Do you think house prices will return to 2004 levels? Or, what percentage drops are you predicting?

[WideWebWitch]

What appears to be the house of our dreams is in the paper this week and we could afford it if we got the price down by 30%.

I know I've been banging on about expecting 30% drops by 2009 but if were to offer 30% under asking that would be what it was worth in 2004 (and current owners paid for it) according to Zoopla.

So, 30%, realistic or in my dreams?

[noddyholder]

You can pre empt the falls though and offer 30% off now and maybe achieve about a 25% reduction esp on houses that have been on a while.

[KatieDD]

Tracey you want 30% off the price that it goes on the market today, not 30% off 18 month old prices.
The penny is dropping slowly but i think 18 months will be a good time to buy, the message that your house is not a cash point should have sunk in by then or their will be lots of reposessed houses on the market, either way you win.

[wombleprincess]

66% falls? i wouldnt say across the board but i could see this happening in some areas. but this is mainly because of over valuation by EA in the first place so in some ways this is a "fake" drop if you know what i mean. So a house in our area started off at 495 and sold for 300. He actually bought it for 290.. so does that mean he made 10k or lost 195..?

I suppose perhaps really a house only techinically falls in value if it falls below the price paid for it by the owner plus, for example inflation over the years of ownership ... but then what we have borrowed on top of original purchase prices is causing all the problems ....

dont know. but anyway, i will miss all those property programmes!!

[1dilemma]

wombleprincess hanaflwer is right about just some of the reasons why demand will drop further.
the rental market is not boyant round here, rents are dropping and the number of properties is rising, they are also available for longer.
As katie says the smart money has left property long ago, a lot of BTL is not profitable, a lot has been bought by continulaay remartgaging leaving the buyer highly exposed......
just imagine what would happen when the gov. realises that the next source of money is to make rental income taxable pre deduction of costs!!

There are no tent cities because there is no shortage of property

[wombleprincess]

well maybe i am a bit too optimistic but i just think life will go on, people marry, have babies, divorce etc regardless of any credit crunch, and the cost of borrowing has become even more prohibiitive so rental will remain the only option for some.

rents in premium areas remain stable.

i doubt very much the govt would tax rent pre costs as they need the private rental market for social housing as much as anything else, it would also go against some fairly rigid and commonly accepted tax principles.

[1dilemma]

I think you're possibly a bit deluded sorry not trying to be rude
I wasn't actually thinking that will be Alistairs next tax grab

(FWIW private rental social housing is one of the most profitable areas so could best 'afford' to be taxed)

[wombleprincess]

"afford" to be taxed... erm well if you taxed it and then landlords withdrew from the sector you would need more money from the Government to build and maintain social housing so your argument doesnt really stack up.

[KatieDD]

There is a whole team being recruited to trace and find all the capital gains "lost" by buy to let landlords selling up and not declaring it, I know because I interviewed them all a few months ago, teams of investigators up and down the country. So whilst they may not tax the rental income they do plan to profit when the landlords sell, hence why they are moving heaven and earth to try and stop a crash. They'd rather screw the future of this country than admit they are liars who built on the good times on credit. They know they won't get another term so are saving their skins for now ready to let the Tories be the bad cop and sort all this mess out. I just can't believe the people fall for it over and over again, but then when you look at the Sun readership it's actually not that surprising.
Do not ever think you are "safe" under this government from anything, GB will not be happy until everything is under government control.

[1dilemma]

yes it does landlords who own properties privately and rent to social landlords are generally making the most profit and generally own older places which they paid less for and they generally spend less on upkeep so they make more money so they have more they can pay tax with! (they also probably generally own more properties)
landlords with one precious new build BTL (or their own home which they are LTB ing) don't generally go into social housing, and are generally making a lot less loosing money therefore they have less they can 'afford' to be taxed on!!!

[clam]

I have just found this. If you go on the UpMyStreet website, it will tell you all the properties that have sold in your neighbourhood within a range of months (and how much for). This info comes from the land registry so there's a bit of a time delay.
The thing is, I've just checked within a mile radius from my house and sales have fallen from 173 in April-June 2007 to 77 in the same period this year. And from July to September 2006, it was 156, then 137 last year and this year 11. (although there are another couple of weeks to go).
If anyone is still in denial about things selling, or rather not selling, they should take a look.

[wombleprincess]

1dilemma, do you understand how taxation of buy to let properties actually works? "so they make more money so they have more they can pay tax with" "making a lot less loosing money therefore they have less they can 'afford' to be taxed on"

tax is proportionate to the profit...

[lalalonglegs]

But surely taxing landlords on mortgage interest would be very difficult to do because, whatever you feel the ethics of BTL are, mortgage interest is a legitimate business expense. If the government taxes that business expense, does it also start taxing others? Or would it just be a property tax in which case would someone who owned a business and built or bought new premises not be allowed to offset that against their taxes?

[KatieDD]

I suspect 1dilema means the landlords who are making a profit and they should already be declaring that profit on their tax returns, this it not a new idea it should be happening now and indeed will be cracked down on in the near future along with the capital gains. Many many people who have bought buy to let properties don't seem to actually realise they are actually running a business.

[wombleprincess]

lalalonglegs, sort of my earlier point, BTL is treated like any other form of business/investment. and at the end of the day, the rental sector is needed (whehter mums netters like it or not!)

Its actually fairly difficult to get away in the long term with not declaring either rental income or eventually capital gains, as BTL mortgage lenders inform HMRC of who is borrowing what and any sold properties get registered on the land registry. If you are making a loss its in your interest to declare it - you would get a reduction in income tax on your salary if you were pulling income from elsewhere.

re gordon brown tories... isnt it the right to buy and deregulation of financial services markets which have got us into this mess to start with which i believe was the good old tories....

[dinny]

50% more like

[fiodyl]

falls of 50% are looking mor likely after todays news IMO

[KatieDD]

But again, a hell of a lot of landlords don't even have BTL mortgages, the number of posts on this site I have read where people are letting out one home, the rent just covers the mortgage but they haven't got the required 25% equity and the advice ? well just don't tell anyone.
As for the right to buy, yes that was a good idea at the time to give personal responsibility to people and the opportunity to secure their own futures. Unfortunately the champagne solicalist's we have now (how many buy to let properties have Cherry and Tony got again ???) have pushed up debt - not actual gains - for everybody young and old and now intend to use tax payers money to bail out those too stupid to realise that the bubble would burst. Pathetic.

[hattyyellow]

Wickedwaterwitch just wondering if you've had any more thoughts on this/put in the low offer?

We're in a very similar position - saw a beautiful house at the weekend, which would be in our price range if they knocked £50k off.

Looking in our area, that sort of price drop does seem to be happening - but this is in a very lovely village in catchment for a very popular primary so that might attract lots of people who can pay more..

Interested to see if you go ahead/low offer is accepted..

[noddyholder]

what % is 50k?worth a shot atm I ahd a low offer accepted last week

[hattyyellow]

We'd be asking for 18% off the asking price...it's a second home for a family who want to sell it to buy a new second home in France. They bought it years ago so its hard to know what their finances are and whether they would take an offer. Has only been on the market for a few weeks..

Noddy do you mind me asking what % under asking price you managed to get accepted?

[noddyholder]

25.We had another house which i loved which fell through for structural reasons and that one was 27% off so can be done with careful negotiation and a thick skin!

[noddyholder]

how long have they had it?If post 2000 you can find out what they paid

[hattyyellow]

Cheers Noddy. They bought in summer 05 for £250k, now on at £335k. We can't go above £275k..it definitely needs to go below the asking price a bit as the bathroom and kitchen are extremely dated, respectively avocado and brown!

The whole place needs redecorating and there are some patches of damp.

It's just such a lovely house with lots of space, good sized garden, we could stay there for ages and ages - and it gets our girls into a fantastic primary. I guess there's no harm putting in a low offer and seeing what happens..

[critterjitter]

Well I spoke to my old rental agent at the weekend (who works alongside sales staff). She said that sales were now completely dead in their office. At best they have one viewing per week. They've laid off 50% of their staff. In terms of offers, she said that ANY offer would be looked at nowadays, however low! This is in a prime area just outside London, with top schools and excellent transport links into London.

[expatinscotland]

it's looking less and less likely now.