It has been many years since the housing market in the UK was truly buoyant; there have been a couple of times in the past couple of years when we all thought it was on the rise but now due to the on going economic uncertainties, the housing market is stagnant again. Many (mostly homeowners) like to believe growth in prices has merely slowed and that prices have not truly fallen but they are not being realistic.
I have viewed a range of houses over the past year in a wide price bracket and there simply seems to be no consistency with the pricing. Clearly some sellers want to move quickly and are pricing their homes at relatively realistic prices but others seem to be asking prices that are astronomical (even by the standards of the South East). Because there is a shortage of good family homes here some people think they can ask a price that just doesn’t stack up compared with similar houses in the same area. The fact that my hometown is a real mix of house styles makes an exact comparison quite difficult – even on the same road houses can vary from two-up two-down Victorian terraces to detached 4/5 bed houses on large plots.
Estate agents, in their eagerness to secure the limited business around, seem willing to agree on any price the sellers believe their house should be worth. Perhaps they hope to gradually tick the price down to something more reasonable over time.
I recently saw a house go from £795,000 to £695,000 in just 2 drops over 4 months before it sold. But that seems to be a rare situation and I can only guess that the buyers had a need to sell quickly. I had myself already viewed that particular house and although it had some great features such as large white porcelain tiles throughout the large hallway and kitchen (I love those, don’t you) the living space just didn’t work for me as I need a dedicated office/study for my home-based business. There was plenty of space but just not in the right place as I hate working from what should be a bedroom. I don’t mind doing home improvements, decorating, even knocking down walls but there are some things that just can’t be changed about certain houses and this was one of those – it’s layout would never have worked for me.
There are still many more homeowners out there who refuse to accept that house prices have fallen. Consequently, many homes for sale are languishing on the market because they are over-priced but the problem is that such over-priced homes have a knock-on effect for other homes in the same area as homes are often “valued” by their owners in comparison to other, similar homes so it only takes a few homeowners to over-price their home and the rest follow suit. With expectations set at a particular level it is extremely difficult to persuade sellers to be more realistic.
I priced my home at what seemed a realistic level but was then offered massively lower amounts because everyone seems to be assuming that every house is optimistically priced. Putting the price up, however, has resulted in no offers – as my estate agent says “a house is only worth what someone is willing to pay for it”.
But selling my house is just one part of the problem – the other is buying a new home. Banks and building societies have reacted to the economic situation by tightening lending criteria to the point where it is practically impossible to get a reasonable mortgage at a reasonable rate.
I’m not advocating a return to the lax lending criteria that got us in this mess in the first place but even with a 75% deposit (yes that’s the deposit), a decent salary, secure job and an excellent credit history some lenders’ affordability criteria mean I can only borrow 2.5 times my salary. Even by the standards of a previous generation that is a pretty low multiple.
Also the range of mortgage deals available has fallen in the time I’ve been looking, even though the base rate is still an unbelievably low 0.5%. There don’t seem to be nearly as many tracker deals tracking that base rate anymore – I wonder why?
One thing I have discovered is that not all lenders will offer the same deal – many have their own different affordability criteria that they use for determining amounts they will lend as a mortgage. But they also seem to have some discretion on what they can lend if you get to talk to the right person so calling them is a much better bet than checking rates and applying online. I’m just hoping that in another year’s time I’m not still in the same house.