Page 4 | Waiting for the current housing boom to calm down

stuckinaditch · 2021-04-25T15:11:40+00:00

We were originally planning to buy a new (larger) property last year but decided to wait due to the current property boom fuelled by pent up demand, more WFH, v low interest rates and government policy. Things seem to be peaking now in many areas currently with many houses selling in a week at over asking price, bidding wars, etc We have decided to monitor the market and wait as we are not in a huge hurry and don't want to get involved in what seems to be a frenzied market. Obviously there are risks to waiting but equally there are risks to buying now. Has anyone else decided to do similar?

MissDolittle15 · 27/04/2021 21:12

We have done the same OP. Houses in the area we were looking at were selling upwards of 20% over the guide price. Total madness. The real estate agents said they had never seen the market like this.

We decided we were not desperate to buy right away and we would wait. Yes, it is a gamble (as some have rightly pointed out), but I don't believe this level of demand will continue and that things will cool-off in a few months. I think the market has been disproportionately driven up by the stamp duty exemption, but also I think people are just sick to death of their current homes after a year being stuck inside them.

worriedatthemoment · 27/04/2021 21:27

When was the last time prices came down by much , I am in somerset and my town prices have gone up 14 pc in a year as people from cities move down as now wfh
We have probably 3 pages property whereas used to be 15 pages
But i have been looking for few years and market rarely drops by much just stays similar for a bit that I can see , no big drop in years
As a ftb I hope it does but just can't see it

Original poster

stuckinaditch · 27/04/2021 21:47

@rabbitcarrot

Waiting 5 to 6 months doesn't mean waiting for the house market crash, It just want to see the situation/market better, Without the STD and furlough those government intervene policy, how the market react & turn to normal, assume the mortgage payment holiday will be over by then.

Current market is definitely not normal, one house got 20/30 bids over, most house are sold over asking price. Without strong job market support, it's not sustainable. Unless the economy got quick recovery/bounce back fast as government expected, I just don't see it will last long after September.

It's right in long run, house price are always increasing, but if you see the trend of last 20 years, it's not always straight upwards line, it will dip a bit or correction slightly reflect corresponding policy/interest rate.

Any decision takes risk. life itself is full of choice, sometimes it's like gambling.

This and what @Outonmyear and @MissDolittle15 say.

I even had an estate agent tell me that he would wait 6 months if he was me as the market is so over heated and eveything going to sealed bids.
The government support will have to be withdrawn at some point (probably slowly) and the current debt burden is so huge. It's a big concern.

OP posts:

ChochoCrazyCat · 27/04/2021 21:59

What I don't get is, why is there such a shortage of houses on the market...if so many people are wanting to buy, then surely they must have to sell their current house? They can't all be first time buyers surely?

AColdDuncanGoodhew · 27/04/2021 22:03

Us too. We can’t compete with the offers others are putting in, so staying put and saving for another year. We bid 10k over the home report for a house and it went for 30k over the report (40k over asking).

We stay with family and its not ideal but needs must. We even looked at a house needing a lot of work thinking it wouldn’t get much interest, it went to a closing date and sold within the week.

Alonim · 27/04/2021 22:06

An estate agent told us to wait too OP. We had a valuation in March and he advised us not to sell at that time.

We were shocked and wondered what his motive was. But now I believe he was right. It’s wiser to wait.

Alonim · 27/04/2021 22:08

What I don't get is, why is there such a shortage of houses on the market...if so many people are wanting to buy, then surely they must have to sell their current house

Because people like us are waiting/ can’t afford it now with prices as they are. Also older people are not feeling safe yet to have people round viewing?

Sinner10 · 27/04/2021 22:13

I don’t know if I’m being a bit stupid but is the stamp duty savings not cancelled out by the hiked up house prices? Potentially a lot of people will be in negative equity soon?

Confusedaboutlots · 27/04/2021 22:15

www.dailymail.co.uk/femail/article-9509085/Kirstie-Allsopp-says-people-stop-rushing-buy-homes-overheated-market.html

this about covers it. we are just pushing for a bit too. our house sale is going through though.

the problem is 18 viewings a day, sealed bids by 9am the monday after. it’s frenzied and madness. and even if prices go up slightly whilst we pause id rather buy knowing what my future work and commute situation will be.

and i’ll also buy the house that fits the budget i have - it may not be the perfect house but it will be the house i can afford at the time. it is what it is but i am not going to pay £100k over asking just because some other eejit is doing that as a sealed bid.

i live in london so it’s a crazy market at the best of times

Saz12 · 27/04/2021 23:38

Sinner10 - the stamp duty saving is less than increased house cost for most. But housing market is very irrational! Sometimes people will pay over-the-odds for (eg) a well-dressed nicely decorated home, others over-pay for a do-we-upper (thinking they can “add value”), will buy more readily if the sellers seem happy, or if they ‘lost out’ on a house at sealed bids they’ll offer too high for the next one, etc etc.
When the market gets really busy it just feeds into a frenzy of people determined not to “loose out” on a property, regardless of its pitfalls. When it slows down people become incredibly risk-averse and are put off everything they see by something minor, making it slow more.

The longer term trend is price increases, but peaks and troughs on that trend line will mean some people will have negative equity for a time. Just not enough to be newsworthy and instead people will just say “well, he just overpaid, what a fool” or “wow, he got a bargain there!”.

InescapableDeath · 27/04/2021 23:47

Re stamp duty, we don’t have 15k in cash but did have the earnings to get the mortgage we needed so having the stamp duty holiday really helped us. Even if we have slightly overpaid, it enabled us to make the next step earlier than we would’ve done otherwise.

Alonim · 27/04/2021 23:52

But ... @InescapableDeath don't you use some of the mortgage to pay the stamp duty? You don't need to use cash to pay stamp duty - do you???

You're not being stupid @Sinner10 not at all. The stamp duty holiday benefit has been completely cancelled out by the price hikes. This is precisely what our estate agent told us too. I was surprised he could see it or at least be so honest.

Smokeahontas · 28/04/2021 00:05

@Alonim you can use some of your equity, but not actually the loan the bank gives you

InescapableDeath · 28/04/2021 00:16

We could’ve used the equity that’s right but it depends how much of a deposit you need to take forwards. In our case, I put most of our equity forwards and kept back a little bit in case of stamp duty or survey discounting. We ended up getting got 10k back after the sale so we could’ve made the 5k up for stamp duty if we’d needed to from our own money, but I’m glad we didn’t need to.

InescapableDeath · 28/04/2021 00:16

*additional 5k

TortolaParadise · 28/04/2021 03:14

This is all very interesting as I live in London and my agent has reduced the sale price of my property twice now. Perhaps I need a new agent!

Bluntness100 · 28/04/2021 07:03

@TortolaParadise

This is all very interesting as I live in London and my agent has reduced the sale price of my property twice now. Perhaps I need a new agent!

I’m sorry but in this instance it would indicate it was substantially over priced in the first place,

EssentialHummus · 28/04/2021 07:07

tortola from a few other threads it seems like some areas in London are in a frenzy, but others are very quiet. Itself interesting.

Original poster

stuckinaditch · 28/04/2021 07:52

@Sinner10- you are right, the house price rises have far exceeded the stamp duty holiday savings in many areas (4-5 times in some).

OP posts:

PowerslidePanda · 28/04/2021 08:29

@ChochoCrazyCat

What I don't get is, why is there such a shortage of houses on the market...if so many people are wanting to buy, then surely they must have to sell their current house? They can't all be first time buyers surely?

It's not a complete shortage, it's a shortage of certain types of houses - namely family homes with gardens. Flats are struggling to sell. So are houses with small and overlooked gardens - even if the house itself is a decent 3 bed.

Countrylane · 28/04/2021 09:33

I also think the current mini boom it is partly being driven by families wanting to leave London who want to be sorted by the new school year. I think once that rush has settled, people will chill out a bit too. (I also think a lot of the people who could leave London "easily" have done so this is the last surge of that).

PicNic44 · 28/04/2021 09:35

We've been waiting too and are just at a complete loss to know what to do right now. We're currently on year 4 of a 5 year plan made a decade ago to move out of London into the Dorset/Somerset borders. Decided when kids were very young that we'd move out that way within 10 years and in May 2018 started that process by renovating then selling house 1 which finally went through Sep 2019. Moved into house 2 (MILs house) which needed even more renovating than house 1 so started that early 2020 with view of putting on the market this April and whole family moving south west this year. Timescale for moving this year was fixed as DH had reluctantly renewed business lease 5 years ago as not then ready to move. Lease ends this November so we've been working towards this date and come Nov it's been decided to close the business and he'll be unemployed. The plan was to set up a new business from country home.

So obviously coronavirus altered all that, not only causing delays on the renovations meaning we've decided not to do as much, but what to do about moving this year? To the country... Where we've been looking at moving to for years, but now everyone's doing it and the prices have all gone up, and should we just jump in and sell here and hope we're lucky finding something to buy or sell here and rent there for a bit, or wait and see etc etc. Apart from being annoyed that it looks like we're just jumping on the bandwagon when we're actually not 😂

So these posts have been somewhat helpful, but then again not as still no idea what to do, like so many others 🤔 I'm thinking jump in and keep our fingers crossed...

PicNic44 · 28/04/2021 09:47

We're looking to sell a 3 bed family home with large garden on a quiet cul de sac close to outstanding schools IF we decide to sell this year, so hopefully we'd currently get a good price. Problem is if we're going to have trouble funding something to buy we can't yet sell so if we wait we might not get as good a price on the sale later. An option is selling soon and renting in the area we're looking, but I'm loathe to waste money renting which could be for a while 😒

Outonmyear · 28/04/2021 10:22

We missed out on a house on our current road in late 2013. We later bought the equivalent house on the same road in mid 2018 and it had gone up 45k which is about 8% increase per year.
Didn’t think about the increase, it felt normal and we live in a desirable area. We were happy to pay that.

What’s freaking us out is prices have gone up about 15% in about 8 weeks and the atmosphere is frenzied. That is not normal and definitely not sustainable.

When we bought our current house the seller asked us to wait 5 months as they were emigrating. Didn’t give price increases then a second thought - they probably missed out on a few thousand but nothing in the grand scheme of things to avoid renting.

According to current valuations on our house we’ve missed out on £17k by selling at the end of January. Prices have gone up on what we are trying to buy and we are in an impossible situation.

I think when Kirsty Allsop thinks house prices are over heated then things are weird.

I don’t know whether the new prices will stick around but just flatline for a long while rather than crash.

Nothing to rent around here either.

ThinkAboutItTomorrow · 28/04/2021 10:29

@Countrylane

I also think the current mini boom it is partly being driven by families wanting to leave London who want to be sorted by the new school year. I think once that rush has settled, people will chill out a bit too. (I also think a lot of the people who could leave London "easily" have done so this is the last surge of that).

I think you're right as a 'surge' but I think there'll be a steady stream of people leaving London over the next 2-3 years. People who have decided they want to move but who need to see how return to the office goes to know how far away is feasible.

This week it's starting to take shape for us. I'm likely to need to be in 2-3 days a week and DP is 'fully flexible'. Realistically that caps our commute at 1.5 hours door to door. So we can't race off to Dorset but Home Counties looks doable.