To worry about falling house prices

[Ll81]

They say prices in central London have been falling for a while and this is rippling out to the rest of the country. Also lots of talk about raising interest rates and they could also be another downward pressure on prices along with lots of EU nationals leaving.

Anyone else worried that falling prices may mean many that have bought in the last few years maybe stuck in ne?

We bought our first house in August 2008 in the knowledge we'd go into negative equity. Prices went back up again though and we sold in 2013 for a little more than we'd paid. It beat paying rent for 5 years!

We are now 10 yrs on from the 2008 crash and many friends/family are still in negative equity from then as prices didn't rise enough for them to resell so this isn't something new.

If prices drop it still won't massively hell first time buyers. A lot of people will stay put, as has been said on here...it only matters if you're moving. So a lot won't move.

Banks being less willing to lend doesn't worry me -- we'd get a mortgage in a heartbeat by anyone's standards, we'd just been priced out of the area we'd settled in.

I wouldn't bet on it, gwenneh. If you are currently priced out, you'll be priced out even more.

I wouldn’t worry about it. Long term predictions are talking about falls of 1,1.5%. That’s nothing

A home should be to nest, not to invest.

There is London and then there is the rest of the UK.
Those SE prices are ridiculous. £250K can buy a very large house in many parts of the country. You might earn more in London but you are not better off.
A house should be a home rather than an investment.

People have been posting about a crash in house prices for the last decade. It hasn't happened and unless we have total economic Armageddon it won't. And in that latter case it won't help anybody buy as nobody will be able to buy even the cheaper houses!

I've bought quite recently and might end up in NE if prices declined enough, as we only have about 20% equity I think. I'd still welcome a correction because we as a society need it.

We had problems trying to sell deceased fil's house in south east London - was on the market for about a year with no viewers. In the end sil bought fil's home and she sold hers ( slightly more towards central London ) to the local council who were buying something like 400 houses within a certain price range presumably to ease the social housing crisis. I think we were very lucky that this happened because we could still be waiting for it to sell and prices do seem to be falling in London.

I think the market in London/SE is going to change considerably (although there will always be pockets of success). I don’t necessarily think the bottom of the market will change much eg flats will still be overpriced & hard to buy. However I think if you buy a flat today for 400k, it’s very unlikely to be worth 600k in 2/3 yrs. The banks have already tightened up lending & interest rates will have to rise. No way are we going to see the historic growth of the last 10 yrs.

I think prices will rise in the North as investors turn there & I think more young people will be attracted to other cities such as Birmingham as opposed to London.

Depends where you are and what you're selling. In my area you can't get a four bed house for love nor money so they're always snapped up. Ditto anything with a garage or detached. Everything as far as the eye can see is two or three bed terraces which haven't gone up much in value in 15 years.

I also pretty sure that at some point we are going to see income tax increases & we are defo going to see council tax increasing.

I'm not worried.

I bought a 5 bedroomed semi in a leafy area 20 minutes from the heart of the city.
Cost me £215K 3 years ago, is now worth £260.

A deliberate move as I suspected prices would rise quickly in this area.
Not planning to move though.

They need to drop dramatically.

I will feel huge sympathy for anyone caught in negative equity but the housing market is beyond ridiculous, and so unaffordable for far too many people, especially in the South East where even a good above average two income household won't get you anywhere near buying a house (or even a flat!) in so many areas.

But it won't help anyone if they fall. Banks won't lend and cash rich people will buy them as an investment.

Not true.
First time buyers with a good deposit will benefit.

I hope the arse falls out of the whole lot of it. Its not sustainable. It happened before and it will happen again.

10-15% wouldn't be a full crash, it would be a small adjustment, there are a few people who would be stuck but far fewer people than are currently stuck renting and want to buy so on average it would be an improvement. If it is more like a 20-30+% drop there would be wider implications but even then not a disaster.

And yes mortgage lending is a different world to what it was ten or twenty years back. I just remortgaged after separation and it was a gruelling process even though I earn more than I did and was wanting to borrow a comparatively modest amount. They couldn't fling enough at me in 2003 and I was on peanuts.

I think buying a detached house is out of reach for most unless you are earning a very nice wage and/or have a large property to sell yourself. Most first time buyers will never be able to buy one without help or inheritance.

My ex fil bought a detached bungalow with a loft conversion, so 3 bed with a dining room or 4 bed without, a large front garden, a nice size back garden, a garage, 10 minute walk from the beach, nice area etc - for £125.000 in1998! It's now worth we'll over £500 k 😱 and completely out of reach, as is the whole area, to those on average salaries.

He is also of the mindset that young people don't have houses because they don't work hard enough/save/buy Starbucks/have sky tv.

Easier if they come down, makes it easier to trade up or gives people a chance to get on ladder

We’re first time buyers with a good deposit. We’re waiting to buy. A few years ago we might have risked buying a flat with the view to steeping up but it’s not worth the risk right now as we have dc so need a certain amount of space. The thought of negative equity terrifies me so we’re waiting until we can afford a home that we won’t have to leave any time soon. I’m sure we’re not alone in doing that. I do think it connected to brexit so we’ll wait to see how it plays out.

We are fortunate as we live in a relatively expensive house with over 50% equity. I would welcome a reduction in house prices to be honest. It is currently ridiculous and even though on paper we are affluent we can't afford to move as the jump up is obscene. I'm much more concerned about rising interest rates (and by that I mean a return to 7 or 8%) as we would feel that much more. A reduction in capital might lead to you being stuck in a house for a few years but an excessive rise in rates could lead to repossession.

House prices crashed up to 35% in 1989/90 about 6 months after I bought in London.

Everyone survived - some (like me) in negative equity just stayed put (it was a roof over my head, not exactly where I wanted but meh), some had to keep renting (again roof over head, not on the property ladder but meh), some people suffered more as interest rates were extremely high and couldn;t afford thier mortgage and their house was repossessed, some people got bargains from the repossessions.

And life moved on.

It was a lesson to many people that house prices go down as well as up and we were all much more cautious for a long time. I think that's probably worn off now, judging by this thread.

My mortgage rate was 15% for a while and didn't drop to under 10% until the early 90's

Buy to let investments are dropping dramatically - dropped by 50% in 2017 so it certainly won't be investors swooping in.

If they did drop though, a house worth say £300 k could drop to £250 k and still be unaffordable to most first time buyers. It's gone so far and beyond that a price drop would have to be colossal for a first time buyer to afford it, even then the owner probably wouldn't sell their house at such a loss, they would stay put until the market picked up again. The whole situation is shite and it makes me feel really sad to be of a generation who suffered with housing in this way (30s) and it's even worse for the next generations after me.