The current market is utterly depressing

[DrinkingLattes]

Does anyone else feel the same way?

I'm a first time buyer and started house hunting around 4 months ago after my contract in work was made permanent. Deposit and AIP ready and solicitor lined up but there is absolutely nothing coming onto the market. I check right move every day and there are around 6-7 properties being listed but they are all flats or 4-5 bedroom houses. Where have all the starter homes gone? Is it just the time of year or the fact prices have fallen? I know people (myself included) were hoping that prices would come down due the mortgage rate rises but now it seems like people just don't want to sell... it's depressing

One person posting on a forum changes the fact that mortgage applications are down 40%? Sorry, that definitely doesn`t work.

We moved into our starter home four years ago and now we're stuck here for the foreseeable.

Last year, we were looking at upsizing as covid changed our plans about starting a family and we wanted to move sooner than expected. We were looking at a house that would have been about £500 extra a month. Then the rates changed and we're looking at a similar increase just to stay in our current house.

Our home is an OK size for us to stay in indefinitely, so we're basically staying put until either rates drop significantly, we have no childcare fees (5 years down the line) or until I inherit (hopefully a long way down the line). I imagine a lot of people are in our situation.

There’s quite a few houses coming onto the market where I am, but they’re sitting around for a long time and eventually being reduced.

The depressing part is the price. Starter homes where we are were around £120-150k about 5 years ago. Now it’s minimum £260k for a doer-upper and the interest rates are obviously so much higher as well.

We’re hoping to buy next year but the monthly mortgage payments on a starter home are nearly 3x our current rent. I think we might end up sticking it out a bit longer in rented.

I work in mortgages. We are so so busy and have been since Covid hit. OK so purchases are lower but mortgage applications themselves are higher than ever. Mainly remortgages obviously
@CrashyTime what's your housing situation?

We had been planning to move this year but there is nothing on the market to buy. We are in a starter home and need to upsize (3 dc in the 4 years we’ve been here). I feel your pain OP.

Similar story for neighbours of ours.
And of course, baby stuff takes up a lot of space, and a smaller house has a small footprint. But you can get away with 2 kids sharing even in a 2 bed. At least, until they're teenagers.

You know what you need to do OP: stop drinking the lattes. Then you will have a much bigger budget. If you also have an avocado toast habit you can cut down on, you might even be able to go straight to the family home option & skip the starter home altogether.

I don`t need a mortgage thanks.

On a more serious note, do you deal with commercial mortgages? What is your view on this....

https://www.cityam.com/st-jamess-place-suspends-property-fund-as-investors-pull-cash-and-demand-falls/

Your situation is very relatable to me. We tried to sell our flat last Spring and had 5 good offers. It went smoothly for a bit but then our buyer turned into an absolute demon. She obviously got cold feet and thought she'd over offered because about 4 months into the conveyancing she started demanding for reductions because she wanted to recarpet and change the kitchen (both of which were relatively new), she wanted us to "gift" her lots of our furniture (lol!) and then she decided that she wanted huge changes to the lease that were going to cost in excess of £6k and which just couldn't be actioned by the time her mortgage offer ran out. She was a classic FTB trying to act like she knew everything while knowing precisely nothing.

In the end we told her where to go and decided to stay put. We weren't in a position to accept an 11th hour gazunder as our onward purchase depended on the original offer. We would love to upsize but everything in our price range needs a lot of work and with mortgage rates the way they are, we just wouldn't have any cash left over to make the appropriate changes. Like you, we have a cheap mortgage which enables us to overpay and save so our plan is to build up as much equity in this property as possible and try again in a couple of years.

It’s the same in my village. The smaller 2-3 bed houses go in a matter of days. The large 4-5 bed houses stay on RM for months (personally I think they’re very overpriced). One 5 bed has been on RM since March! I don’t think people are up sizing. There was a thread a few days ago about whether to stay in a smaller house and be able to afford holidays etc or have a bigger house and no holidays. Most people said they’d prefer a smaller house and holidays. I think with the COL staying put in a smaller house and being able to afford a few luxuries is a lot more appealing for most people. People aren’t going to stretch themselves like they used to.

@aggywaggy do we have the same buyer 😬 sorry to hear you had such a rough time selling, and thanks for sharing your experience. This is actually really helpful for me to hear I'm not the only one dealing with this. Our buyer also wants changes to the lease that are going to turn into an absolute legal quagmire and I think it makes more sense for us just to walk away and extend the lease ourselves. I have a horrible feeling she is going to keep on asking for money off for this and that and generally making our lives miserable. Did you get any grief from your estate agent for pulling out of the deal?
All we have in writing is an offer acceptance letter in which we have accept the sale price the buyer proposed, but we haven't signed anything legally binding to say that we would agree to any of their other demands. I said I would consider them but on further research they aren't legally or financially in my best interests..
This is the second time a FTB has tried to boss us around and gazunder us and for mental health reasons as much as anything else I think I need a break from the whole circus. As the working mum of a toddler, life is already a juggle and this is just adding too much to my plate at the moment
(OP sorry for hijacking your thread!)

I spoke with my broker yesterday and he said he's really busy too. Sadly, however, a large number of his clients can't get the mortgages they need.

The stats are pretty clear that approvals are way down too.

While some of Crashy's posts are rather enthusiastic about the market crashing, which very few people sharing his enthusiasm, his assertion that mortgage approvals are down is correct. Was your post meant to show that the stats are somehow wrong, and the mortgage market is a buoyant as in recent years, @Jmaho?

Wow, yes yours certainly sounds like the absolute kn*b we had too. At first she was trying to get reductions on everything and when we wouldn't give in, she (under the guidance of who turned out to be a very inexperienced solicitor) decided she wanted a whole myriad of very specific changes to the lease rather than a lease extension (the lease is 149 years and was renewed about 5 years ago!) that noone could make sense of. This went on for nearly 6 months and she was simultaneously putting pressure on us to exchange bc her mortgage offer was running out while finding more faults with the lease which initially was fine, then became suddenly defective in her view. It was maddening.

It was a catch 22 situation and she just didn't seem to understand that it wasn't possible to undertake a significant deed of variation with a two week turnaround! Tbh, my goodwill had ran out at that point so we didn't even try to help, we just walked way. We'd only bought the flat 3 years prior too and my solicitor (plus someone I also paid for a 2nd opinion) were not of the view our lease was defective so we felt quite vindicated in our decision. When we pulled out, I had no qualms in telling her that while our plans to upsize had been halted, we were already on the property ladder and it made no odds if we moved or not, she on the other hand was not.

Thankfully the EA understood when we pulled out and tbh, I think they were sick of her too. Also the buyer's nightmare solicitor was the one recommended by the EA so I think they felt partially responsible. I do maintain they should've been firmer with her in the beginning though. I know a lot of EAs won't stand for this sort of flaky stuff from FTBs but I guess the market has changed now so they are trying to keep them happy, when in reality they never will be!

@NoWordForFluffy No my post wasn't intended to say the stats were wrong.
My post was to say I work in mortgages and we have had the busiest period of my working life since 2020.
I did say mainly remortgages.
I asked about crashys situation as was interested when they had bought if that's the case as know a lot of people who have bought in more recent years that worry that they have overpaid

I think that higher rates will lead to a shortage of FTB properties as people delay upsizing

I own a small 3 bed semi which is my first property. I was planning to upsize, but won't now because taking on a bigger mortgage while rates are high is not an attractive prospect. There will be lots of people in this position.

Very easy to say that buyers should be patient, but every year there is a new generation of buyers, more pent up demand, more competition.

There is already a massive shortage of rental property in many areas, which is a least in part down to 'patient' buyers clogging up supply.

And that's why prices won't fall much. It will pick back up again, but right now isn't a good time to sell so unless people have an urgent reason too why would they?

Many of the 2/3 bedroom houses in my part of London have been extended with lofts and downstairs, which turn them into something much bigger (more expensive).

A house is a luxury these days. A 1 bed flat is a starter home, 2 beds if you're lucky.

Yes, but people desperately trying to find better rates to fix at because they borrowed too much isn`t what I was talking about, I was talking about the lifeblood of the market, new borrowing, the borrowing that drives chains and sets prices.

I'm interested in your St James's Palace link @CrashyTime

I know normally sure fire commercial property is struggling based I assume on Covid work from home changes and this forms a huge part of most SIPPS.

Feels like a worrying combination as someone with property in a SIPP.

Yes, people need to diversify away from property, and this is the sort of thing that happens when a lot of people head for the exits. The technology to WFH has been here for many years but it would have been frowned upon in many sectors I think before Covid, I genuinely think that the PTB thought people would run back to the office for the social aspect or something, they just totally misjudged how sick of commuting and high commuting costs plus having to pay top dollar for average property in London to be near work etc. people were, it is now a battle of wills with the top management to get people back in isnt it? Personally I would be getting out of investments with heavy property exposure, but the problem is that so many sectors, tech for example, that make up big chunks of peoples pensions etc. were also pumped up by all the cheap money and may also be due a correction.

Totally agree, fortunately we aren't leveraged in commercial property in that sense as our holding is farmland I'm just concerned about the connection via the holding SIPP but can't work out what the implications will be yet.

This discussion on ETF`s (demand for the "wrapper" differing from demand for the underlying assets) might interest you

https://www.housepricecrash.co.uk/forum/index.php?/topic/251204-st-james%E2%80%99s-place-suspends-property-fund-as-investors-pull-cash-and-demand-falls/page/3/

One has to bear in mind the last 20+ years of monetary policy and it's effects on the housing market for perspective. A huge increase in the money supply was obfuscated quite conveniently for the central planners (central banks, statist government) via the good inflation of house prices.

They thought they had become masters of the economic universe, it was a global effort and everyone (almost everyone) felt great for a period whilst they perceived their 'value' to be increasing beyond what mere 'work (labour)' would provide. Indeed why bother working when your house earns more than you (on paper)?

Which is why property bubbles have been blown in almost every developed country. Indeed China even got on the bandwagon, the centralised control of the money supply too tempting for the hard left to resist. Their bubble is quite magnificently popping as we discuss this (see Evergrande etc).

Now, however, due to the bond market waking up, good inflation has given way to bad inflation (CPI). Of course the italics are a little facetious here, inflation is bad in any form IMHO and is always the result of an increase in the money supply.

So sit back and watch the crucial measures. As mentioned earlier in this thread, the housing market has incredible lag to it due to the pricing of debt products, in addition to being incredibly illiquid with an archaic transaction process. Mortgage approvals are down considerably and the market is in a stalemate. This happens in all markets at all timeframes, prices are set at the margins. As one poster possibly correctly points out a starting move back down in rates may well jump start volumes. People may mistakenly believe the experiment which created the mirage of wealth will start up again. That will be a classic bull trap, bad inflation will take years to tame.