Will house prices finally fall?

[PupInAPram]

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

No. Not whilst rental income is so high. If they drop even slightly you’ll have more buy to let’s bought, pushing prices up again.
1/3 rent, a good chunk of them would buy if they could. So that’s another push up from prices

I think there is a deep depression coming.So yes, I think house prices will fall.

i'm a bit scared about this

Population in the UK is increasing so supply will be a constant issue.

it's going to start declining in a few years. it's largely been driven by people living longer & immigration. We are less attractive to immigrants now

The market was not flooded with folks suddenly deciding wow, my house has lost value, think I shall sell it
I would.
I'd love a new house. It would be a largely sideways move, no mortgage, maybe slightly more expensive. A price fall would be the ideal time and would save me a lot in stamp duty etc.

I doubt it. There's still too much money sloshing around. Look at all the properties being bought for AirB&B. Ridiculous.

And the banks and the government will prevent those sort of increases in interest occuring again with all of their might.

I thought this but then there seem to be not doing much re the energy bills which are predicted to stay high for 3/4 years if they ever they come down. I'm not sure what they can do.

No. The government will continue to do whatever it takes to keep property prices rising, as they have since the 2008 financial crisis. The reasons for this are political: Homeowners are disproportionately likely to vote Tory.

@Kendodd you're correct it's easy to move up in a falling market. The supply is low now as so many can't afford to move up in this market.

I don't have a BTL but ai understood it's not so profitable now. In interest rates went up so that saving paid would that become more attractive?

@portionplate

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.

Wrong! One of our rentals has doubled in value, in less than 10 years. No property prices won't crash. There are too many landlords like us with cash to buy another if they do as well as bank of mum and dad giving out huge deposits. Neither of those are generally affected by the cost of living crisis. Unfortunately the people who are affected are generally poor and won't benefit from house price crashes if they are struggling to make ends meet.

I think prices will stagnate for a while, or even drop a little, but not huge amounts. Also, it will be very area dependent. Back in 2007/8, I remember the town we were moving from there was a slight downward trend, and the town we moved to was still increasing, although at a slower rate. However, over time, they gave both increased at a similar rate.

@portionplate

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.

I think it’s to make people go back to offices and prop up their commercial interests. But I’m very cynical.

Surely there comes a point where the government run out of levers to pull, out of ways to intervene to keep house prices inflated?

No, theres not a big rough supply of houses for sale at the moment and plenty of buyers around. The cost of living rise isn’t affecting the people buying houses at the moment. People underestimate how much wealth is around.

Of course eventually prices will fall, government can’t beat the market, as black Monday proved, for those who are old enough to remember!

At the moment it’s still a sellers market, I think most of us thought a dip was possible after the SDLT holiday ended. But most conveyancers I know are turning away business as they are still flat out busy.

The lack of supply is causing prices to continue to rise. But there are a lot of chickens coming home to roost, rising inflation, huge upsurge in energy/fuel costs, properties selling over valuation and then being down valued at survey. General rises in the cost of living. War in Europe etc.

These factors alone, will undoubtedly cause a tremor in the property market. It’s always a ripple effect, so it takes a while. If you can wait till late 22/ early 23, it might pay to do so.

I really hope there won’t be a crash, I saw the effects in the early ‘90’s, I wouldn’t wish for anyone to be trapped in negative equity or facing repossession.

@Enzbear I wasn't necessarily talking UK wide. However in my area of London prices went from 80k in the 80s to 2m in the 00s, that price growth doesn't really happen anymore & most people who see good gains need it to move up the ladder as everything else in the same area has also gone up.

@Flatbrokefornow interesting, I didn't think of that.

I think it hasn't really hit us yet. We can all see the rising prices on everything and I think it will be a good 6 - 12 months before people will struggle. Those with savings will use those first.
Those that haven't like me well it's tough luck.
I still have friends spending as normal as they have not really been fully impacted by the rises yet and still eating out, buying clothes that they want etc. Give it a year when the rising prices have impacted spending. Things may change. People will always prioritise their mortgages before anything!

I think it’s to make people go back to offices and prop up their commercial interests. But I’m very cynical

Thousands of offices have closed because companies have realised it’s cheaper for their employees to work from home.
I’d love to go back to mine to reduce my fuel bill (and just because I fucking hate working from home), but it’s closed for good. 20,000 people used to work there.

They’re still rising sharply, I can’t see them dropping much in the near future. We bought in August and paid 21% over the ‘offers over’ price. And even then it was being cash buyers that swung it for us. There were higher offers than us!
Now houses in the local streets that in worse state/no extension etc are now sitting at offers over the price we paid. So I’m glad we bought when we did cause we couldn’t afford the run down ones now,, never mind the one we bought!

Nah. Minimum wage is too high now.

@PupInAPram

Surely there comes a point where the government run out of levers to pull, out of ways to intervene to keep house prices inflated?

No. Because the value of money decreases op. Inflation is cumulative, a 100£ in 1990 is worth or the exact same as 211£ now.

So house prices naturally increase because the value of the pound decreases. In reality the real net increase isn’t that much.

So if you bought a house for 200k in 1990, because of cumulative inflation it would be worth 425k today. Both sums are worth the exact same in their given year.

The actualincrease in value is anything that house sells for over thr 425. So say it went for 600. The actual increase in 31 years is actually much smaller than it looks. Because you also need to take the cumulative inflation out of the additional 175 k increase. So it’s actually about eighty grand without inflation. And even then you need to take out rhe cost of maintaining etc. the profit in real terms is small.

In reality that house that was worth 200 k in 1990, is selling for thr equivalent of 280k. . The cumulative actual increase in value year on year for thirty years is actually tiny. But people look at rhe original 200 grand purchase price and think ooh they made four hundred grand and sold it for 600. They didn’t. Because cumularive inflation means the pound is worth far less than it was 31 years ago.

So You need to take the effect of cumulative inflation out of your calculations and thoughts.

Peoole keep going on and on about buying a house years ago and how folks have cashed in, in reality very few parts of the country have seen such a thing.

A 100£ in the mid fifties was the equivalent of 2200 pounds today. So if you bought a house for 30 grand in the fifties, due to cumulative inflation the exact same value is 660 grand today. The two values are identical in their given years. 30 grand in 1955 is the exact same as 660 grand in 2022.

Wanting them to fall won’t happen. Not for any extended time. Becayse the value of the pound will,always inflate. Always.

In thirty years time, a house that costs 200 grand today will cost 660 grand , simply due to cumulative inflation.

Nah. Minimum wage is too high now.

i'm not sure people on minimum wage are buying property.

Salaries do not get raised by inflation in the same manner as house prices so current day house prices are inaccessible, due to income multiples, for current generation which may have been for previously. eg an accountant salary now v previously. Where is the money coming from when households with two professionals cannot buy desired next step on ladder?

I bought mine for 195k in summer 2019 with a 70k deposit (Midlands)

I had it valued recently as I would like to upsize. it was valued at £270k but it is absolutely no help to me as to move up to the next size would require at least another 100k 🤦‍♀️ even with my equity . And I would be very cautious about adding to my mortgage in this economic climate plus if they do fall I don't want to be in negative equity