Trading up easier as property prices plummet

silvercar

After the last crash, the studio and 1 bed flats dropped in value like stones. FTBs looked past them and went straight for the 2 beds and small houses leaving very few buyers for the 1 beds.

whathavewedone

It's the same story for us. We had a 3 bed semi in a nice area but huge numbers of the same sort of houses. We sold it for £375k in 2007 which was more than any comparable property in the area had ever sold for. Tbh we never expected to get 375k for it but we were lucky in that a couple of oldies offered the asking price without having sold their houses in the first week so when people who were actually in a position to buy wanted we had good grounds for not budging. We sold it in 3 weeks.

Given that some of the agents told us at the peak that £330k was about the right price for that house I wouldn't like to be trying to sell it now. We would never have been able to make the move to a bigger property if we hadn't sold then. Ok it would have been better if we'd STR but where we live now the prices aren't budging, in fact they seem to be higher than when we were looking - maybe hoping people will offer 20% off and think they are getting a bargain. Also 3 bed houses to rent round here cost more than our fixed rate mortgage and our house has 4 bedrooms.

So I'm glad we moved when we did tbh.

katiegizmo

i have the other side of the story..... i recently moved from a one bed converted studio to a 3 bed semi in a nicer area.

while i dropped around 4% on my asking price for the flat, i had put it on the market overvalued so i still made a profit on my 2006 purchase price, and actually only dropped a couple of % what it was worth.

the house we bought dropped nearly 10% on the asking price.... this made it possible for us to jump several rungs of the ladder. and we were able to put down a larger deposit

when looking at moving a year ago we could only have afforded to move to a 2 bed terrace or somewhere needing lots of work, and we would have struggled to get a greater than 10% deposit.

we may end up in negative equity, sure, but we bought this as a home not a moneymaker on the end of the day and have no intention of moving for a long time yet. we have enough space that we wont be forced into upsizing or put up with feeling cramped.

so i am also glad i moved when i did, now i just sit back and work on getting that mortgage gone!

greenwheels007

scousethife wrote: »

no one trades up without adding to their mortgage
if houses go up tan percent then the more expensive house went up by more money you lose out by trading up

Its an absolute myth invented and cultivated by lying estate agents and an idiot thick enough the not question it.

100 k house

200 k house

both go up 10 %

100k is now 110k

200k is now 220k

Science - rocket - not.......................well actually it is for some people.

Mmmm now, having read the thread which is about two bed houses dropping faster than the rest of the market lets have another look shall we?

Say house prices went up 10% in 2007
100K to 110K
200K to 220K
The defecit (mortgage) has gone from 100K to 110K
You are right the defecit has increased well done.

Now lets say house prices reduced in 2008 by 15%
100K - 85K
200K - 170K
Defecit is now 85K

If you had traded up in 2007 your defecit would have been 110K, by 2008 figures the defecit would be 85K.

It is also possible to trade up without increasing your mortgage. I am sure that I could get a nice 4 bed house in some places for the price of a 1 bed flat in Chelsea.

So the myth 'cultivated' by EAs is not entirely untrue in any market, particularly a declining one. And I think it is a little offensive to suggest that anyone who agrees is thick!

Maybe you should give the rocket science a miss for a bit!

dervish

scousethife wrote: »

no one trades up without adding to their mortgage
if houses go up tan percent then the more expensive house went up by more money you lose out by trading up

Its an absolute myth invented and cultivated by lying estate agents and an idiot thick enough the not question it.

100 k house

200 k house

both go up 10 %

100k is now 110k

200k is now 220k

Science - rocket - not.......................well actually it is for some people.

:rolleyes:

Yes but prices are FALLING!!!

Theefore trading up should see the prices narrowing not increasing.

moving from a 100k to a 200k...:

100 - 10% = 90
200 - 10% = 180 - difference now only 90k instead of 100k...

Thrugelmir

Trading up is possible only if you have the equity in the property. On the back of rising prices and mortgages granted on high income multiples this is probably the most "stretched" part of the market in relation to income.

Reading the article interesting that gap between 3 and 4 bed houses has widened. Suggesting that people that have achieved their goal of owning a large house are sitting tight. Of course this market segment is less lightly to be hit by BTL. Which suggests that fall in average house prices still has a lot further to go, if 4 bed houses have suffered relative small fall so far.

michaels

I think this is true sadly but I don't think it is as clear cut where the cut off is - I have a two bed terrace that I would consider an FTB property (it was for me) but the 3 bed semis I would want to move to have fallen by a smaller percentage and indeed the gap in £££s is actually probably larger than a year ago when I decided to wait rather than trade up

I am hoping it is just the stage in the cycle and that as chains become impossible to put together and more families get to the 'have to move' point then the gap will start to unwind again.

Kez100

We traded up at the bottom of the last recession. It was not easy.

Luckily had a very saleable, attractive - albeit small - FTB property. Unluckily, we also had negative equity. Only way to move up was to save outselves out of it. It took 6 months to get an offer and during that time we had saved enough to be able to accept the offer, but we'd scrimped to do so (it was worth it).

Then we were in a position to move up.

We looked at all sorts of property but the only ones prepared to do a great deal were desparate sellers/repos and they were often the end of a chain. So, whereas a FTB in the good times started a long chain - back then a FTB often fed a chain of only a couple of properties. Right place right time springs to mind.

So, we managed it and it is a great thing to do BUT the hurdles need some manoeuvre and a lot of luck!

whathavewedone

My sister sold her one bedroom flat in South London with 20k negative equity in the last recession and bought a 4 bed house in Tunbridge Wells. She was able to bring her negative equity with her. She sold her flat for around 45k (had bought for 65k at height of 80s boom) and then bought a house for 90k. She was also allowed to borrow more money to do it up.

She sold it for 250k in 2000. She did have a good job and prices had bottomed when she sold and bought but she was able to move and borrow more with negative equity.

Don't know how common that was at the time or whether it would happen this time - maybe so if they feel that prices aren't going to fall any further and people are earning a good salary.

Dan:_4

whathavewedone wrote: »

My sister sold her one bedroom flat in South London with 20k negative equity in the last recession and bought a 4 bed house in Tunbridge Wells. She was able to bring her negative equity with her. She sold her flat for around 45k (had bought for 65k at height of 80s boom) and then bought a house for 90k. She was also allowed to borrow more money to do it up.

She sold it for 250k in 2000. She did have a good job and prices had bottomed when she sold and bought but she was able to move and borrow more with negative equity.

Don't know how common that was at the time or whether it would happen this time - maybe so if they feel that prices aren't going to fall any further and people are earning a good salary.

I seem to recall Halifax offering NE mortgages in the 90s. You had to have a perfect credit rating to be approved.