Do You Expect House Prices To Increase In Over The Course Of The Next 12 Months?

Doozergirl

wolvoman wrote:

If 5 flats are sold for £167,000 and the sixth is sold for £147,000 then plainly the previous 5 flats were sold above market value. OK perhaps not quite as much as £20K difference because from the poster's account, the developers were trying to sell the flat quickly. But there is no way that the quick sale accounted for a 15%ish discount.

It won't undervalue the other flats. You pay a small premium for a brand new house, but they will sell for what they are worth in the future, regardless of what the last buyer paid.

Developers work as a business; they'll have a target price to acheive for the entire development, not just individual properties. Once they've hit that target, they would potentially be happy to drop the price on the last property to be out of that development.

It's cash back in the bank, saving them interest charges, money on the ongoing marketing and free staff to work on selling new developments. A development that sells out quickly also makes the developer's brand stronger.

mary

Doozergirl wrote:

Well done for getting a good price, but there is no way they're making a loss on your flat. Saves them money on staffing the sales office and selling within their budget period? yes. Making a loss? No way. Not even close.

The sales office had already been closed down, and the property was being advertised with the local estate agent.
Making a loss - maybe I'm naive, but the person I liaised with at the developers, told me that £147,000 was the break even point and that the final £145,000 I got it for was actually a loss. It had to go to Sales Director level to be accepted

tomstickland Quote:
Flat in a somewhat "posh" development in a small rural town in Glos.
Malmesbury, Tetbury?
No, Stonehouse


Rave Quote
Right....so are you planning to 'flip' this flat for a quick buck? Or will the market rent cover the interest on your mortgage plus a decent return on your deposit?
Just interested to see how you think you'll be better off as a result of this deal?

No, I'm planning to keep the flat for several years. It is a long term pension item. Mortgage repayment for new flat will be £600, rental will be £650. Rental covers it, as the lenders based the mortgage on the rental of £800 from parents' old house being more than 125% of the mortgage repayments.
No I didn't put down any deposit. I borrowed the mortgage company's money on an interest only basis and didn't use mine, except for approx £5,000 legal etc. etc etc.fees. I'll be better off as I will be now sitting with two properties with potential growth, rather than one and I'm looking long term.

IN LIKE EVERYONE ELSE! Quote:
Good luck.
If you think they (the builders) have made a loss on this flat you are sadly mistaken, the materials cost on that flat were probably 15-20k. Look around and add it up, a few stud walls, stainless kitchen pack, plastic bath, ill fitting doors, plastic windows, cheapest materials you can find, bought in bulk.
That flat is now worth 20k less because the price you just paid will lower the value of all the flats in your area, you are behind.

Well, in my favour, husband is a professional architect, so his opinion is good enough for me, as to whether I've wasted my money or not! I would say it is quality compared to some builders who are around.
The price I paid will not lower the value of the flats, as they have already been sold - mine was the last one.

Doozergirl Quote:
Originally Posted by wolvoman
If 5 flats are sold for £167,000 and the sixth is sold for £147,000 then plainly the previous 5 flats were sold above market value. OK perhaps not quite as much as £20K difference because from the poster's account, the developers were trying to sell the flat quickly. But there is no way that the quick sale accounted for a 15%ish discount.

It won't undervalue the other flats. You pay a small premium for a brand new house, but they will sell for what they are worth in the future, regardless of what the last buyer paid. QUITE AGREE

Developers work as a business; they'll have a target price to acheive for the entire development, not just individual properties. Once they've hit that target, they would potentially be happy to drop the price on the last property to be out of that development. EXACTLY THE CASE

It's cash back in the bank, saving them interest charges, money on the ongoing marketing and free staff to work on selling new developments. A development that sells out quickly also makes the developer's brand stronger.
JUST WHAT HAS HAPPENED

YOU ARE SPOT ON WITH YOUR OBSERVATIONS

IN_LIKE_EVERYONE_ELSE!

Dear Mrs Architect,

Quote: A development that sells out quickly also makes the developer's brand stronger.

What brand was the flat, Gucci, Armani, D&G or Lidl?

mary

mary wrote:

Doozergirl Quote:

It's cash back in the bank, saving them interest charges, money on the ongoing marketing and free staff to work on selling new developments. A development that sells out quickly also makes the developer's brand stronger.
JUST WHAT HAS HAPPENED

I was agreeing with the first sentence, not particularly with the second! Since the staff have now moved on to new sites.

The brand was David Wilson Homes!!

IN_LIKE_EVERYONE_ELSE!

Wow, David Wilson Homes, didn't they get a BBC Watchdog roasting for p**s poor workmanship and poor customer service?

BobProperty

Without bothering to quote various previous posters can someone explain why anyone will buy a flat in this development for more than the £145k just paid, when someone just paid £145k?

I wish the purchaser success in their investment but i don't think the numbers are good enough and I haven't for some time.

I believe developers look for around 33% on a development. (Isn't there a housebuilder on here? Please tell.) At an inital asking price of £165k they were hoping to make about say £50k. They've come down £20k plus some incentives, so I reckon they still made £20-25k. If they were losing money on it why the incentives? As has been said they were just trying to shift the last one, avoid costs dragging on and get the sale in before the end of the year.

superscotsman

blue_monkey wrote:

Just reading this thread with interest. At the age of 34, married living with my husband and we have 2 children we live with my mother in her 3 bedroom house. We are on the council list and have been for the last 5 years without even a sniff of a place and won't for the ferseeable future either. With the 75k (ish) mortgage we can get we cannot even afford a mobile home now. We live and pray that the housing market will crash as we cannot afford a place of our own ever. Where will we go when my mother is not here to house us is anyones guess - there are 4 kids plus others so the house will get split so maybe we'll get 40k but that won't pay a deposit and a mortgage, a 3 bed place around here is around 175-200k. It is madness. There are others like us so demand will eventually fall, where do you get the money to pay the deposit? OK for the wealthy of us out there that have the finances behind you or wealthy families to get you on that ladder but for the working class person with average pay (I was on 12k for around 10 years) there is no way we will ever own our own house unless something significant happens somewhere along the line we will still be here for god knows how long. Just my thought really. Houses prices probably will rise but nothing significantly.

I'm all right (Jack) but I do have a son who is supposed to be leaving uni in 2006,and I have no idea how he is going to get onto the housing ladder in Rip-Off Britain. I believe it is highly unlikely that the housing market will crash. What is far more likely is that the housing market will jam - like it did in the 1990s. I have told my son that if he has any sense he will leave the country. I have nothing but the utmost sympathy for you, because my wife and I were first-time buyers once, and the prices of houses now are utterly ridiculous, and are nothing like the prices we had to face. In order to unjam the housing market they are going to have to bring in multi-generation mortgages for first-time buyers - where the mortgage is taken over by the next generation, when the older generation can no longer keep up payments. They've had these types of mortgage on the Continent for decades.
I am afraid I have nothing but pessimism for the British housing market, and for those who are trying to get onto it.
Good luck to you.

manhattan

ive thought about leaving this country too!

if i cant get on that ladder in the next few years,im outta here!

Kenny4315

EdInvestor wrote:

Hi Kenny,

You've described how people use a rising market to speculate, but you haven't explained why the market is rising.

What superscotsman is describing is what used to happen in the old days when we had high inflation and high interest rates.

Thought I had answered this. The rising market has been fuelled by the speculative factors I have previously discussed. Lets look at a FTB scenario over recent years. They have been increasingly competing with BTL's speculating on a profitable venture, the end result has been FTB's competing with BTL's thus prices rising, due to more bidders, and the frantic panic to buy (many well above affordability). The rest of the market falls into line with the resulting price of ther FTB house, as overall the market values stay in approx ratio to each other. If BTL's become loss making which I expect will be the case for many who have joined the band-wagon late, then there will be less competition for the FTB houses and BTL's (who have not planned or expect continually growth) will be forced to sell, those more supply.

Sure a factor in the ability to buy / remortgage has been interest rates. But lets look at this popular affordability myth in more details. When I bought my current house 5 years ago with a 25% deposit at £120k leaving £90k outstanding, the mortgage was around £500 per month, if I bought the same house given recent valuations, with the same deposit % now the mortgage would be close to £1500 because of the rise in capital values, far outweighing any reduction in interest rates in terms of the total cost. Result is that the interest arguement and affordability does not stack up with the true mortgage cost, as prices have doubled if not nearly trebled in some cases. This is especially the case with FTB who in reality are those that dictate the pattern of the house market. For example, in very bacis terms, 5% on £100k is £5k, while 4% on £200K is £8k (plus additional capital repayment), although interest rate is 20% lower the total payment is still considerably higher.

Superscotsman is correct in the view that one of those that have benefited without too much risk have been those are selling larger houses and moving into smaller flats, etc. For instance, those retiring, etc.

Doozergirl

IN_LIKE_EVERYONE_ELSE! wrote:

Dear Mrs Architect,

Quote: A development that sells out quickly also makes the developer's brand stronger.

What brand was the flat, Gucci, Armani, D&G or Lidl?

If you don't agree with me, then you could always try a reasoned argument.

You must be incredibly naive to think that housebuilders aren't building a brand like everyone else. Joe Public will always see quality in a name that he recognises and therefore trusts, simply because so many others have already invested. If David Wilson were building across the road from some small developer you'd never heard of, David Wilson would sell better, regardless of price.

You may think you're being sarcastic, but there's absolute truth in your comment when you consider that people like John Rocha and Llewelwyn-Bowen are putting their names to new build. (Make whatever comparisons you will!)