Are houses over valued?

zoemk12

We’re looking to move and we’re shocked at what some houses are priced at the moment, eg over 400k for a 3 bed semi! Are agents over inflating prices due to lack of availability vs high demand?
we will get far more for ours than we expected,  but not sure if we should do this now, sell & go in to rented or stay put & extend? 

Appreciate thoughts please. 

[Deleted User]

Whether you sell/buy depends on which direction you think house prices are going in.

Extending is a whole other matter and depends on whether you want/need to stay in the area, etc.

Work out your objective and go from there.

LMJ10

Yes I do believe they are valued high. We are looking at moving as SSTC on ours, but I’ve seen some houses that have increased 50k in 9 months! 

It makes me think what valuations would say.

ACG

It depends on your outlook. 
Where I live, houses are going on the market and selling within 24 hours with offers over the asking price. One agent literally has nothing to sell as he has sold everything they sign up. 

Between the lack of stamp duty, people feeling flush as they have been working from home and unable to go out and spend money, the demand of people wanting to move out of cities/out of the parents etc demand is definitely up (as an example, we are about 2 months ahead of where we would expect to be in terms of number of applications submitted and I have been turning new customers away for nearly a month!). 

I have a customer who has offered £75k over the asking price (that is about 25% over!). 

Demand is absolutely through the roof, so when you look at supply and demand, no they are not over priced as there is not enough supply. But I do think it will calm down, although I am not sure I would expect to see a massive drop in prices personally, I think it will just start to level off. 

Mickey666

Are house prices too high?  Well, the only real alternative to buying a house is to build one yourself.

Have a look at self-building to see how much it would actually cost to build your own house (not necessarily physically yourself).

That will give you the basic cost.  Then compare with the price of buying one instead and decide for yourself whether too much profit is being made on the asking price.

zoemk12

Thanks for replying. We will get more for ours than expected but then to get what we want we will have to go a lot higher than we hoped, more so than the increase in ours if that makes sense! 

We’re considering renting also because we thinking ours will go quickly & currently there is nothing we want to buy! 

I’m not expecting a crash but perhaps a slow down which will help with supply vs demand? 

So difficult to know what to do for the best. Wouldn’t know where to start re self build but know that land here is very expensive. 

zoemk12

I the other idea is to stay and make what we have a good as we can but we have a smallish garden so limited room to extend. Basically we have a 3 bed Victorian terrace with no parking, a downstairs bathroom, small kitchen and a small garden. We would like a 3/4 bed period property with an upstairs bathroom, parking, garage, large garden and a big kitchen or the scope for one. However to do this it looks like another 200k on the house price is necessary 🙄

Mickey666

zoemk12 said:

I’m not expecting a crash but perhaps a slow down which will help with supply vs demand? 

So difficult to know what to do for the best. Wouldn’t know where to start re self build but know that land here is very expensive. 

Depends on the reason a for a 'slow down'.  If it's because owners stop putting their houses on the market then it will reduce supply, so unless the demand also falls then it could mean prices rising.  If the slowdown is because there are fewer people wanting to buy then that would reduce demand so prices might fall.  However, as pointed out many times, owners will always resist selling for less than they paid and the vast majority will simply sit tight, thus reducing the supply . . . and so it goes on.

The real driver for higher house prices is demographics - a higher population, more people being single, people living longer.  All these factors create demand and the rate of house building doesn't keep up with this demand.  There are all sorts of reasons for this, but that's what it boils down to. 

If every couple in the country limited themselves to having just one child then in 20-30 years housing demand would start falling quite dramatically and prices would follow.  But of course that's not going to happen.  So in a runaway market, the best thing is to jump aboard as soon as you can because delay will cost you dearly.


As for self-build, I was only being half serious.  But it's instructive to consider the alternatives.  Most things can be obtained cheaper if you DIY, but if you think seriously about building your own home then you begin to realise how complicated it can be - not so much in laying bricks but in all the rigmarole of finding land, getting planning consent, dealing with utilities, etc etc.  Of course it can be done but it's not necessarily a lot cheaper - mainly because self-builders generally want something 'special'.   They are unlikely to build themselves a bog-standard 3-bed bungalow.

dunstonh

Are houses over valued?

No.  As long as people are paying the prices then the prices are not over valued.

Are agents over inflating prices due to lack of availability vs high demand?

Or is it the other way around?

The minute demand drops, house prices will drop.  But then the Government will be under pressure to get house prices increasing again.  Despite also being under pressure to get houses affordable.