From the BBC:
House sellers have dropped their asking prices for the second month in a row, the property website Rightmove says.
Sales have been held back by the reality gap in the market, with asking prices rising for most of this year while selling prices have been flat. However, Rightmove says asking prices dropped by 2.1% this month after a 1.6% fall in July. The average asking price of £231,543 is now 14% higher than the average £203,528 selling price. That selling figure comes from the government's own monthly house price survey, produced by the Department for Communities and Local Government (DCLG).
The gap between asking prices and selling prices is even wider if data from other house price surveys is used. The Halifax puts the cost of the average home at £163,981, and the Nationwide puts it at £168,731, so sellers and their estate agents could be overpricing their properties by as much as 41%.
I must admit to being eternally puzzled by the discrepancy between the average house price of about £165,000 according to Halifax, Nationwide, HM Land Registry and HM Revenue & Customs; and the average price of over £200,000 according to DCLG and Rightmove.
For sure, Halifax and Nationwide don't include cash sales, but:
a) HM Land Registry and HM Revenue & Customs certainly do. That's joined up government for you, I suppose, and
b) Is it really plausible that cash buyers would outbid mortgage buyers by £40,000? I thought the whole point of being a cash buyer was that you can slightly underbid, but your offer is still likely to be accepted because there is less messing about.
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6 comments:
These days; I suspect that the money laundering laws make it more likely that a delay will occur with a cash sale than with a mortgage sale.
It happened to me with the sale of my house; and some friends with the sale of theirs. The buyer(s) were constantly saying "I'm just transferring the money".
So it suggests utter greed, if not scam. LVT is beginning to look more appealing as we go along here.
OP, surely not if you're transferring the money from a legit UK bank account and you duly declare your National Insurance number on the forms (do you still have to do that?).
JH: "LVT is beginning to look more appealing as we go along here."
Indeed. The point being that the opportunity cost of owning a house with no mortgage is very low (all you lose is 1% bank interest on the money you could free up, and this is in most cases nowhere near enough to pay rent on something similar) and the real cost of buying a house is the price x mortgage interest.
What LVT would do is put buyers and sellers in a very similar position, the cost of staying a house and the cost of buying it would be very similar, ergo better decision making overall.
A lot of transactions recorded in the land registry will not be for the entire property. Some may represent a a buy-out from a joint ownership. This is of course not clear as with the absence of cash purchases.
I'd hazard that there has been an increase in cash purchases with the popularity of BTL, as a number of people found they could remortgage their main residence and pick-up a little rental property out-right. A lot of holiday homes would fall into this category too. A reform of the land registry is overdue IMO (do we really know who owns the UK - it might open a few eyes?) and of course it would help smooth the way for LVT.
OP, surely not if you're transferring the money from a legit UK bank account and you duly declare your National Insurance number on the forms (do you still have to do that?).
I have no idea; it was the buyers in each case that caused problems. They were each bringing in money from off shore accounts.
If someone asks you "discount for cash?", ask where the cash is now, because if it's not in a UK current account, you really aren't gaining much over a mortgage-bound buyer.
It seems that the DCLG survey is based on a sample of mortgage completions, so it doesn't include cash sales either.
However, their figures are "mix adjusted". And that means:
"The house price index is mix-adjusted to allow for the fact that different types of property are sold in different periods. House prices are modeled using a multivariate fixed effects regression model ("hedonic"
model) incorporating several factors that produce a large number of "cells" (variable combinations such as first time buyer, resale, and detached house in London). Once the monthly price estimates for all cells have been determined by the model, they are combined with their appropriate weights to produce that month's mix-adjusted average prices for all the required output categories. Weights are calculated once a year based on the relative numbers of transactions during the previous three years, given by the Land Registry data. The index is an annual chain-linked Laspeyres-type index."
I think that means the DCLG figures are cobblers! ;)
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