Selling a City Centre Flat and in negative equity - when to take the plunge?

Annisele

Trigger79 wrote: »

If there has been a lot of fraud and repossessions it would seem to make sense that eventually they'd come back more into line with the average (which would mean a rise).

I'm afraid I'm not convinced by your logic there.

Defining 'true value' in whatever way that seems reasonable to you, and bearing in mind that I've made the figures up, imagine:

New build flats were selling at 200% of their true value. Older flats/houses were selling at 150% of their true value.

Now new build flats fall in value by 50%, and older flats fall by 33%. Both old and new flats are now selling at 100% of their true value - so there's no reason to think that new flats will rise in value any faster than old flats.

SouthCoast

Trigger79 wrote: »

@LilacPixie - good question. A few have been on there for quite a while I think (6 months+) but I can't be sure. Very good question!

A

Check out Property-Bee.

Anecdotal evidence suggests that lots of folks are waiting for the "Spring Bounce" before putting their properties on the market.

FATBALLZ

Trigger79 wrote: »

My question was specifically about city centre areas with lots of new builds where prices have dropped so much more than the average (am I right in saying 25-30% is far more than the national average?)

Purely talking about new builds i doubt this is significantly worse (if indeed it is at all worse) than the national average fall, as I mentioned earlier new builds in my town (population just over 100k) have fallen at least 30%.

I haven't got any statistics to hand to back this up but most of the falls experienced have been new builds, and particularly flats, so unfortunately I doubt your area has particularly undershot the 'true' value of the flats.

nrsql

Where will you live?
Would owning the flat and rentig it out make a difference to that?

Try putting it on the market now at £60k and see what happens. It's not committing you to anything but might give you an idea as to whether that's a reasonable price. Might get no interest or flooded with offers (I suspect the former in the current market).
Not sure how shared ownership works if you sell at less than purchase price.

The other question is how much can you afford - do you have healthy savings and able to save monthly at the moment?

Personally I would put it down to experience and get out asap in case it got worse. £10k isn't that much compared to what could happen.

Running_Horse

Tough one.

I had £20,000 negative equity in the 90s, stuck it out and ended up with £120,000 positive equity, then made my dream move.

On the other hand, I really felt trapped for years like my whole life was on hold.

happywarmgun

There are a couple of dynamics at play here specific to you....

- New build Urban flats have been the bell weather of the housing market as a whole for the last three housing cycles. They see the most extreme rise and falls ahead of the rest of the market.
-Birmingham has a glut of them in excess of natural demand that is perhaps rivalled only by Leeds per proportion of population.

Your gut instinct is probably correct that the 'extreme' downward swing which factored in these two facts is probably over. All the stretched buy-to-let mob, and caught mortgage liars have sold and dumped. But the second instinct that says Brum flats will therefore see a greater correction the other way quickly is probably off. It is my opinion only but I think these facts:

- There is STILL a glut of flats
- There is STILL a glut of people in similar situation to yourself who haven't been mandated by circumstance to sell, but really are looking to get out as soon as it feels less like financial suicide to do so.
- We are in a recession. There are nowhere near the number of professional jobs in Brum paying the wages that allow folk to pay the kind of rent landlords need to service the mortgages they got if the bought anytime 2005-2009.
- Consequently more and more 'premium lifestyle' flats in Brum are being let to students - with a fall in rents - and consequent fall in desirability to those professionals that may have chosen to live in them and could afford them. Rents are a bit of a race to the bottom still.
- Any rise in interest rates (likely) will see more and more people move from the 'holding on and hoping' scenario to the 'simply have to sell' scenario.

They will bounce around where they are for years - I think the worst is over, but there is still room for another small fall because of the above. Good luck.

(note personal interest to declare - I own a Brum City center flat which I rent out - luckily I have cleared the mortgage on it, so will go for the long term - however reality check is that I paid £165k for it in 2002 and I'd be pleased to get 145k for it now.)

wymondham

Can I just comment what a sensible and informative thread (increasingly rare on this board). Good advice given and seems the OP is responsive to all ideas. Best of luck to you in whatwever you decide and happy christmas/new year...

Trigger79

Hi everyone,

I wanted to echo what Wymondham said and thank everyone so much for such considered and helpful responses.

It feels like the message is pretty clear - I obviously overpaid for my flat in the first place, and now should probably count myself lucky if I only lose £10,000. It's frustrating but in the end, it could be so much worse (a friend of mine bought in Dubai and is now in hundreds of thousands of pounds of negative equity).

My original plan was to put it on at 60K and to see what happened - I think I'll do this as soon as possible, and see if I can get a good enough offer before more flats come onto the market in the Easter as I'm sure quite a few will.

I thought the point about the potential loss being worse than the benefits of the potential gain was a very interesting one too.

The only decision to make now is how low I'm willing to go. I'll have to cross this particular bridge when I come to it!

Thanks again everyone for your help, I will definitely be back to let you know how it all goes.

Tim

ILW

This does make a refreshing change from the usual "how dare the bank undervalue my flat, I know it's worth a fortune and I need a load of cash to buy that 5 bedder" type thing.

Lance

If the OP is moving to London and cannot rent the flat at break-even, as he states, then I would sell. If rented he will need to pay an agency and if anything goes wrong, non-payer or damage or vacant, it will hit him hard. I also think house prices will drop futher as the cutbacks bite and inner city new builds will get hit hardest. Despite the 'cut backs' government spending increased massively in November so things are getting worse.