Are estate agents overvaluing homes in Wales and elsewhere?

[2longinthetooth]

When are estate agents going to get real. Seriously here in Wales their valuations are crazy. Can people be that deluded that they think they will achieve 350k for a semi in the valleys. These are not exceptional properties neither. I mean wth.
Ive been following the market for 1yr and this summer I can count on 1 hand the properties that have actually sold. Surely estate agents have to get a grip at some point because surely they are starting to lose a lot of money. People are not even reducing. Its gone full stalemate. I think they are hoping its their summer slump and September will improve but ive doubts. Properties have been sitting on the market for well over a yr, some are reaching their 2yr mark. Who are these people who sit for that long. Obviously not serious house movers.
How is it in the rest of the country.

No one has to accept an EA valuation. Set it lower to sell.

Agree about Cornwall though. Very difficult to sell there and it’s why people let out houses as holiday homes. If it’s in a run down area, lower the price to rock bottom.

It's not just Wales. Houses across the UK are being overvalued. It's not going to end well however it pans out in the decades to come. I think we're either going to see the house prices collapse or serious social unrest due to a deeply unequal society.

Yes the difference is huge. For example :

Borrowing 600k over a 25 year mortgage at 1.9% (as was the average at the end of 2021) used to have a total cost of around 755k to repay in full and own outright - over term.

Skip forward to now - where borrowing 600k over 30 years (as most need to stretch the term to qualify) at the current average of 5.6% - has a total costs a staggering 1.24 million !!

So (assuming borrowing remains at historic normal levels which looks likley for the foreseeable) to borrow the same on a property today you are looking at a total repayment of an extra 420k and an extra 5 years to pay it off and own outright.

Staggering when you do the maths that way - something has to give eventually and it looks like it will be values. To be fair Estate Agents have a difficult job navigating expectations during this adjustment. Mortgaged owners too - can't be expected to just immediately eat the new cost of the debt they hold without trying to get as much as possible for their sale. Who can afford to just swallow that ? so for some they have to sit on the market hoping whilst values drift down further - many are eventually withdrawing from the idea of moving when they finally accept they have become mortguage prisoners.

Its a proper mess atm

I thought that the money they earn on managing rental properties is probably keeping estate angents afloat?

exactly @DrySherrywe plan to move again but we won’t be borrowing loads as I don’t want to waste money on debt, life is too expensive now!

It's the same in Devon. Nothing is selling and houses are having to be reduced 2-3 times. We saw a massive boom down here during covid, when people realised they could wfh and live in such a beautiful place. Unfortunately the market is now saturated with thousands of new builds and there are thousands more in the pipeline! We've just lost our maternity unit, have a serious lack of jobs and will be getting one of the biggest data centres in the UK soon, so I can't imagine many people itching to move here over the next few years.

I agree. We might see both actually. The inequality has gone too far.

Exactly. Why are some sellers and agents surprised that there are less people looking to buy at these sort of prices? As you say, people wanting to move up are stuck or just deciding they don't want to take on so much debt. That's before you mention high earners who are losing their jobs at a faster rate and the cost of everything rising. I do think we will see lower rates before long but I think it will be because of recession rather than any good economic news.

This is what happened to my sale, I went under estate agent valuation but slightly over the sold prices for the area. No offers so reduced to sold prices and got full asking. I thought at the time people may give us a cheeky offer but apparently that is not a thing anymore ??? Now we are onward buying and there are a few houses seen only worth 325k but these homes are on for 360k now way would I even bother viewing. Waste of time. So we are going into rented until we see value in a home.

We were in devon last week and tbh the prices there are reasonable. 3 bed bungalows on for 320k, in wales they are asking more than that for a semi that needs work. Crazy.

The real value of houses has dropped significantly, taking into account inflation. It’s huge. People aren’t ready for it.

Because we are 70, we have a fairly fixed budget for our next house, which will probably be the last house we buy. We're relocating 200 miles, to be closer to friends and family. Our budget is decent, but we don't want a huge project on top. Stamp duty is a large chunk of tax over the asking price too, and we still have massive uncertainty about the future tax/rules. So we're not rushing; we love our current house. Yes, I concede it's a privileged situation and set of choices, but we're not desperate.

Specifically, the valuations on our four bedroom detached house on one-third acre in a lively village with a view to die for, are down about £150k from 2023. It's about earnings and economic optimism; there are not many jobs locally paying enough to support that much mortgage.

But there is only one house, so we only need one family to love it. Our neighbours aren't moving anytime soon.