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Question for people who remember the 90s crash


spunko

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I have been looking at sold prices in the mid to late 90s when prices were very low / realistic. Example: https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=49060005&sale=66552588&country=england

This got me thinking, were the re-build costs lower than the value of the house at any point? That example above I would assume today a rebuild cost of £300 - £400k today (according to insurers). When prices crashed in the 90s, did they go below the rebuild costs - and if so what happened, were they just demolished and left as a plot of land?

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Prices have often been below rebuild costs (arguably it is the average state of play).

In terms of the question -- they weren't demolished, just left derelict.

To answer the question in a different way, I remember my parents pre 80's boom always referring to any building project as vanity -- that is, they could get better value just by using the cash to buy somewhere already done (larger, etc).  It is only in the last 25 years where 'anything you do to a property will increase its value more than the cost'

[apart from swimming pools -- the one thing you can do to decrease a house's value]

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Bobthebuilder

As post above.

I bought a house in late 2012 at re build cost.

Many sold under re build in the mid 90s.

Lots of "its my pension innit" types cant believe that its possible, oh the blind.

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Bought a flat for 77K at the height, sold for 55K in 93.  It is apparently now worth knocking on half a million  o.O  Should have kept it and rented it out innit  

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Chewing Grass

Round my neck of the woods prices doubled in little over 12 months from 1987-88 and then halved from 1990 ish IIRC. The rebuilding cost was always less than buying.

Where rebuilding cost was lower due to collapse of industries whole estates were litterally erased from existence. I can think of one place in Scotland (can't remember name) where half a town disappeared when the pit shut.

 

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3 hours ago, dgul said:

Prices have often been below rebuild costs (arguably it is the average state of play).

In terms of the question -- they weren't demolished, just left derelict.

To answer the question in a different way, I remember my parents pre 80's boom always referring to any building project as vanity -- that is, they could get better value just by using the cash to buy somewhere already done (larger, etc).  It is only in the last 25 years where 'anything you do to a property will increase its value more than the cost'

[apart from swimming pools -- the one thing you can do to decrease a house's value]

This - most of the time new homes and extensions come with a premium that you would never recover. 

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4 hours ago, dgul said:

Prices have often been below rebuild costs (arguably it is the average state of play).

In terms of the question -- they weren't demolished, just left derelict.

To answer the question in a different way, I remember my parents pre 80's boom always referring to any building project as vanity -- that is, they could get better value just by using the cash to buy somewhere already done (larger, etc).  It is only in the last 25 years where 'anything you do to a property will increase its value more than the cost'

[apart from swimming pools -- the one thing you can do to decrease a house's value]

The sum of the realistic values of the flats where I live is materially lower than the rebuild costs (verified by recent survey and valuation) plus the value of the land.

Maybe we should torch the fucker...

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sleepwello'nights
5 hours ago, spunko said:

I have been looking at sold prices in the mid to late 90s when prices were very low / realistic. Example: https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=49060005&sale=66552588&country=england

This got me thinking, were the re-build costs lower than the value of the house at any point? That example above I would assume today a rebuild cost of £300 - £400k today (according to insurers). When prices crashed in the 90s, did they go below the rebuild costs - and if so what happened, were they just demolished and left as a plot of land?

I've never known a time when build costs were higher than the value of a house. With the exception of extraordinarily large properties, like old castles and mansions. 

The cost of the land alone, with planning permission, underpins the value. I've always used the back of a fag packet rule 1/3 land, 1/3 build costs, 1/3 profit. So build costs would tend to be 1/3 of market value. Never ever seen a property for sale at 1/3 of market value or 2/3 even. 

There's probably a Parkinsons Law that dictates build costs will increase to meet the defined proportion of market value.

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Bobthebuilder
6 hours ago, One percent said:

Bought a flat for 77K at the height, sold for 55K in 93.  It is apparently now worth knocking on half a million  o.O  Should have kept it and rented it out innit  

Tell anyone young about those times and it will just go over their heads.

I had mates who put keys through the banks letterbox and walked away.

I bought my first flat in 1996, a lot of people thought i was mad, my mortgage adviser even warned me about mortgage rates being cheap at 9%.

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Rebuild costs do vary as well, quotes would have been a lot more competitive in 1991 vs 1987, another factor to take account of as builders were on their arse at the time and quoting very low.

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Bobthebuilder
8 hours ago, spunko said:

I have been looking at sold prices in the mid to late 90s when prices were very low / realistic. Example: https://www.rightmove.co.uk/house-prices/detailMatching.html?prop=49060005&sale=66552588&country=england

This got me thinking, were the re-build costs lower than the value of the house at any point? That example above I would assume today a rebuild cost of £300 - £400k today (according to insurers). When prices crashed in the 90s, did they go below the rebuild costs - and if so what happened, were they just demolished and left as a plot of land?

I would guess that place was a wreck when they bought it and a full refurb was done. Kitchen looks about 20 years old. Probably spent a lot of dosh on that.

Lovely house mind.

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40 minutes ago, Bobthebuilder said:

I would guess that place was a wreck when they bought it and a full refurb was done. Kitchen looks about 20 years old. Probably spent a lot of dosh on that.

Lovely house mind.

As a wreck,  new plumbing and heating system for a start - by the time you're down to the fabric of the building and floorboards up and parts of ceilings down to fit heating and electrics then a full re-plastering job is often required, then full redecorating, could easily soak up £100K in today's money.

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7 hours ago, Chewing Grass said:

Round my neck of the woods prices doubled in little over 12 months from 1987-88 and then halved from 1990 ish IIRC. The rebuilding cost was always less than buying.

Where rebuilding cost was lower due to collapse of industries whole estates were litterally erased from existence. I can think of one place in Scotland (can't remember name) where half a town disappeared when the pit shut.

 

they had the pathfinder scheme here,knocked down hundreds of terraces and then replaced them with nothing.

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Bobthebuilder
3 minutes ago, onlyme said:

As a wreck,  new plumbing and heating system for a start - by the time you're down to the fabric of the building and floorboards up and parts of ceilings down to fit heating and electrics then a full re-plastering job is often required, then full redecorating, could easily soak up £100K in today's money.

Indeed, add in new windows, doors, 2nd fix carpentry, kitchen, bathrooms, driveway, landscaping, outbuildings, fencing, gates, flooring, carpets, any structural or roofing repairs and trades at £150 a day. i would say more like £160000.

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Just now, Bobthebuilder said:

Indeed, add in new windows, doors, 2nd fix carpentry, kitchen, bathrooms, driveway, landscaping, outbuildings, fencing, gates, flooring, carpets, any structural or roofing repairs and trades at £150 a day. i would say more like £160000.

Absolutely, left out the other bits as you can go as expensive as you like with the finishing touches - just the structure/shell and internals of a functioning house are not cheap to renew and you can rapidly go form a mild renovation to full as each renewed element exposes how bad (relatively) other aspects of the building are, soon becomes an all or nothing exercise.

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1 hour ago, Bobthebuilder said:

I would guess that place was a wreck when they bought it and a full refurb was done. Kitchen looks about 20 years old. Probably spent a lot of dosh on that.

Lovely house mind.

Those photos are from when they tried to flog it for £1.8m in 2017.

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Bobthebuilder
1 minute ago, onlyme said:

Absolutely, left out the other bits as you can go as expensive as you like with the finishing touches - just the structure/shell and internals of a functioning house are not cheap to renew and you can rapidly go form a mild renovation to full as each renewed element exposes how bad (relatively) other aspects of the building are, soon becomes an all or nothing exercise.

Agree.

A typical London 3 bed house refurb is £90 to £125K, that place has all the outside space as well.

People sometimes don't know when to stop with all the extras you mention, like £11k for copper rads that were not specified on a job i was once on.

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Bobthebuilder
7 minutes ago, spunko said:

Those photos are from when they tried to flog it for £1.8m in 2017.

Yes, as i said the kitchen looks like it was fitted in the 90s.

£1.8m ? are you gonna make an offer spunko?

So to answer your original question, i would guess rebuild at £600K.

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sleepwello'nights
1 hour ago, Bobthebuilder said:

Yes, as i said the kitchen looks like it was fitted in the 90s.

£1.8m ? are you gonna make an offer spunko?

So to answer your original question, i would guess rebuild at £600K.

Yes, but its only 2,500 sq ft. I'd go at half that, maybe less if you did your own project management.

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Bobthebuilder
5 minutes ago, sleepwello'nights said:

Yes, but its only 2,500 sq ft. I'd go at half that, maybe less if you did your own project management.

Nothing worse than a home owning project manager. No thanks ,use the cheap guys.

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For the South East Prime Central London Top spec fit out £150 - 200sqft with the upper end if a complete rip out and refurb is required.

 

Zones 3-4 for  typical london house at £50-75 - £100sqft range.

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3 hours ago, Bobthebuilder said:

Yes, as i said the kitchen looks like it was fitted in the 90s.

£1.8m ? are you gonna make an offer spunko?

So to answer your original question, i would guess rebuild at £600K.

I was trying to think how much it should be worth nowadays if the banks hadn't inflated the prices, probably much less than 400k. 

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23 hours ago, stokiescum said:

they had the pathfinder scheme here,knocked down hundreds of terraces and then replaced them with nothing.

Well, you've got to reduce supply to keep prices up.

xD

What a load of bollocks that was.

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2 minutes ago, SpectrumFX said:

Well, you've got to reduce supply to keep prices up.

xD

What a load of bollocks that was.

was it just stoke or other citys that got fucked over/improved has well

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