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.

TonTonMacoute
We came to the conclusion that if it was as simple as just prices being too high then people would still be looking at property and offering under the market price. But in our case no one seems to be looking at all, and other people we know in the area who are also trying to sell say the same

Trust me, we’re looking. But when you’ve put in offers below, 2 - 10%, more times than you can count, depending on the property and are constantly met with…
‘They want their asking price, they won’t accept that, can’t you up it? Or worst of all complete silence.
You tend to stand back and wait. We’re cash, no chain and it makes no difference. Buyers fatigue sets in.
Dropping the price and meaning it shows an enthusiastic seller. Done and dusted 12 weeks max. Remember those days?!!

Perhaps then you should look at property you can afford the asking price of?

An interesting take. If that was the case then there wouldn’t be a problem and everything would sell. It doesn’t seem to work like that though does it?!
These houses rarely sell and just disappear or fall through.
It would have to be a very special house in the current market for anyone to pay asking, if the house is clearly 50-100K over.
It’s very true, it is always the price.

In all fairness I think if you have been used to steady house price growth it takes a while to see that a 15-20% drop since 2021 is the norm in some locations.
We thought we bought well in 2023 but it's bit us on the bum. Well 'lose' about 18% if we want to sell in this market. Not quite what we paid but not far off. Biggest percentage drop was since the Iran war. We can't even remortgage so we'll let our current house out and move to something smaller. Things are still going to final bids here but they are smaller and not family houses. People are also having fewer children!

Odd then if it works like you say that you've not bought anywhere yet. Oh perhaps it is down to price then.

Yes you’re probably right.

I doubt that @augustusglupe or many other buyers want to over pay in the current, falling market, with a worsening job market. As can be seen on this thread, and many others, over pricing sellers are unlikely to sell. They can hope that it will be better in the Spring, etc like I said earlier but it will probably be worse next year, not better.

I'm sure no buyer wants to overpay, of course they might need to pay what the seller is asking. Are you selling btw?

That's very interesting. We were in the same position and similar ages as yourselves but in 2019. We were fed up with travelling down the M5 from our home in Somerset to Gloucestershire to see our daughter and she was also keen for us to move so we bit the bullet so to speak and put our Somerset cottage on the market. It was lovely, but an acquired taste and had a huge garden and orchard - we sold within a fortnight to a lovely working couple from the Home Counties.

Our onward purchase was a bit more of a challenge due to the fact we were quite particular about location, only wanting to be about 30 minutes max from our daughter. We also didn't want a project or a house with massive upkeep which our 17th century stone cottage was certainly was! We ended up with a lovely 20 year old four bed detached with a manageable garden in a very nice rural village but with many amenities and close to a small town with library, cinema, supermarkets and GP surgery. While I do drive to my daughters' home, we are also on a main bus route to the nearest city for hospitals and other amenities. All accomplished within five months - and that was only because we accommodated our buyer who was still teaching at the time so we agreed to delay completion until the end of her school term. We were pleased to also come out of the sale and purchase with a good surplus of funds too which we added to our savings.

I hope you find your perfect home in due course.

Things were very different in 2019, though!

We've previously gone on the market and completed on both sale and new purchase in as little as three months (house hit RM last week in Feb, moved house third week in May). That was in Essex with a chain of five (we were at the top) back in 2011.

Where we are now (West Sussex) I can report a similar situation to other posters on this thread - period cottages up to around 500k are selling, if reasonably priced compared to the competition, even those in need of work. Bungalows too, including ones that are being gutted or replaced with houses. Then there's a huge gap up to the £1m+ type which are shifting...but again only if they represent extremely good value for money. Properties renovated badly and overpriced are sticking...in all price brackets.

I'm closely watching the house of an acquaintance of DH - purchased in 2022 for 600k. Demolished and replaced with something bigger/modern but not cool contemporary which cost a further 500k. It's just been valued and listed at 875k!

People are deluded if they think they can command 2022 prices. We live in a nice area, mostly detached, the houses are on for 450k to 850k. Some have been on for over a yr not sold. The market is shifting down. Lenders are getting tight and so are valuations. If you want to really sell your home in today's market, you have to look at sold house prices within the last yr. The contrast in what you want and what you will get is staggering. Its the difference between an actual sale or languishing on the market in hope of that 1 buyer.
Thing is everyone has access to rightmove/sold prices they know exactly what the going rate in the area is. Unless your home is exceptional you cannot blindly follow your neighbors valuations. Buyers wont even view it. For those wish to wait I think in time you will have wished you hadn't. There are buyers out there we have just sold and others are selling to but only to people with realistic prices. People wont pay over inflated prices.

Yes, "supply and demand" was a classic, supply and demand for cheap credit is more realistic.