Great discussion about the Times story this morning – house prices being slashed as up-market family homes struggle to sell.
Dominik Lipnicki and Andrew Castle live on LBC Radio.
Would you accept a drastically reduced offer for your home? Here’s the full transcript.
AC: Let’s get back to that Times Story this morning – prices of up-market family homes are collapsing as hefty property taxes and uncertainty over the economy force sellers to make big, eye watering reductions according to research for the Times. You don’t have to research too hard, to be quite frank, to know that that’s happening.
Dominik Lipnicki is owner of Your Mortgage Decisions – hello Dominik.
DL: Good Morning Andrew
AC: A very good morning to you as well. This is… it’s one of these stories which is “not news” once again. People have to get practical don’t they, about the price they will accept otherwise they won’t sell?
DL: Absolutely, what we’ve seen in 2017, especially in the last six months and especially down in London, properties over a million pounds really are not selling unless sellers are really really desperate to sell and are willing to slash prices – properties just stay on the market. That’s a real difference that we’ve seen. That said, clearly property price increases in the last ten years, you know, at some point it had to stop.
AC: Quality sells though doesn’t it still…and frankly the estate agents have something to do with this to get the instruction… They often over value to get the instruction.
DL: Indeed and this is a common problem when an estate agent comes round to value your property. We have a tendency often to go with the estate agent that compliments us on the property and makes us believe that the property is worth more than it really is.
AC: Yes. So which part of the market is being hit heaviest with this because, you know, we’re sitting here – I don’t where you are actually Dominik – but we’re talking about houses between a million and two million not shifting… and I know why that is and you know why that is as well, because the transaction costs – Stamp Duty – are way too high. That’s why people are doing basements – they’re going up, they’re going out to the side, they’re doing everything but they’re not moving because it costs too much. But when we start talking a million to two million, there are people in other parts of the country just going… you’re absolute idiots to live in such an expensive place aren’t you?
DL: Absolutely. If you look in the south east and actually I’m in Surrey and Surrey is a perfect example of this, the market that has been hit the hardest as you rightly said is between a million and two million – yes it is the stamp duty – it is how much it costs to buy the property, but it’s also uncertainty. It’s uncertainty over Brexit and the economy as a whole. And many of the properties in the south and the south east are funded by the City – so people earning a lot of money working in the City and of course there’s plenty of uncertainty with the jobs there and of what will happen after March 2019.
AC: Yes. So George Osborne, going back all those years, is there any chance that Philip Hammond’s going to unwind some of these stamp duty percentages? I mean it is absurd how much is taken as a transaction charge. It’s stifling the market. People don’t move so demand stays the same, supply goes down because it’s so expensive. I don’t understand why, why he doesn’t free the market. I don’t like the government interfering in this way… do you?
DL: No of course, look we do not want to pay taxes that are as high as that, you know, if you buy the property we’re talking about – a million and a half – it’s not far off a hundred thousand pounds in stamp duty. That said, Philip Hammond has already tried to help although I think it’s nowhere near enough with first time buyers.
AC: That’s a pathetic gesture. That was a pathetic gesture…
DL: It really is yes, it really is. But I don’t believe that there is any political will to change stamp duty for people buying property of a million to two million pounds…
AC: So the market doesn’t get freed up then. It’s as simple as that. So instead of just talking about it and yacking about it, why don’t they actually do something about it? Everybody knows that the part of the market above above a million quid, which is more than anybody really wants to admit – it’s a big part of the market – it’s not going to shift until you change stamp…
DL: Absolutely – it’s huge and you could also add to that the uncertainty over the next year or two. The problem we have and this isn’t a Tory or a Labour thing – whatever government is in – they do a lot of talking but very little action. And I think that the first time buyer changes are a perfect example of that – it’s headline grabbing but that’s all it is.
AC: Yeah I would imagine that. I wonder what should be done with supply… I mean 300,000 new properties a year is the aim – it’s just not going to happen. Why can’t we be honest about this?
DL: Absolutely it’s not going to happen. Every year we hear this from the government – ambitious targets but when you look at what they’re actually doing about achieving those targets there is very little substance in it. The perfect example of this is the amount of housing ministers we’ve had (laughs) over the last ten years and that isn’t even a cabinet position.
AC: Yes – I think Barwell was quite good wasn’t he?
DL: Yeah – look there have been some good people wanting to do good things but we need the government behind it and we haven’t had that. And I don’t think Theresa May is treating this seriously at all.
AC: Do you think they’re a bit busy with Brexit Dominik?
DL: Well (laughs) many would say that – I think we’ve seen that the government, you know, all that we’re talking about is Brexit and nothing else gets done be that the NHS or be that housing, it’s all second place to Brexit.
AC: Dominik Lipnicki, owner of Your Mortgage Decisions, thank you very much indeed.