House prices to fall 14% next year

[GreenestValley]

www.thetimes.co.uk/article/house-prices-forecast-to-drop-by-14-next-year-lbj77clv2

What does everyone think? I’m looking to buy my first home and this makes me very nervous. Stamp duty reduction is obviously a benefit but if prices drop by this much waiting would be a far better choice... Eek. Anyone else in same position?

[JoJoSM2]

It’s always swings and roundabouts. During the last recession, prices fell by even 30-40% in some places but they actually went up in some areas too.

If I was thinking of buying now, I’d just pick something that:

1. Could be improved, eg a fixer upper so that the added equity offsets a potential price drop
   
2. Somewhere that could work for longer. For example, if you’re likely to start a family in the next few years, I’d go with a spacious flat or a small house (if affordable) near a good primary and a nice park etc.

[BrieAndChilli]

We are in the same position. Due to a small inheritance we finally have some money to use as a deposit.
As we rent as so don’t have any stake in a property to sell we can wait until next year. A friend of mine who is a surveyor has said he would wait and that people are way over valuing thier properties at the moment plus with furlough ending people may need to downsize to reduce thier outgoings.
My worry is that there will be no properties within our range and needs for sell next year!
Not so worried about prices going up further as don’t think they will until end of next year so I think we are going to keep an eye out and only jumping we see something perfect.

[DotTheCaddy]

I think its strongly likely they will fall next year, although who knows by how much. But it's the perfect storm with Covid and Brexit and the associated economic consequences plus the end of the stamp duty holiday.

However, we have decided to bite the bullet and buy a new house anyway. We are upsizing and even though a bigger house might cost less next year itll be no good for us if we have lost much of our equity in our current house.

However as a FTB you have a big stamp duty free allowance anyway? If it's a house you plan to stay in for a long term and you can get a low mortgage rate on a 3-5 year fix I wouldn't worry about it tbh.

[FurierTransform]

Variation will be incredibly type/area specific IMO.
I'd expect new build flats to take a hammering. Conversely large houses in suburbs bought by 3/4th movers could still increase further.

That said, if it's your a normal person buying a house to live in, the old adage pretty much remains true : don't try to second guess the market; no time like the present.

[Raifa]

Browsing on Zoopla a fair bit recently, many houses have been reduced in the search area (Muswell Hill/North Finchley ish) by 5% to 10%. Obviously, the one I can see are those who didn’t sell so it’s just anecdotal, and the asking prices have been kite flying even for the area, so it does suggests there is room for reduction. So much unknown for the foreseeable future, it’s impossible to predict wether it will go down by 14% or 5% or 30% but direction is pretty likely to be downward given the headwinds for the economy.

[Gatr]

Sister is a ftb who found a house and her mortgage offer has been rescinded. The monthly payments went up 25% so they lost out on their property unless they could find a 15-20% deposit.

House prices going down only helps ftb if mortgages become available

[Justpassingtime1]

If my job was secure and I was going to stay there at least 5 years
then yes .

[WoolyMammoth55]

IMO getting on the ladder (if you can afford to) is always worth it.

Had a good friend who bought her OH out of their flat due to a break up. She was pushed to the absolute max to afford by herself. 2 months later it was the 2008 crash and she went into massive negative equity...

She could afford her repayments and held on, eventually moved abroad and rented it out, has made an absolute mint on the flat.

(I realise there are people who lost a lot in that crash but this is just by way of saying that it doesn't have to be that way!)

It's always a gamble :) Wish you best of luck!

[Sitdowncupoftea]

I think they will drop. Many people will lose their jobs soon. The UK will go into a recession due to Covid. If your not planning on moving not buying on whim or doing a flip it won't affect you.

[hhh0809]

If the price drops, the number of high quality properties on the market will also decrease. Who will sell their nice house in recessions?

[Didiusfalco]

Id say it depends on the type of property. If you can get a house that you can stay in for a number of years I would go for it. If you’re looking to get on the ladder with a flat, I might hold on as I think flats will take a hammering. In fact I think I’d feel nervous of buying a flat full stop at the moment - they seem to have become disproportionately less desirable since lockdown.

[BrieAndChilli]

@hhh0809

If the price drops, the number of high quality properties on the market will also decrease. Who will sell their nice house in recessions?

I have heard somebody say that there will always be some houses for sell due to the 3 Ds - Debt, Death and Divorce.

[Lightscribe]

I've said many times on here, that it's inevitable eventually that we will see a 15-20% drop nationally area dependent and at could be up to 40-50% in new build city flats.

The BoE predicted a 16% correction. The banks and pension funds have already priced this risk in. The banks have already withdrawn their higher LTV mortgage products and pension funds have suspended their property funds (commercial and residential).

www.bloomberg.com/news/articles/2020-09-13/british-banks-brace-for-deeper-slump-by-pulling-mortgage-deals

However the global economic situation going forward may prove to be more like the 1920's depression. Brexit will be a drop in the ocean if that does prove to be the case. An economic bounce-back maybe unlikely in a time frame such as 2008 onward so don't expect the property asset gains of the last couple of decades.

The following report from Deutsche Bank research team is unsettling to say the least.

www.dbresearch.com/servlet/reweb2.ReWEB?rwnode=RPS_EN-PROD$HIDDEN_GLOBAL_SEARCH&rwsite=RPS_EN-PROD&rwobj=ReDisplay.Start.class&document=PROD0000000000511857

[Bouncycastle12]

It's so hard to tell. The reality is that prices have been pretty flat ever since Brexit , so were due a bounce upwards. They were tracking up when the pandemic happened. I'd be astonished it any fall was anywhere near 14%. A lot of people I know have been saving since lockdown started and have stashed a way quite a bit and are looking to buy. They figure it's cheaper to pay mortgage than rent, so even if prices fall a bit, they'll still be ahead. Plus they'll have a house. Supply and demand in this country tends to dictate a rise in property prices.

[Viviennemary]

I thought they'd fall by now but they seem to have gone up since last year especially first time buyers houses. Near us most of the half decent ones are being snapped up like hotcakes. I agree up to a point that people aren't going to part with their nice house for a knock down price. But they might if they can get a bigger/better house.

[Lightscribe]

@Bouncycastle12

It's so hard to tell. The reality is that prices have been pretty flat ever since Brexit , so were due a bounce upwards. They were tracking up when the pandemic happened. I'd be astonished it any fall was anywhere near 14%. A lot of people I know have been saving since lockdown started and have stashed a way quite a bit and are looking to buy. They figure it's cheaper to pay mortgage than rent, so even if prices fall a bit, they'll still be ahead. Plus they'll have a house. Supply and demand in this country tends to dictate a rise in property prices.

"Supply and demand in this country tends to dictate a rise in property prices."

Nope. Its the available credit and the banks willingness to lend.

[DonnaQuixotedelaManchester]

So, if the new builds are going to go down it might be worth buying one when they are at a lower cost with HTB.

[Lightscribe]

@Viviennemary

I thought they'd fall by now but they seem to have gone up since last year especially first time buyers houses. Near us most of the half decent ones are being snapped up like hotcakes. I agree up to a point that people aren't going to part with their nice house for a knock down price. But they might if they can get a bigger/better house.

There was months of backlogs, so a froth in property sales once the market reopened was always going to be inevitable (I said that on here repeatedly). Annual house price statistics went negative in June (they went negative monthly in London and the SE for some time pre-covid)

The stamp duty prop poured fuel onto the fire by skewing the statistics of sales at the higher end of the market but hasn't made hardly a difference to first time buyers. This was intentional, as falling house prices means people are naturally more hesitant to spend. That's the last thing the government wants.

[WoolyMammoth55]

FWIW number 2! :)

My FIL rented for a decade 2001-2011 because he was convinced (life-long economic whizz) that the market was due a massive correction.

If he'd spent the £120,000 that he paid in rent on buying a house in 2001, he'd be much wealthier today, even given the 2008 crash.

There have always been people who predict huge falls and advise renting - but thus far in my lifetime it's never worked out better that way.

[NotQuiteUsual]

We've just bought a place. We got it just before lock down and it's already risen over 10% due to the pent up demand(looking at neighbouring property that's sold since) . So if they are to fall that much it seems reasonable. But considering we were renting for £1000 a month for a smaller place, I'm not too worried about house prices dropping. We're still in a sya better position than we were renting. Our house could loose half its value and we'd still be in a better position over 5 years.

[Lightscribe]

@WoolyMammoth55

FWIW number 2! :)

My FIL rented for a decade 2001-2011 because he was convinced (life-long economic whizz) that the market was due a massive correction.

If he'd spent the £120,000 that he paid in rent on buying a house in 2001, he'd be much wealthier today, even given the 2008 crash.

There have always been people who predict huge falls and advise renting - but thus far in my lifetime it's never worked out better that way.

It did correct in 2008. It's also been entirely area dependent and due to the credit availability. Ask someone form Durham if they feel well off after buying 20 years ago in line with inflation.

Here's one example

www.rightmove.co.uk/house-prices/detailMatching.html?prop=61134348&sale=90349116&country=england

[JoJoSM2]

@Lightscribe

Do you know how much those rent for? Probably still cheaper to have paid the mortgage for those 15 years rather than rent.

[DonnaQuixotedelaManchester]

It's problems getting the deposit together for some people, that stops them buying - that's all. @JoJoSM2

[Gatr]

Mortgage offers are being withdrawn and rates being offered are terrible. The offer given less than 3 months ago for my sister has gone up over 25% and hundreds of pounds per month in that time. Even if she had a higher deposit the rate is poor. The jump from a 10% to 15% deposit is over 10,000. Not small change and will take months if not at least year to save up for

Shes well aware of the pitfalls of renting but if mortgage offers arent available then thats what will happen

[NotSuchASmugMarriedNow1]

I've said it before but i'll say it again. In the long term, property increases in value.

The type of people who are going to lose their jobs when furlough ends, ie, retail and hospitality, are not traditional homeowners anyway. Furthermore, high property values and low interest rates are the only thing keeping the tories in power and they know it and will do everything they can to keep it that way.

In order for house prices to drop people will have to sell their houses for less money than they paid for them. Can I ask you who you think is going to sell their house for less money that they paid for it - genuine question.