Will house prices finally fall?

[PupInAPram]

They've been defying gravity for so long, but surely now there are too many downward pressures?

I think it more likely it'll be a slow fall due to banks tightening lending, cost of living crisis and rising IR and inflation.

Inflation as we used to know it was controlled from around the mid 1990s. Since then we have had a bull market in assets funded by quantitative easing, globalisation, internet inventories and low interest rates.

That party is ending with polarisation, national socialism, protectionism, war and of course Covid.

It is going to get harder to make money out of property growth as it will in other asset classes. And if you did, the state will tax it harder to fund the national housing, infrastructure and welfare payments needed to support rental benefits which will undoubtedly rise over time due to a generation of 'having less'. Mind you, some people will say the problem is because 20 year olds keep eating avocados.

Ha ha. Avocados. I just want my child, who is crazy good at saving and has worked so hard to achieve academically and in his career, to get out of renting. I've been telling him for years that house prices have fallen in the past and will again, but he's only ever seen massive rises since he started saving for his deposit.

Not sure about a fall but not keep going up. Feb GDP was crap & that was before the war. Plus banks are tightening up lending.

I don’t know how they can fall massively - people won’t want to sell if they’re in negative equity, they’ll just sit tight unless they absolutely have to move.

It is going to get harder to make money out of property growth as it will in other asset classes.

I would agree with this although think it's been true for a few years.

@SnowdropsInSpring

I don’t know how they can fall massively - people won’t want to sell if they’re in negative equity, they’ll just sit tight unless they absolutely have to move.

This. If they fall too quickly or too much there won't be any houses on the market to sell! It would only be people who have no other choice but to sell with would make it a very narrow market.

people won’t want to sell if they’re in negative equity, they’ll just sit tight unless they absolutely have to move.

doesn't it depend on interest rates & when the fix ends. I think it will be fine for most but would be anxious with a 90/95% mortgage

I bought mine for £150k around 10 years ago so and it's probably worth around £200k based on zoopla predictions. We are actually considering moving in the next few years but if the house isn't at least worth what we would need to buy a bigger home, there is literally no point in even thinking about it.

@SliceOfCakeCupOfTea normally it's easier to move up the ladder in a falling market

People have been wanting prices to drop for years. People who have no experience of the housing market waiting and waiting and then finding they have missed the boat.

I think they will start to plateau though but as PP say - if they drop people will just stay where they are. I would...

They might drop a bit. But realistically not enough to make any real difference to affordability for most people.

Here are the latest predictions - up to 10% drop in 2023, potentially. Though obviously it's one of those things people are constantly saying, and sooner or later a handful of people are randomly proved right and get to nod sagely.

www.thetimes.co.uk/money-mentor/article/will-house-prices-drop/

Just actually read it and that 10% only applies to parts of London...

Not by much. And judging by what happened in Ireland after 2008, where prices did drop 50%, it just comes roaring back worse than ever in another few years.

But prices did fall drastically in the early 1990s and in the recession of 2008, so it can happen. In London from 1989 to the early 1990s prices fell 32% on average.

I think a plateau not a fall, but as always it’s very location specific. I bought just before the global economic recession, everyone convinced of a crash. Didn’t happen and my house/area doubled within 2 years of that (not London and not cheap). We were lucky to get on the ladder. Then COVID - same threads and everyone convinced of a crash. For 20 years friends have been saying “must crash/slow down now”… never has in my area and that original house is now probably 3-4 times equivalent what we paid. Some friends are permanently priced out of the area, others lumped with bigger mortgages for a ‘starter house’ as they got on the ladder years latter.

Not saying any of this is right but demand is there, as per your own children. That coupled with supply issues mean prices are very unlikely to plummet. Even those in negative equity, as long as you pay the mortgage and ride it out probably cheaper than renting.

my part of London stagnated since Brexit really.

I think with remote working expensive areas won't be so attractive & they will plateau & because house price growth has driven so much of the market there will be a knock on effect.

No. There are still enough people able to buy, and there is a basic shortage of supply keeping prices high.

Developers won't build many new houses if prices fall, because, having bought land at 2020 prices, they will wait until prices are high before they develop the land. That way they achieve best return on their investment.

I also expect some kind of property/wealth tax as they can't hit income any further but the country is broke & the new h&s levy will not be enough to cover the nhs/social care with the ageing population.

This gov are notorious for propping up the market though & part of me thinks the lack of action over energy bills is to hope older people in the bigger houses downsize to keep the marker moving.

No. There are still enough people able to buy, and there is a basic shortage of supply keeping prices high.

It's a supply issue at the moment but growth has largely been driven by low interest rates.

It's been a long time since house prices had anything to do with household incomes and expenses so what's happening with those two things won't affect them. As a PP said it's more to do with state approach to that particular asset class. No sign of any change in this despite noises about getting bent Russian money out of London (and even if that does change there's plenty of bent Ukrainian and other global cash to replace it).

If they do, it will be bad news for everyone, including FTB’s. Lenders will massively tighten up their lending criteria. There will be fewer houses on the market as people can’t afford to make the next step up the ladder. People will be in negative equity. Houses will be repossessed, leaving people without a home. And surely no one hopes for other people to lose their home just so that they can snap up their house cheaply?
House prices dropping is usually a sign of massive recession, which adversely affects most of us.

And surely no one hopes for other people to lose their home just so that they can snap up their house cheaply?

I can't begrudge someone younger than me being excited about cheaper prices, why shouldn't they be?
Plenty celebrate price increases & don't think of those shut out.