London is a joke (moan)

Jhoney_2

Digsby wrote: »

It's very simple - if a seller bought a house 15 years ago for £100k, and prices have doubled since that time, then I would expect to pay roughly £200k, all else being equal.

If they are asking for £300k, I'm not interested unless there is a good reason for it or they are prepared to talk sensible money. If there is a good reason for it, and it's within budget, then I am interested.

If you agree with that as a basic principle, then my software will help you by doing the fag packet calculations for you, and providing some other useful information and tools. If you don't then good luck and all the best.



I can see how it might sound like envy, but does the above sound like envy? I'm happy to pay twice as much as somebody else paid where the market has doubled, I'm not asking anybody to accept loads less than that, but I'm not going to pay three times as much.

Am I being unreasonable?

Quidsy, anotheruser(?) and yourself have used the term greed on this thread in one way or another e.g homeowners, BTL LLs... - I believe you also said you cant blame people for trying to get the best price possible - hence the envy.

However whilst I see logic in your explaination - it doesn't make sense in terms of the way it works in practice.

In other words, you are not being realistic in today's market, because someone else will pay the (approx)price if that's the price it takes to buy it.

All it takes is one person to pay x on a street (all else being equal). That could be numerous reasons specific to their situation e.g mum lives around the corner and needs regular help, it was area of childhood home etc etc and the next bod (two doors down) will be on market at there or there abouts - give or take condition, spec!

The seller is only interested in an acceptable offer, not a logical one.

Cornucopia

Exactly.

Whilst I applaud the creativity involved, and whilst I, as an erstwhile programmer still enjoy putting together obscure bits of software to do similar things, I think it fundamentally misses the whole point of a marketplace.

Where there is lots of demand, prices are "strong" and asking prices will often be met or exceeded. If there is little demand, then sellers face often face a choice: reduce asking prices or don't sell. Even then, there is the possibility of a particularly motivated buyer who fails to grasp the opportunity to negotiate.

It also sounds from Digsby's latest post like the benchmark percentage increase is not particular localised - and unfortunately, areas rise and fall both collectively and individually.

Presumably he has evidence to show that asking prices are weak in particular areas - where those asking prices deemed excessive eventually result in a sale price much closer to what his algorithm expected.

Physics

Given that buying a house is, for most people, the single largest and most important financial transaction of their lives, I'm rather astonished someone is getting flak for doing some research before buying. Lots of people take more time and research over buying a car, let alone a house.

AdrianC

Physics wrote: »

Given that buying a house is, for most people, the single largest and most important financial transaction of their lives, I'm rather astonished someone is getting flak for doing some research before buying.

They aren't.
They're "getting flak" for denying reality.

Cornucopia

The question is whether it is meaningful research.

That is: does a previous selling price from several years before have any bearing on the price or value of the property now?

Digsby

I feel you're both missing the point, or misunderstanding my objectives, but I'm at a loss to explain why or think how I can plug the gap to reach an understanding. I don't see that anything either of you have just said conflicts, challenges or disagrees with my view. I suspect it's because you're looking at it from the outside as observers whereas I'm looking at it from the inside as a participant, or perhaps you're seeing it from solely the sellers side?

I've mentioned subjectivity, and local factors, or those specific to a property that might cause it's price inflation to diverge from general trends in the wider area, and I've talked about rough guides and fag packet calculations.

I have used the word greed, but I've also talked (unprompted) about the entitlement a seller has to acheive the highest price possible. If a seller achieves that price then they are simply exercising that entitlement, and who am I to disagree with that price? I and other buyers are equally entitled to achieve the lowest price possible. Sellers also talk about greed, with buyers putting in "rude" and "offensive" offers. Those buyers are exercising their entitlement - it works both ways, see?

The sellers objective is to sell the property without accepting any less than they need to. The buyers (me) objective is to buy the property without paying more than they need to. If those points intersect then we have a potential transaction and if not, then we don't. Simple as, I'm sure you'd agree. If that's not the reality of how the market works then please, do enlighten me.

My challenge as a buyer, is to not chase after every property I like and pay as much as the seller wants for it, but to decide on what price point that intersection might lie, or rather, initially, whether it might exist or not.

Of course, when you are deciding on how much to offer for a property, you have to consider how much other buyers are willing to pay, how much other similar properties in the locality have sold for, how sought after the area is (does it outperform the general area or not), the state of the property, how much it might cost to make it suitable for you, how long it has been on the market, how much any commuting might cost, what amenties are close by, and to many other factors to mention.

You have to start from somewhere, and I like many others start from how much it has sold for in the past (if known), and how much the prices in the general area that have sold since have risen, or fallen, as the case may be. The asking price is one starting point, but in a market where 36% of sellers (41% in London) set an asking price above that which their estate agent recommends, it's as good a starting point as any other. Every house can't outperform the average rate of price inflation for it's area, by definition, can it?

Incidentally, I've now released a new version of the extension that has the feature I mentioned up thread. You can now put any listing "on watch", where the software will periodically check the listing in the background, and notify you of any changes in either the price or the status of the property. So if it's Sold STC, or was previously and the sale falls through, and/or if the seller reduces or increases the price, you'll know about it without needing to regularly check it manually.

Incidentally, incidentally, the LR HPI report for March is out. England and Wales is -0.8% from February as expected. London is +0.2%, against my prediction of -1.5%. Then again, I only monitor Streatham and Kensington - Lambeth was static and Kensington and Chelsea was -1.6%, so I got it right for those areas, but I guess they just aren't representative of London as a whole. Of all the regions in England and Wales, only London and the South East were positive.

onthehill

Hi digsby

I have read the news reports/press release on the latest land registry data release but do you have the link for the bit of their site which gives the individual london borough figures?

Digsby

Hi,

Can I post links yet?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/424293/HPIReport20150428.pdf

Yes!

It's on page 11 I think.

Surrey_EA

Digsby wrote: »

The sellers objective is to sell the property without accepting any less than they need to. The buyers (me) objective is to buy the property without paying more than they need to. If those points intersect then we have a potential transaction and if not, then we don't.

I was once told that a sign of a successful negotiation is one where both parties went away feeling hard done-by!

moneyistooshorttomention

Cornucopia wrote: »

Have you any idea what that would do to rents?

It might have a short-term effect on sale prices, but I'd be very surprised if the market didn't absorb it and carry on.

The fundamental issue is a shortage of housing, and no amount of tinkering is going to change that.

..and the shortage of housing comes from....pardon me for mentioning it....but too many people after it because there are too many people in Britain...

We do need to bear in mind the root cause of the whole problem.....and then add in people being allowed to buy properties in somewhere like London and deliberately leave them empty (ie because they've been bought as investments - rather than as homes).