House prices

[Twiglets1]

Hi Guys, we got to the end of the last thread so need another one on this controversial topic!

And to respond to @CrashyTime I don't say "demand is strong" over and over again. In fact, I rarely comment on demand at all. My posts are more focussed on house prices and interest rates/mortgage rates.

And I don't deny economic "reality", I just don't exaggerate how bad the house price correction is likely to be. I have a running bet with @XVGN that property prices generally will fall about 5% in 2023 and another 5% in 2024 so I do believe prices are falling in most areas. Just nothing like the 30-35% crash predicted by some!

Sorry that mainstream media triggers you, Crashy. My advice is to stay away from all news channels & newspapers & stick to websites you know to be impartial like the House Price Crash one.

@Postapocalypticcowgirl Im not convinced that 99% mortgages would be that helpful either. They would help some FTBs who struggle to save a deposit, maybe because they are already paying rent. But a bigger issue than finding a deposit is being able to afford the high cost of the property, especially in the South. It would be a niche product but I can see the Tories unveiling it at the Spring budget. Even if it did take off it wouldn’t necessarily be helpful in the long term for FTBs as could increase prices.

@cloppyklip I think with guide prices people normally hope that they won’t get any offers below the lowest point of the guide price.

Having said that, the property is proving hard to sell & you are free to offer whatever you want, though be aware that the poor condition of the property was already taken into account when the EA valued it. If it’s on at a range beginning 235k then I think the Sellars would immediately reject 210k so I would start a little higher personally to be taken seriously. Maybe 220k? Up to you.

99% mortgages will only be on new builds. Looks like another ‘help to sell’ scheme. Someone needs to buy the thousands of unsold flats available.
New builds are often sold at a premium anyway. It will lead to immediate negative equity.
If it’s going to happen (Labour will have similar plans) would be better if the mortgages are only available for freeholds and on second hand properties also.

I agree it would be so much better if 99% mortgages were available on older properties also, not just new builds. New builds are not the best investment in my opinion as tend to depreciate in value for the first few years as have lost their USP of being brand new.

I don’t so much agree with your point about freeholds. Only because in certain parts of London (& maybe other cities I don’t know) nearly all available flats are leasehold. Many are long leases though of close to 1000 years.

I'll just be glad when most people buy properties as homes rather than investments.

I genuinely think most people do buy primarily as a home ( excluding developers or people who buy to let a property).

But no one wants to go into negative equity so it’s sensible to think about buying somewhere that will at least hold its value or preferably rise in line with other properties so you’re in a good position when (if) you choose to move in the future.

@XVGN I think it’s part and parcel of climbing the property ladder: you can’t buy your forever home at the start, so the first few homes you buy ARE investments (even if they’re working investments), until you can afford where you actually would like to stay..

No. The property is NOT an investment. And that's especially true in your scenario when prices are rising. The next property up will be even more expensive so that will not have worked in your favour.

You are mistaking the benefit of salary growth and mortgage versus rent as being the "investment". Those have worked in your favour - not the rising house prices.

Wrong thread.

LOL.

Will house prices rise in 2024?

Article from Richard Donnell from Zoopla; his overall opinion is No. The key takeaways from his research are:

• We are still locked in a buyers market, so it’s unlikely we'll see prices rise in 2024 at a national level
• House price falls were modest in 2023, despite mortgage rates more than trebling since 2021
• But buyers remain price sensitive and 45% of those with mortgages are yet to remortgage onto higher rates
• Inflation appears sticky, meaning there is only so far mortgage rates are likely to fall
• The average UK seller is having to accept offers and is getting around 95% of the asking price, so sellers must remain realistic on pricing

It occurs to me that while sellers must remain realistic on pricing, so must buyers. If the average UK seller is getting around 95% of the asking price, it is realistic to start negotiations at about 10% below, as a rough guide. Not at 15% or 20% below which I have seen a few people ask about on Mumsnet. For a property to sell at such a high percentage under asking, there is likely something very undesirable about it or the Seller was completely unrealistic which should be obvious as it will have lingered on the market for months & months.

Also, when inflation does start falling again (and it is when, not if in my mind), so too will mortgage rates.

Time will tell. At least he hasn't done a 180 like that well known property expert Frank Knight -3% to +4%. We have more expertise on this forum than they have.

That depends- if house price inflation is uniform then that is true, but generally house price inflation at the lower end tends to be greater because there’s more pressure and demand. I saw greater growth as a proportion of my first 2-bed apartment (50% in 2 years) against 30% on my first 3-bed house (in 2 years) against the house I’m in now (my forever home which has seen about 25% growth over the last 4 years). So the relative performance of houses as investments at the lower end does drive the move because there’s less demand as you move up the housing chain (this makes sense because not everyone’s wage growth is uniform, so the combination of increased relative house value along with wage growth leads to the ability to move up the housing ladder).

I suppose that the “house flipping” phenomenon (which appears to be ending now anyway) suggests that you can increase the relative value of your investment (even if you’re living in it) to make further jumps.

It's a plausible story so it had me checking! It obviously worked for you at an anecdotal level, but at the general level it doesn't appear to be true.

This is true. Ignore the ticket price - it's just a flag to tell people they're thinking of selling. View and offer what the home is worth to you be it -30% or +30%. No one - not even EA's - know what the market is doing for any particular home. Buyers are the market.

I’m not saying never offer more than 10% off. I just think it’s rare that an owner will accept 20% off or even 15%.

Where you see houses get reduced in price that much there is normally something wrong with them imo. The desirable properties that people want do not get reduced that much even in a stagnant market.

The ones that have been reduced multiple times were obviously way overpriced to begin with. May as well wait for them to start getting reduced before making an offer because the seller is unrealistic when they list the property. They are unlikely to accept a big reduction off the bat but will instead suffer death by a thousand cuts.

Agree with @Twiglets1 - it’s not about whether you’re justified to go lowball with your offer - it’s just the mental gymnastics for a seller who is very likely deluded about what they can get means they’re unlikely to accept. If they’d made the mental adjustment they’d have reduced to attract those lower offers. You could be lucky and strike at precisely the point at which they’ve started to mentally accept they’ve over estimated the value, but even then they’re likely to eg reduce by 10% in the hope they get near to that reduced price.

I thought Nationwide would be the first to start ticking up interest rates but it's Santander. I expect more to come. Thankfully not a big increase just yet.

www.standard.co.uk/business/santander-mortgage-lender-interest-rates-loan-borrowing-home-property-bank-of-england-inflation-house-b1134172.html

Barclays has just reduced its mortgage rates - they’re a bit all over the shop

And now Nationwide is cutting again. Interesting times, all over the shop is exactly right..

You can. The seller just isn’t likely to accept it. Which is also fine, if they aren’t that interested in selling.

I think there’s a middle ground - tbh if a house was ridiculously overpriced, like 20% or more over what I thought it was worth, I’d just assume the seller was going to be a total nightmare and steer clear! If you offer them 20% under, even if they accept it they are going to be resentful about it, and a reluctant seller is going to be a massive pain in the arse to deal with. I’m not sure any house is worth the stress of dealing with a batshit vendor.