glasgow-property exterior. Phil Spencer Talks Credit Crunch And House Prices

Location, Location, Location: Index Phil Spencer's House Price Advice

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Date Published:
03/11/2008

Q: What advice do you have for people running the risk of negative equity?

Phil: Negative equity is an interesting one. People facing negative equity will be those who bought towards the end of the boom, as it were, and who didn’t have a huge deposit.

Phil Spencer Talks Negative Equity

The market has fallen 15 per cent so far, so if you bought at peak prices with a 15 per cent deposit, you are now facing negative equity, which is a situation where the amount owed on your house is more than the current market value of that property.

Now, whilst this might not feel particularly nice and, in fact, it might feel decidedly awful, if the value of your home is less than the mortgage you have on it, the problem really only comes home to roost if and when you need to sell that property. If you bought towards the end of the boom, in the last year to 18 months, if you bought it with all the right considerations such as how much you bought it for, how long you can live in it for, whether you can add value and whether you’ll still be living there in five years time, then you shouldn’t be looking to sell it at the moment and the problem shouldn’t come home.

With the economic climate as it is, and the danger of the increase in the numbers of unemployed next year, if you bought the right house and paid the right price, but lose your job over the next year and the deposit that you once had has been eroded due to markets falling, and liquidity hasn’t returned to the mortgage markets so you are unable to remortgage, then you’re in a very nasty spot. But until that situation arises, while negative equity might not feel very nice, it doesn’t really matter.

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  1. Dear Sir, What is the procedure when a person likes a property that has been introduced on the TV program 'a place in the sun'? please advise, thank you, Selva Joulakian
    Posted by selva on 15/10/2009 19:56:51
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  2. Hello Phil, I bought a flat on the site you were visiting today,(copper quarter, swansea) it should have been completed in 2 years, but here I am 2 years on and the site isn't even 1/3 complete, so the cost of my flat has reduced due to the current climate as well as not being a complete site. There are no morgage deals available and part exchange is not an option as I would need to add 30% to orginal cost. What is my position with the developer as the site is not complete and finding out when it will be complete, I have approached customer services but have no certain answer. There are many issues as it is not complete for example :with parking as the road will not be handed over to the local authority until complete, people park everywhere and no fines can be enforced until the governemnt own it, people are parking on pavements and curbs are being damaged, the maintenance is also an big issue. Is there any governing bodies who can assist me in getting some real answers that are realistic? thanks
    Posted by michele on 19/09/2009 18:08:27
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  3. Phil, as a first time buyer I find myself in a very common situation. Although house prices have dropped banks are unwilling to give a good mortgage deal unless you have a minimum of 25% of the price of the house you intend to buy. Any tips?
    Posted by Kieran on 26/07/2009 12:23:35
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  4. Hi Could anyone please tell me how to get the price of my house in 1984, Which the council tax should be based on... Please help me as I have searched all over internet and all i got was a virus on computer. No one seems to give you a price this far back,???? I have seen and heard on news that the council have made millions of over banding our houses.. thank you if you can help.. kaz
    Posted by kaz on 28/06/2009 11:10:31
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  5. I want to put a offer to buy a house in Clapham - SW4. The asking price is £500k.It is my understanding that house price is 25% less than 2007/06.I looked at land regisrty - where the simmiliar houses on the same road were sold £380k in Dec 2006. Can you please advice me what would be the correct price range offer I should be making ? Kind Regards Sonali
    Posted by Sonali Parekh on 22/06/2009 17:08:13
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  6. Hi there,in these days of saving money I've tried to reduce my council tax by asking for a reassessment but I can't find a website that will give house prices back to 1991 (date of valuations).The council have this information but will not release it(freedom of information?). I can find selling prices for 2000 but this is insufficient. can you help please?
    Posted by steven vaughan on 20/05/2009 14:45:55
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  7. Hi Phil & Kirstie, my hubby and I are huge fans of your shows. We've just sold our unit and looking for a larger property to move into. We know the areas we want to move into but properties aren't coming up that frequently or are sold before we've even had a chance to look at them. What would you suggest? Would it be worthwhile doing a letterbox drop to houses in our preferred areas?How do we get to the estate agents to contact us before the property even comes on the market? Any advice would be greatly appreciated! Thanks
    Posted by Tanya, Australia on 11/04/2009 01:30:20
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  8. We had an offer on our property 23/11/08. We have still not exchanged and I dont know what to do. Our solitors say's that the property market is bad and just hold on, but the estate agent has taken our property off the web site. aOur solitors has come up with all kinds of excuses. Like the buyers are in Ghana. If the buyers really wanted our property they would know by now when they would like to complete. The solitor and estate agent are friends. Do you think this is fishy? Kind Regards
    Posted by Denise Caley on 02/04/2009 12:44:32
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  9. Hi Kirstie & Phil, We watch your show every sunday, in the Netherlands, and we love it. We are planning on moving to the USA and we were wondering if you might be interested in doing a show over there, finding a house with us? If not, maybe you can give us tips of how to go about buying a house abroad in an area your not totally familiar with. We hope you can help us out.
    Posted by Jalmar & Jonna on 27/03/2009 13:53:48
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  10. I have a good deposit, and I am looking to buy a house, I have seen the program and I would like to know where I can get some help for it.If you could please let me know as much information as possible I would appreciate, specially because I am foreign. Do you know a good website apart find a property and Right move where can I find houses? Is it a good idea to buy a reposessed house? Where can I get information about it?
    Posted by Wilma on 20/03/2009 18:18:17
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  11. I have just found a valuation for my flat on Mouseprice.com but how reliable is this website?
    Posted by Katherine on 18/03/2009 19:32:42
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  12. Hi,Phil and Kirstie, We have lived in Crystal Palace for ten years and like the area. However we would like to move from a mid terrace to a semi or detatched house. Could you give us some advice as to whether we stay in Crystal palace or move out where we can get more for our money. Many Thanks, Caroline Meek
    Posted by C Meek on 16/03/2009 14:47:40
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  13. How do you contact people like Phil & Kirstie and what sort of cost is it for using this process? Does it mean you still deal with estate agents directly?
    Posted by Lorraine Fletcher on 23/02/2009 21:50:40
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  14. Phil, we have a 3 bed end of terrace (850sq ft) in wimbledon but with a toddler and a baby on the way are rapidly outgrowing the space. We have a gd sum of cash (inheritance) and have checked with the bank about borrowing a further 90k. This means we can sell our place but buy in the same area and upgrade to a bigger 4 bed (1200-1500 sq ft). Our LTV would be about 50%. Alternatively we could extend our current house but there is some opportunity cost to this (compromising 1 bedroom and some of the garden plus the chaos with 2 small kids). Everyone keeps saying now is a good time to move if you're upgrading and have the cash but we've only been in our current place 2.5yrs. Any advice gratefully received!!
    Posted by Grahame on 23/02/2009 20:16:13
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  15. Hi - I am looking to buy a new build and found the perfect property, that was until I went and viewed it. It is an L-Shaped house with Hardieplank siding on one 'leg' of the house. I have been put off as I never wanted the maintenance involved with a wooden house and, although not wood, it still isnt brick. As the house ticks all the other boxes as Phil & Kirsty would say, am I being over-cautious? Anyone know how much maintenance fibre cement board really needs and how long will it last? Thanks
    Posted by Midway on 17/02/2009 15:53:27
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  16. Has anyone found how or where you can register to participate in the show? I have looked all over the site and find now clues. We are planning to sell our garden for development and rent or sale our house and would love to have the team help us find a new location and possibly a holiday home as well.
    Posted by john on 22/01/2009 14:11:38
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  17. We are looking to put in an offer on a property. We plan to modernise it and sell it. How can we find out how long it has been on the market and how many price changes there have been. The agent isn't being very forthcoming with this information unsurprisingly!
    Posted by Sandy Prater on 20/01/2009 16:24:17
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  18. we have a plot with d.p.p. in our garden we would like to sell our bungalow and then build the new one but all agents have advised us to at least get the shell up first so the buyers can see whats next door unfortunately we are pensioners and can't afford to do it where do we go from here? will we miss the boat with builders available and good prices for materials?
    Posted by carol henshaw on 13/01/2009 21:45:10
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  19. The bigger estate Agents in our maket town seemed to have clubbed together in asking for between 1.6-1.8% based on the asking price rather than the selling price. Is this now common? It seems to me that that agent isn't working for me if they have a fee based on the asking price it doesn't matter what price they sell for-they have their money. Grateful for your views
    Posted by Howard C-S. South West on 15/12/2008 19:55:06
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  20. Hi again, Just as I hit send I was like ... one more thing!! Auctions! Scary for some grovy to others. 1) how can I keep update date will houses going to an auction anywhere in the country from a paticular area. Will i need my own tv show? 2) Are housing prices at auction also being affected by the recent decline in property value? 3) Is it a bad time to start a second career in property development? 4) I have family in the states and hold to be with them very soon. Would it be a better investment in the US market or the Uk. From what I hear US prices are going down by up to 40%. they say it will have a knock-on-effect as it always has to the UK. Where is your money best invested?
    Posted by Roy North East on 27/11/2008 19:59:47
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  21. Hi Phil & Christie, I sold my family home gone August (taking almost 12 years to achieve) and decided to rent for a while. I'm having the same issue as many on here trying to invest back in the market with sellers over valuing their homes (which I cannot blame those that have negative equity). I'm doing my research as to when the buyer bought the property, and could they have remortgaged, even going to lengths to find out if they are a motivated seller. I seem to fail at the last herdal "THE BID". I bid fairly taking in to consideration the condition and the cost to put this right, with a market also looking to lose another 10%. When viewing I am really soft. is it an idea to point out all thats bad to the owner? Because come the kitchen room I could be wearing a few pans.
    Posted by Roy North East on 27/11/2008 19:45:44
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  22. Hi Lana The most important thing to say is that your daughter should not over commit herself any more than she has. Secondly, she needs to find out why her flat isn't renting. What are the local agents saying? How many agents is it on with? Is it prominent on their website? Are they pushing it for her? Is she canvassing local websites - perhaps there's a hospital or university nearby she can put her details with... etc etc. Selling her flat is not a great option at the moment - although around February/March, the market traditionally picks up a little - and there are signs that sales are increasing currently. However, they're still very low and buyers are of course asking for a discount - and it is a buyers' market. Can I suggest you have a look at this feature: http://www.channel4.com/4homes/buying-selling/selling-property/ essential-guides-and-advice/ 30-ways-to-sell-your-home-in-a-flat-market-08-08-15_p_1.html. It might help.
    Posted by Lucy 4Homes Ed on 20/11/2008 14:54:46
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  23. Hi Kathy I think you can do this with most search sites - try ours at http://channel4homes.nestoria.co.uk/. If you type in the nearest big town, you'll get a range of properties to look.
    Posted by Lucy 4Homes Ed on 20/11/2008 12:29:55
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  24. Hi, Does anyone know of a website that helps when looking for areas that you can afford to live. There are plenty of good sites but you need to know what area to search in. I would like to put in the amount I can afford and then be given the areas that I can afford.
    Posted by Kathy on 19/11/2008 20:03:20
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  25. My daughter owns a flat (with a mortgage)in the Northwest of England. Her job has taken her to the South of England, where she is renting a flat. She is finding it very difficult paying for both. She was in negotiations with a developer selling new properties in the South who said they would do part-exchange on her property, unfortunately they changed their mind at the last minute. My daughter is finding it very hard selling her flat for the price she bought it for. Originally she paid a £12,000 deposit for her flat and is in danger of losing that, which means if she sells at a lower price she will not have enough deposit to put on her next flat. She has tried renting her flat, but as yet it is not rented. She would prefer to sell her flat rather than rent it. Is there any advice you can give my daughter on what steps she sould now take, as her situation is getting desperate. Thank you Lana
    Posted by Lana Hogaeth on 19/11/2008 14:16:59
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  26. Hi Ben I wouldn't encourage gazumping, as it's called - it's not nice. But if your vendor is dragging their feet, I think it's perfectly reasonable to have a conversation with them - if nothing else, it might hurry them along.
    Posted by Lucy 4Homes Ed on 18/11/2008 18:48:16
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  27. Hi Karen There are various ways of looking at this. You might have lost £15K, but any house you buy now will be worth less than this time last year, too. So, assuming you're trading up slightly, or buying a house for a similar price to your own, you won't be losing out significantly. As for renting out your home, before you even go down that route, you need to check what the market is doing in your area - whether there's a glut of properties to rent on the market, what it would get, etc, before you go down that route. And of course, while you're renting, the market could begin to climb again (although it's not predicted to at the moment). Tricky decision - in this situation, I think you need to work out what you can afford and ensure it makes you happy...
    Posted by Lucy 4Homes Ed on 18/11/2008 18:46:06
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  28. Hi RichardH You're right - but I heard a report today saying that the rental market is flooded with empty properties for this precise reason. I think any sale is a negociation. If a vendor can afford to meet a buyer's offer (if, for instance, the vendor's new home has also been similarly discounted), then he/she should drop. It's a buyer's market, of course, but only if vendor's are prepared to drop their prices in the first place...
    Posted by Lucy 4Homes Ed on 18/11/2008 18:40:54
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  29. Hi Hayley It is a buyer's market but it might be that the vendors can't afford to sell at the price you're offering. You could try going back to them again if the houses are still on the market, underlining the strength of your position. Failing that, the best you can do is to enter a period of negociation. If you want a house badly enough, and you're going to live there for some time, you may have to pay a little over your calculations to get it. Or, keep looking...
    Posted by Lucy 4Homes Ed on 18/11/2008 18:38:46
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  30. Hi Phil My husband & me would like to move to the essex country side, but not sure of where. I have tried to put my name down for you & kirsty`s show but i seem to be going wronge somrwhere as it does not let me in.We would really love to be on the show & have both your help. yours sincerely maureen& terry o`brien
    Posted by maureen obrien on 18/11/2008 17:33:31
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  31. I enjoyed the programme but I agree with Sarah-Phil really did blow it for the couple who were looking for a home not an investment. His little bit of showing off about his knowledge of the market was as clearly wrong as his spatial ability when he insisted on reversing another couples car into a space which was clearly too small.Despite what Kirsty and Phil say they are still perpetuating the "How much is your house worth?" myth which has contributed to the current housing situation.
    Posted by Niall on 18/11/2008 16:04:09
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  32. Good Afternoon I watched your propery special programme last night and there was some advise given for 1st time buyers with regards to lending money. Getting interest free loans, renting your property and eventually buying it?? or help for 1st time buyers with less then a join income of £60,000. I have been looking on the website for information on this but can find it. Hope you can help me and advise on who and where to go for this kind of help. Thanks Louise.
    Posted by Louise Hearsey on 18/11/2008 15:23:21
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  33. In all the programmes available for viewing I have always found LLL to be one of the more factual and well presented, with subtle propaganda, unlike the BBC. It is with regret that I find that despite the fact that last night’s (17/11/08) viewing consisted of confidence building, which I, like many others, want to believe, the hypocrisy was just too much to stomach. Why go to the effort of affording us more accurate research, facts and figures, showing regional percentages of the fall in house prices and then knock nearly £50k off the asking price for a couple that have already been on the receiving end of such a deal. We seem to be forgetting the key role that the Estate Agents and Property Developers have been playing over the past decade. Living in each others pockets, taking the control away from buyers and sellers for big cash sums hidden in the paperwork AND the unsurpassed support they have received from the Banks, bolstered by Surveyors for unjustified fees... ALL conveniently being ignored by the media. Phil, your actions clarified that the Estate Agents have no credibility, leaving your credibility questionable on the basis, that %u201Cgreedy%u201D puts you back to the start. You clearly blew it for the couple that just want a home and to get on with their lives. Location, Location, how-low-will-you-go?!
    Posted by Sarah on 18/11/2008 10:06:52
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  34. Hi Phil,Kirstie Excellent program as always. I found it difficult to hear your negoiations on price but it helped me to finally accept my feared reality - I need to reduce again ? how much, off to check out ! Then hopefully you may give me the opportunity of your joint help buying applicatioin form virtually ready to send !! All the best.
    Posted by peggy on 18/11/2008 09:15:53
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  35. Please, please can we have your advice. We have SOLD our house and have the funds burning a hole in our pockets. We have put reasonable offers in on two properties, one a second hand house and the other a new build and have been knocked back and had offers refused on both properties. Both offers were 'calculated' as recommended in the survival guide show. What can we do to secure a sale for us on one of these houses? We thought it was a buyers market.
    Posted by Hayley Parsons on 17/11/2008 22:51:53
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  36. Having just watched the problem, my conclusion is that it is very foolish to sell your house at current market rates, hoping then to buy the house of your dreams at the same realistic price. House after house that buyers went for on this program had the vendors refusing to sell at a realistic price - and just putting the property on the rental market.
    Posted by RichardH on 17/11/2008 22:36:00
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  37. Hi Phil I bought a property 2 years ago, which I had always intended to sell about now in order to move to a different part of the country. Fortunately I had a large deposit so I'm not in negative equity, but I'm still looking at losing up to £15k (9%) compared to what I paid for it. Am I better off not selling, but renting out my property, and living in rented accommodation myself, until prices recover? That would have a lifestyle effect as I'm planning on starting a family soon. My town has a lot of properties similar to mine so I'm also worried that when prices recover, the market will be suddenly swamped. Are different parts of the country expected to fall/rise at different rates and times? Thanks.
    Posted by Karen Buttigieg on 17/11/2008 13:14:33
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  38. I'll be watching just to see if this is for real or is some form of joke. I can't believe even these two would have the reckless audacity to provide investment advice that would lead to hardworking families buying in the market now!
    Posted by roy on 16/11/2008 13:33:10
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  39. Hi Phil, my partner and I are in the process of buying our first house so I will watch your next show with interest. Our offer was accepted in September but not a lot has happened since because the vendor needs to get probate sorted and has been not very efficient, indeed to my knowledge I don't think she has even applied. Since our offer was accepted houses have decreased further so what would your advice be when renegotiating? Since our offer was accepted our mortgage provider has "changed their lending criterion" so this also compounds our situation since if the vendors probate isn't sorted out soon we will need to find another £10K from somewhere to get the same mortgage deal.
    Posted by Ben on 12/11/2008 15:38:47
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  40. Hi Mel How rude! I doubt Phil would dare broach the subject...!
    Posted by Lucy 4Homes Ed on 12/11/2008 14:44:18
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  41. Phil, Please could you ask Kirstie to update her dress code its a bit dated we go from flower patterns to polo jumper to long trench raincoats what on earth is she thinking!
    Posted by Mel on 08/11/2008 14:49:55
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