[Closed] housing market - whats your bet?

Chances are house prices will increase, moreso in more rural areas, if WFH becomes hip and trendy as and when Covid hopefully becomes less of a danger.

It would be a top end flat in a good urban area in Edinburgh

How much do you both need the money in the next five years?

Chances are the market will stay as it is I think (i.e. continue rising steadily), but let's say there's a 25% chance it'll go down/stagnate, and a 100% chance you and your dad will need that money in the relatively short term, it's not a gamble I'd take.

If it's just 'spare' cash I'd go for it. You can always rent if it's not going to sell for what you want it to immediately.

I only really know the local market in Crawley and surrounding, my company owns quite a few rental houses and flats, at the upper end of quality. We also sometimes do development like you suggest.
My experience in the last 20 years is that no matter what happens, house prices increase for quality properties. Demand in town for quality has varied thus:
10 years ago the well off were heading for the country.
5 years ago they got fed up with the move to the country because commuting got crazy and started to move back in to town.
Now with corona its reversed.

These demand effects served to slow or accelerate house price growth for good properties (ie good fundamentals, location, shape, layout), but prices have always gone up.
I do know of properties that have lost value, but they were newbuilds which had bad fundamentals, or others that were speculated on without good fundamentals.
In a boom people will always invest in properties that you would never consider in a slow market. We have always avoided this.

So if your flat is in a good location that is perennially popular, has a good layout, and doesn't have any weird twists, then its hard to lose.
The gamble gets bigger if you don't meet these criteria...

Note: There is a user on here that thinks this concept (profiting from house refurb/price movements) is morally wrong so be prepared.

If you’re just wanting to turn a quick buck then just buy it and do nothing with it and sell it further down the line. Hours of watching daytime shows like homes under the hammer as a student showed that the bulk of the value increase people made was from house price escalation and not what people actually did to the house.

House prices will continue to go up due to the wonderful way the market is rigged.

it wouldn't make money in its current state / because of stat notices - its all very complex but it cannot really be sold on the open market right now

I also agree with wobbliscott.
I forget to mention, in a rapidly increasing market, condition makes less difference to price if the fundamentals are good.
When the market is flatter, condition will make more of a difference.

edit

it wouldn’t make money in its current state / because of stat notices – its all very complex but it cannot really be sold on the open market right now

Ok, then you have to do some work. I think wobbliscotts point still stands after that though.

they are your morals, do what you want.

but dont buy property with pension money, enjoy the returns through the housing market AND complain that the next generation have no chance of affording property and are likely to be crippled by extortionate rents for years to come

soobalias - its a fair point. My only excuse would be that its going to be turned into a nice home for someone and not be a rental. Its already way beyond affordability for a first time buyer

Edinburgh market *always* does well.
What neighbourhood is it in? If it's close to the centre-ish you can make incredible amounts of cash through airbnb, so you're making rental income AND the capital value increases every month.
My flat goes up about £600 a month in value and I can get £2k a month off of airbnb.
So you can do that, or advertise it almost as a business?

airbnb is work though. Changing beds, check in and out, risk of damage etc.
I am sure it's profitable.

YGH - my morals do not stretch far enough to use it as a holiday rental see soobalias point. I would only do this to get it back into the market as a home for someone

Its on the shore in Leith - fabulous location worth a 25 % premium on any other local flat

but dont buy property with pension money, enjoy the returns through the housing market AND complain that the next generation have no chance of affording property and are likely to be crippled by extortionate rents for years to come

I can also see your point, but it shouldn't be TJ's responsibility.
I don't subscribe to the individuals responsibility for the nations woes.
Life is tough, if you have got lucky and can make good then go for it, its the responsibility of the govt to fix housing not TJ. Who I think is/was a nurse? Unless he did Shipton-esque will adjustments I don't think he's minted, and I think he should take his opportunities as they come.

Its on the shore in Leith – fabulous location worth a 25 % premium on any other local flat

Facing the water?
Above a pub? Or a shop?

top floor above offices with a view of the river

Life is tough, if you have got lucky and can make good then go for it, its the responsibility of the govt to fix housing not TJ.

Errmmm - I would actually say that its my responsibility to only do this if in a way that is morally right ie its to provide someone with a good home at a realistic price - same as our accidental rental which is fitted out to a very high standard for a less than market rent and now being let at a 20% discount as the occupants are furloughed

the owner is also desperate to sell but as above cannot really do so on the open market without discounting it by a huge amount which she is reluctant to do. She has been stuck with it for 15 years ( it was her dads)

top floor above offices with a view of the river

Sounds good.

Responsibility and choice are different things. Like lots of people that give a large proportion of their income to charities. Well done.

Personally I am all for legislative changes to effect huge increase in min wage, limit ratios in directors profits to least paid employee, huge taxes for huge incomes, banning offshoring, investment in council or subsidised housing, local authority syndicates for help to buy/help to build, secure tenure for tenants etc etc.
The money market needs to be completely revised:
A big thing is rip off mortgages for new builds. Near me there is a development where the builder will give you a cheap mortgage for an inflated house price and no issue if you have crap credit rating or poor income.
When the cheap deal runs out, the house is in negative equity and no actual mort co will give a mortgage due to uncreditworthyness, buyer defaults and original mort co gets house back. Its massive exploitation of the poor/ignorant/unwary and is a crime.

But if I opposed all this on my own I'd go under..

The new build estates i have seen are shockers, no infrastructure, no green space poor access, all squashed in together. They sell at inflated prices as they px your old one and offer finance.

Once they hit the resale market they find their true value.

Edinburgh is a good market, like leafy sw London even covid did not affect it. In fact, people leaving central London for more space have just stoked up the market, sales and letting.

The historic sales prices of the same house reveal all, the blighted ones change hands every few years, sometimes at a loss. Good houses rarely become available, in fact 2 of my last uk houses have been in the same hands since I sold them over 20 years ago.

I am looking at buying a house and turned down a few, I just didn't want to participate in the stamp duty freeze sales bonanza. Now that's effectively over a bit of normality should come back.

Aren't Edinburgh short term let's regulated, if not they should be at some time. Here in Spain you need a tourist rental licence and city flats are limited.

Long term good property has always been a good investment, maybe the odd blip but they soon recover.

The new build estates i have seen are shockers, no infrastructure, no green space poor access, all squashed in together. They sell at inflated prices as they px your old one and offer finance.

Once they hit the resale market they find their true value.

Exactly, it is a con masquerading as a contribution to solving the housing crisis.

And the Semies/ terraces (sorry) "town houses" have paper thin walls.

Yeah its a terrace with a 1 ft gap to the house next door.

Anyway, apologies, drifted off topic .
Back to the plot.

What do you think then TJ, do you agree prices will go up or is there something we bulls have missed?

the owner is also desperate to sell but as above cannot really do so on the open market without discounting it by a huge amount which she is reluctant to do.

And you're prepared to pay the pre-discount price? Why?

the owner is also desperate to sell but as above cannot really do so on the open market without discounting it by a huge amount which she is reluctant to do. She has been stuck with it for 15 years ( it was her dads)

Sounds like she could sell it for market value quite easily.

Somebody will buy it and resolve the issues. It might as well be you if you can make the finances work.

Dunno what it’s like in Edinburgh, but bear in mind that trades are pretty busy right now. I recommended our last builder to a neighbour, and apparently he’s booked for the next year.

I recommended our last builder to a neighbour, and apparently he’s booked for the next year.

This is crucial, we have just agreed retention bonuses to our trades to make sure we have availability.

I think, in the future, the general population will be homeless, living in tents in the street. Developers will continue to build over them, sealing them in a sunless warren of old streets under colossal blocks of "luxury" flats. These blocks will stretch from coast to coast without a single gap and reach many miles into the sky. And all completely empty. Owned by overseas investors and marketed at rents many times over per-week the average lifetime earnings potential of a normal person.

Or vote green.

What do you think then TJ, do you agree prices will go up or is there something we bulls have missed?

I do not really know so hence i asked - views on here are useful with people from all sorts of differnt backgrounds and virews

And you’re prepared to pay the pre-discount price? Why?

Sounds like she could sell it for market value quite easily.

Its a really complex situation . there is an unresolved stat notice on the property which makes it very hard to sell. ( she tried to sell it 5 years ago and didn't get a single offer) As its my neighbours flat under the same stat notice as i am its possible for me to buy it and to take the liability. No one would do this on the open market ( I would obviously be discounting the price by the amount of the liability) If she sold it on the open market with her retaining the liability then the lawyer would have to hold a large part of the proceeds to cover the maximum potential liability.

the flat is rented out really cheaply and is soon not going to be in a habitable condition without significant money being put into it

thats why I am in a position to pay more than anyone else because I know the maximum the actual liability is and if she sells it to me she would receive more money and have less hassle

I think even in normal times a gamble on a 12 month property investment is a risky proposition.

The next 12 months are such an unknown. The BOE and others say there’s a huge boom sitting latent in the economy that’s going to erupt as soon as restrictions lift, but it’s never going to replace what’s been lost this last year (I’m only talking financially).

Others, who who aren’t economists but socialists are expecting a Great Depression to happen as soon as Furlough ends in a few short months when 10m people find out if they really have a job or not.

Either way my feeling is that this odd house boom we’ve seen isn’t just people clambering to move out of the city for a bit more of a wfh friendly place. I can’t help but this it’s partly fuelled by boredom.

I would at least wait until the Budget in 10 days. Whilst it might not have a direct effect on Scotland, it will let us know how the Gov plans to cut all the COVID stimulus and when etc. It will have a huge impact on the economy, jobs and property values etc.

Budget advice is smart.

Seems bonkers to me that there won't be a big recession after COVID. But yeah property prices keep increasing, and Edinburgh is a strong market.

Cheers. the aim is to add value via a complete refurb and also to get the title free from the stat notice - so not just sitting on it waiting for it to go up in value. It would also not be happening for a few months yet

thanks for the thoughts tho - I am an optimist, MRs TJ is a pessimist on this stuff.

I'd bet on the housing market, given the current state of the economy etc and the fact that the housing market is a really low hanging lever for the treasury to pull when it needs to give the UK a jab in the arm (eg the current stamp duty cut). I can't see them cutting off the drip anytime soon. In fact, I'd bet they'll be pumping steroids into the market for a few years to try and get the economy back to 2019 levels. After Covid & Brexit, it's going to take a lot of drugs to get there...

hey footflaps, I've PMed you..

Interesting situation. As well as waiting for the budget i’d really want to be sure I understood the potential risk from these stat notices. Sounds like you are in a far better position than most to do this but selling the asset while retaining the liability would worry me, especially if it was my pension pot...

Everything comes with risk but this to me sounds solid if you get a handle on the stat notices. I haven’t looked at Edinburgh and Glasgow specifically but I would expect the market to remain buoyant there; in the UK demand is outstripping supply. Yes anecdotally people are striving for 3+ bed houses with gardens as their flat was horrible during lockdown, but they can’t buy that 3bed without selling the flat first. If you can flip it quick enough you’ll hopefully be grand.

With regard to the possible depression; I wonder if the largest sector on furlough is retail and the service industry? If so, those still likely to get trading are likely to reopen and staff come back off furlough?

Seems bonkers to me that there won’t be a big recession after COVID.

This (covbrexitcluster****) is the biggest thing that has happened economically since forever. It could be the thing that finally does it.
However I think footflaps is right, the govt will prop it up, it's probably all we have left..

Don't forget to figure in all the fees. Stamp duty will have the extra 3% added to it and you'll be paying cgt on all the profits.

Is the council actually willing to separate the stat notice from the property? Surely then they lose all leverage

5lab - the stat notice situation is complex. But yes that can be done that way ie buy the flat and take on the liability so the stat notice costs stay with the property. Most folk will not buy under that situation so what is done if she wants to sell is a) she has to discount it to make a flat with this going on attractive adn B) when she does sell the lawyer needs to retain enough to cover the maximum possible bill which is 3 or 4 times the actual bill

I could go into more detail but basically If I buy it and take the liability she ends up with a lot more money

What’s a stat notice?

Statutory notice. A way of the council forcing repairs. Edinburgh had a special scheme that basically was corrupt as hell and on my building its been a 20 yr battle. fortunatly my "debating skills" have been honed on here and I have forced them to take a huge loss - the work should have been less than £400 000, the council spent 2 million, the will be lucky to actually recoups 250 000 from the owners. MY share was orginally billed at £130 000 x2. People have settled for !5 000

Doom,I suspect it is the flats share of eye watering common repairs. Edinburgh Council were literally scamming people a few years ago with this and 2 council surveyors and 2 building contractors were jailed. Teej took them to court and won!

Apologies for anybody who sees this graphic image at breakfast time.

http://www.bbc.com/news/uk-scotland-edinburgh-east-fife-34341605

TJ; it is Embra prices but does the risk match the reward.

Dear god, I was eating my breakfast. No need for that!

So TJagain you have pretty good experience of Stat notices, and you feel that these are fixable within budget? You are probably in a better position than most right?

The works have been done. Still in dispute about how much to pay.

I don't quite understand the post

The only thing I know about house values is that it's going crazy in more rural locations as so many folk have realised they neither need, nor want, to live in the city as a result of the CV pandemic.

We're seeing eye-watering price increases but that must mean reduced demand elsewhere - in the cities? As for Edinburgh in particular, I guess that longer term demand might also be affected by the likelihood of independence. I'd expect a bit of a boom in that event.

The works have been done. Still in dispute about how much to pay.

I don’t quite understand the post

I am talking about the new flat.
Do the stat notices apply to works that need to be done, or have been done?
I was pointing out your experience with your flat, has you well placed to take on the new flat. The thread is about the new flat, your previous shenanigans are an interesting side note...
IE the tshirt would say "if anyone knows about stat notices TJ does."

Look on the downsides, what if you had issues - whether legal or building etc - still worth the bet?

And from looking at colleagues (I work in the Gyle, although not been there for a while 🙂 ) I'm not hearing of anyone buying a flat in Edinburgh, but I am seeing folk moving out to the (far) suburbs.

Not sure about North/West of the city but decent property in the Borders is selling as soon as it hits the market. Must be worth looking elsewhere if you're after a return.

TJ; it is Embra prices but does the risk match the reward.

Back of fag packet calculations only - we would need to invest £350 000ish for a profit of £50 000+ if the market rises next spring then any rise is added to the profit market falls we make no profit. Loss is unlikely IMO

this is assuming the only will sell at that price but due to the stat notice shinanegans she would receive more cash as 1) her lawywer would not have to hold a huge retention to cover any possible stat notice charges ( she would get the excess back eventually) and anyone not in my position would want a discount to cover the risks from the stat notice

5 plus 8 - the work is already done.

the flat in question is across the hall from me thus making renovations very simple logistically

again a reason why its worth more to me. It would also mean we owned the entire top floor ( albeit briefly as it would be to sell on not rent)

ahh OK, this explains a lot. The stat notices issue is the same as your previously reported issue!

As I said, it seems you are leveraging your experience when it comes to the risk of taking on the stat notices?

As I said, it seems you are leveraging your experience when it comes to the risk of taking on the stat notices?

yes partly.

FWIW, risking my own money? Possibly. Risking someone else's? No way. I just couldn't do that.