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Hello, I have question for anyone who wants to contribute please.... How do you value a property in a 'hot' or quickly inflating market? For the last year or so, I have found it really challenging to confidently assess the value of residential property in the UK. The normal method I would use, which is mainly Rightmove/Zoopla sold prices for the street and immediately surrounding streets has started to bear very little resemblance to what properties are selling for in the current market. I started to pay more attention to the 'Under Offer' section on Rightmove to get a sense of buyer demand on pricing, but for most properties this is currently significantly higher than sold prices...showing that demand is causing fast inflation in most areas. I would previously usually ignore 'For Sale' prices as these are estate agent valuations, which are generally optimistic and often end up being negotiated down or reduced by the seller. However, it does seem in the current market that there are less properties being reduced in price than in previous years. As the majority of properties are bought with residential mortgages, RICS surveyors are obviously approving the valuations on these properties, even though they are often 10-30% higher than the previous sold prices in that local area. I would really like to get a better understanding of how this calculation is made. Are there certain tools, methods, formulas etc (other than the ones I mention in this post) that can be used to confidently tell that a property is correctly valued when it is priced significantly higher than previous sold prices in that area? I always used to ignore the Zoopla home values estimates https://www.zoopla.co.uk/home-values/ - these are so wide ranging that I felt I couldn't use them to accurately predict what most properties would sell for. However, recently I realised that they presumably include 'under offer' prices and some element of % market inflation into their value calculations...and now I am actually finding that the 'High' estimate in this tool is a closer indication to what most properties are selling for than using Rightmove sold prices. Do you include an element of market forecasting in the valuation, as a way of future proofing the risk? For example, if the Savills residential property forecast for that region shows a predicted 4% increase in the next year...would that be used as a buffer to offset the lack of proof available from sold prices due to the inflated value being paid for the property? It seems that as long as the mortgage deposit (e.g. a minimum of 10% for residential and 25% buy-to-let) is more than the uncertainty or margin of error around the valuation, that lenders are probably not too bothered about inflated values, because they know they could repossess the property and sell it for enough to cover their costs and profit? Obviously this scenario is very bad for the property owner who overpays and then has to sell but unfortunately one of the consequences of a housing crash. Finally, auction guide prices. These would usually be set at least 15-25% below what the same property would achieve on the open market, based on sold prices. However, I have recently looked at some new listings for upcoming auctions and many of the guide prices are higher than Rightmove sold prices for the area. This suggests to me that even the 'discount' end of the market is undergoing such strong inflation that valuing a property is more of a leap of faith than a considered calculation at the moment. How do you know that the prices properties are selling for are not overly inflated and would cause negative equity if the market crashes in the next few years? Obviously choosing high yielding BTL properties with the intention of holding them long term would mitigate this risk to a certain extent...but it would mean you wouldn't be able to remortgage to withdraw funds for further investment for potentially quite a long time. Any feedback and advice would be appreciated please. I am interested from both a BTL and flipping perspective, but also as a home owner. Many thanks, James

I’d like to start a conversation about macro-economics and the effects that it might have on property investing. In particular, I’m going to challenge the notion that house prices always go up and highlight that the price rises which have been enjoyed by property investors for the past generation have been largely due to the steady decline in interest rates. Ultimately I’d like to find clarity on the question of whether property investment is still a good idea today and if so then is the same formula that worked previously still the best approach. I’ve tried to research this topic thoroughly but please do disagree with me and offer alternative ideas. What I say relates mostly to buy-to-let (BTL) investments that involve a mortgage. A) Let’s start with some fundamentals: property investors generate profit from two sources: rental income and capital growth. With rental yields where they are today (around 4-6% gross) it typically works out that the rental income is similar to the running cost of the property, and so the investor relies on capital growth to actually make profit. If you knew house prices were going to stay still for the next 30 years, would you still be interesting in BTL? B ) Having established that capital growth is important, let’s examine what causes it. For people to pay more for houses they have to be able to afford to pay more and this generally means one of two things: either they are earning more (wage growth) or they can access cheaper mortgages (interest rates falling). Rob & Rob have often talked about affordability on their podcast and explain how it’s this combination of wage and interest rate that determines what people can pay, not just how much they earn. Interest rates have been falling reasonably steadily now for several decades, meaning that year on year buyers have been able to afford bigger mortgages, pushing up house prices. This is demonstrated by the fact that, over this time, the house price-to-income ratio has increased substantially but the mortgage payment-to-income ratio has been relatively unchanged. A research paper by Victoria Monro of the Bank of England [1] estimated that over the past three decades about half of the housing price growth was due to wage growth and the rest due to falling interest rates. Therefore, if interest rates had not fallen, we would have seen half the price growth over the past three decades. C) So what happens next? Assuming interest rates will not go negative, two things can happen: either rates stay low or rates go up, and surely they will eventually go up. This means that investors will be relying on wage growth alone to push property prices higher and when rates do rise this will have an opposing effect as buyers are faced with higher mortgage payments. If rates slowly rise over the three decades back to the point they were 30 years ago, might we expect the roughly equal contributions of interest rate changes and wage growth to cancel out and house prices stay flat. D) Does this present risk to property investors? I’d really like to hear some opinions from you all. In my eyes there are some significant risks: If I were to purchase a BTL today and house prices stay flat, I might make a small or zero profit on the rental income. But this scenario is likely to occur as a result of interest rate rises, in which case my costs are going to go up and I could find myself in a scenario where I’m making a loss each year on running the property and there are no price rises to bail me out. If rates rise especially fast then house prices could even go down, but I’d be surprised if central banks would allow this to a significant extent. Any thoughts? E) Is there a particular strategy that could be safer? Please do make some suggestions. I for one have been wondering whether the era of capital growth is coming to and end and instead investors should be seeking to maximise rental income rather than capital growth. This would sustain a larger proportion of returns when the growth stops and give a stronger cushion as interest rates rise and increase the mortgage payments. Conclusion I’m proposing that rising interest rates over the coming years are likely to counter the effects of inflation and leave house prices standing still. This means that property investors no longer be able to rely on capital growth as part of their strategy. Furthermore, investors face a risk that their portfolios will no longer be viable with higher mortgage payments. Contrary to popular recommendation, higher income (lower capital growth potential) investments might be a safer bet for the next generation of investors. Ultimately, the central banks have control of the interest rate lever, will their decisions be likely to help or hinder investors? But what about the 18 Year Property Cycle?!? Aren’t we entering the boom phase?? Well I’ll be honest, I’m not sure I believe in the 18 year property cycle... it’s often easy to pick out a pattern when you go looking for one, that doesn’t mean it means anything. Perhaps the 18 year cycle has some validity resulting from human psychology and it certainly seems like people are expecting house prices to go up right now. But I believe there are larger forces at play – these people need to be able to afford it at the end of the day. We might see some more growth still, I’m not predicting a crash; new 95% mortgages could push the market a bit higher still as could wage growth. But otherwise the economic levers that inflate house prices don’t go any further, and eventually will start going back the other way. This won’t necessarily result in prices going down, if central banks decide to avoid that. But it could mean prices staying flat and costs going up, potentially rendering traditional BTL strategies unviable. Please feel free to agree, disagree and generally offer your thoughts on these fundamental issues. [1] Read abstract and see Table 3 from https://www.economic-policy.org/wp-content/uploads/2020/10/9100_UK-House-Prices-and-Decline-in-Risk-Free-Real-Interest.pdf

Hi There, My name is Harry and I'm 23 and researching where to buy my first property. I've had some ideas of places that caught my eye (derby, Gosforth, Stafford as it's near me), however I visited Wakefield recently and it seemed like a very nice place. I've listed to the podcast for almost a year now and caught up on a lot fo the early stuff and listen every week. I know Leeds is a very popular place to invest at the moment and so I feel Wakefield would be a good place to invest and after doing some preliminary research it seems I'm on the right track. However, with not being very experienced as an investor and also not having been to Wakefield many times (so not knowing the area too well apart from the online research I've initially done) I was wondering if anyone could give me a breakdown of the good and bad areas of Wakefield so I know where to target my search. Any background/extra info on Wakefield and perusal experiences would be much appreciated and I'd be more than up for a chat to get the low down. I'd also like recommendations on good quality resources for when/if I decide Wakefield is for me, such as: - Letting Agents - Property Sourcing companies - Maintenance (plumbing, electricals, landscaping, interior design, building work) - Mortgage Advisor (local) And other things of this ilk. Any information and advice given is much appreciated and I look forward to hearing what people have to say about this area! Thanks, Harry

Hi, I was looking for the best advice on how to approach on offering less on a property and how much less I could do. The property was first listed for £100k on 19th July 2017 it was then lowered by 5k to 95k on the 4th October. So in less than 3 months it has been lowered and now we are in March 2018. I am a first time buyer into buy to let so looking to get it as low as possible. 75-80k would be where I want to be buying. What is the best approach when speaking with the estate agents and do you think this type of discount is reasonable considering time on the market? Thanks!

Hi All I put in an offer in a terraced house in Plaistow, London for £346K. This was accepted by the seller. The survey has been done by the mortgage company who estimate the cost of the property to be only £330K. What can I do about this lower value? I would obviously prefer to pay the lower value. Can the seller insist that I pay what I offered? thanks in advance