"How much money will we make on this house?"

RHemmings

Sometime last year, or perhaps late 2006, someone posted something that made a big impression on me. They were, I think, a mortgage advisor. And they said that many or perhaps nearly all of the people getting mortgage advice were asking them "how much money will we make on this house". This surprised me, because I thought that even then the outlook for housing wasn't good, but it rammed home how bullish general sentiment was.

Who was that (masked?) poster? If they are still around and recognise themselves from this description, could they give us an update on whether sentiment among buyers is still the same?

Anyone else with real world experience of buyer sentiment?

exil

from what i gather from the media and internet, agents have noticed it's turning into a buyer's market. So, FTBs should find things a bit easier. People like me who want to buy AND sell should lose with one hand and gain with the other. People who HAVE to sell are going to be in trouble.

Not sorry, really, if people go back to seeing a house as a home and not a money-making machine, but obviously I sympathise with recent buyers who are going to see their property lose value.

PasturesNew

I won't buy this "FTBs should find things a bit easier" at the moment.

So far there has been a small slip over a few months. This won't miraculously make things easier for them overnight.

Indeed, with the credit crunch they can't borrow as much as they could, say, a year ago.

So, if prices are still (currently) more than a year ago - and if FTBs can now borrow less than they could a year ago (at higher rates too), then it isn't easier YET.

Prices need to drop down to the prices of 3-4 years ago, to wipe out the "silly gains" seen from recent speculation, before FTBs can really look and say "Yes, now is the time".

merlinthehappypig

As a potential buyer (not first-time) currently renting and needing around 20% LTV, I would say that things are balanced on a knife-edge.

With a decent deposit mortgages are still easy to get. I can still get a high multiple mortgage without declaring any financial information if I wanted to. Without a decent deposit things have tightened up a bit.

We have been looking seriously for around 6 months so have experienced a bit before the Northern Rock problems and a lot after.

We would say that whilst there are very few serious buyers, there are also limited numbers of houses for sale. This means that, in our experience, buyers are only reducing prices if they have to sell. People who are simply playing at selling (and there are many) with no plans, are not yet at the stage where panic is setting in.

Two examples of having to sell from our viewings - a couple emigrating to New Zealand who were very aware of the risk to house prices had the house on at £649950 and offered it to us at £515000. Another couple moving because of his job reduced from £649950 to £499950. Both of these have now sold.

Other sellers won't budge from the asking price or will only reduce a little. We have (stupidly) made an offer of £470000 on a house with an asking price of £495000. It has been 3 full days since the offer and they haven't come back to us despite having had the house for sale since late Spring last year and no viewings since November., so they are still living in a fantasy world.

Other economic factors aside (and you just have to look at the market turmoil and the FED rate cut today to show that things are worse than most people thought) I think that, if the situation remains the same with the number of buyers and the number of houses for sale increases, as is traditionally the case in Spring, sellers will need to start competing with each other and prices will fall.

If the economy takes a nose-dive as seems likely then we could easily be in a crash. Whilst many people will talk about 'soft landings' and say that a crash won't happen they are the same people would not have said that the world markets could drop by 10-20% since the start of the year, but they have.

So my summary is that prices will definitely fall, either slowly over a few years or very quickly, but the eventual fall will be the same and quite significant. It's just not really happening yet, but all the factors are in place.

I would not be buying now unless I had to, certainly.


Just my 2p's worth from the last few month's of looking.

RHemmings

Thanks for your posts. But I'm still interested to know if anyone has an answer to my question as stated.

mahdlo

merlinthehappypig wrote: »

As a potential buyer (not first-time) currently renting and needing around 20% LTV, I would say that things are balanced on a knife-edge.

With a decent deposit mortgages are still easy to get. I can still get a high multiple mortgage without declaring any financial information if I wanted to. Without a decent deposit things have tightened up a bit.

We have been looking seriously for around 6 months so have experienced a bit before the Northern Rock problems and a lot after.

We would say that whilst there are very few serious buyers, there are also limited numbers of houses for sale. This means that, in our experience, buyers are only reducing prices if they have to sell. People who are simply playing at selling (and there are many) with no plans, are not yet at the stage where panic is setting in.

Two examples of having to sell from our viewings - a couple emigrating to New Zealand who were very aware of the risk to house prices had the house on at £649950 and offered it to us at £515000. Another couple moving because of his job reduced from £649950 to £499950. Both of these have now sold.

Other sellers won't budge from the asking price or will only reduce a little. We have (stupidly) made an offer of £470000 on a house with an asking price of £495000. It has been 3 full days since the offer and they haven't come back to us despite having had the house for sale since late Spring last year and no viewings since November., so they are still living in a fantasy world.

Other economic factors aside (and you just have to look at the market turmoil and the FED rate cut today to show that things are worse than most people thought) I think that, if the situation remains the same with the number of buyers and the number of houses for sale increases, as is traditionally the case in Spring, sellers will need to start competing with each other and prices will fall.

If the economy takes a nose-dive as seems likely then we could easily be in a crash. Whilst many people will talk about 'soft landings' and say that a crash won't happen they are the same people would not have said that the world markets could drop by 10-20% since the start of the year, but they have.

So my summary is that prices will definitely fall, either slowly over a few years or very quickly, but the eventual fall will be the same and quite significant. It's just not really happening yet, but all the factors are in place.

I would not be buying now unless I had to, certainly.


Just my 2p's worth from the last few month's of looking.

do you not think HIP's are going to prevent a lot of people putting their houses on the market?

traditionally, many people who are not 100% they want to move have taken the step of "testing the water" to see what interest they get in theirs and what's out there to buy - this isn't going to happen so often, if at all, if it's going to cost £400 for a HIP, therefore, less houses up for sale?

less supply makes for a sellers market, doesn't it?

mahdlo

RHemmings wrote: »

Anyone else with real world experience of buyer sentiment?

people who need a home are still buying.

people who want to make money aren't.

merlinthehappypig

mahdlo wrote: »

do you not think HIP's are going to prevent a lot of people putting their houses on the market?

traditionally, many people who are not 100% they want to move have taken the step of "testing the water" to see what interest they get in theirs and what's out there to buy - this isn't going to happen so often, if at all, if it's going to cost £400 for a HIP, therefore, less houses up for sale?

less supply makes for a sellers market, doesn't it?

Yes, I think that will help to a limited extent, though that isn't what they were designed to do. All the houses we have viewed recently were on the market pre-HIPS, as were the examples in my post.

Fewer houses available would normally make a seller's market, but there are very few buyers around with the will, and the means, to buy, so I still stick with my assessment that things are evenly balanced at present. It won't take much to tip things in favour of the buyer. This is already the case if the seller has to sell, for whatever reason.

moneysavinmonkey

i need a 'home' but am not buying!

sarkin

This sounds a bit like me as a sales man you have to give what the buyer wants and often people want to know what the maximum they can borrow is. AS lenders stretched income multiples, people could borrow more and house prices went up like wise.

Spoke to an estate agent the other day and he said it was quite, sellers dont want to take offers and buyers want discount off asking price. So stale mate at the momment I think if people start taking offers this will feed into the stats and we will see price falls which will then lead to more price cuts.

There are over 2,500 1 and 2 bed flats for sale in Bournemouth at the momment, if these guys need to liquidate quickly then they will have to drop 10% - 15% imho.

carolt

If HIPs have had the effect of putting off people who were just testing the waters and only left vendors serious about selling, then that is a blessing for potential buyers.

We've been let down by 3 vendors none of whom were serious about selling - 2 just changed their minds and took their house off the market, one was selling in a divorce situation, but had neglected to check she actually had rights to sell the house (she didn't). I think having to pay £400 upfront might have sharpened their decision-making skills a little, and saved me lot of unnecessary time wasted and hassle....