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.

@thequantofmontecarlo - in fact, I'd hazard a guess that they are very much like yourself, but have made a different calculation/decision.

But am not an economist or a finance person - personally I just try to figure out what's best to do for myself and interested in what is currently going on.

Also - I work in property law and my peers are being made redundant left right and centre. The work isn’t there.

@Greenhats10 I honestly don’t know a single person who’s looking to buy at the moment. This varies from those who were looking at properties ranging from £500k to £2M. A really good friend of mine got an awesome bonus earlier this year and had started the process of buying a place in Richmond but pulled out when the lockdown was imposed (despite her relatives saying property in Richmond never drops in value etc etc).

Actually what I’ve noticed is that people who don’t work in finance aren’t shy about spending money on property as it’s they don’t apply the same level of due diligence as a traditional investment (funny thing is that the exact same people then usually later depend on it as an investment for retirement etc). They tend to be like retail investors in the markets who flood in after the markets have made their moves and are usually the ones left high and dry (dot com bubble, bitcoin boom etc)

[quote yellowymellowy]@TheGuruishere- most of what you are saying makes absolutely no sense. You also seem to have an incredible amount of faith in the Tory government.
Do you seriously think that, even if the rates go negative, banks will be paying people to take out mortgages, ie losing money themselves? That makes no sense whatsoever. Banks are a business and a business that wants to make lots of money for themselves. What you suggest isn't going to happen.
The Tory government are interested in their super rich, property owning donors and contacts plus most of them are exceedingly wealthy on a personal level and no doubt own property amongst their other investments. They also value 'the grey vote'. They are really not very interested in FTB (how on earth has the reduction in stamp duty helped FTB?) and millennials. The stamp duty reduction is an attempt to prop up the market and give it a (temporary) boost as we enter recession. I wonder if it may be extended but even that seems highly unlikely to save house prices as we enter a depression. The government don't have unlimited 'tricks up their sleeve' even though I agree that the desperately want to keep prices high. Add Brexit to this and the possibility of a no deal....
Surely on a personal level, many people on here have suffered or have friends/ acquaintances who have been made or at risk of redundancy and self employed people whose businesses are struggling. There are many, many people in these situations across the country. Even from my perspective, as a non Economist, the outlook looks bleak.

I agree with several posters that the choice of whether or not to buy will be based on a number of factors as are most things in life. Those, like @thequantofmontecarlo who are in extremely well paid work, very well qualified, without any dependents, etc may well make a different decision to those with much lower incomes, older age group, children to take into account, immediate need for schools, space, etc. I think the most important thing is to be informed and make an informed choice. Without wanting to describe our exact circumstances, we are choosing to wait.[/quote]
Earlier in the thread. I said, I clearly agree with how thequantofmontecarlo, was describing the path of the economy. If there was no goverment intervention.

Now, I understand that in the UK, we are not used to or know of negative banks rates, currently most countries actual banks, don't offer them. Even when the central bank is negative, however you would be surprised, that some EU banks do offer negtive interest rate mortgages. Just hit a google search and see for youself.

Now, I'm not disputing that the banks may not go negative on rates, but what you may find is a similar counter measure, such as mortgage tax relief or HTB extended to all homes.

thequantofmontecarlo, has been rather rude towards me, throughout this post and I disagree on their perspective of the future and the advice they are throwing out, without knowing individuals circumstances.

Stating that its guaranteed....

Now normal supply and demand logic, would state the stock market should been its knees right now? Do you agree? Why isn't it, due to QE and free money, props come in during and before crashes now, rather than after.

You also understand, as thequantofmontecarlo pointed out that HTB increased Londons house prices..

The Tories are very interested in lumbering FTBs, into negtive equity trapping them in a new houses.

FTBs, also prop up the market, often most chains have FTB at the bottom.

An you make, an even stronger point, that the Tories hold alot of property wealth themselves and therefore an incentivised to protect it. Sunak himself has 10mill, worth of property.

It also seems, that banks and lenders don't share such a bleak view, as 10% mortgages are still on offer.. 5% in some cases. They are betting as I am, on HPI.

Who knows truly what the BOE and govemrnent will do, within the coming months.

The housing market currently has no logic. It's one massive bubble, pumped up by cheap credit. thequantofmontecarlo, rather logically is arguing that, the bubble has burst...

I'm arguing, that their going to keep pumping, the gas. Theres no logic to be found currently...

@thequantofmontecarlo my flat was £400K. It has 2 bedroom and is a 1920s purpose built (not ex council). I had a 15% deposit.

Of course for me the cheapest option was free- to stay with family but I have already done that for 3 years. I was worried about price falls when i bought my flat in 2019 (when I bought the brexit negotiations were a terrible state but i guess they are now too), but my MIL said- just buy, if you lose your jobs, rent out the flat and move back to her London house.

I think prices will generally go down, but as others have pointed out there are plenty of other factors at play in the decision to buy.

And one major issue is you might be able to pass the mortgage affordability criteria now, whereas you may not be in a position to in 12 months time if you lose your job. I would imagine there are some that will go for it now and tighten their belts as need be - they are probably betting on still being able to make the repayments in tighter circumstances, eg if 1 of a couple lost their job, what with savings, one income, rent-a-room possibly, relative assistance. And who knows, I didn't foresee the furlough system to save jobs, what if there is some sort of deal to try to keep people in their homes rather than a collapse of the market with massive forced selling?

So if it's that, or the anticipation that if you don't act now when you can legitimately say to the mortgage companies 'yes, we have an
income of this and we've had it for 2 years', then you're maybe looking at never getting on the market, or never getting your dream home. And renting for the next however many years until you can get a job to meet the official affordability criteria again? The mortgage affordability criteria seem to anticipate you will spend a lot of your other income on frivolous things - they don't work to people's own preparedness to do whatever they need to do to make those payments to stay in their home. My mortgage provider will only allow me a certain amount - I know full well I can easily pay double the monthly payments that they have limited me to and still live pretty well.

@yellowymellowy

Not many FTB in London have 60% LTV plus 18-24 months savings. It is simply impossible for most people to save that amount of money. I think many young people buying in London are given large gifts by their parents but, even then, 60% seems unusual.

It would have been a 20% deposit if I'd purchased in the area that I'd had my heart set on. Such is the disparity in London. I decided to compromise, and my compromise meant that I ended up with a much larger deposit, for a smaller property, in a different part of town. I also (imo) got a pretty good deal on my flat since the seller was desperate to shift it. So even with a 10% deposit, the mortgage would be cheaper than renting.

@TheGuruishere

I am taking onboard all of the things people are saying here but I am curious as to whatever mechanisms you think are left?

For example, extending HTB to all properties isn't in the interests of the developers who the Tories like (donors, etc).

The housing market in this country has always functioned by hooking people in at a certain level - they then need to ride it out - if you could use htb on a second hand property, everyone would do it and it would flatline the market at the bottom as there is no depreciating asset (for the seller to profit on and move up.

Negative rates - I don't know about but I always thought an equilibrium was at play whereby interest rates also kept the savers happy. Aren't lots of Tory voters actually modest working class with a modest bit of savings not Sunak level investors?

@Greenhats10

I think there has been an influx of interest because everyone is bored sat at home with next to full pay (furlough). That bubble will burst soon.

I sold a property yesterday (the sale
was agreed in June, it completed yesterday) that sold in 24hrs of being on the market. I also sold something in June, that was delayed having been agreed in Feb owing to lockdown. I’m confident I timed them well. The first was a coincidence, the second I had been thinking about and with Covid thought it was the peak.

We are actively looking for a new residential home, but definitely not in a rush.

In our area pre Covid around 200 houses went on the market each day. Now it’s nearer 60. We have made a few offers and been met with competition, as you have. I will not allow myself to get whipped up and offer more than something is worth at the moment. We have a need to buy though - we really need something bigger.

I think the possibility of negative interest rates definitely exists since there is no room to go and ECB did it. But banks are very unlikely to pass that on in mortgage rates. So yes, cheaper but not negative.

Anyway back to OP, I think you should look specifically at your area and circumstances and forget what all these economists and what nots tell you. Look at your targeted area rent, schools, the zoopla price trends, and compare the options. Work out what you would pay in rent and mortgage + remember you can refinance your mortgage, either way you have to pay towards your housing cost and mortgage has an advantage of forcing you to 'save' in the form of capital repayments. Remember also it's your home for children to grow up.

To answer your question, in my area (london zone 5) large houses are flat to falling (but it only takes one buyer and too few transactions to assume a whole market dynamic from) but terraces are holding their value. I suspect they might go up because many have decent sized gardens and good school catchments, making them very attractive for the ftb or young family moving a bit further out for the space and schools. There is a supply shortage too.

I really advice those who’re “speculating” with economic theory to do more research and learn a bit more about how these levers work. Negative interest rates will super heat the economy as it’s a blunt instrument compared to QE. QE is focussed on certain assets and while there is a trickle down effect, it is significantly limited. Negative interest rates on the other hand, actively discourage people from having any cash savings resulting in expenditures not only on houses (only a minority in England can afford more than one property) but across the board. Consumption across all products will shoot up and that will boost inflation significantly. The only resort in that instance would be to increase the interest rates, which will knock on into reducing house prices.

Also, negative interest rates destroy bank balance sheets (no one will want to deposit money and therefore there’s no profit in lending) and it will have the effect of seizing up large credit markets like London.

But feel free to listen to the likes of @TheGuruishere and his/her GCSE econ advice.

In our area pre Covid around 200 houses went on the market each day. Now it’s nearer 60. We have made a few offers and been met with competition, as you have.

Not sure what 'your area' is but demand has always massively outstripped supply in London. Will be interesting to see if this changes at all.

Savers definitely are not happy with the interest rates at the moment!

If you are thinking of buying a property and are paying rent in the meantime, I still think it's better to own the place yourself if you can (I recognise that not everyone can buy property but this is a thread about buying).

If prices plummet (and I don't think they will) sending people into negative equity they won't sell anyway. There is never going to be a flood of cheap houses on to the market. There is never going to be a perfect time in real life.

@serenada Scotland actually has an open market shared equity scheme. It's pretty restrictive (low income and purchase value, or it was when I looked several years ago). Just mentioning re your htb comment - it's been around up here for a long time. Wouldn't be a usual Tory policy but these days who knows what they'll try - I don't think a Tory government coming up with furlough would have been expected either!

Prices are never going to fall, never have and never will.

I bought in East London in 2003 when people said they were going to craah. They've instead carried on rising and my main home has out earnt my professional job!!

I'm nearly 40 and have a net worth of over 3 million as I remortgaged and invested in a couple more properties. I could of made way more but it can be hard work so stopped buying any more.

Soon enough ( less than 6 years) all my mortgages will be paid off and I'll have more money than what I know to do with.

Moral of the story buy now! Don't wait around or you'll miss the boat. Property always rises as we're in island and they're not making any more.

thanks @StatisticallyChallenged I didn't know that and yes, I think a lot of people have been very surprised at Sunak's response to covid

Prices absolutely have fallen in the past, they've just then bounced back eventually in most places (not all)

To me the "should I buy now" question probably comes down to a few main things

1. Will your financial situation be more or less secure during this recession if you buy (vs current situation, whether rented, existing owner etc)
2. Could you buy something better in future by waiting/buy the same for less (considering differentials if buying and selling)
3. Is the quality of life benefit from buying now sufficient to outweigh the answers to 1 and 2

For me personally:

1. No difference really - we're probably talking a

@Smallgoon Despite demand outstripping supply, house prices fell in 2009, 2011 and 2012 in London. Demand is a lot more complex than “people wanting to buy houses and there’s not enough houses”, economic conditions, availability of credit and confidence in the jobs market are critical factors. These are the factors that affected prices in 2009, 2011 and 2012 when “more people wanted to buy vs houses available”.

I’m in West Yorks in a commuter area and look at Rightmove daily.

New instructions seem to be at low levels, lots of houses have asking prices that look high, suspect there’s a built in “Covid Discount” of around 10-20% especially at the top end of the market (£500k +)

Houses are still getting to the SSTC stage though- a house on our road went on the market a couple of weeks ago priced around 20% above what they paid 5 years ago and has SSTC already. Surprised me as last time we had a valuation the EAs looked down their nose at our road.

We were considering a move to one of the desirable villages nearby throughout lockdown but will probably stay put for a while now. We have renovations to finish and I’d like to enjoy them before we sell. The stamp duty cut hasn’t incentivised us to consider moving even though we would benefit as firstly there isn’t anything on the market that would interest us at the price advertised and secondly I think prices will rise a little to compensate in the short term.

I think overall the market will plod on for a while- new instructions will be low as would be sellers hang tight unless they really need to sell. This will subdue stock levels and result in poor choice for buyers. There will be buyers for well priced and desirable houses. I suspect prices overall will remain flat with some drops and some rises depending on areas. I don’t see interest rates rising at any speed- wage inflation is too low to take the hit.

I wouldn’t be trying to time the market if I was a buyer right now, but instead buying the right property at the right time for me.

Clearly, a lot of people in the UK/ Ireland are obsessed with making money off property and moving up the „ladder“.
It‘s an alien concept in other countries and generally, families don’t „speculate“ on property.
You rent until you can afford a mortgage on a suitable family home, in a suitable location, with the view to stay there until at least retirement. You don‘t move up a ladder, unless you won the lottery, or get a better paying job. In the UK it seems to be a property- flipping frenzy with the mantra „buy low, sell high“ and „get a step onto the ladder“ - just because some people were lucky to get a huge windfall on their property value, doesn’t mean that everyone will be - or wants to be - in that position. I am not sure, if the situation in the UK/ and parts of Ireland, is driven also by the need to move into the range of an (currently)„outstanding school“ - but there is no certainty for this, so it is still a gamble.

We bought our family home about 2 years ago. It was the perfect house in the perfect location for us and it was on the market for almost a year. The owners (probation sale) didn‘t accept all previous offers on it, so the interest died down. The previous offers were out of our price range anyway, so we walked away with a heavy heart, but we contacted the EA a couple of months later and offered what we could afford for it. They accepted our offer - even though we offered 10k below the previous highest offer. We felt incredibly lucky and thankful! We didn‘t overpay or overstretch ourselves financially and we are focussed on paying the mortgage off asap. Property market conditions do not affect us, since we intend on staying here forever and wouldn’t sell it unless our lives depended on it!

@Motherof3Dragons the problem is most people can't afford their ideal property as a first time buyer. Particularly in London. In London, a family home with 3 bedrooms cost 800k- £1 million, it would be rare that someone can buy that as a first time buyer. So people buy smaller houses until they can get the ideal home- the difference i suppose is that people do have higher expectations- in other countries, people are satisfied with raising children in 3 bedroom flats but I suppose there aren't many 3 bedroom flats in the UK so people aim for 3 -4 bedroom houses. I would love a 3 bedroom flat, but I can't really find a suitably priced 3 bedroom flat/2 bedroom cottage with double reception for my budget so I decided to buy a 2 bed flat instead. The problem in the Uk is that renting is so uncomfortable that people would literally buy anything including houses miles and miles away from their ideal location in order to not rent.

Also there are no pensions so a lot of people think of their house as their pension, which isn't advisable

@Motherof3Dragons correction when i say no pensions- i meant that a lot of people find that their pension payout is not high enough for them to retire!

Agree with @Desiringonlychild - I don’t think “the ladder” used to be common in the UK: my parents and the parents of most of my friends still live in our childhood family homes which they’ve been in for several decades and which in most cases were their first or second property purchase. Likewise, I don’t think it’s common even now in parts of the UK where house prices are fairly stable and commensurate with salaries and people can buy a small house with a garden as their first purchase and grow their family into it.

This is why you can meet Londoners who don’t think of a £100k salary as being a high-earner, because many people on that salary won’t have the trappings usually associated with being well-off. As this thread has demonstrated, we have a man in his thirties who claims to be a very high earner with the ability to raise a mortgage of three quarters of a million; yet is looking to buy a very average house in a very average London suburb because that’s all he can afford. And he can afford more than most his age! That’s why Londoners are obsessed with “the ladder”, you have to start off with whatever you can afford, and pray your investment makes you enough money so your next place can be something big enough to raise a family in (if that’s what you want.)

@Motherof3dragons, believe me, I would have bought “a suitable family home in a suitable location” if I could have afforded it. I don’t relish paying estate agents’ fees and legal costs. I bought a small flat, because the alternative was to keep renting, and the rent would have cost me more per month than my mortgage!

I’m in Somerset and now I’ve paid off my mortgage, I’m hoping to sell my flat and move to a larger property. I’m shocked to see how little flats are selling for these days. A studio flat in my area has just gone for £35,000. Some one bedroom flats in good condition are going for £60-65,000. Those prices would have been unthinkable five years ago - back then there were very few properties on the market for less than £100,000.

@Cattenberg just curious are bigger flats selling for less these days in your area? You know, the kind which is.1000-1200 sq feet so as big as a house in terms of floor area. It might be the leasehold scandals which don't apply to all flats but people think they do.

In London and other cities, they are still holding up because that's all people can afford.