Readers Question: My mother passed away recently and we now have her house on market…we have dropped but don’t want to go too silly as they have worked hard all their lives and it feels wrong to sell at too low a price. I would like to give a good proportion to my son to buy his first house. What would you suggest? renting for a while and also how long do you predict this to last? Thankyou.
Thanks for question. I would suggest that the general consensus is for house prices to fall by 12-15% over the next 12 months. After 12 months it becomes more difficult to predict and there is a divergence in forecasts. Some pessimists feel house prices could fall 30% over (or even more) in the next 2-3 years; they feel that house prices are grossly overvalued. However, others, such as myself, feel house prices in the long term will stop falling after 12 months and regain their upward trend. See forecasts for long term house prices and Buying cheaper than renting.
Alot depends on when the mortgage crisis is averted. This is the main downward drag on house prices - people simply can’t get new mortgages. When liquidity is restored to the mortgage sector, this will definitely help improve the housing market. The problem is that past relief efforts don’t seem to have worked. It is hard to know when the credit crunch will end.
Selling the House at the Right Price
When selling the house, it is best to ignore feelings of what we think we ‘deserve to get’. For example, if you bought the house in 1995, it is still likely to have increased 150% in value. see: historical trends in house prices If you want to sell it is best to look at a realistic market price and hope that setting a realistic price will encourage people to view and then make an offer. If we keep an unrealistically high price based on old expectations, we might not get anyone interested to come and view. Then the house will just continue to lose value over the next 12 months. Look closely at the price houses are being sold for.
Note there is a difference between asking price (advertised price) and completion price. It is suggested that many houses are being sold for less than their asking price. see: 7 Tips for a quick house sale
If your son is thinking of buying (assuming he is a first time buyer), I think there would be no harm in waiting 12 months, perhaps saving more for a deposit. At best house prices will fall by at least 10%, at worst they will stagnate. By waiting you should be able to get a cheaper house. In 12 months if house prices are still falling and the situation looks bleak, it may be worth waiting longer.
1 comment so far ↓
“My advice would be to see what other similar houses on the street and in the area are being sold for, as this will give you a rough idea as to what you could get for your house. Alternatively you could pay for a valuation, which will give you more of an accurate idea as to what the house is worth. If you need any further advice, please feel free to contact me or any of my colleagues here at Ashley Moore Financial on 0870 868 0000, as we are always here to help.”
Leave a Comment