South London house prices stagnating/slowing

[strappyshoe]

So for a long time I have thought London prices were separated from reality, eg a bog standard terrace in not a great area with average schools costing close to 1m & wondered if there would be a tipping point. Was visiting parents on the weekend and noticed one of those flyers advertising a recent sale. Now this is a highly desirable area with a fairly insulated target market but the price was not that different to what it would have been some years ago which if calculating inflation would be a loss. And this was a prized house on a prized street.

Have family & in-laws in other parts of S London and have noticed a lot of property particularly at the top end sitting on the market and looking still overpriced.

Is it because of lack of equity in recent years making it hard to make the traditional move from a flat that's gone up in value to a house. Plus renovation costs? Is it the high costs of borrowing? stamp
duty? Hybrid working & huge fee increases for private school pushing families from inner London to Outer London. Do people just want more for their money?

I remember reading a theory that when "boomers" start to die there would be a glut of expensive property (family homes) for a sale at a similar time which would devalue prices because there were not enough buyers. I didn't think it sounded right but now am not sure.

I plan to move in the next few years but because of stamp duty it will be the last move. I'm also toying with moving to one z4 instead of where I am.

Sounds sensible! So many not even so young adults still living in their parents' homes now. I also see middle aged adults with their own children living with parents amongst lower earners. It's become a necessity for some nowadays.

If you have a big enough garden you can also put up a temporary structure with bathroom and kitchenette and studio like living for one DC. I am seeing friends do this more and more for post uni DC, to give some independence. Who wants to pay 2000 rent!

I didn’t say agents always tell the truth. The point remains that unless the agent has a cash buyer, the bank ratifies the valuation (usually the purchase price) to confirm the property is of that value and therefore confirm lending. Cash buyers, obviously, can pay what they like for things, but for everyone raising a mortgage the process is as explained above.

I’ve never disagreed that the lenders valuation is not relevant. The lender and estate agent aren’t the same. EA’s overprice things and don’t give a shit if they get knocked down at a later stage, at least they’ve got a sale.

Yep

Yep, the house we are looking for is going to need to be big enough that our DD can stay as long as she needs to and possibly my older DS can move back in to save!

This is one reason we want to move (smaller mortgage) & will likely not choose a private secondary. So we can help with uni fees & house deposits.

Interesting discussion.

I do think @80smonster raises some valid points about how valuations are done. But I think they underestimate the degree to which EAs give over optimistic valuations simply to win the business. Knowing full well that the client is unlikely to actually get that price and is far more likely to have to reduce the price down the line or be prepared to accept a low offer.

I know when I’ve sold property in the past the EA always asks if we’re in a hurry. If we say No they urge us to put it on at a high price “just to see”. It’s hard to resist the psychological appeal but it’s not good tactics in a stagnant market like this one.

Correct, the lending valuation is of course the check and balance, and this generally insures no one pays more than a property is worth - which is calculated using postcode/area sales data. As I said earlier, the agent can add a little on, but it’s not usually worth their while to make a property so expensive it doesn’t have viewings, or laterally the mortgage is refused.

That's not actually what you said before:
'Banks and estate agents use the same desk top valuation system, this uses local data (of properties sold of same type/size sold on the same roads/adjacent roads) - pulling from land registry sold data. You may find it overpriced, but that is a separate issue'

Not all estate agents value in this way and many are clearly over pricing at the moment and the LR figures are very out of date and been adjusted down all the time. If they were not, there would be far less reductions, far less people struggling to sell and far less fall throughs. Some areas and some houses may well be moving quickly and some agents give realistic valuations but many do not.

When you’re buying houses that cost in excess of a million or more, there’s often more money in a deposit that can be juggled around in the event of an overvaluation.

I can post houses that are overvalued and I can name estate agents that repeatedly do it and are renowned for it locally. It isn’t hard to find out recent sale prices and look at the land registry.

I’ve no idea where you’re dialling in from, but in London (which is what the OP is about) this is the system I have seen used over x 5 sales/purchases. The agents and banks use the same sales data, feeding from land registry, known as desktop valuation system. Usually a good agent will have recently sold comparables for your area, to underpin the sales estimate. Which agents and areas are you referring to?

Your experience of 5 houses does not give you some sort of knowledge that trumps everyone else’s experience. You’ve sold in zone 4, I’ve sold (3 weeks ago) in zone 2. We don’t deal with the same estate agents or the same properties. Everyone knows how houses are valued but how a lender values a property and how an estate agent does for the purposes of getting a sale, isn’t the same!

@80smonster why do you think you are the expert? Did you read the link I sent?

Yes, the point is that the EA may use the same tools to reach a valuation, but they then add a bit on and that's the 'value' they give to the prospective client. So the price either gets knocked down to get an offer, or someone offers high and then subsequently renegotiates following lender valuation. If the seller is lucky, the buyer offers high and then sucks up the shortfall because they have enough equity.

To try and get back to the interesting discussion we were having. The multi-generational house thing is interesting. I'm a Gen-Xer and couldn't wait to have my independence. I moved out when I went to uni and then never went back other than for a few summers. I went straight from doing my Masters to moving to London. The idea of returning to live with my parents in my 20s is one I find hard to get my head around.

I wonder how do young people feel about moving back with parents, or indeed not leaving home at all? Does it feel restrictive do you think? And do parents notice a difference in behaviour in their children as a result of them not leaving home? Or have young people just changed from the way we were in the 80s and 90s?

I don't have children so the only experience I have of this is seeing other people's kids.

So can I ... looking at you Dexters

Ha! That’s who I’m currently dealing with.

I think it’s good to be able to have it as an option - particularly when the costs of renting are so high. I also wouldn’t have wanted to live with my parents (and didn’t) but I may have been less keen to get into my own place if I had to spend half of my salary on doing so.

My children are very different.

My daughter hated living at home again after uni and found it restricting even though we're very liberal parents.

My son didn't mind at all and in fact is still here in his mid 20s with no particular desire to move out. He definitely isn't interested in renting somewhere where he would have to pay more for a less comfy life (more independence though). So I guess some adult children are ok with it and some aren't. But I do worry that it makes them act more "dependent" for longer - more like teenagers than the young adults they are.

Personally, I hated living at home after uni so I do feel it must be really hard for those that want to move out but can't. Basically multi generational living is fine if it's a choice but many young people don't have that choice these days.

@Gekko21 I'm a millennial & went back to parents after uni. Tbh I didn't have an issues with it, I paid rent, saved etc. But I was lucky to have space as the family home is quite big & my parents were quite relaxed (although I have always been very sensible). It was the same for DH, we met at uni but actually grew up about 20 mins drive apart so that was easy to.

I would always choose the family home over living in a house share but I'm quite a home person if that makes sense. My siblings did similar although one went travelling for quite a long time.

20s is optimistic lol. DH's siblings are living with their inlaws in their 30s, one even has a child in tow. In fact we are the minority amongst his cousin/siblings who have our flat. The rest live with parents or inlaws. His siblings left before us but had to boomerang back.

We lived with parents in our 20s but bought as soon as we were able, i was 26.

my first property was only 15 mins walk from my parents & now I'm 20 mins ish drive. If I move a bit further out it will be more like 30 mins plus. It will be an adjustment! 😆

Yes, I think I am quite out of touch, although I do have nieces and nephews so am starting to think about how it will be for them (the eldest will be 16 soon and is in GCSE year).

Whilst I got on with my parents, my mum tended to have strong opinions on how life should be lived and it wasn't until I left home that I actually gained the confidence to forge my own path. I do wonder how that would have been had I been forced to stay at home until my 20s or 30s. Maybe parents are a tad more relaxed these days 😆. Certainly I see this with friends who have children - they seem more open to their kids' desires and plans.

I'm now at the stage where I'm starting to think about how generational living will play out the other way around. I'm trying to convince my mum to downsize and plan ahead before it becomes a necessity. There is resistance because the 'dream house' cannot be replicated in a more sensible location. And no doubt, there will be disappointment over the valuation and an inability to see that someone might not see the decor & style as perfect, but we will cross that bridge when we come to it.

We are actually moving to a house where multi-generational living could be an option down the line, but I do wonder whether we might just end up killing each other 😅.

www.telegraph.co.uk/money/property/london-property-premium-evaporated-charts-prove/

www.businesstimes.com.sg/property/london-suffer-uks-worst-drop-house-prices-surveyors-predict

Interesting recent articles.