Why are property prices rocketing?!

[totallyfedup77]

I’ve just been reading the very depressing article below and don’t understand - we’ve just had Brexit and are still in the midst of a global pandemic. You’d expect prices to be falling if anything but according to this article, in some places they’re up by as much as 48% in a year! Why?!?!

www.dailymail.co.uk/property/article-9621715/Most-expensive-seaside-property-revealed-Salcombe-topping-list.html

@totallyfedup77

Who said anything about smallholdings? I don’t think anyone is planning to build many of those. More like massive housing estates of overpriced modern homes with no storage that all look the same.

It's not surprising that a massive change in employment patterns to work from home has caused massive house price rises.

I don’t believe the media reports that there’s been a mass exodus of people moving hundreds of miles from their offices. If there has then it’s rather short sighted of these people to say the least. It’s far too soon to say for sure what new working patterns will look like when life gets back to normal. If you’ve moved hundreds of miles away from the office then suddenly find yourself called back four days a week, then what?

I’ll be wfh permanently if I stay with my current employer. They’ve sold their offices, so there won’t be any backtracking. It means a number of my colleagues are buying houses by the coast or in the countryside as commuting is no longer an issue.

My grandson and his partner have been saving for five years and now have a good deposit or so they thought but the rise in prices and the number of people trying to buy every house they see is soul destroying. They are now thinking that perhaps they should wait and hopefully see things calming down a bit. It is so difficult and we feel so sorry for them.

The house we are trying to buy has been down valued by £25k today and apparently 1 in 3 houses are being down valued. Looks like we are back to square one.

@Paddingtonthebear

The house we are trying to buy has been down valued by £25k today and apparently 1 in 3 houses are being down valued. Looks like we are back to square one.

Where did you hear this?

Could be true. I had my house up for sale and it went for a stupid price above the asking. I've decided to stay because I couldn't find anywhere to move to due to the bonkers market. Currently remortgaging and the bank have valued it significantly below the offers I got.

I read it online on a professional forum, I also read that a bankrate did a survey in October last year of 1000 house sales and 40% were down valued by mortgage lenders. Our mortgage broker has also said today they have experienced this many times lately with other clients. even the bloody estate agent said they are seeing it a lot recently but still expects us to find a way to pay the asking price.

Op - if you don’t want to build more houses, you can’t complain about house prices being high. One is because of the other

That said, I know a few other people buying at the moment that are having no issues with valuations. Just bad luck I guess.

@Paddingtonthebear

I read it online on a professional forum, I also read that a bankrate did a survey in October last year of 1000 house sales and 40% were down valued by mortgage lenders. Our mortgage broker has also said today they have experienced this many times lately with other clients. even the bloody estate agent said they are seeing it a lot recently but still expects us to find a way to pay the asking price.

Could you post the link?

If I was in charge I'd ban second homes, and I'd sort out the empty homes in London - 25,000 are sitting there unused. Of course this will never happen under a Tory government. I'd also make renting much easier, and a longterm option for those who can't buy - like in Europe where people often happily rent their whole lives.

@CayrolBaaaskin

Op - if you don’t want to build more houses, you can’t complain about house prices being high. One is because of the other

It is not as simple as you make out. Houses have not become more scarce this year, but prices have gone up. In the 1990s, houses were not being built at an enormous rate but prices fell 20%. If people were only allowed to borrow as much as a multiple of income they were in the 1970s, prices would be much lower. Prices are going up now at a point when there are fewer households in the country due to people leaving because of Brexit. There are many factors that affect house prices- a big one is well-heeled people using BTL as a pension, thereby pricing first time buyers out and leaving them forced to rent.

BTL is becoming more and more difficult. Lots of these houses at well come on to the market.

Second homes affect some areas but not where I live. Where I live is expensive because new housing is very restricted.

The house price crash in the 90s was not about supply of houses - it was the supply of money and unemployment. Confidence in the housing market was low and people could not pay their mortgages. It happens from time to time. However in most areas, shortage of homes is the problem that fore prices up. Not second homes or BTL.

@Beecham

If I was in charge I'd ban second homes, and I'd sort out the empty homes in London - 25,000 are sitting there unused. Of course this will never happen under a Tory government. I'd also make renting much easier, and a longterm option for those who can't buy - like in Europe where people often happily rent their whole lives.

Hear hear.

Second homes, in particular, are an abomination.

@PresentingPercy

BTL is becoming more and more difficult. Lots of these houses at well come on to the market.

Second homes affect some areas but not where I live. Where I live is expensive because new housing is very restricted.

The house price crash in the 90s was not about supply of houses - it was the supply of money and unemployment. Confidence in the housing market was low and people could not pay their mortgages. It happens from time to time. However in most areas, shortage of homes is the problem that fore prices up. Not second homes or BTL.

But second homes and BTL mean there's less in the pool for homebuyers to purchase. How can that not decrease supply? Where I live homes are kept for the kids instead of sold when people are up sizing.

Stamp duty holiday + COVID related moves + very low interest rates.

I was hearing a World Service prog. last night about how IRs are going to have to rise soon.

BTL are bought on the open market. Other buyers can buy them. They form a necessary part of housing for people who cannot buy. So at the moment there needs to be more house to buy. It’s not possible for all renters to buy so they need homes too. If they could get social housing and vacate BTL then that would mean prices might fall as there could be a glut of housing stock.

It’s too simplistic to say high prices are due to others buying homes for the rental market and second homes. If there were too few rental homes, what would happen then? Still a load of people who could then not afford even higher rents and no chance of buying either. So social housing is the only answer probably.

We need to start looking hard at the now redundant shops and offices for redevelopment into homes IMO. The biggest thing stopping more houses is planning controls. Keep building regs so developers can't build rubbish quality but remove planning restrictions altogether for any development creating new C3.

@MaudBaileysGreenTurban

I’m incredibly grateful for people having second houses, because without them, we wouldn’t be getting a holiday this year. And probably next year

If the UK staycation is her to stay, that can only happen because there is a ready supply of holiday homes for people to rent for a week or two

I’m aware of the problems they cause in some towns (I grew up in the West Country) but they serve a very useful purpose and benefit an awful lot more people than just the owner

In Cornwall, tourism is 33% of local business . Lots of it from second home owners and renters. It’s a vital industry. The only way to help is more housing where people need it.

@totallyfedup77

Who said anything about smallholdings? I don’t think anyone is planning to build many of those. More like massive housing estates of overpriced modern homes with no storage that all look the same.

It's not surprising that a massive change in employment patterns to work from home has caused massive house price rises.

I don’t believe the media reports that there’s been a mass exodus of people moving hundreds of miles from their offices. If there has then it’s rather short sighted of these people to say the least. It’s far too soon to say for sure what new working patterns will look like when life gets back to normal. If you’ve moved hundreds of miles away from the office then suddenly find yourself called back four days a week, then what?

A great many workplaces has transitioned to agile / activity based working pre pandemic. Office estate is any organisations second biggest cost after payroll. Hotdesking / hubs and a few days WFH a week was already very much the norm across the civil service for example.

The traditional 5 days a week in an office was a thing of the past already

What the pandemic has done is make those 2.4 FTE targets per work station unworkable because it doesn’t allow for any social distancing / massively reductions in the capacity of offices.

Sorry that’s got nothing to do with house prices

@BlueMongoose, interest rates are so low that savers and anyone with cash/pension savings have to look beyond the banks and building societies for a place to make their money work for the long term. Lots of people are like my DH, who has several family members who were defrauded of their retirement savings in the 1980s by their naievete in believing promises of decent investment returns. Those people, and the generation behind them, have decided that there is not much to go wrong with buying a two-bed house suitable for BTL. And while I know anyone under 35 wanting to buying a two-bed starter home will complain that it's preventing them from getting a foothold on the property ladder, because it is, the BTL owners are only storing capital safely and will sell when they need the cash. Having lived through the 80s and early 90s, I never thought I would ever write the words that "we need some inflation back in the mix". But we do need enough inflation to pay savers a return on savings, and that will hit the people who have stretched themselves to manage a low interest mortgage. And the inevitable crash in property values is going to hit as hard as it hit in the 1990s. But it will be nastier because of zero hours contracts and PT work.

What we need is more council housing.
Nobody needs to own a home. Everybody needs a stable and affordable home.

Far better to build or buy more social housing than have significant inflation or a drastic crash (although interest rates do need to go up a little as it's time to reward and encourage saving rather than debt).

I'd disagree that no one needs to own a home. Most families prefer to know that their house is their house, even if they are paying a mortgage and that as long as they make the payment monthly, they can do pretty much as they like.

But there does need to be more social housing.

There's a difference between need and want.

It's nice to own but not a need.

We have a situation where a significant and growing number of families and individuals don't have what they need - a stable affordable home.

It's not for society or the government to cater for wants. There is, however, a responsibility to provide the necessities.

Stable home = stable families = stable communities = stable society.