Red flag or not?

Instability

Hi.

We're FTB's currently negotiating a price for a property - getting pretty close to an agreement and likely will have something agreed over the next couple of days.

Whilst trying to do a thorough search of the area for anything to be aware of before going too far into the purchase I've been looking at other sales in the area to see that what we pay is good value. The houses in the area we're looking at were built late 1990's, and when looking at prices over the last 15-20 years they've remained generally pretty much static, some of course increasing, but with a fair number having even lost value over this period. And given that generally house prices in the UK over the same period have increased a fair bit it has raised a bit of doubt in me. We'll be living there for 5-6 years minimum but may have to move after this so would be keen to have a property that will be somewhere that won't depreciate over that time period.

Personally haven't been able to find an obvious reason for this, as the area seems nice, quiet, great transport links, schools in the area are "outstanding", no flood risks etc.
A lot of these properties in this area seem to be leasehold, and the house we are looking at currently is but the lease is "too short" for a sale, therefore the current owners are purchasing the freehold and will sell it as such. This was perhaps the only thing I could see, perhaps they're all under similar short lease lengths which had led to issues in sales/depreciation in value?

Area we're looking at is West Allotment near Newcastle if that helps/anyone was interested in trying to do their own investigating.

Thanks

MovingForwards

Property goes up, property goes down, it's always been like that.

Unicorn_cottage

Are you from the area?

Instability

MovingForwards wrote: »

Property goes up, property goes down, it's always been like that.

Of course, but over long periods, e.g. 15 years, generally prices have been up - landregistry website suggesting the UK average from 2004 to be £135k, now at £228k.

I guess my question is would a stationary house price over that period when most areas are rising make people think there is a cause for concern that I'm missing, or just one of those things and I'm thinking too much into it and just take the plunge.

Unicorn_cottage

Are you from the area? How long has the property been on the market?

Instability

Unicorn_cottage wrote: »

Are you from the area? How long has the property been on the market?

Lived in Newcastle for 7 years, so not too far from there, but not lived in or experienced the specific area more than driving through and exploring whilst looking at properties.

Property on the market about 1.5 months; however viewings have been on hold at least a week (when we rang to ask, so potentially longer) until today, as the property was leasehold with a short lease which they're purchasing (presumably at a fairly substantial cost) without raising the asking price. So it's difficult to read into the length that it's been on.

Nobbie1967

Prices tend to reflect the level of wages in the area, so maybe these haven't risen much over the last 20 years? Who are the main employers around the area? What sort of wages do they pay?

Unicorn_cottage

You say that on average that UK house prices have gone up but that is massively skewed by the London and the South East and major cities. The market in the North East is generally a lot slower although of course there are exceptions. I would not expect your property price to rise in the time that you are proposing to live there.

The area you are talking about is an old pit town so there might be issues with subsidence?

I would also be extremely careful regarding the leasehold situation as there is momentum building in England to stop this dubious practice. Take a look at https://www.homeownersrights.net/buzz/leasehold-to-fleecehold/

Sorry to be doom and gloom but it is better to be informed.

Instability

Unicorn_cottage wrote: »

You say that on average that UK house prices have gone up but that is massively skewed by the London and the South East and major cities. The market in the North East is generally a lot slower although of course there are exceptions. I would not expect your property price to rise in the time that you are proposing to live there.

The area you are talking about is an old pit town so there might be issues with subsidence?

I would also be extremely careful regarding the leasehold situation as there is momentum building in England to stop this dubious practice.

Sorry to be doom and gloom but it is better to be informed.

Yeah not expecting a rise as such, stable prices would be fine by me. Obviously anything can happen, and prices may go a bit wacky with Brexit or anything else that comes up, but if there was an obvious problem with the area that I'd not noticed prior to buying I'd probably be annoyed at myself down the line.

The pit town and subsidence is a good idea thanks; I'll be sure to do some digging into that to make sure it won't bite me.

And I plan to be diligent regarding the lease; we've been told it will definitely be freehold when we purchase, but of course I'll ensure that's at the top of the priority list for the solicitor to confirm. That alone should add value to the property I'd think.

Unicorn_cottage

Not necessarily. Do you know who the developer of the estate was? Are there any other charges like maintenance etc. Developers have become very very clever and whilst you may think that buying the freehold is a positive thing it is not necessarily what you think. Please read the link I sent you. They have a FB group too. You could see if the estate you are wanting to buy on is registered there.

Are you considering any other areas? New build housing is becoming increasingly under scrutiny for many many reasons therefore personally I would not want the aggravation.

Crashy_Time

MovingForwards wrote: »

Property goes up, property goes down, it's always been like that.

That hasn`t been the case for a while, for a number of years there has been significant intervention from the central bank to keep them up, making over-paying now all the more dangerous. Of course some areas are just not "hot" areas for whatever reason and prices have slipped or stayed flat.