Worried about valuation

Sunsaru

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

Crashy_Time

Sunsaru said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

So you think this one months worth of data will be the new normal? 

Crashy_Time

What was the eventual valuation OP?

Getting_greyer

Crashy_Time said:

Sunsaru said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

So you think this one months worth of data will be the new normal? 

You can't just index transactions from 2006 and then deny the relevance of another peak in 2021.  Unless it absolutely plateues a peak is a peak and therefore higher than average. I'm gonna start indexing from 1906 from now on.

Sunsaru

Crashy_Time said:

Sunsaru said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

So you think this one months worth of data will be the new normal? 

Nope, I think things will die down eventually. I was just correcting an incorrect statement.

Crashy_Time

Getting_greyer said:

Crashy_Time said:

Sunsaru said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

So you think this one months worth of data will be the new normal? 

You can't just index transactions from 2006 and then deny the relevance of another peak in 2021.  Unless it absolutely plateues a peak is a peak and therefore higher than average. I'm gonna start indexing from 1906 from now on.

The point I was making was that the transaction peak was built on loose lending, and declined as lending was pulled back, this peak is due to the stamp duty holiday and record low rates plus people believing (again) that because the government jumped in to the rescue with furlough they will back every dumb financial decision they might make (IMO) and the link I posted with the 40% drop in transactions pre-Covid  didn`t correspond with a similar rise in homelessness did it? The overall point was that prices are not driven by an actual "need" for housing.

Getting_greyer

Crashy_Time said:

Getting_greyer said:

Crashy_Time said:

Sunsaru said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Crashy_Time said:

Mickey666 said:

AdrianC said:

There are ALWAYS comparables. You just need to do a bit of work to adjust for differences.

What else are your buyers going to be looking at around the area?

Well, up to a point, but then the 'adjust for differences' becomes hugely subjective making the comparables not very comparable at all.

I know of a probate sale where the property was valued by three EAs specialising in up-market 'unique' properties and the estimated prices ranged from £350k to £600k!  

Most properties are not that unique though, and there is definite trend for "down-valuing" from banks (if not from EA`s!) as global economic volatility increases.

You're right, most are not unique . . . by definition

As for banks down-valuing properties, surely that's really only an issue for anyone looking for very high LTV loans - mostly FTBs I guess.   I don't know what percentage of the market these buyers make up but assuming a typical chain is four properties then FTBs are going to be around only 25% of the market.  Plus, of course, there are many buyers out there who don't need any loans at all, so they are unlikely to even get a bank valuation.

"Down-valuing" mainly affects sellers trying to get a certain price for their property (the thread is from a seller concerned about valuation) the FTB can walk away slightly sad that they didn`t get the "one", but knowing that they saved money and there will always be another property to buy, and cash buyers are unlikely to pay over a bank valuation?

Don't underestimate determined buyers - who do you think is driving up prices at the moment while rushing to beat the SDLT holiday deadline?  Also, how many cash buyers are going to see a bank valuation anyway?  (I'm referring to a REAL cash buyer, ie someone with the necessary funds without recourse to a loan).

So you are saying that someone with the cash to buy a house outright wouldn`t bother with getting a handle on the market valuation of the property? Interesting belief,  but one I don`t share though

Of course they would, but we're talking about banks down-valuing houses, which is not the same thing as a market valuation.

The typical scenario is A puts their house on the market for £X, B comes along and offers the asking price (or very near).  Great - that's the 'market price' sorted out.  But then B's mortgage company requires a valuation survey and they down-value the property and so won't lend B enough to buy it.  B offers a lower price (ie all they can now afford) and one of two things happen - the sale price is reduced or the sale falls through because the bank won't lend the 'market price'.

But, if B is a cash buyer, ie needs no mortgage, then the deal is done at the original asking price because B is unlikely to pay for a bank valuation when they don't need a mortgage.

Basically, the market price is what someone would be willing to pay.  If the banks won't lend them enough then it just reduced the chance of a sale but it doesn't really reduce the 'market value', which is defined by the buyers and sellers, not the lenders per se.  All the lenders can do is restrict what the buyers are ABLE to buy, but they can't change what the buyers would be WILLING to pay if the funds were available (as they are to a cash buyer).

Sure, but are you not just trying a little too hard to deny what is reality for most people, if the bank says NO they have to adjust their expectations on what they can offer?

I would agree that most people are dependent on a loan, but by down-valuing properties the lenders are effectively applying downward pressure on the market pricing and restricting what people might otherwise offer, which doesn't sound like a recipe for house prices to crash.  More like a situation in which supply cannot meet demand and it is only the lenders that are preventing prices from rising faster than they would in an unrestricted market.

I would agree up to a point, and there will always be markets that are hotter than others, but who would have predicted a few years ago the damage that would be done to the selling potential of London flats for example by cladding issues and Covid? The banks restrict lending for a reason, and the reason this time is the potential for rising borrowing rates which most definitely ARE a recipe for house prices to crash.

The idea that banks restrict lending in order to CONTROLhouse prices is somewhat fanciful.  The reality is that they simply REACT to the prevailing and forecast economic conditions, yet we all know they sometimes get things spectacularly wrong in their primary pursuit of profit.   Central banks might well have some wider strategic view because of their close government connections, but they're not the ones dishing out mortgages are they?

When interest rates are at an historic low then of course there is "potential for rising borrowing rates", but we've had double-digit interest rates before and I don't recall it 'crashing' the housing market.  People need somewhere to live so they are forced to adapt accordingly.

Perhaps we're getting carried away with the word 'crash'?  I can certainly envisage higher mortgage rates slowing down the housing market for a while, but I can't see it significantly reducing the demand.  How can it when people NEED somewhere to live.  So I can't see house prices 'crashing'

Perhaps you could share your definition of a house price 'crash'?   We surely must be talking more than a 10% drop, because that's well within the 'noise' of negotiation.  How about 20%?  But that's only 10% below the 'negotiating noise' and is not far off house price inflation meaning that within a year or so the price will have recovered anyway.  Again, not really anything to get too excited about.  So how about a 'crash' being a 30% drop?  Or 40%?

Come on, share your definition of what sort of price reduction would constitute a 'crash'.

Transactions are at a much lower level than their peak, 2006 was it, and have dipped even before Covid...?
https://www.todaysconveyancer.co.uk/main-news/uk-property-transactions-fall-third/
Most people buying a house already have somewhere to live.

https://www.theguardian.com/business/2021/apr/21/uk-property-sales-at-16-year-high-as-house-prices-soar

So you think this one months worth of data will be the new normal? 

You can't just index transactions from 2006 and then deny the relevance of another peak in 2021.  Unless it absolutely plateues a peak is a peak and therefore higher than average. I'm gonna start indexing from 1906 from now on.

The point I was making was that the transaction peak was built on loose lending, and declined as lending was pulled back, this peak is due to the stamp duty holiday and record low rates plus people believing (again) that because the government jumped in to the rescue with furlough they will back every dumb financial decision they might make (IMO) and the link I posted with the 40% drop in transactions pre-Covid  didn`t correspond with a similar rise in homelessness did it? The overall point was that prices are not driven by an actual "need" for housing.

Fair enough.

Mon2907

We still don’t know - our buyers haven’t got their mortgage offer yet. I would just like to say thank you to the person who works for the mortgage lender for giving me some perspective - indeed, I have barely slept the last couple of weeks over it all. Our mortgage offer sailed through in 5 days but I seem to be exception not the rule! I will of course update you when it comes through. The thread has provided some good debate, so thank you for replying. We wait....... 

Mickey666

Crashy_Time said:

Mickey666 said:

Getting_greyer said:

Fiesto88 said:

I’ll try and bring a little bit of positivity to counteract the gloom in this thread. 

I work for a mortgage lender. The surge in down-valuations that some people gleefully report here is complete fantasy. Now, as always, the vast majority of purchase valuations match the agreed sale price - the majority of reports coming back to us aren’t even reviewed by a person. Of the small number that are down-valued, there is usually a clearly stated reason and even then, we automatically accept them if they fall within a certain % tolerance of the agreed sale price. Most of the down-valuations we do see are remortgaging customers who’ve pushed their luck a little too much in their own estimation of how much their house is worth. They’re usually deliberately trying it on to get a better rate, expecting to be reined in. 

There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident. 

This is exactly what an operative of a clandestine global cartel would say.

. . . which is exactly how all this nonsense is promulgated, along with the web's unique ability to put all the world's loonies in touch with each other so they can reinforce each other's fantasies.

Regardless of who Fiesto88 might work for, their comment "There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident."  seems more rooted in reality than is convenient for the conspiracy theorists.

It's a bit like the moon landing deniers.  I suppose it's theoretically possible to have faked the entire thing but the reality is that it would be more difficult to keep such a thing secret than going to the moon in the first place!  But of course that's what THEY want you think, so what more proof do you need? 

? It`s not "secret" though is it? Plenty of people say it was faked, and plenty of people believe them.
There is no "conspiracy" about a bank reigning in lending, they see higher rates and possible job losses and want to minimise the potential for a borrower to default on their mortgage debt, seems pretty simple to me. Never mind faked moon landings the greatest "Conspiracy" of them all was getting large numbers of the public to believe that a basic house knocked up in a couple of weeks or less was worth decades of mortgage debt, LOL.

Well, compared with the alternative of paying a lifetime of rent, a couple of decades of mortgage seems like a bargain LOL

Crashy_Time

Mickey666 said:

Crashy_Time said:

Mickey666 said:

Getting_greyer said:

Fiesto88 said:

I’ll try and bring a little bit of positivity to counteract the gloom in this thread. 

I work for a mortgage lender. The surge in down-valuations that some people gleefully report here is complete fantasy. Now, as always, the vast majority of purchase valuations match the agreed sale price - the majority of reports coming back to us aren’t even reviewed by a person. Of the small number that are down-valued, there is usually a clearly stated reason and even then, we automatically accept them if they fall within a certain % tolerance of the agreed sale price. Most of the down-valuations we do see are remortgaging customers who’ve pushed their luck a little too much in their own estimation of how much their house is worth. They’re usually deliberately trying it on to get a better rate, expecting to be reined in. 

There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident. 

This is exactly what an operative of a clandestine global cartel would say.

. . . which is exactly how all this nonsense is promulgated, along with the web's unique ability to put all the world's loonies in touch with each other so they can reinforce each other's fantasies.

Regardless of who Fiesto88 might work for, their comment "There really isn’t a grand conspiracy. Nobody’s actively trying to derail legitimate purchase transactions. Of course, it happens - but we’re talking about a handful of instances against vast numbers that pass without incident."  seems more rooted in reality than is convenient for the conspiracy theorists.

It's a bit like the moon landing deniers.  I suppose it's theoretically possible to have faked the entire thing but the reality is that it would be more difficult to keep such a thing secret than going to the moon in the first place!  But of course that's what THEY want you think, so what more proof do you need? 

? It`s not "secret" though is it? Plenty of people say it was faked, and plenty of people believe them.
There is no "conspiracy" about a bank reigning in lending, they see higher rates and possible job losses and want to minimise the potential for a borrower to default on their mortgage debt, seems pretty simple to me. Never mind faked moon landings the greatest "Conspiracy" of them all was getting large numbers of the public to believe that a basic house knocked up in a couple of weeks or less was worth decades of mortgage debt, LOL.

Well, compared with the alternative of paying a lifetime of rent, a couple of decades of mortgage seems like a bargain LOL

Many people are on 30 years+ mortgage debt, many will never pay it off.