What % decrease in asking price would it take for you to consider buying?

Nenen

I'd love some opinions as to what % drop in asking price it would take for you to consider buying a house you really liked at the moment. I know no one has a crystal ball but the expected drops seems to be around 20%. Even the more optimistic HPCers don't seem to expect much more than 30% drops by the time we've hit the bottom.

A house we like was originally on for £300,000 in January this year. At that time I thought it was overpriced by about £20,000 as it needs a lot of work doing on it. In May the price was dropped to £270,000 and a week ago it was dropped to £250,000. The elderly gentleman who used to live there is now living in a nearby sheltered house. The house is half-owned by him and half by his two daughters (I assume his deceased wife left the daughters her share to avoid death duties).

I'd love to buy this house but am extremely worried about negative equity etc. We put in a starting offer of £200,000 last Wednesday. The EA told me it was unlikely to be accepted as they had already had two offers of £250,000. Hmmmm.... at first I thought she was telling fibs as the asking price is now £250,000 and it hasn't sold! However, I now wonder if they had the 250 offers several months ago and these are no longer on the table as they are now chasing the market down.

Realistically, given what needs doing to the house, we could go to £210,000. If by some miracle that was acceptable to the vendors, it would mean a 30% reduction on its original starting price and a 25% reduction on the starting price I thought was realistic of £280,000. The $64,000 question is... is this enough of a drop to ensure we don't get our fingers burned?

phil_b_2

In my opinion the % drop has nothing to do with it.

A 1 bed flat could be put on the market at £500k. It could then be reduced by 50% to £250k, but if it was vastly overpriced in the first place and only ever worth £100k you still wouldnt buy it would you?

The thing for me is to look at what houses were selling for on that street in 2004'ish (perhaps even earlier?), and aim to match those prices.

I have recently seen a house on at £185k, and houses on that street were selling for 170k in 2004, so it seems that finally a realistic valuation has come-about and I may take a punt. Other folk on the street have theirs up at £200-220k which dont look as good.

baby_boomer

phil_b wrote: »

In my opinion the % drop has nothing to do with it.

I agree.

In a rapidly falling market it can be hard for EAs and especially their clients to face reality. Others cotton on more quickly.

So there's more scope for variety in original asking prices than usual IMHO.

napoleon

I'd be a bit tempted if prices fall by 20% but ultimately I can't really envisage myself buying until prices actually start rising again

Nenen

Thanks very much for your replies. However, without wishing to sound ungrateful or rude, I can't quite see why looking at historic sold prices is any more/less valuable than % drops. Surely, if one knows the rough percentage drop expected for the area, that is just as good an estimate as guessing which year's prices the market will bottom out at isn't it?

Anyway... as a comparison, I've just looked at historic house prices in the road the house I like is in and found that a similar house sold for £245,000 in 2004. On that basis the price of the house I like will only drop by 19% from original asking price (or 12.5% from the price I considered to be more realistic). Making more (wild) suppositions as I don't know the condition of the one that sold for 245 in 2004, assuming it was in a reasonable state, the one I like would be worth less as it needs lots doing (rewiring, heating, windows, complete redecoration).

Slightly OT... but out of interest another house in the road sold for £210,000 in 2001 and again for £340,000 :eek: in March 2007!

pickles110564

It does not matter if property falls in value, you just have to work your sums out and get it for the best price possible to then turn it round and make a nice tidy profit.

Zammo

50% standard.

Gorgeous_George

Where my BTL property is, I would buy if the yield exceeded 10%. A property that I had my eyes on (3-bed semi with garden) was on the market at £75K.

Recent price adjustments seem to have been ignored and it is now marketed at £80K. I would consider buying at £50K (rent approximately £425).

So, I need a 37.5% drop.

GG

clobber_2

Couple of houses I have had my eye on are overpriced by about 30%, and would buy if they dropped to that.

It does depend on the house.

GracieP

Nenen wrote: »

I know no one has a crystal ball but the expected drops seems to be around 20%. Even the more optimistic HPCers don't seem to expect much more than 30% drops by the time we've hit the bottom.

Where did you get that from? There are plenty of predictions out there that prices will fall further. http://www.guardian.co.uk/business/2008/jun/09/housingmarket.houseprices for example.

Personally the type of house that I'd be interested in buying would want to drop 50-60% off today's asking prices before I'm tempted back into the market.

Nenen

GracieP wrote: »

Where did you get that from? There are plenty of predictions out there that prices will fall further. http://www.guardian.co.uk/business/2008/jun/09/housingmarket.houseprices for example.

I know there are some people who do predict greater than 25-30% prices drops but, having read these threads avidly for the last two years, these people are in the minority (of course that's not to say they are wrong)! With the greatest respect, the article you quote above states that they predict house prices will have a fall in value of 23.5% from their current price. This is conservative compared to those who think 25-30% drops are on the cards.

The Guardian article you quoted goes on to suggest that if average retail price inflation is included then in real terms houses prices will drop by 47.5%. However, I am simply looking at the difference in selling price between top (Aug 2007) and bottom (possibly 2011 or beyond according to some) of the market. What inflation does in this time is anyone's guess!