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Where will the property bubble burst first?


spunko
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An interesting new angle from the MSM!

https://www.telegraph.co.uk/property/uk/country-house-price-bubble-could-burst/

Where the country house price bubble could burst

Bidding wars and cold, hard cash: the rush to move in the wake of the pandemic drove a well-documented frenzy in the rural property market.

But there are signs that this is a bubble that could soon burst, causing prices to fall, especially in “B-list” locations. Buyers could suddenly find they have overpaid substantially.

In October 2019, 15pc of rural homes sold above their asking price, according to Hamptons estate agents. In October 2020, that share had climbed to 18pc. In the same month this year, it rocketed to 40pc.

This was the highest share on record, which goes back to 2009. In remote rural areas, 46pc of homes sold had three or more buyers, according to Hamptons. In the countryside, 29pc of homes sold so far this year were subject to bidding wars, a jump from 18pc last year.

Sale prices have climbed by 9.8pc in the year to date, building on 8.7pc growth in 2020, according to Hamptons. This was a sea change from the 0.3pc flatline recorded in 2019.

Prices of the most expensive country homes have jumped 20pc over the course of the pandemic, said Jonathan Bramwell, of The Buying Solution consultants.

He noted a 7,500 sq ft house in the Cotswolds with a £6.5m asking price. It is now under offer at £7.1m. “Two years ago, I would have said it would go for £5m,” said Mr Bramwell. That is equivalent to a 42pc jump.

But in the most expensive parts of the rural property market, the boom is losing steam. Prices have finally become too steep and buyers no longer feel that pandemic-induced time pressure to buy that helped push up bids.

In the Surrey town of Haslemere, previously a super-charged propert hotspot in the pandemic, a house was listed four months ago with an asking price of £2.5m. Richard Winter, a buying agent, said: “First it dropped to £2.25m, now it is down to £1.95m. We have made an offer but it is still nowhere near guide.”

The dynamics of the market have shifted. “Back in May, we were bidding on a house in Hampshire that had an asking price of £1.95m and it went for £2.25m. There were six people bidding for the same house,” said Mr Winter.

“The difference between then and now is that agents are guiding at much higher prices and buyers aren’t as eager to compete. They don’t want to get into bidding wars.”

Deborah Moriaty, an agent at Richard Winter Surrey Property Search, said: “The market is more subdued, it is not moving at the same voracious pace. We have been securing properties at asking price or just below.”

The stamp duty holiday, which triggered an artificial spike in activity, has now gone. Workers are returning to offices and commuting links are becoming more important again. Agents still report exceptional demand, but there is a question mark over the future of pandemic trends.

“It will become a very polarised market,” said Mr Bramwell. “The places that are always popular, in Areas of Outstanding Natural Beauty, with good schooling and train links to London, they are bulletproof.” The country’s secondary markets, however, are not.

“During the pandemic, areas without these qualities have seen huge price inflation. Maybe they are half an hour from a station, or they’re out on a limb for the school runs. Suddenly, when the market turns, there will be nothing else drawing buyers in. That’s where someone could really burn their fingers,” said Mr Bramwell.

Areas within a 2.5 to three hour journey radius from London will be vulnerable, he said. “People who paid £3m for a property could easily find it is back at £2.5m quite quickly.”

But some buyers simply do not care. Alex Goldstein (triple brackets?), a buying agent who works between Yorkshire and London, said: “People are taking a much longer viewpoint [when buying property]. It used to be five to 10 years. Now it is 15 to 20. If they have to pay over the odds to blow everyone else out of the water, they feel it will be OK over a 20-year period. They are prepared to go through the short-term pain.”

In Yorkshire, sales of the most expensive homes at 5pc or 10pc over guide price are common, said Mr Goldstein. But not all mortgage providers are on board. “Surveyors and lenders have struggled to keep pace, and we are seeing down valuations.” In one case, a buyer offered £1m and had to source an extra £30,000 in cash after their lender downvalued the property.

The post-pandemic surge in activity could come at a price further down the line. Chris Sykes, of mortgage broker Private Finance, said: “The stamp duty holiday did spur decisions very quickly and a lot of people brought plans forward. There could be a bit of a corresponding lull in the future. That could mean prices could stay flat in the medium term.”

Anticipated rate rises will have a cooling effect, added Mr Winter. Aside from reducing buyers’ purchasing power, rate rises could trigger a rise in supply. “It may encourage people to sell because they will be worried the market will slow,” he said. “We’re seeing quite a lot of people who want to buy and put their house on the market in January.”

Edited by spunko
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Bobthebuilder

I am convinced, the shires that have risen the most during the plandemic are going to fall just as fast.

The area I keep an eye on is North Dorset, small roads, no railways. Seen a bungalow listed the other week that would have been around £250k 2 years ago, now £500k. Now I know you are all thinking green field views with a nice river in the valley but no. We are talking about a small bungalow in a cramped 1980s estate, on a shit road in a market town next to an industrial estate.

Its gonna crash baby.

So I am going for North Dorset.

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Frank Hovis

Anywhere with a lot of holiday lets like, but not restricted to, coastal Cornwall.

Their price shot up, dragging up all surrounding house prices, through a combination of people thinking they can work from home for ever, so they relocated from the cities, and people desperate for a holiday paying £3k for a week in a three bed near the sea meaning that people paid top dollar to buy these because they were taking this as being a standard letting rate.

Next year people will be reversing their moves, when they realise that their employer isn't prepared to pay them to sit at home looking at the sea, and the holiday let owners will find that their market has gone somewhere with warm seas fir the summer at half the price.

"Timber" is my estimation; though with all such reversals people's refusal to recognise that their property's value has fallen means that there will be lengthy listings at the old higher price.

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With a crooked smile
5 minutes ago, Frank Hovis said:

the holiday let owners will find that their market has gone somewhere with warm seas fir the summer at half the price.

💯, my partner has owned a flat in Brighton for years. We were very early adopters of Airbnb. When we started long term rental was 12k a year before costs we were turning over 24-26k a year. Sept before covid 2019 we went back to residential letting rather than holiday let as the yield for effort wasn't worth it anymore. Brighton was flooded with Airbnbs and many people haven't worked out long term costs of refurbs ect. 

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With a crooked smile

Incidentally chatting with someone in Keswick today who is buying the house he currently rents. Surveyor told him when he was doing mortgage valuation he's valued 70 properties since December in Keswick this is the 4th one he's valued for a local person! 

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HousePriceMania
4 hours ago, spunko said:

An interesting new angle from the MSM!

https://www.telegraph.co.uk/property/uk/country-house-price-bubble-could-burst/

Where the country house price bubble could burst

Bidding wars and cold, hard cash: the rush to move in the wake of the pandemic drove a well-documented frenzy in the rural property market.

But there are signs that this is a bubble that could soon burst, causing prices to fall, especially in “B-list” locations. Buyers could suddenly find they have overpaid substantially.

In October 2019, 15pc of rural homes sold above their asking price, according to Hamptons estate agents. In October 2020, that share had climbed to 18pc. In the same month this year, it rocketed to 40pc.

This was the highest share on record, which goes back to 2009. In remote rural areas, 46pc of homes sold had three or more buyers, according to Hamptons. In the countryside, 29pc of homes sold so far this year were subject to bidding wars, a jump from 18pc last year.

Sale prices have climbed by 9.8pc in the year to date, building on 8.7pc growth in 2020, according to Hamptons. This was a sea change from the 0.3pc flatline recorded in 2019.

Prices of the most expensive country homes have jumped 20pc over the course of the pandemic, said Jonathan Bramwell, of The Buying Solution consultants.

He noted a 7,500 sq ft house in the Cotswolds with a £6.5m asking price. It is now under offer at £7.1m. “Two years ago, I would have said it would go for £5m,” said Mr Bramwell. That is equivalent to a 42pc jump.

But in the most expensive parts of the rural property market, the boom is losing steam. Prices have finally become too steep and buyers no longer feel that pandemic-induced time pressure to buy that helped push up bids.

In the Surrey town of Haslemere, previously a super-charged propert hotspot in the pandemic, a house was listed four months ago with an asking price of £2.5m. Richard Winter, a buying agent, said: “First it dropped to £2.25m, now it is down to £1.95m. We have made an offer but it is still nowhere near guide.”

The dynamics of the market have shifted. “Back in May, we were bidding on a house in Hampshire that had an asking price of £1.95m and it went for £2.25m. There were six people bidding for the same house,” said Mr Winter.

“The difference between then and now is that agents are guiding at much higher prices and buyers aren’t as eager to compete. They don’t want to get into bidding wars.”

Deborah Moriaty, an agent at Richard Winter Surrey Property Search, said: “The market is more subdued, it is not moving at the same voracious pace. We have been securing properties at asking price or just below.”

The stamp duty holiday, which triggered an artificial spike in activity, has now gone. Workers are returning to offices and commuting links are becoming more important again. Agents still report exceptional demand, but there is a question mark over the future of pandemic trends.

“It will become a very polarised market,” said Mr Bramwell. “The places that are always popular, in Areas of Outstanding Natural Beauty, with good schooling and train links to London, they are bulletproof.” The country’s secondary markets, however, are not.

“During the pandemic, areas without these qualities have seen huge price inflation. Maybe they are half an hour from a station, or they’re out on a limb for the school runs. Suddenly, when the market turns, there will be nothing else drawing buyers in. That’s where someone could really burn their fingers,” said Mr Bramwell.

Areas within a 2.5 to three hour journey radius from London will be vulnerable, he said. “People who paid £3m for a property could easily find it is back at £2.5m quite quickly.”

But some buyers simply do not care. Alex Goldstein (triple brackets?), a buying agent who works between Yorkshire and London, said: “People are taking a much longer viewpoint [when buying property]. It used to be five to 10 years. Now it is 15 to 20. If they have to pay over the odds to blow everyone else out of the water, they feel it will be OK over a 20-year period. They are prepared to go through the short-term pain.”

In Yorkshire, sales of the most expensive homes at 5pc or 10pc over guide price are common, said Mr Goldstein. But not all mortgage providers are on board. “Surveyors and lenders have struggled to keep pace, and we are seeing down valuations.” In one case, a buyer offered £1m and had to source an extra £30,000 in cash after their lender downvalued the property.

The post-pandemic surge in activity could come at a price further down the line. Chris Sykes, of mortgage broker Private Finance, said: “The stamp duty holiday did spur decisions very quickly and a lot of people brought plans forward. There could be a bit of a corresponding lull in the future. That could mean prices could stay flat in the medium term.”

Anticipated rate rises will have a cooling effect, added Mr Winter. Aside from reducing buyers’ purchasing power, rate rises could trigger a rise in supply. “It may encourage people to sell because they will be worried the market will slow,” he said. “We’re seeing quite a lot of people who want to buy and put their house on the market in January.”

It's a bubble ?

 

Why has no one spotted this before ?

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HousePriceMania
Great headline, no one reads the articles, that's why they have headlines !!!
 
Edited by HousePriceMania
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1 hour ago, HousePriceMania said:
Great headline, no one reads the articles, that's why they have headlines !!!
 

It is indeed. But I think the content of the article is wrong, personally. It specifically asks where 'first', and if you look at previous crashes they have nearly always started at either the very top or very bottom end (or both, contracting together). The shires will be hit hard, but they will probably recover quicker too. I wouldn't want to be sitting on a 1 bedroom flat at the moment, they always tank hard in recessions because they are, ultimately, undesirable and cramped.

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London, where crashes always start.

Mainly as London has all the weak points - loads of leverage, most of resi io mortgages due to end in 10 years, etcetcetc.

Then you've got holiday let's, where tye io btl missouts piled in. Tgeyll be hit by sbrr reforms sooner rather than later.

Then commuter places which relied on being 1h commute of London. No longer needed if people are doing 1 or days in office. Might as well come from somewhere much than home counties.

Then places where the finsec jobs have gone. Mouth is tge buggy but most towns about 1h-2h from London gave Bern hammered j9b wise.

 

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1 hour ago, spygirl said:

Mouth is tge buggy but most towns about 1h-2h from London gave Bern hammered j9b wise.

May I translate? 

Mouth (Bournemouth) is the biggy but most towns 1h-2h from London have been hammered job wise.:D

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Frank Hovis
1 hour ago, janch said:

May I translate? 

Mouth (Bournemouth) is the biggy but most towns 1h-2h from London have been hammered job wise.:D

1a7fd66be7da75c8dd87730b8e8bd5a8be261680

or rather "Spy".

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Bus Stop Boxer
On 18/11/2021 at 13:01, Bobthebuilder said:

I am convinced, the shires that have risen the most during the plandemic are going to fall just as fast.

The area I keep an eye on is North Dorset, small roads, no railways. Seen a bungalow listed the other week that would have been around £250k 2 years ago, now £500k. Now I know you are all thinking green field views with a nice river in the valley but no. We are talking about a small bungalow in a cramped 1980s estate, on a shit road in a market town next to an industrial estate.

Its gonna crash baby.

So I am going for North Dorset.

I 100% agree. As a Nth Dorset resident. Lots of re-availables poking their heads through. 

Also to add. ANECDOTAL. A friend of a friend, who i do not know is down in Weymouth from London. Huge mortgage, kid in private school somewhere. He works from home for some fucking bank and they absolutely HATE Weymouth. She wants to go back to Stabonistan.

Must be thousands of this type dotted about. Like buying a lockdown dog but more expensive.:)

 

Further to add, flats seem to be dropping nicely round here.

I will be buying a couple with share of FH when the time is right.

I need an income not derived from the world of work. Always held off being a BTL er but we are no longer in sane normal times.

I have always felt a great deal of sympathy for 20-30 year olds, and still do really. But its going to come to a point of survival for me. I'm not re-entering the world of work under this stasi shite.

 

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Bobthebuilder
49 minutes ago, Bus Stop Boxer said:

Must be thousands of this type dotted about. Like buying a lockdown dog but more expensive.

I am hearing a few stories from friends born and bred in the area. It's the same old thing, they all think the nice fields, valleys and rivers are a theme park for their own pleasure, not working farms with all the shit that comes along with it.

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AlfredTheLittle

If energy prices keep going up and we have a cold winter, prices for older houses with shitty insulation or crap heating could fall, it's no fun being broke and cold.

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Axeman123
5 minutes ago, AlfredTheLittle said:

If energy prices keep going up and we have a cold winter, prices for older houses with shitty insulation or crap heating could fall...

I thought you were talking probates!

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AlfredTheLittle
1 minute ago, Axeman123 said:

I thought you were talking probates!

Good point, the jab could help with that too

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One percent

They are getting into bidding wars round my small corner of god’s own. It’s all incomers (or white settlers as we prefer). Talking to a few and they have little idea about what life is really like. If you want a half decent shop, it’s at least a 60 mile round trip.  The winters are fucking cold and a bad winter means you can’t get out the town for days.  I’ll give them all one winter.  Oh, and then the hoards from smoggy descend in the summer meaning the town is completely clogged.  With pissed up neanderthals.  xD  they will be running back to the Home Counties toot sweet. At least I hope so. 

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JoeDavola
29 minutes ago, AlfredTheLittle said:

If energy prices keep going up and we have a cold winter, prices for older houses with shitty insulation or crap heating could fall, it's no fun being broke and cold.

I think with the runaway inflation, there are going to be a lot of old boomers crumbling big houses coming on the market that very, very few people could afford to actually renovate and then heat/maintain.

Doesn't mean they'll drop the price of course but I reckon you'll some sitting on the market for a long time.

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Bobthebuilder
18 minutes ago, One percent said:

Talking to a few and they have little idea about what life is really like. If you want a half decent shop, it’s at least a 60 mile round trip

I lived in the middle of the New Forest for a short while, I once did a 40-mile round trip to buy some bloody Rizla papers, and no I'm not joking.

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One percent
10 minutes ago, Bobthebuilder said:

I lived in the middle of the New Forest for a short while, I once did a 40-mile round trip to buy some bloody Rizla papers, and no I'm not joking.

Welcome to the countryside.  xD  it’s going to shock them.  

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