House price reality

Pimperne1

Kohoutek wrote: »

You forgot to include where your area is...assuming that conversation happened in real life, not just in your head.

To be fair these anecdotal posts are often simply intended to inflame (not saying this one is but they are of little value as they are impossible to authenticate).

Pimperne1

Dirk_Rambo wrote: »

goolies m8. round my way all the estate agnents has closed down. no work 4 them. theyre all on the rock and roll

Fine but how are the Estate Agents doing?

DervProf

THE_GHOULISH_CODPIECE wrote: »

Popped in for my weekly chat and ended up having a very interesting discussion with my friendly local EA today. Apparently, and this is from the horses mouth so to speak, he has seen a large increase in the initial enquries from cash rich FTBs and also a substantial rise in the instructions from venders to raise the rents. This is all feeding into the pipeline for January. He repeated his warning to me that although its a great time for young couples to buy their dream homes this window of opportunity is fast closing. Publicly spirited I told him I'd pass on the advice to others.

Conclusion: You've been talking to yourself again.

myhouse_2

THE_GHOULISH_CODPIECE wrote: »

Popped in for my weekly chat and ended up having a very interesting discussion with my friendly local EA today. Apparently, and this is from the horses mouth so to speak, he has seen a large increase in the initial enquries from cash rich FTBs and also a substantial rise in the instructions from venders to raise the rents. This is all feeding into the pipeline for January. He repeated his warning to me that although its a great time for young couples to buy their dream homes this window of opportunity is fast closing. Publicly spirited I told him I'd pass on the advice to others.

So cash rich FTBs have increased from 0 to 1?
I can believe the raised rents story though.

myhouse_2

Deleted_User wrote: »

Sorry to quote and respond to all your points but it's the easiest way to answer!



One things for certain - around where I live new houses were being built left, right and center between 1999 and 2007. Then nothing for the past three years or so. So, if hoards of new houses were snapped up like hotcakes between 1999 and 2007 and old houses weren't sitting empty there was a need for lots of new houses then. It would be kind of strange if suddenly we can go three years without building any houses and not have shortage now.

Yes - it obviously has to play a big part. Yet inflation has remained pretty low in recent years. Don't you think if availability of money alone pushed prices up then wouldn't cars, holidays, groceries, clothes etc have shot up in price too?

Prices will go up when a) a resource is scarce, and b) those bidding for the limited resource have lots of money at their disposal.

Is it really the case that money isn't available? My observation is that people with a deposit or those moving up the housing ladder are having no problem getting mortgages. They are willing and able to pay asking prices. Because of low interest rates mortgages are more affordable than they've been for a long while.

It seems to me that the real problem is that it's no longer possible to get a mortgage if you don't have a sizeable deposit.


They've now had two years to lower their sights and save a deposit. In that time house prices have stayed fairly level. I would have thought that we'll gradually start to see more and more first time buyers in a position to buy. And when they do that unlocks the chains and allows things to get moving again.

Of course, anything is possible!

Huge amounts of building have been going on throughout the country and yes, they have been snapped up, even in areas with relatively stable populations. I don't believe there are huge differences in divorce rate etc which cause more people to need houses but I suspect a fair amount of houses have been sold to people who wouldn't/shouldn't have been able to buy them according to long-term affordability criteria. We shall see if there is still demand for them - perhaps there will be, or perhaps people who bought houses they couldn't afford will have to move back with their parents.

As for your other comments -
The amount of money available for mortgages is significantly down on previous years - there is no doubt about this as all the figures clearly indicate it. You suggest that the problem is simply that FTBs can't raise deposits. Of course this is true, but I think you've missed the fact that the two issues are inextricably linked. Banks can't lend to everyone so they lend to people who present the least risk - i.e. those with deposits who are lending within their means.

As you say there are plenty of FTBs who have bought or aspired to houses beyond their reach. FTBs need to realise they can't afford as much anymore. So what impact do you think this will have on the market. As the market relies on money coming from the bottom of the ladder, it will pull prices down.

[Deleted User]

myhouse wrote: »

As you say there are plenty of FTBs who have bought or aspired to houses beyond their reach. FTBs need to realise they can't afford as much anymore. So what impact do you think this will have on the market. As the market relies on money coming from the bottom of the ladder, it will pull prices down.

Currently first time buyers are aiming at a whole range of properties from tiny studio flats to detached houses. Certainly in some parts of the country you can get homes from around £50,000 yet some first time buyers in those areas are aiming for properties at £150,000.

Those that are struggling to raise a deposit for a £50,000 house won't be able to buy. But those saving for a deposit on a £150,000 house can quite possibly afford to buy a £100,000 house now, and those saving for a £100,000 can probably afford to by a £50,000 house now. So, it's been two years and prices haven't dropped. When FTB's start to realise that they can't afford as much any more the £50,000 and £100,000 houses will sell. The owners of those houses will have decent deposits and will be able to buy the £150,000 houses. And so on.

You make the point that there isn't much money for mortgages and those with deposits only getting them easily because so few houses are selling. I guess if the demand for mortgages increases then savings interest rates will need to go up in order to bring in more money. That of course would mean that interest rates for borrowers would go up to. That in itself will price out a lot of buyers. So it seems to me that it would need to be a very gradual recovery - even stagnation for a while - more of what we've seen in the last couple of years. But I'd have thought we *probably* won't see house prices drop significantly.

Another thought. If indeed some people have to accept that they can't buy their own house and choose instead to live with parents then we have a situation where there's multiple wages coming into each household. This means that those households have greater spending power which could well push prices up for some types of property.

We might see more people moving out to the country too where house prices are much lower. And that would push prices up there. So probably lots of reshuffling ?

myhouse_2

I think you're right in some ways and horribly wrong in others. FTBs going for smaller properties than before means that there is overall less money in the housing market - that will pull prices down.
Interest rates are primarily for controlling inflation - they will be raised at some point, but not with the purpose of bringing in more money to the mortgage market. Raising IRs will reduce the borrowing power of people, and therefor reduce the money being borrowed (and spent) on houses. Again, that will bring prices down. It will also force on-the-verge sellers to get rid of their investment quicker than if their mortgage paymens were low. That will also bring prices down.
Yes, living with parents allows people more spending power - I hope you're not relying on this to bring prices back to bubble-era levels. It's effect is likely to be limited and it would take years to have an impact.
If you remove 50% of the funding to the market, the market cannot continue to function at the same price levels. If the number of cars on the road in the world reduces by 50%, what do you think will happen to petrol prices?

myhouse_2

Pimperne1 wrote: »

Fine but how are the Estate Agents doing?

I think when any significant Spring Bounce fails to appear then the EAs will finally realise that the game is up unless they adapt to the new market. Raise prices in a boom, drop them in a bust.

macaque_2

THE_GHOULISH_CODPIECE wrote: »

Popped in for my weekly chat and ended up having a very interesting discussion with my friendly local EA today.

You mean the person who sits next to you

Apparently, and this is from the horses mouth

Your friend is confused. The horses head is at the end with the eyes and the teeth.

he has seen a large increase in the initial enquries from cash rich FTBs

There are always a few cash rich buyers around. The challenge for estate agents is to find the ones who never read newspapers or listen to the news.

and also a substantial rise in the instructions from venders to raise the rents.

Vendors are supposed to sell sell houses. If they are putting up the rents they are called 'accidental landlords'. There are a lot about at the moment.

He repeated his warning to me that although its a great time for young couples to buy their dream homes this window of opportunity is fast closing.

When faced with a 'window of opportunity' the smart thing to do is go through it in the right direction.

PhylPho

I do so love these socially responsible EAs who step forward bravely to say "the best time to buy a house is right now".

I also like the car dealers' local newspaper ads of similar honesty and objectivity: "there's never been a better time than now to buy your next car."

This wholesome spirit of care for others is a wonderful feature of life in the UK today, where many a department store window features genuine consumer advice along the lines of "buy now at sale prices while stocks last!"

Even if a sale isn't on, I guarantee that every one of the umpteen mobile phone sellers in my High Street has only the interests of potential customers in mind when it sticks up big notices reading "best value contracts anywhere, get your new phone now!"

As indeed have the tour package operators that now own that same High Street's various travel agencies: "best ever deals available if you buy your 2011 holiday today!"

The magnificent altruism of everyone from estate agents to used car dealers to store chains and shop owners, floggers of mobile phones and purveyors of package holidays warms my heart, for if these charitable souls didn't provide so selfless a public service, what chance would anyone have of spotting a window of opportunity?

For that reason then, I can well understand why Ghoulie is so pleased to be able to pass on the fantastic, and expert, advice of his humanitarian estate agent friend.

Such insider knowledge is worth treasuring, and all credit to Ghoulie for sharing it on here when he could just as easily have kept it to himself and hugely profited thereby.