Owning your own home

I reckon for the next six months supply will go off a cliff

Do you think this might mean house prices won’t drop too much?

The wife and I had gotten a few valuations on the house (1 bed house with front garden and assigned parking space on Camberwell Grove) back in Feb with a view to advertising it around now, but obviously that can’t materialise. We’ve now decided we want to make a speedy exit home to Ireland so have pretty much resigned ourselves to renting our house here and living in rented accommodation in Ireland for a while.

If supply is low and we can get what we paid for the house 2 years ago plus enough to cover the legal fees etc, that would be preferable, but it’s so hard to know what way it’ll go.

Do you think this might mean house prices won’t drop too much?

If there's a supply shortage prices will flatline or gradually decline and selling or buying will be massive pain the ass.

Depends on what you are selling though. Little house with a nice garden? Gonna look real appealing to a couple who just spent two months cooped up in middle-floor flat.

This is why the %16 or so from 2008 isn't that helpful. Some stuff went down a lot more than 16%, others flatlined, some even bucked the whole thing and went up.

Yeh when we bought our place, our options were a 2 bed 2nd/3rd floor leasehold mezzanine flat with parking, or directly across from it a 1 bed freehold end of terrace with front garden and parking. Until end of February, we sort of regretted not buying the 2 bed, but the garden has been a life saver recently.

Yep I think you won there.

I don't think anyone is winning right now

Ok erm, losing less badly?

Now is the time to lowball! But not on the place where you already looked the buyer in the eye and said £X is fair and they agreed.

Ugh. Had been planning on exchanging a few days before lockdown. 5 or so house chain that seem to be in limbo waiting (after the top pulled out of selling).
I expect the number of houses sold will fall off a cliff, but I'm not convinced the prices will crash in line with that.
Fuck knows...

Someone was supposed to be buying our place. Survey done, assignment pack paid for...

Complete radio silence now for three weeks. I’m resigned to spending the rest of my days in a place we out grew five years ago. Le sigh.

I Know i've banged on about this before but buying a house pre crash is not a cool experience. Whether you have plans to keep hold of it long term or not I don't think its at all un reasonable for buyers to be readjusting their offers in response to whats coming. It's been on the cards for a while but its taken something major like this for the general population to open their eyes. Its not Corona thats caused this situation but its certainly helped to speed things along. I know its not nice to be on the other end but anyone (especially FTBers) completing on a purchase now are very brave.

I really wanted to pull out of my sale in 2007 but my GF at the time persuaded me otherwise, one year later I was sitting in a house worth 35-40% less than we paid and there were tons of far nicer houses on the market with garages(i didnt have one but really wanted one) that I had no chance of getting as I was stuck in my current place. It took 10 years before I could sell it again and that really ruined a lot of my long term plans.
Back then the government was able to drop interest rates but no one learnt from 2008. Thanks to these historically low rates and HTB House prices in the south are up 100% from 2008 highs. Have wages doubled since 2008?
With the insane amount of printing ahead there be inflation coming and if anyone thinks rates will still be 0.something% in 5-7 years time they are having a laugh.
I really think this will be the start of the everything bubbles deflation and southern property will be one of the big sufferers.

I doubt there will be a seismic readjustment.

What will happen is those with means will solidify their positions off the toil of those without.

if anyone thinks rates will still be 0.something% in 5-7 years time they are having a laugh.

That is also what people have been saying for years, and yet here we are. No-one knows so it is foolish to speculate either way.

The conditions are different this time. This stimulus package is absolutely humongous.

Clearly they've shown their left wing hand.
Next step is taxation of the megalopolis rich, reclaiming tax from evaders, and then finally stringing Mike Ashley et Al up till the cash pours out of them.

Quite

I mean, we're no Japan, but they have had longer periods of negative interest than positive in the past 20 odd years.

Still - everyone loves a self professed expert.

As others have said, it was partly the nature of how this happened that was annoying, not just the wildly speculative amount.

They were a first time buyer (although realistically I think the parents were buying as an investment) and if they'd just said I don't think now is the right time, we're pulling out then it would be annoying but so be it. The 20% bit just made them seem like a chancer looking to exploit the situation.

Personally I'd say it is way too early to be making speculative adjustments to offers. In the case of @greeno I can see a justification for "we want to revisit the price as it already seemed high and banks may become more conservative" and a sensible discussion. For me, a 3-5% drop would have been a discussion that would probably have resulted in a reduction.

Ultimately I can't see this changing the underlying issue, London has too many people and not enough housing.

I think @Señor_Bear made a fair point that sellers are not generally known for turning down higher offers which come in at the last minute in overheating markets.

Mostly, I'm glad that I don't need to buy or sell a house right now so I do feel for people on both sides of transactions at the moment.

However, to me it's really clear that the world has massively changed in the last 4 weeks. And to expect things that were negotiated before we got to this point to proceed without any adjustment seems unrealistic. I fully appreciate that the way this adjustment has been approached in the original post is pretty shitty, and deserves a similar response.

On the supply drying up; I don't see any reason why supply side will be worse affected than demand. Economic damage will be massive. Many people won't have jobs. Money will be scarce.

Home owners who have been prevented from moving will want to move when things get "back to normal". Will there still be enough wealth at the bottom of the chain?

We don't know but my guess will be it will take a hit.

Will there still be enough wealth at the bottom of the chain?

It’s really about availability of debt rather than wealth.

If bank lending multiples went back to 3-4x earnings rather than 5x+, you would see a fall in prices. Whether this happens is anyone’s guess

It’s really about availability of debt rather than wealth.

Well, it's a bit of both as you have to have an income to start with. But yes, I agree that lender criteria and interest rates are key factors.

I wonder whether the influx of rental property from air b'n'b landlords who have lost their shirts in the lockdown will affect the market?

I think @Señor_Bear made a fair point that sellers are not generally known for turning down higher offers which come in at the last minute in overheating markets.

You mean gazumping? That's shit behaviour. They've looked someone in the eye, agreed to something, then reneged on it because they could come out the other side better off if they trade their honour for a few £.

If you mean they try to get the most for their gaff before accepting an offer, then sure, of course they do. The have the asset, other people want it and you can’t magic another one from a factory. It's not a balanced situation, the seller has all the power. That others will offer £x + 1 is pretty great evidence that the place is worth at least £x +1.

And to expect things that were negotiated before we got to this point to proceed without any adjustment seems unrealistic.

Yeah I mean people are going to do dumb things like try to renegotiate on deals they've already agreed. But how much less should they now offer? And what puts them in a position to decide? Only the fact that they have the seller trapped, and that they can play on their fear. Some might think that it's balanced the situation, but I don't. It's shit behaviour.

I really wanted to pull out of my sale in 2007 but my GF at the time persuaded me otherwise, one year later I was sitting in a house worth 35-40% less than we paid and there were tons of far nicer houses on the market with garages(i didnt have one but really wanted one) that I had no chance of getting

8B's example above shows that even after a downwards negotiation buyers can still inflict a large amount of self harm upon themselves by proceeding.

Better to apologise and sack it off if you can't handle it. And that's how the readjustment will come.

Is there a tool that will show me all the nice villages within roughly an hours drive of Heathrow?

But how much less should they now offer?

It's always going to be partially a guess, isn't it? It's a guess on the way up, and a guess on the way down. The sum total of buyers and sellers guesses as to what things are worth at any one point in time makes the market.

It's a volatile situation at the moment which means some people are going to guess wrong.

My point was that in a normal situation the open market decides - anyone can make an offer. The true value comes out in the wash.

In a downwards renegotiation with a ‘trapped’ seller, through a quirk of fate only the buyer decides, there are usually no other buyers involved. The true value cannot come out in the wash because the buyer does not & cannot know. The only thing they do know is that it’s worth less to them than it was yesterday, which is weird.

All this stuff about looking someone in the eye and making a deal is kinda weird. It's a transaction, just because it's a home doesn't mean it should have it's own rules.

I dunno, you try conducting your business that way, see how far you get.

Example - I agree a rental contract with potential tenants. They are happy because they’ve found a home. I send them a summary contract with the agreed figures and state that the contract is to follow.

A couple of weeks later and a few days before issuing the contracts I tell them that it’s now 20% more expensive because magically the market has got really hot overnight.

That’s a shitty thing to do, no? Ignoring the emotive ‘poor buyers’ and ‘evil landlords’ tropes, obvs.