the housing market sharply increasing prices from about 2013.

The BOE are considering negative rates, so interest rates are likely to remain low and possibly go negative.
Umm. All the more reason to not take a mortgage now. This means interest rates are going to go even lower.

Just be careful, as many people didn't buy following 2008, held out and now bitterly regret that decision.
Sorry, don't have an answer to this emotional scare tactic. I prefer to deal with facts.

@TheGuruishere didn't even address the current economic situation. This is very different to the last financial crisis - the last time banks had risky assets that blew up and they refused to lend leading to a liquidity crisis (credit crunch). In this instance, demand has collapsed. No amount of QE is going to make this go away. Even Rishi Sunak knows this otherwise he would extend the furlough for another year or so or resort to helicopter financing in which case inflation will explode (a la Zimbabwe...).

@Focusanddetermination Here's a really cool video by renowned investor Ray Dalio that explains some of the concepts discussed here and the pitfalls etc.:.be

Yes. East Midlands city. I live in a popular area and I'm glad I bought my house when I did, I suspect I could sell it at a decent profit now if I wanted too.

My BIL sold a house a couple of miles from me, and had 30 viewings and two offers within 48 hours. It sold for over the asking price.

@thequantofmontecarlo

You talk such sense and I'm continually surprised by people comparing what is happening now to the GFC.

And if I hear one more person say the economy is 'paused' with the expectation that it's just going to pick up where it fell off the cliff in February 🙄

The effect will be worldwide from what's happening. The housing market will drop. That's for sure once furlough ends and the slight pent up demand has expired.

But tbh, anyone who doesn't have the nouse to hunker down and just get through the shit storm that is coming down the line. Well that's on them 🤷

Asking prices shooting up here too (Home Counties west of London). Lots going ‘sold subject to contract’. I wonder if the sales agreed are for full asking price.

Interesting article in Money Week Magazine. They can’t see huge falls coming or huge gains, except in certain highly desirable hot spots.

I know first hand from estate agents in Greater London that offers of 5%-10% below asking are 'very likely' to be accepted and are now the norm. This wasn't the case pre-lockdown so the hike in asking prices should be taken with a pinch of salt

I'm East Midlands, I would say the market is slow round here. Lots coming up for sale but not much seems to be selling and a lot are getting reduced.