Houses wildly overpriced near me and NOTHING is shifting

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My parents are house-hunting at the moment in the area close to me, and it's so frustrating. They've sold, but literally every "downsizable" house in my area is on for genuinely I would reckon about 200,000 more than they're worth. I think 2022 was about the peak in my area, but these prices look as if prices had carried on tracking up for the last four years. We're in an area that boomed during WFH, but is not going to do so well as people are ordered back to the office - which is certainly not reflected in the pricing. Nothing is shifting at all, and it's only going to get worse with Iran. Houses are going off the market and coming back on for sometimes, insanely more. It feels like people got their houses valued in 2022 and are just never going to accept that the market isn't there any more. I'm irrationally annoyed with one local estate agent who tells everyone their house is worth X when it's just clearly not the case. My parents accepted less than they would probably have got in 2022, because they figure that is what their house is worth now - and they can rent for a bit and they'd rather not be in a chain. GRRRRR.

https://www.telegraph.co.uk/money/property/house-prices/london-flat-market-collapsed/

Do you have a share token otherwise we cant access that article

Sorry no, but if you search a bit it is easy to find out that the whole thing is in collapse mode at all levels, basically a classic Ponzi scheme. I think this time the credit crunch will come from a private credit/shadow banking collapse rather than sub-prime, and of course the massive cluster-fuck developing in the ME, although sub-prime might also be thought of as partly "shadow-banking"?

thenegotiator.co.uk/news/uk-housing-market-news/hundreds-of-high-end-properties-to-flood-london-market-after-collapse-of-shadow-bank/

I don't disagree, but I think the house and the location merit the price, so everyone is happy. The vendor is selling at near asking price.

Good result, everyone happy is the basis of a good deal?

Yes please, haven't been out today. Could you get mushrooms, tagliatelle and Oykos yogs please? I'm making a bolognaise.

Exactly, don"t throw your hard earned deposit into a loss making property.

It's difficult though. I'm one of these really. I'm in a 5 bed house, divorced, no mortgage so don't really need to move. But thought it might be nice to release some equity. But the step down once all fees stamp duty etc is paid doesn't really seem cost effective 🤔

Agree throwing money away on fees and more stamp, especially if you’ve already moved a few times, is such a waste.
If the stamp and fees were lower downsizing ro release equity in retirement would be more prevalent. As it is I can see there being a bottleneck in the future

Sure. The taxes are high but it depends how you look at the situation. You can hold on in accommodation that is likely to become too difficult/impossible and perhaps too expensive to manage and maintain as you age, leading to unnecessary stress and the building potentially becoming dilapidated, eventually selling for less, so that you can save some ££ now. People never think this will happen to them but it does. Or, you could choose to be more pragmatic and move somewhere that would suit an older person better, near to family, near to amenities, on a good bus/train route, etc. You may be able to release equity and enjoy your retirement more or gift ££ to children.

I'm mid 50s 😂 I've got a little time left before everything goes to shit. My youngest is 14 and my eldest is living with my whilst training as an accountant. He wfh a lot, as do I.

So at the moment we need three double bedrooms - we have five, so we have a lot of space, but potentially still need it for another year or so.

When I'm looking at houses one layer down once we've paid all the fees stamp Duty etc we're not really releasing a lot of equity so I'm thinking of hanging on until the youngest leaves for uni then buying a little bolt hole in the city centre and a place in the sun.....

Exactly, what is it people think will happen going forward that makes it easier to sell a house? The cheap debt bubble era is over, chapter closed, and some areas are seeing falling demand, there are not enough buyers to go round.

Oh, hi, @CrashyTime. Finally got that keyboard issue fixed?

Seriously, don't engage with this one, guys.

We have that too and as well as being an university city, landlords have dumped their stock. We also have what look like repossessions. There are so many houses for sale.

This market seems deluded since COVID.

Lots of areas have lower demand, not enough buyers, are you sure the landlords have dumped, or are they trying to dump?

I've made a small mortgage calculation. Average FTB mortgage in London is 350K.

So if you borrowed 350K few years ago at 1.79% rate, your monthly payment would be £1736.

If you borrow now at 4.79%, to keep monthly payment around the same, you could only borrow 270K.

If FTB can borrow 80K less now than few years ago - house prices can't stay the same or go up either, because there will be significantly fewer buyers for them. And as FTBs are the 1st element of the chain, everybody will have to reduce in order to sell.

That's right. Could you also do that calculation showing what will happen if we see the interest rate make two moves upwards this year - as now that seems to be the likley path that is being reported. How much less will they be able to afford if we get two 0.25 increases ?

Just had a valuation on my 4 bed semi. Down 15% from 3 years ago. I am a semi-reluctant down sizer, so that made the decision for me. I will stay in my lovely over-sized house for now.

It will not be as dramatic, buyer will be able to borrow only 15K less if mortgage rates hike for another 0.5%, but it's 100K drop from the time mortgage rate was 1.79% (was it like 4 years ago?).
So sellers will unlikely be able to make money selling the house bought at peak prices and low rates 5 years ago.

Here's the calculator
https://www.themoneycalculator.com/mortgages/calculators/mortgage-payment-predictor/

Did you buy it 3 years ago?

Apologies yes trying to dump their stock. Little terraces with 5 ensuites squeezed in.

However
Most people downsizing are not moving from massive houses far from amenities
They usually just drop a bedroom
That bedroom could make a massive difference to a family needing it but many people, who have that empty room, will stay because it’s just too expensive to move anymore. When you have retired that’s cash you can’t make up again in the future.
Its cash lost to your estate.

Exactly 💯 and most my age will also be mortgage free. So don't need really to sell, just thinking ahead. I just want a smaller version of this house in the same area.

I think incentives offered for downsizing might help as someone suggested upthread.

Thanks that mortgage calculator is useful. I have been messing around with it.

I put in a mortgage rate of 6% (which is now the expected average by the end of April)

That equates to the borrower being able to borrow £110k less than they could just a few short years ago ! (if they wanted to keep that £1736 monthly payment).

That's eye opening and suggests prices can only go down :/

Just waiting for the fourth horseman of the apocalypse to join KeepPumping, rainingsnoring and DrySherry......... will it be a two-word user name or maybe something less obvious