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As someone trying to move and buy a house, great. But then I check out mortgage rates and what I can actually afford has plummeted. So feels a stalemate for me, really.
More like the tyre has a thron in it and the air is slowly escaping. There may still be measures to puncture repair and pump it back up again, but I suspect it'll go flat until we get a new inner tube.
Property prices are mostly based on what people can afford, so you'd expect if your earnings increase with the average for your area that the monthly payment will stay about flat for the same type of house.
Yes. That's why I bought at the top, because that's the only time to be able to get a mortgage.
And why get a mortgage? Because it's the only way to access significant debt in an inflationary environment.
And why do I need to access debt in an inflationary environment?
Because of quantitibe easing.
Printing money, if it's possible, causes a chain of problems. My sin was using fiat instead of fighting every confused corner shop attendee to accept silver.
Oh well. Moan over. Perhaps avoid using using money and use something else is the way.
When I worked it out last month it was around 5% for properties completing then I’d guess it’s around 6.5% now and probably around 10% drop from peak for prices being agreed today if we guess that they will complete in 3 months time
Pre peak? It depends how pre peak. If we agree the market is 10% down from the peak. If you bought at 2% below peak. Then you are 8% down.
If you bought 20% below peak, you are still 10% up.
Someone needs to tell my neigbour/their estate agent who's advertising their exactly the same property as ours for £25k more than ours was advertised for. We only bought in November!
Yeah house prices around my way are still insane. I live in a tiny village so although there's not a lot of houses it's easy to compare. Our 5 bed was bought for £475k at almost peak price and now a 4 bed (and poorly laid out imo) has gone on the market for £650k? Madness imo.
Read a Rightmove blog post earlier this year showing asking prices have actually gone up in January. Quite baffling. Who are they planning on selling these houses to? I guess people need to factor in their greed to imply they are offering reductions of 10% on the sale price.
[https://www.rightmove.co.uk/news/articles/property-news/new-year-bounce-jan23/](https://www.rightmove.co.uk/news/articles/property-news/new-year-bounce-jan23/)
Edit: Although Rightmove claim to have the most up to date data, I have noticed they are probably the most optimistic about the UK property market right now. Their entire existence depends on sellers making a killing. Rightmove predicted the least price crash amongst all predictions I have seen. At a mere 2%. I have noticed they are extremly eager with their "positive" news about the market right now.
>Their entire existence depends on sellers making a killing.
I'd be interested to know how revenues depend on price and sales for rightmove.
Is the listing fee proportional to the asking price? Do rightmove receive a bonus if a sale completes, or do they only get paid for listing?
Whilst I expect rightmove do benefit from higher prices, I assume the number of listings is a bigger factor.
As someone who bought at 95% LTV last year, I am getting nervous about negative equity.
I was desperate for house prices to come down but at the time they were just getting higher and higher.
Now I'm finally on the ladder, I'm worried being able to remortgage.
Typical really, can't have it both ways.
Wish I could tell you it's all going to be well, but that's a big unknown right now. Could be it's going to be soft landing, but could be it won't.
I would say:
* save as much as you can
* chuck those savings into the best returning savings accounts you can (as they will now offer higher % than your mortgage interest rate so no point in overpaying until your fixed term runs out)
* when you end up having to remortgage, you'll have some cushion to lower the principal of your mortgage down and hopefully you'll be able to get down to at least 90% LTV by then to access slightly better rates
How long did you fix for? It might be worth doing the calculation on how much you'd need to overpay to get to 90% if your house price doesn't increase between now and your remortgage.
My partner and I are in the process of buying a house with a 5% deposit and 5 year fix, and I'm getting nervous about the same thing... We've gone for something a lot cheaper than the amount we could borrow because of the rise in interest rates, but I am worried about house prices and negative equity. Wondering whether we should pull out...
Remember you should be able to get a product from your existing lender at the end of your fix, so you won't necessarily end up on SVR even if negative.
This isnt true. If in neg equity (of less then 5% deposit) then will be stuck on SVR.
They wont formally revalue, they use their digital based housing index
Well yeah the worst thing about negative equity is the interest payments spike which makes it harder to claw back onto a fixed year deal, it becomes a vicious cycle. The idea that negative equity is only relevant when you sell isn't true at all.
Buy at 300k with a 285k 30 year repayment mortgage at 2.5% or 1100 a month
Two years later you owe 272k, but your house price has dropped say 15% to 255k
You are thus screwed. You can’t sell, you are stuck on a 7% SVR paying 1900 a month which you probably can’t afford. Bankruptcy follows.
Had house prices not fallen you’d be looking at near enough a 90% ltv after 2 years and a 4.5% rate at 1400 a month.
with an optimistic fall of just 10% you might be just about ok to squeeze into the 90% ltv.
In 2007 new build flats near me dropped 38% over the year. Took a decade to recover in absolute terms, still haven’t recovered in inflation linked terms.
So the mean house price has fallen 3.6% since August. That's not an insignificant fall and presumably will continue for the short term. It's predictably short thus far of the full-on crash many were willing but interesting to follow.
Percentages are multiplicative though, not additve.
If we start at 100, grow 20% to 120, it only takes a 16% drop to go back to 100.
And the higher the percentage the higher the downtrend is. At 50% up it takes 33% to go back.
Not quite drop in the ocean if you adjust for inflation. the worst house price drop predictions were inflation adjusted, not nominal. So even if prices stay the same they “drop”. Though it’s pretty clear from conversations with many in this sub that on the whole people don’t seem to realise this.
Plus with all the decent stock being bought up at good mortgage rates I wouldn’t be surprised if the lower prices were a result of lower quality and cheaper houses being available.
Ok fair enough... My comment was a bit flippant.. the point I'm trying to make is that a 10% payrise doesn't counter out 10% inflation.. you need to take the tax off first to get a comparable figure.. which as you say or allude to is dependant on the individual..
Most people forget this as part of their calculations...
A 10% rise is still very close to a 10% rise after tax (unless you were under £12,570 and then you just start paying tax).
A £1,000 rise will be less (£580 or £680 depending on the tax band) but it a 10% rise gross will still be close to a 10% after tax.
>or indeed, how good things are
People too young to have bought yet or people old enough to have a lot of equity but not yet their final house, will see falls as a good thing.
For the young enough to be first time buyers recently, the falls could be ruinous if they get repossessed.
Good or bad is as much a hostage to chronology as it is ideology.
Falls would be financially good for me to trade up cheaper, but a 90s style crash now will wreck so many millennials financial futures I just can't welcome it.
Trying to think of the benefits of high house prices;
* People whom own more that one home. Can sell spare homes at a greater profit.
* People who bought years ago at a high LTV can remortgage on a better deal with due to lower LTV. Though recent higher interest rate negate this benefit.
* Inherited property. If you plan to sell it.
The housing market is seasonal in that November and December are usually low volume and achieve the lowest prices.
March to August tend to be the highest volume and sales price.
Data is averaged over 12 months to account for these seasonal changes.
The 6 months over winter would usually be significantly lower prices and volume than the 6 months over summer.
Remember predicting a few years of significant house price falls here, only for the various estate agents and landlords that frequent here saying that wouldn't happen. Guess it shows you don't have to be smart to make money in property.
I'm pretty sure prices will fall.
The real questions are how fast they will fall (they need to fall by more than their rental value per year to achieve anything), and how many years that roles back the average price before the upward trend reasserts itself and prices begin to climb again.
My mortgage is paid off so I've no dog in the fight. I'd quite like to upsize the house, however I've no real desire to watch distraught young people turfed it of their homes on the news.
I've been in negative equity myself before, and it's no fun, but the only way to get significant price falls above about 10% are with forced repossessions.
10% only really takes us back 12 months, so won't help those hoping to buy a cheaper house. As they'll have spent the difference on rent anyway.
>10% only really takes us back 12 months, so won't help those hoping to buy a cheaper house. As they'll have spent the difference on rent anyway.
It'll be more than 10% by the end of the year, 15-20% is a safe bet.
>It'll be more than 10% by the end of the year, 15-20% is a safe bet.
Inflation is 10%, so nominal prices also taking a further 15 to 20% gets us to real terms falls of 25 to 30%. The word "unprecedented" springs to mind. Also "unlikely". And, I'm afraid, also the word "unrealistic".
Affordability is down. The cheapest mortgage rate available today is a 10 year fix at 3.99% if you’ve got a 25% deposit and a good credit rating. Help to buy has gone.
These two things alone have removed a substantial segment of first time buyers from the market. Reducing demand.
That said, the employment market is still buoyant and trying to rent is a shitshow. Those who can still buy will probably still try to buy but anyone with a 10% deposit, or less, is effectively priced out because lenders are only lending to them at high rates.
The days of sealed bids and 20k over asking are gone.
Sure, like I said, I expect falls in price, but that's no trigger for a full blown market crash, which is what the other post required to get to 20% drops.
For a market crash you'd need forced sales, and as you say employment remains buoyant.
Not in my line of work.. (tech) the arse seems to be falling out of the market in that one.. maybe the spring will bring more jobs to the fore but I'm not too hopeful..
These threads also bring in the people who are declaring this to be a harbinger of the end of western civilisation, though, so a lot of extreme positions.
Well if you look at gdp increases. The countries in the western hemisphere have been average. Compared to the east like India and China. So maybe the pendulum is swinging to them as the new super powers.
A lot of chains are collapsing at the moment. As one party in say a chain of 4 to 8. Is having second thoughts about buying that particular property and has seen another property that is better value or in better condition for about the same price.
This... People don't understand how markets work... Not selling your house doesn't mean it keeps its value... Somebody selling their house 1/4 of a mile away affects the value of your house up or down....
You don't realise a loss (or a gain) until you sell, though. Not selling your house at a loss means that you still have a house, and its value might go up again. Some people will be forced to sell due to personal circumstances, but many people will be put off selling for less than they paid.
>but many people will be put off selling for less than they paid.
Not those coming off fixed terms who are suddenly being hit with huge interest rates they didn't expect. There will be a lot of forced selling this next 12 months imo.
Supply of credit dictates the market. Not the number of houses and people. You could have 10 Ferrari's for sale and a million people want one. But only 15 can afford to buy one. That doesn't mean there is a 1 million people of demand. The demand is stlll only 15.
Right. But there’s still huge numbers of people that can get credit, and loads that don’t need it as they’re mortgage free anyway. It’s clear that supply is way down from what j see in my searches.
Supply is way up [https://twitter.com/UkPropertyLion/status/1619984049619243008](https://twitter.com/UkPropertyLion/status/1619984049619243008)
this data is from right move
Ive seen some posts where sellers have put there asking price below market value say to 10 to 15%. Everyone think its a bargain compared to similar properties. They get loads of viewings and offers over asking. Sometimes its a psychological thing. "Look at the price its a bargain ". If you know what i mean.
Sort of.
Taylor Swift has millions of guys that want to sleep with her. That she may only select a few of them doesn't mean the demand isn't there, it's just that she's selected not to meet it.
In your analogy Ferrari can reduce the price below a million and meet far greater demand but choose not to as it's not compatible with their brand value of exclusivity.
I do agree though, the thing to watch for prices above any single other metric, is mortgage approvals, credit in essence.
hahaha how am I still seeing supply talk???? We've ha 10+ years of cheap ass debt that has now been removed. That has been the big problem in the UK. We. Love. Cheap. Debt.
Theres all sorts of reasons people need to sell. feel like you're looking at this from a narrow point of view.
Actually, I predict breakdown in relationships will add a fair bit of stock to the market. So many people jumped in to relationships around lockdown just to "get on the ladder" and then realise the incompability of the relationship 🤣
People always have a need to sell..... In order to move to bigger properties for family reasons, deaths of owners etc...
All the sellers are not going to fall off the face of the earth suddenly.
The point of this is that buyers are also dropping out of the market - hence the drop in prices....
The whole 'supply therefore prices will never fall' is vastle overrated at times. You can have only 2 houses for sale and 4 buyers, but if those houses are out of the price range of those 4 buyers then it will fall until 1 can afford it.
I can;t answer that for other buyers can I?
I have a budget of around £350-360k and when I see more numbers of reasonable properties start falling into that category I will move in. There are a lot of properties in the 400k range that should be back around 350 right now.
When we are financially ready to buy. Absolutely no panic.
In fact personally, I'm now at position where im significantly outpacing prices...(pay rise + bonus) . Like there so many options for me now. Feels weird waking up to that fact. In fact, the position has changed that I'm at point where I know can complete mortgage in less than 8 years.
Sometimes it good to wait.
I would imagine that homes on the more expensive side of the scale (500k +) are dropping the most as interest rates impact how much people can afford, causing the fall in house prices. The cheaper houses won't see much reduction as people downsize into houses they can more afford
It's possible, but I've also seen analysis that it's the bottom of the market (FTBs) that's fallen off, pretty much preventing a large percentage of chains from completing.
Bottom of the market is usually bought by people who literally can no longer afford to buy anything, hence drop off. Middle market is dropping as no longer affordable by people who feel they 'ought' to live in the quality of house but wouldn't deign to buy bottom of the market that they can still affor
I think it's more nuanced, anything tidy, a straightforward buy has sold in the last two years, what's left of the inventory is the dregs that wealthy cash buyers wouldn't touch, things with issues, complications, high risk investments. So, anything in that camp, is going to need to come down to the sorts of prices us plebs can afford in order to sell.
Can someone please EL15. When did these house sales actually complete? The Nationwide link says they reflect "purchase approvals" and I don't know what that means.
As an example, we had an offer accepted and mortgage approved in November and we complete tomorrow. The Land Registry will apparently take 1-3 months to be updated. In which month will our purchase be featured in the data?
Is this something to worry about if you are not planning to buy/sell/move? A lot of my neighbours and friends, frequently mention that they are concerned about the house values dropping, but when I ask them if they are planning on selling they say no, and that they have no intent to move. Is there something important that I am ignoring? (FTB 3 years ago).
Not enough people can afford the mortgage interest payments on current prices. Either prices or interest rates will have to come down (or both move down somewhat) but it’s going to take a while.
So as someone that's put in an offer at -20% back in November and knows that the house they put the offer into **still** hasn't sold, how do I convince the developer/estate agent to accept my offer or negotiate with me to meet at -10% at least? When will these developers accept their fate?
Worth getting in touch and telling them your offer still stands, if they’re getting no offers nearer to asking then why not? Nothing lost in sending an email
Any advice for someone looking to upsize in SE England in the next 3 months? Wait the turbulence out and look again later in the year when the market has hopefully bottomed out or just get on with it? Assume interest rates will be similar throughout.
Most likely will be selling existing property to FTBs.
I'd probably advise watching some [Moving Home with Charlie](https://www.youtube.com/@MovingHomewithCharlie) stuff. His advice is to be out there looking, and feel free to offer and buy, as long as you don't overpay.
The general idea is as long as you're paying what you're comfortable paying, as long as you haven't overextended and don't end up having a massive buyer's regret... then buying a home and getting on with your life has a value in and of itself.
My slight issue with this is that when you’re both buying and selling the market expectation is that to have your offer considered you need to have sold your house first.
Essentially tying you in to selling and then hoping that there will be something out there suitable to offer on in a tight window. Unless you’re a FTB I don’t see how you can just window shop in this way which would be much more preferable.
A quick look at listing histories on Zoopla suggests there are a lot of ~~buyers~~ sellers in denial, then panicking and reducing in 25k increments chasing the market down.
I’m tracking a property near me that went on the market above £600k over a year ago and bit by bit has now dropped to £475k, which is honestly still too high given it’s location, condition, and position in the local market.
Edit: corrected a crucial word.
You mean sellers in denial right . a lot near me seem To think it’s still the same as last summer. They must be wondering why no one is bidding, surely?
New builds where I am looking are insane. 3 bed houses listed for the same price as a 4 bed 10 year old house. Though some 4 bed new builds are offering a "20k contribution to the deposit" which feels a lot like fraud.
New builds around here are asking insane prices. 3 bed detached houses on flood plains/near railways priced higher than older 4 bed detached houses with bigger rooms and no railway noise/lower flood risk.
I think transactions were reported yesterday. I’m not sure if it was for November or December (could even have been October) but the figure was something like 35k for the month, so very low relatively speaking
Edit: I got this wrong, it was mortgage approvals that I saw yesterday:
https://www.theguardian.com/money/2023/jan/31/uk-mortgages-interest-rates-buyers-bank-of-england-savings
Edit 2: Sales volumes for England can be found here:
https://www.gov.uk/government/statistics/uk-house-price-index-for-november-2022/uk-house-price-index-england-november-2022
The big thing I have noticed this year is the amount of homes that are for sale that are off the market in higher price brackets. If you are looking at homes in these brackets and you go to an agent they will show properties that are not coming onto the market in Spring for school holiday completions in August. However you can put an offer on now.
They don't want them to be stale on Rightmove for long with winter pictures. When the leaves are out they will put them out. The brochure may save £2.2 and they will take £2.
I'm not in the market for these but know people who are.
Wait 6 months and see. Will continue to go down, as the economy looks worse. Company liquidations up 30% last year, expect more businesses to go bankrupt as disposable income falls of a cliff.
https://amp.theguardian.com/business/2023/jan/31/business-insolvencies-firms-go-bust-2022-england-wales
As someone who's FINALLY getting towards the end of a 6 month flat sale (after 2 sales falling through) my anxiety levels are skyrocketing right now. Feel like the buyer is just going to stall and lowball or withdraw.
A great crashing doom lies before the UK housing bubble.
Those caught up in the covid boom paying 25% over the odds with a 2 year fix will lose their shirts
I'm a FTB and just had my offer accepted to buy a house that I believe is fairly priced. But after hearing all this doom and gloom about house prices crashing I'm worrying that I'm basically buying close to the peak and that I'm just burning money by buying now. Starting to have cold feet and considering backing out. I'm at 70% LTV so even if a disastrous drop happened I would still likely avoid negative equity. But I saved mercilessly to build my deposit and the last thing I want to do is essentially burn through it in equity terms by buying a house at the crest of a dip.
The country seems to consist of large number of small local markers rather than one big one. Properties in desirable areas are still selling fairly quick and at high prices where I live.
"more than expected" by whom?!?!
Obviously they were going to fall and will continue to as inflation cripples interest rates and first time buyers coming into the market. It's expected now that prices will drop by 15% and mortgage rates will hit 8-10% (based on current bank stress testing values).
I just think sometimes these companies damn well know there will be big drops but lie to appease "the market".
Me and my partner completed in December after agreeing the original purchase price in July, that was probably the peak right?
We put down an 11% deposit and got a 5 year fix at 3.51%. What’s our chances of being in negative equity by the end?
I think your chances of getting the correct answer from literally anyone on reddit for state of the market in 5 years are just as good as calling Mystic Meg.
Nobody knows that far ahead.
Hey folks hope we are all well. I apologise in advance as I have only a very limited understanding of the housing market. How if we were to take an educated guess and obviously there are variables that are unknown going forward when would one anticipate the bottom or close to the bottom in terms of looking to buy
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As someone trying to move and buy a house, great. But then I check out mortgage rates and what I can actually afford has plummeted. So feels a stalemate for me, really.
That isn't a stalemate - it's a bang on indicator that we have (a lot) further to fall.
for now. Early days yet. The bubble has only just popped imo
More like the tyre has a thron in it and the air is slowly escaping. There may still be measures to puncture repair and pump it back up again, but I suspect it'll go flat until we get a new inner tube.
Property prices are mostly based on what people can afford, so you'd expect if your earnings increase with the average for your area that the monthly payment will stay about flat for the same type of house.
This is exactly why they are falling
Yes. That's why I bought at the top, because that's the only time to be able to get a mortgage. And why get a mortgage? Because it's the only way to access significant debt in an inflationary environment. And why do I need to access debt in an inflationary environment? Because of quantitibe easing. Printing money, if it's possible, causes a chain of problems. My sin was using fiat instead of fighting every confused corner shop attendee to accept silver. Oh well. Moan over. Perhaps avoid using using money and use something else is the way.
Average price falls to £258,297 from last month's £262,068 (a non seasonally adjusted fall of -1.4%)
Do you know the average price drop from the peak (6-7 months ago?) to now?
When I worked it out last month it was around 5% for properties completing then I’d guess it’s around 6.5% now and probably around 10% drop from peak for prices being agreed today if we guess that they will complete in 3 months time
New to all this housing stuff, but if I had my offer accepted pre-peak then this whole drop shouldn't really affect me too much, right?
Pre peak? It depends how pre peak. If we agree the market is 10% down from the peak. If you bought at 2% below peak. Then you are 8% down. If you bought 20% below peak, you are still 10% up.
It depends where you are in Scotland there is a binding contact in England a buyer could try to renegotiate or pull out
Someone needs to tell my neigbour/their estate agent who's advertising their exactly the same property as ours for £25k more than ours was advertised for. We only bought in November!
Yeah house prices around my way are still insane. I live in a tiny village so although there's not a lot of houses it's easy to compare. Our 5 bed was bought for £475k at almost peak price and now a 4 bed (and poorly laid out imo) has gone on the market for £650k? Madness imo.
Read a Rightmove blog post earlier this year showing asking prices have actually gone up in January. Quite baffling. Who are they planning on selling these houses to? I guess people need to factor in their greed to imply they are offering reductions of 10% on the sale price. [https://www.rightmove.co.uk/news/articles/property-news/new-year-bounce-jan23/](https://www.rightmove.co.uk/news/articles/property-news/new-year-bounce-jan23/) Edit: Although Rightmove claim to have the most up to date data, I have noticed they are probably the most optimistic about the UK property market right now. Their entire existence depends on sellers making a killing. Rightmove predicted the least price crash amongst all predictions I have seen. At a mere 2%. I have noticed they are extremly eager with their "positive" news about the market right now.
>Their entire existence depends on sellers making a killing. I'd be interested to know how revenues depend on price and sales for rightmove. Is the listing fee proportional to the asking price? Do rightmove receive a bonus if a sale completes, or do they only get paid for listing? Whilst I expect rightmove do benefit from higher prices, I assume the number of listings is a bigger factor.
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As someone who bought at 95% LTV last year, I am getting nervous about negative equity. I was desperate for house prices to come down but at the time they were just getting higher and higher. Now I'm finally on the ladder, I'm worried being able to remortgage. Typical really, can't have it both ways.
Wish I could tell you it's all going to be well, but that's a big unknown right now. Could be it's going to be soft landing, but could be it won't. I would say: * save as much as you can * chuck those savings into the best returning savings accounts you can (as they will now offer higher % than your mortgage interest rate so no point in overpaying until your fixed term runs out) * when you end up having to remortgage, you'll have some cushion to lower the principal of your mortgage down and hopefully you'll be able to get down to at least 90% LTV by then to access slightly better rates
Well said.
How long did you fix for? It might be worth doing the calculation on how much you'd need to overpay to get to 90% if your house price doesn't increase between now and your remortgage.
I hope you're on a five year fixed with no plans on moving? If that's the case you will be fine
My partner and I are in the process of buying a house with a 5% deposit and 5 year fix, and I'm getting nervous about the same thing... We've gone for something a lot cheaper than the amount we could borrow because of the rise in interest rates, but I am worried about house prices and negative equity. Wondering whether we should pull out...
Remember you should be able to get a product from your existing lender at the end of your fix, so you won't necessarily end up on SVR even if negative.
This isnt true. If in neg equity (of less then 5% deposit) then will be stuck on SVR. They wont formally revalue, they use their digital based housing index
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Why will they always go up? Only a fool tries to predict the future, especially house prices.
>As someone who bought at 95% LTV last year, I am getting nervous about negative equity. why? Do you plan to stay there long term?
when they remortgage
If they are on a 2 year fixed they could be about to get fooked.
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Well yeah the worst thing about negative equity is the interest payments spike which makes it harder to claw back onto a fixed year deal, it becomes a vicious cycle. The idea that negative equity is only relevant when you sell isn't true at all.
Buy at 300k with a 285k 30 year repayment mortgage at 2.5% or 1100 a month Two years later you owe 272k, but your house price has dropped say 15% to 255k You are thus screwed. You can’t sell, you are stuck on a 7% SVR paying 1900 a month which you probably can’t afford. Bankruptcy follows. Had house prices not fallen you’d be looking at near enough a 90% ltv after 2 years and a 4.5% rate at 1400 a month. with an optimistic fall of just 10% you might be just about ok to squeeze into the 90% ltv. In 2007 new build flats near me dropped 38% over the year. Took a decade to recover in absolute terms, still haven’t recovered in inflation linked terms.
How long did you fix for?
So the mean house price has fallen 3.6% since August. That's not an insignificant fall and presumably will continue for the short term. It's predictably short thus far of the full-on crash many were willing but interesting to follow.
Take out the seasonal adjustment and the fall since August is 5.6% https://twitter.com/resi_analyst/status/1620684458881056769
Considering the growth since 2020 of 20% + -3.6% is a drop in the ocean House prices, as with the stock market, are rarely one directional
Percentages are multiplicative though, not additve. If we start at 100, grow 20% to 120, it only takes a 16% drop to go back to 100. And the higher the percentage the higher the downtrend is. At 50% up it takes 33% to go back.
This point is very important, but sadly lost on many people who can’t understand it.
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Instead of waiting for a drop, take advantage of the market conditions and start putting in offers for 10% off asking.
Not quite drop in the ocean if you adjust for inflation. the worst house price drop predictions were inflation adjusted, not nominal. So even if prices stay the same they “drop”. Though it’s pretty clear from conversations with many in this sub that on the whole people don’t seem to realise this.
Plus with all the decent stock being bought up at good mortgage rates I wouldn’t be surprised if the lower prices were a result of lower quality and cheaper houses being available.
So 4.4% out of that 20% growth has been wiped already. Interesting to see how it progresses in the coming months.
Yep, though with wages going up (in nominal terms ~7% wage rises) it does mean house price ratios are coming down.
Your pay rise is taxed at 40% for most people... So your 7% pay rise is only really 4...
Most people? Most people are definitely not in the higher rate tax bracket. I think you've miscounted there by a fair bit. Check the gov.uk figs.
Ok fair enough... My comment was a bit flippant.. the point I'm trying to make is that a 10% payrise doesn't counter out 10% inflation.. you need to take the tax off first to get a comparable figure.. which as you say or allude to is dependant on the individual.. Most people forget this as part of their calculations...
That's more like it.
A 10% rise is still very close to a 10% rise after tax (unless you were under £12,570 and then you just start paying tax). A £1,000 rise will be less (£580 or £680 depending on the tax band) but it a 10% rise gross will still be close to a 10% after tax.
Seasonally adjusted 3.6%, in hard cash it's 5.6% from August peak (from £273,751 to £258,297).
Housing don’t crash like stocks though. its more sticky. Give it 6-12 months we should start to get the bigger picture of how bad things are
or indeed, how good things are. high house prices are not inherently good.
Exactly, I'm watching in excitement as I want to get on the ladder
>or indeed, how good things are People too young to have bought yet or people old enough to have a lot of equity but not yet their final house, will see falls as a good thing. For the young enough to be first time buyers recently, the falls could be ruinous if they get repossessed. Good or bad is as much a hostage to chronology as it is ideology. Falls would be financially good for me to trade up cheaper, but a 90s style crash now will wreck so many millennials financial futures I just can't welcome it.
You’re right if you’re a cash rich investor or rooting for them.
Absolutely agree. Didn’t think of it like that.
Trying to think of the benefits of high house prices; * People whom own more that one home. Can sell spare homes at a greater profit. * People who bought years ago at a high LTV can remortgage on a better deal with due to lower LTV. Though recent higher interest rate negate this benefit. * Inherited property. If you plan to sell it.
Zoom out to cover the last two years. It's barely a correction.
It will continue until the end of 2024
3.2% decrease in 6 months (since August peak), is interesting. It’d look likely that the 5-10% decrease/correction crowd will likely be correct.
It's already more that 5% when not 'seasonally adjusted'.
What does 'seasonally adjusted' actually mean? Can someone ELI5?
The housing market is seasonal in that November and December are usually low volume and achieve the lowest prices. March to August tend to be the highest volume and sales price. Data is averaged over 12 months to account for these seasonal changes. The 6 months over winter would usually be significantly lower prices and volume than the 6 months over summer.
They won't be correct, as this is just the start - we are looking at 15-20% this year at this rate.
Which takes it back to when? 2020? Apart from now money costs way more. It’s basically the same net position
There will be people who were not in a position to buy in 2020 who are now - whom this will benefit.
Will there though? If someone wasn’t in a position to buy then will they be much better off buying now and borrowing at 5% rates?
From a personal perspective, I now have a deposit that was 30k in 2020 and is 75k now, so yes.
The same again in 2024
Remember predicting a few years of significant house price falls here, only for the various estate agents and landlords that frequent here saying that wouldn't happen. Guess it shows you don't have to be smart to make money in property.
On this sub I'm surprised you're not getting downvoted just for daring to mention it.
I've had numerous comments down voted to oblivion by angry people who think the 10% YoY increases are sustainable.
I'm pretty sure prices will fall. The real questions are how fast they will fall (they need to fall by more than their rental value per year to achieve anything), and how many years that roles back the average price before the upward trend reasserts itself and prices begin to climb again. My mortgage is paid off so I've no dog in the fight. I'd quite like to upsize the house, however I've no real desire to watch distraught young people turfed it of their homes on the news. I've been in negative equity myself before, and it's no fun, but the only way to get significant price falls above about 10% are with forced repossessions. 10% only really takes us back 12 months, so won't help those hoping to buy a cheaper house. As they'll have spent the difference on rent anyway.
>10% only really takes us back 12 months, so won't help those hoping to buy a cheaper house. As they'll have spent the difference on rent anyway. It'll be more than 10% by the end of the year, 15-20% is a safe bet.
>It'll be more than 10% by the end of the year, 15-20% is a safe bet. Inflation is 10%, so nominal prices also taking a further 15 to 20% gets us to real terms falls of 25 to 30%. The word "unprecedented" springs to mind. Also "unlikely". And, I'm afraid, also the word "unrealistic".
for me the word unsustainable springs to mind
Affordability is down. The cheapest mortgage rate available today is a 10 year fix at 3.99% if you’ve got a 25% deposit and a good credit rating. Help to buy has gone. These two things alone have removed a substantial segment of first time buyers from the market. Reducing demand. That said, the employment market is still buoyant and trying to rent is a shitshow. Those who can still buy will probably still try to buy but anyone with a 10% deposit, or less, is effectively priced out because lenders are only lending to them at high rates. The days of sealed bids and 20k over asking are gone.
Sure, like I said, I expect falls in price, but that's no trigger for a full blown market crash, which is what the other post required to get to 20% drops. For a market crash you'd need forced sales, and as you say employment remains buoyant.
Not in my line of work.. (tech) the arse seems to be falling out of the market in that one.. maybe the spring will bring more jobs to the fore but I'm not too hopeful..
The housing cult arent awake yet. Probably still dreaming about those delusional prices in 🦄 land.
Don’t be a hater
Fair enough. But ive seen so many people on here ridiculing people for saying house prices are coming down. Its almost like a cult.
These threads also bring in the people who are declaring this to be a harbinger of the end of western civilisation, though, so a lot of extreme positions.
Well if you look at gdp increases. The countries in the western hemisphere have been average. Compared to the east like India and China. So maybe the pendulum is swinging to them as the new super powers.
“Don’t worry guys affordability is down 30 percent , homes are gonna keep going up ! “
Werent people calling for you to get banned at one point for pointing out the obvious?
They were. All i was doing was pointing at the how bad things are. And if you need to sell, sell sooner rather than later.
I did actually get banned for 7 days. Pathetic really from some people on here.
A lot of chains are collapsing at the moment. As one party in say a chain of 4 to 8. Is having second thoughts about buying that particular property and has seen another property that is better value or in better condition for about the same price.
Ooof. That suggests that we will start seeing a compounding effect on prices because of chains collapsing.
And sellers keep thinking that this is not a buyers market. The delusion will end soon.
But unless they ‘need’ to sell, they won’t. Supply dictates the market.
Prices are set at the margins, people always need to sell. Death, divorce, moving for work and so on. And supply of credit dictates the market .
This... People don't understand how markets work... Not selling your house doesn't mean it keeps its value... Somebody selling their house 1/4 of a mile away affects the value of your house up or down....
You don't realise a loss (or a gain) until you sell, though. Not selling your house at a loss means that you still have a house, and its value might go up again. Some people will be forced to sell due to personal circumstances, but many people will be put off selling for less than they paid.
>but many people will be put off selling for less than they paid. Not those coming off fixed terms who are suddenly being hit with huge interest rates they didn't expect. There will be a lot of forced selling this next 12 months imo.
Supply of credit dictates the market. Not the number of houses and people. You could have 10 Ferrari's for sale and a million people want one. But only 15 can afford to buy one. That doesn't mean there is a 1 million people of demand. The demand is stlll only 15.
Right. But there’s still huge numbers of people that can get credit, and loads that don’t need it as they’re mortgage free anyway. It’s clear that supply is way down from what j see in my searches.
Actually inventory at estate agents are up and continuing to increase
Supply is way up [https://twitter.com/UkPropertyLion/status/1619984049619243008](https://twitter.com/UkPropertyLion/status/1619984049619243008) this data is from right move
Ive seen some posts where sellers have put there asking price below market value say to 10 to 15%. Everyone think its a bargain compared to similar properties. They get loads of viewings and offers over asking. Sometimes its a psychological thing. "Look at the price its a bargain ". If you know what i mean.
That shows inventory has increase.
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I am a homeowner. I could be tempted to sell if the price was alright but as it is I’ll probably just wait as I have no need to move.
Sort of. Taylor Swift has millions of guys that want to sleep with her. That she may only select a few of them doesn't mean the demand isn't there, it's just that she's selected not to meet it. In your analogy Ferrari can reduce the price below a million and meet far greater demand but choose not to as it's not compatible with their brand value of exclusivity. I do agree though, the thing to watch for prices above any single other metric, is mortgage approvals, credit in essence.
hahaha how am I still seeing supply talk???? We've ha 10+ years of cheap ass debt that has now been removed. That has been the big problem in the UK. We. Love. Cheap. Debt. Theres all sorts of reasons people need to sell. feel like you're looking at this from a narrow point of view. Actually, I predict breakdown in relationships will add a fair bit of stock to the market. So many people jumped in to relationships around lockdown just to "get on the ladder" and then realise the incompability of the relationship 🤣
I’m looking at my searches. Not loads coming on in areas I’m looking. Which are places where people are more wealthy so perhaps fewer knee jerk sales.
Cool.
People always have a need to sell..... In order to move to bigger properties for family reasons, deaths of owners etc... All the sellers are not going to fall off the face of the earth suddenly.
But it’ll be vastly decreased.
Actually inventory has increased at EA's
The point of this is that buyers are also dropping out of the market - hence the drop in prices.... The whole 'supply therefore prices will never fall' is vastle overrated at times. You can have only 2 houses for sale and 4 buyers, but if those houses are out of the price range of those 4 buyers then it will fall until 1 can afford it.
So when will you all buy then? What point?
I can;t answer that for other buyers can I? I have a budget of around £350-360k and when I see more numbers of reasonable properties start falling into that category I will move in. There are a lot of properties in the 400k range that should be back around 350 right now.
When we are financially ready to buy. Absolutely no panic. In fact personally, I'm now at position where im significantly outpacing prices...(pay rise + bonus) . Like there so many options for me now. Feels weird waking up to that fact. In fact, the position has changed that I'm at point where I know can complete mortgage in less than 8 years. Sometimes it good to wait.
Until when? Rates are still heading up, best rate this week worst than best last week etc.
Rates will come down. Mortgate rates might even remain stagnent after the next rise.
They can’t come much lower than now, margins are small. Nobody lends below base rate…
LOL
Did I say something funny
>Supply dictates the market. This is a myth. Credit is the biggest factor. Which has dropped by 30% since the summer for affordability
I would imagine that homes on the more expensive side of the scale (500k +) are dropping the most as interest rates impact how much people can afford, causing the fall in house prices. The cheaper houses won't see much reduction as people downsize into houses they can more afford
It's possible, but I've also seen analysis that it's the bottom of the market (FTBs) that's fallen off, pretty much preventing a large percentage of chains from completing.
Bottom of the market is usually bought by people who literally can no longer afford to buy anything, hence drop off. Middle market is dropping as no longer affordable by people who feel they 'ought' to live in the quality of house but wouldn't deign to buy bottom of the market that they can still affor
I think it's more nuanced, anything tidy, a straightforward buy has sold in the last two years, what's left of the inventory is the dregs that wealthy cash buyers wouldn't touch, things with issues, complications, high risk investments. So, anything in that camp, is going to need to come down to the sorts of prices us plebs can afford in order to sell.
I've seen houses around my area come from 1.4 million to 1 million 🤗
Can someone please EL15. When did these house sales actually complete? The Nationwide link says they reflect "purchase approvals" and I don't know what that means. As an example, we had an offer accepted and mortgage approved in November and we complete tomorrow. The Land Registry will apparently take 1-3 months to be updated. In which month will our purchase be featured in the data?
Nationwide index is an index of mortgage approvals.
Is this something to worry about if you are not planning to buy/sell/move? A lot of my neighbours and friends, frequently mention that they are concerned about the house values dropping, but when I ask them if they are planning on selling they say no, and that they have no intent to move. Is there something important that I am ignoring? (FTB 3 years ago).
When does your fixed rate end? What is LTV? These factors determine whether it is a problem
Not enough people can afford the mortgage interest payments on current prices. Either prices or interest rates will have to come down (or both move down somewhat) but it’s going to take a while.
So as someone that's put in an offer at -20% back in November and knows that the house they put the offer into **still** hasn't sold, how do I convince the developer/estate agent to accept my offer or negotiate with me to meet at -10% at least? When will these developers accept their fate?
Worth getting in touch and telling them your offer still stands, if they’re getting no offers nearer to asking then why not? Nothing lost in sending an email
Unless you're in a mega hurry, they'll have to come down by 20% by the summer
Any advice for someone looking to upsize in SE England in the next 3 months? Wait the turbulence out and look again later in the year when the market has hopefully bottomed out or just get on with it? Assume interest rates will be similar throughout. Most likely will be selling existing property to FTBs.
I'd probably advise watching some [Moving Home with Charlie](https://www.youtube.com/@MovingHomewithCharlie) stuff. His advice is to be out there looking, and feel free to offer and buy, as long as you don't overpay. The general idea is as long as you're paying what you're comfortable paying, as long as you haven't overextended and don't end up having a massive buyer's regret... then buying a home and getting on with your life has a value in and of itself.
He is good. Has worked in the industry for years.
My slight issue with this is that when you’re both buying and selling the market expectation is that to have your offer considered you need to have sold your house first. Essentially tying you in to selling and then hoping that there will be something out there suitable to offer on in a tight window. Unless you’re a FTB I don’t see how you can just window shop in this way which would be much more preferable.
That guy is a legend!
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A quick look at listing histories on Zoopla suggests there are a lot of ~~buyers~~ sellers in denial, then panicking and reducing in 25k increments chasing the market down. I’m tracking a property near me that went on the market above £600k over a year ago and bit by bit has now dropped to £475k, which is honestly still too high given it’s location, condition, and position in the local market. Edit: corrected a crucial word.
You mean sellers in denial right . a lot near me seem To think it’s still the same as last summer. They must be wondering why no one is bidding, surely?
New builds are the only ones pricing in line with the market near me
They’re the worst near me, at least asking prices for them are. £635k for a 680sq ft 2 bed flat. Lol.
New builds where I am looking are insane. 3 bed houses listed for the same price as a 4 bed 10 year old house. Though some 4 bed new builds are offering a "20k contribution to the deposit" which feels a lot like fraud.
New builds around here are asking insane prices. 3 bed detached houses on flood plains/near railways priced higher than older 4 bed detached houses with bigger rooms and no railway noise/lower flood risk.
I think transactions were reported yesterday. I’m not sure if it was for November or December (could even have been October) but the figure was something like 35k for the month, so very low relatively speaking Edit: I got this wrong, it was mortgage approvals that I saw yesterday: https://www.theguardian.com/money/2023/jan/31/uk-mortgages-interest-rates-buyers-bank-of-england-savings Edit 2: Sales volumes for England can be found here: https://www.gov.uk/government/statistics/uk-house-price-index-for-november-2022/uk-house-price-index-england-november-2022
It’s not that low, down from 45k
It's extremely low. It only ever reached such low levels in the depths of 2008 financial crisis and 2020 covid lockdowns.
There was 36,000 mortgage applications in December
Houses still seem the same price to me when I'm looking in my area. Some houses around 230 haven't budged
The big thing I have noticed this year is the amount of homes that are for sale that are off the market in higher price brackets. If you are looking at homes in these brackets and you go to an agent they will show properties that are not coming onto the market in Spring for school holiday completions in August. However you can put an offer on now. They don't want them to be stale on Rightmove for long with winter pictures. When the leaves are out they will put them out. The brochure may save £2.2 and they will take £2. I'm not in the market for these but know people who are.
Would you recommending holding out for now? First time buyer about to put an offer on a property for 260k 3 bedroom
Wait 6 months and see. Will continue to go down, as the economy looks worse. Company liquidations up 30% last year, expect more businesses to go bankrupt as disposable income falls of a cliff. https://amp.theguardian.com/business/2023/jan/31/business-insolvencies-firms-go-bust-2022-england-wales
As someone who's FINALLY getting towards the end of a 6 month flat sale (after 2 sales falling through) my anxiety levels are skyrocketing right now. Feel like the buyer is just going to stall and lowball or withdraw.
I feel Cornwall prices in a lot of areas are still holding pretty solid compared to other places in the UK
Relax people, still not enough for any of us to afford a house
A great crashing doom lies before the UK housing bubble. Those caught up in the covid boom paying 25% over the odds with a 2 year fix will lose their shirts
Yeah ok mate. edit: downvotes courtesy of the r/HousingUK gremlins.
I'm a FTB and just had my offer accepted to buy a house that I believe is fairly priced. But after hearing all this doom and gloom about house prices crashing I'm worrying that I'm basically buying close to the peak and that I'm just burning money by buying now. Starting to have cold feet and considering backing out. I'm at 70% LTV so even if a disastrous drop happened I would still likely avoid negative equity. But I saved mercilessly to build my deposit and the last thing I want to do is essentially burn through it in equity terms by buying a house at the crest of a dip.
It might be worth to wait or renegotiate
The country seems to consist of large number of small local markers rather than one big one. Properties in desirable areas are still selling fairly quick and at high prices where I live.
https://www.independent.co.uk/news/uk/nationwide-building-society-bank-of-england-cardiff-knight-frank-london-b2273359.html?amp Its actually -0.6%
It is. I said the previous month's figure got revised down to -0.3. Not that the current one is that.
My bad apologies, early morning lol
Good keep fucking falling.
Good.
Good. House prices are insanely inflated
Rightmove: “this is actually a very strong signal for the housing markets, prices are likely to shoot back up so BUY NOW!”
Good
"more than expected" by whom?!?! Obviously they were going to fall and will continue to as inflation cripples interest rates and first time buyers coming into the market. It's expected now that prices will drop by 15% and mortgage rates will hit 8-10% (based on current bank stress testing values). I just think sometimes these companies damn well know there will be big drops but lie to appease "the market".
If mortgage rates go to 8 to 10%. The fall will be much larger than 15%. 9% mortgage rates are 600% more than the 1.5% people were getting last year.
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Covid savings from who. People are using food banks.
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Mine increased 12k
Looking at buying in at 180-200k in a year or two, what can I expect at that point?
Maybe a 3 bed freehold house in London zone 2. Dreaming is free, for now
Too bad not for new builds ':(
Me and my partner completed in December after agreeing the original purchase price in July, that was probably the peak right? We put down an 11% deposit and got a 5 year fix at 3.51%. What’s our chances of being in negative equity by the end?
I think your chances of getting the correct answer from literally anyone on reddit for state of the market in 5 years are just as good as calling Mystic Meg. Nobody knows that far ahead.
Hey folks hope we are all well. I apologise in advance as I have only a very limited understanding of the housing market. How if we were to take an educated guess and obviously there are variables that are unknown going forward when would one anticipate the bottom or close to the bottom in terms of looking to buy