Persimmon Homes

bluejake

'Could you please explain to me why the house price drop would effect mortage? Sorry, not good at maths'

'Personally, I dont really like old houses and always lived in new properties when lived with parents... We want to buy a house as a home not for investment and would live for at least 3-5 years, and if we do move in the future would be abroad and still would keep the house. any suggestions in this situation?'

'How much discount should we ask for?'

You sound like a lamb going to the slaughter house. Do yourself a favour and watch house prices fall for the next 12 months. And during that time read these boards and elsewhere and the newspapers and find out all the answers to all your questions. And find out questions you haven't thought of yet. And then discover the answers to those questions. And calculate how much money you have saved by not buying. You will save yourself a lot of money and possibly a lot of misery. There is always another house round the corner. A better one for less cash.

Don't come back in 12 months with another tale of woe about buying off plan during a property crash. :eek:

Feline_friendly

We are buying a new biuld on a final phase of a development with a site manager who has won many awards for this. I must say that our house was reduced by £30K a few weeks before we veiwed and then we got a little more knocked off and a good deal on our house for part ex.

Looking at those houses you have shown....they are expensice and a good £50K more than we have bought ours for...but that may be area?? We are in the Midlands.

On my development most of the plots are now reserved.....i wouldnt have decided to reserve if a) the house wernt being released for a year b) the house prices were much higher than houses around the area.

I have no experience with Persimmon other that there is a development in my town....not a great 1 as the houses were squashed together and right next to a power station.....and they had many homes empty....so they sold it to a housing association for social housing....which upset the new owners as they were never warned they may do this. My development i asked this...and although by law they have to provide "affordable housing" it is on a shared equity scheme and the houses are going for £63K..they said they wouldnt as they have now reserved most of their plots..

formulaonefan

Pssst wrote: »

Check if the development is part social housing in case thats an issue ..

Doesn't all new build have allocated social housing? i.e. What they have on plan as 'Affordable Housing'? On top of that will builders have further social housing then?

wsharp

bluejake wrote: »

'Could you please explain to me why the house price drop would effect mortage? Sorry, not good at maths'

'Personally, I dont really like old houses and always lived in new properties when lived with parents... We want to buy a house as a home not for investment and would live for at least 3-5 years, and if we do move in the future would be abroad and still would keep the house. any suggestions in this situation?'

'How much discount should we ask for?'

You sound like a lamb going to the slaughter house. Do yourself a favour and watch house prices fall for the next 12 months. And during that time read these boards and elsewhere and the newspapers and find out all the answers to all your questions. And find out questions you haven't thought of yet. And then discover the answers to those questions. And calculate how much money you have saved by not buying. You will save yourself a lot of money and possibly a lot of misery. There is always another house round the corner. A better one for less cash.

Don't come back in 12 months with another tale of woe about buying off plan during a property crash. :eek:

Can you not read my post???WE ARE ONLY LOOKING... is this board not suppose for people to ask questions?

I don't need your sarcasm!

Thanks

wsharp

Feline_friendly wrote: »

We are buying a new biuld on a final phase of a development with a site manager who has won many awards for this. I must say that our house was reduced by £30K a few weeks before we veiwed and then we got a little more knocked off and a good deal on our house for part ex.

Looking at those houses you have shown....they are expensice and a good £50K more than we have bought ours for...but that may be area?? We are in the Midlands.

On my development most of the plots are now reserved.....i wouldnt have decided to reserve if a) the house wernt being released for a year b) the house prices were much higher than houses around the area.

I have no experience with Persimmon other that there is a development in my town....not a great 1 as the houses were squashed together and right next to a power station.....and they had many homes empty....so they sold it to a housing association for social housing....which upset the new owners as they were never warned they may do this. My development i asked this...and although by law they have to provide "affordable housing" it is on a shared equity scheme and the houses are going for £63K..they said they wouldnt as they have now reserved most of their plots..

Thanks for your reply. 30K is a big discount, we are based in the North East and Penshaw village I have asked around people all say its a nice area. Like you said, unless they give me a massive discount otherwise I will just wait as at the moment we are not in a hurry (unless if I fell pregnant as we are planning to start up a family...)

Geenie

formulaonefan wrote: »

Doesn't all new build have allocated social housing? i.e. What they have on plan as 'Affordable Housing'? On top of that will builders have further social housing then?

I gather where builders have not been able to sell houses allocated originally for private sale in a development, they have been selling them on to housing associations in order to shift them. So what originally may have been a development of only say 25% social housing, has turned into 50%. This has upset many private buyers who bought early, as I assume they feel it will have an impact on their house price and area.

princeofpounds

It affects the mortgage because the banks require a certain level of collateral on their loans to make it a 'safe' bet for them i.e. if you don't pay, they seize the house and recover money from that.

For example, you look at a house you think is worth 500k. The bank require a 10% deposit of 50k, so they can recover their 450k money if the house falls 10% if they need a quick sale.

But on completion it turns out to be worth 400k. The bank then looks at the situation - if they lend you 450k, you put in 50k as agreed, if you stop paying they can only recover 400k. They will have to record a loss of 50k. So they required you to either cut the purchase price, find the extra cash or refuse to give you the mortgage.

Even proportionately small losses like that on mortgages (50/450 = 11%) can be devastating to banks because the deposits that the banks turns into mortgages are way way way bigger than the equity in the bank. Equity is the money put in by the shareholders or earnt by the bank over time, which guarantees they can pay back depositors if they make losses on their loans.

So with a typical bank with assets (i.e. mortgages and loans) to equity of 10x would suffer losses of 11% of assets... i.e. 110% of equity! No more bank!

This is basically one of the main things that has gone wrong with our financial system and why they need to keep pumping money into them. Because many western banks were not running 8-10x assets:equity ratios, but 10,20,30+ (especially the investment banks) so even a tiny loss on lending annihilates the bank several times over. So we have to pump money in or there is no more banks, lending ceases entirely, destroying economic activity, and some depositors don't get paid back.

Feline_friendly

WSHARP.....it does seem alot of people on here are against neẁ biulds and qiute nastily tell you so...even calling you names because you have reserved a plot.....i advise to do as we did and research the development and find out about the site managers. Ours is well on the way of being biult and the site manager is a fab bloke who always has time for you if you want to ask any questions. We have also been told any time we want to go closer to our plot..of course it is baracaded for safety...he will kit us out with safety gear and take us to the house.

Just do your research and then decide.

We also asked our mortgage advisor what would happen if the survey came back and the house would not be worth what we have agreed and he says we go back to the site manager/sales person and tell them this fact...if they dont lower their price we walk away....we will have lost £500 reservation fee...not a huge amount.

princeofpounds

As to your other questions....

What discount should you ask for? Well stop thinking of it this way for start. I will sell you my computer for a 90% discount! A bargain at $600 000. Think of the savings! Doesn't quite work does it? It forces you to 'anchor' on the starting number they give you.

Look instead at comparison and rebased measures of value. Absolute - find out from land registry what things are selling for right now (unfortunately it's a big lagged, so you will need to discount it for that, and DO NOT use asking prices). If they are similar, but not the same, try to estimate what an extra room or a garage would cost and add/deduct. This is quite a good way to figure out what the situation of the market is but you probably won't be able to get enough timely comparison data to make this practical as the market is moving so fast.

The other approach is to look at the main house price indexes (again, not asking price based like rightmove, land registry is best but lagged, nationwide/halifax is a bit more timely but not as accurate) and figure out where you are in 'back in time'. So for example, if the index is saying prices are now back to 2005 levels, then you can look at the land registry for what similar things sold for in 05.

Obviously areas can improve or decline, so these methods just help you narrow down your estimate. It's a judgment call on what you are willing to pay at the end of the day.

One last word... house prices do not tend to reverse quickly. The pace of decline now is still high, so it will need to decelerate for several months before it even starts to bottom out at a minimum. So you need to think about what losses you might incur while the market bottoms out and discount for those somehow. Could be another 5%, could be 40%....

Richard_Webster

If they will sell a 3 bed for £170K then the question is whether 5-25 year old 3 beds in the area are worth say £165K now. If they aren't then the new build is still overpriced.

The point about buying off plan is that people who did that a year or so ago are finding that because mortgage offers do not last that long they have to apply again for a mortgage when the property is nearing completion. The valuer then values it lower and the lender is therefore only prepared to pay a lower figure, but the buyer is already legally bound to pay a higher figure.