House valuation

[Iammetoday]

Estate agents valued house we want. 2 different quotes. 1 £400,000 other 425,000. We've agreed a price with owner of £380000. Had valuation from mortgage company at £375000. Do we try to negotiate more? What would you do?

Again, 'overpaying' is only an issue if you have a short term investment strategy. Residential property for the majority is a long-term investment, with the goal of owning outright the asset of a home, without the uncertainty and sunken cost of renting.

Those that hope for a significant crash need to be careful what they wish for, the economy would be in freefall for that to happen.

Price corrections do happen naturally, but the forecast long term will alwaya be X% higher.

The economy doesn`t need to be in "freefall", all that needs to happen is that the costs of borrowing mortgage debt goes up..

https://www.msn.com/en-gb/money/other/barratt-sees-new-home-reservations-slump-by-30-as-mortgage-crunch-hammers-sales/ar-AA1gjLGR

In fact the stronger the economy the more rates can rise and the more house prices would fall because we are starting from such a stupidly inflated level due to many years of super cheap debt?

As a very basic example, a £300,000 property at 1% will cost £1,131 in monthly repayments.

Say at 5% that same property was sold significantly cheaper, at £200,000, the repayments would be £1,169 which over the course of 25 years would be more expensive.

Rising rates are not a magic answer.

A five-fold increase in interest rates would see a much bigger price drop, you would be buying the house for much less than 200k, mortgage rates at the moment have only doubled and the market is already cratering, Barratt reporting reservations down 30% etc. The smaller amount borrowed would be paid off quicker if you made overpayments and this would leave you less exposed to interest risk as you would probably clear the debt before the 25 year period was up, so overall your example doesn`t really work and the idea that falling property prices are somehow not good for people is obviously incorrect.

"Assets" can go bad and lose value, sometimes lots of value, it happens all the time, and property is THE most illiquid asset which makes it very hard to bail out and avoid losses when the market turns

As someone said upthread, house prices have trended up overall. There are corrections but as long as you can ride out the blips, your money is better protected in purchasing a house than giving it away to someone else to spend on their mortgage. The key is not to overstretch yourself wherever possible so you can continue to pay the mortgage, and to open a constructive dialogue with the bank if you are having trouble.

But if a one off never before in history central bank experiment is the cause of the last "peak" in prices, how could that peak ever be reached again if all the global inflationary and political conditions that allowed that experiment are now reversed? Surely a more sensible approach would be to conclude that house prices will drift (or maybe drop quite quickly) back to the price levels more suited to the return of normal borrowing costs, or are you seriously saying that they will cut rates to under 1%, restart QE and continue to print money to control bond yields so that house prices can go back to 2021 levels? Even putting aside the fact that the bond market would eat the UK alive, the central bank have clearly stated that their policy is to move away from artificial rate suppression and economic stimulus?

They’ve barely dropped since the peak - something like £8k on average. That’s not to say they won’t drop more, but I don’t believe we will have a crash like the one you seem to be salivating over.

And once again, I’ll repeat what I said earlier - even if prices do drop, you are unlikely to lose all your money as long as you keep paying the mortgage. Renting doesn’t enable you to keep any of that money. For some people it’s the unfortunate (and often unfair) position they are in - but I don’t understand anyone who chooses to rent when they can afford to buy.

https://www.bbc.co.uk/news/business-66728391

Averages for prices are pretty meaningless, sales volumes are massively down, that usually precedes big price drops. (Note the subliminal message in the picture, why no drooling couples thinking of all that debt they could spend on basic shelter?)

Losing £14000 off the theoretical price of a house is not the same as actually ‘losing’ £14000 in rent payments in a year. Can’t you see that?

Assuming £2000 per month rent, which seems to be a fairly average figure for a 3 bed, that’s £24,000 a year that’s ‘lost’.

You’re still quids in having bought your house a year ago, before its value dropped by £14k.

For many people who bought a few years ago, they are nowhere near being in danger of losing money or being in negative equity.

I agree that some people who buy right at the top of the market or massively over extend themselves or extract equity may have some tough times ahead, but I cannot see the doom you are predicting.

Cant you see that if your house has lost 14k off its last year price and interest rate rises mean you are paying 14k more a year than last year for your mortgage debt you are down 28k, and that is before rate rises and price drops really kick in!

Someone actively avoiding the property debt bubble because they see where things are heading isn`t going to be renting a 3 bedder at 2k a month, they will squeeze into a 2 bedder at 1200 or 1500 a month or maybe house share for even cheaper or live at home for free?

The news that is coming out now where Barratts are seeing a 30% drop in applications and mortgage applications are down 30-40% should tell you that there are not legions of people waiting in the wings to take up the slack when demand drops (the real demand for housing units was never there in the first place because no one viewing a house to buy or rent is homeless, they wouldn`t get the mortgage or the tenancy without a current address! ) when the price of debt goes up the "demand" is gone, as predicted countless times when people trotted out the "supply and demand", "not making any more land" toddler level economic arguments!

Someone who bought five years ago won`t get back the price they paid now and they will be paying eye watering monthly interest on their mortgage debt if they went all in and over-stretched.

Can you post a link to one of these 3 bedders at 2k a month so we can take a look with PropertyLog to see if the price is moving up or down? I predict it will be heavily down if the recession so much talked about materialises.

Yeah, your weird formatting is making it hard to read that without it seeming like a rant.

Round me there is nothing to rent. People are offering loads over the list price on the handful of properties coming on the market.

And you aren’t down £28k. £14k of that is a theoretical drop - so if you bought for £200k and in 2 years your house went up £20k, then ‘dropped’ £14k, you’re still up £6k. The other £14k on extra interest payments every year is excessive, I’ll give you that. But it’s still better than giving more than that to someone else to pay their mortgage.

Oh, and also round me, the new flats are being snapped up by foreign investors. They don’t need to worry about our rising interest rates. Neither do the large BTL companies who will capitalise on insane rent rises (because fewer buyers mean more renters). There are always buyers to be found. They might wait for a drop, but they’ll snap them up and create the demand that pushes prices up again. Same old, same old.

Foreign investors don`t need to worry about rising interest rates??

I think we should leave our discussion there TBH.

Not the kind of investors who buy off plan new build flats in London. And yes, I’ll happily leave it there. I’m sure you’ll be popping up on other threads about price.

To paraphrase Regina George: stop trying to make crash happen.