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?

But their not really crashing are they!

Losing 11% because you’re first offer collapsed is pretty standard.

Crashing is a wholly different thing

I remember my parents reducing the house value by 100k in the early 90s
It’s totally different now.

No they aren’t yet, and I personally hope they never do - but who knows what Brexit will bring.

High housing costs is one if the reasons we are so unproductive.

Only one in three properties have a mortgage on them. Of that third the average outstanding mortgage is around £60k.
The banks are well capitalised and stress tested to cover a fall of 30 percent in house prices.
The low interest environment was put in place to protect banks against badly risked loans in the 2000's. The banks are once again solvent, it is time for rates to rise to the normal to bring investment in productive industries as opposed to selling piles of bricks to each other.

I think there is a correction that has been happening for a while now. Asking prices are still vastly inflated in London and the SE, this is done to vendors expectations and estate agents are just pandering to get the business. It’s the number of price reductions and sold prices that we need to be looking at. It’s interesting that there are a number of big housing developments in the SE that have been given the green light but there’s no sign of any work starting. Recent developments that are nearing completion seem to be doing a lot of promotion indicating that they still have lots to sell.

Around me (Surrey) there are houses that sell quickly - then lots that hang around for ages. In the second group are lots of houses that are over priced (and even if the price has dropped, still over priced).
But of the "modest family house" category there just aren't enough around - so I can't see their prices crashing too much, although if they did that would be no bad thing if it meant more people could afford them.
Of course a lot of it is Brexit related as the "Super Rich" aren't buying up London flats and houses as freely as they were as they are not longer sure of the UK and if London as a bolt hole is the best investment.
Our house has more than doubled in price since we bought it 10+ years ago, which would be nice if we could cash in. But actually there are relatively few houses on the market.

The one place not to be in a down turn is the position of some old neighbours of DH in the early 90s down turn, stuck in a 1 bed house with 2 children which was worth considerably less than you'd paid for it. I don't know what happened to them but we felt very sorry for them at the time.

In my area they are still rising, my house has gone up by approximately £30000 in three years. My parents house (in a different area of the country) has increased by about £20000 in about the same time. My brother's house (another area again) has risen by about £50000 in four years. None of us live in the South East though so I'm not sure whether it is very different there though.

I hope they do fall - and I live in London. In some areas they have already. Friends rent a new build flat in Greenwich - Cost to buy was £720k a year ago. The same flat can now be bought from the same developers for £380k!

Only one in three properties have a mortgage on them. Of that third the average outstanding mortgage is around £60k

Properties owned outright are more predominant in areas such as rural Wales where there isn't a shortage of housing.

In comparison, just 23% of London's households own their property outright.

I certainly hope they fall. Prices are absolute bullshit everywhere atm. A bog standard apartment should not be 200 thousand plus

That's not everywhere. That's London.

Prices are absolute bullshit everywhere atm

We’ve just bought a large 4 bed detached house with huge garden for £295k. There are places in the country other than London!

Bought a flat in outer London suburbs in 1988 for £65k. Sold it in 1995 for £38k. Property slumps really do happen. Current house prices are (imo) unsustainably high and I think a similar correction is overdue. If interest rates do go to more realistic levels then that will probably do it.

@Grumpyoldpersonwithcats
Do you own your own home now
Was getting on the property ladder in the first place what helped you?
There is always a back story. I doubt you sold, lost all the money and became homeless?
If you did I apologise

People have become so used to the mantra of ever rising house prices and yet complain that the house prices are out of kilter with wages because they do not think it will affect them personally.

It has become an ironic situation were everyone wants something done whilst making sure it doesn't affect them personally, we bailed out the banks and kept the asset bubble inflated since the last financial crash, a correction is needed somewhere in the market and globally it looks like inflation isn't the preferred method.

Depends on if the printing press starts again and we just kick the can down the road though.

Better to be stuck in negative equity than locked out of owning a house because of fantasy valuations. Why is a homeowner’s pain more distressing than a non-homeowner’s? And those who worry that a crash would have a terrible impact on the wider economy – the economy is already negatively impacted by all the money tied up in unproductive houses; think of all the things people can’t afford to buy or do because so much goes towards the basic necessity of shelter.

Don't worry a house will always be worth one house

@Huntinginthedark
Despite 15% interest rates at the time I had managed to pay the mortgage off before selling. So a real financial loss but not horribly impacting - particularly as the next house I moved to had dropped in price as well. I do own my own house now - but no idea how my kids will get on the property market unless prices fall. I've no intention of moving so the market value of my current house is irrelevant to me.

Where are all these people going into negative equity because of falling house prices? The average home in London is still up on a year or so ago and significantly up on 5 years ago. Prices have dropped somewhat at the very very top end - we’re talking £5m+ apartments though

@LI81 I don't think a 10% market fall will bring the economy crashing down with it. I think historically a 10% market fall has been indicative of th economy being in decline, not the other way around.

Overall I think the housing market is ridiculous ATM and is overdue a correction. In some areas, this has started already. Naturally I have huge sympathy for anyone who bought at the top of the market who loses out. I bought my last house in early 2007, within 18 months the value tanked and as a 20 something that was incredibly disheartening. I hung on to it and eventually it went back up to what I originally bought it for, and then eventually I was able to sell it for a healthy profit, but I remember getting told it was worth £40k less than I'd paid for it and being incredibly depressed at the time! Now if the same thing happens to anyone I know I will advise them to just hang on to it and ignore the value unless and until they need to sell. It's also made me wary and now I'm unlikely to buy in conditions when I feel the market is over-inflated.

There's presently a hell of a lot of 30 somethings that can't get on the ladder even though they. have good jobs because they'd never be able to save enough for a deposit. However you look at it, that cannot be right and cannot be sustainable.

We’ve just bought a large 4 bed detached house with huge garden for £295k. There are places in the country other than London! Where are you?

I don't think a 10 percent fall would bring the economy crashing down, it also isn't going to make housing in London a sensible price. It might make more landlords as people need to move but cannot sell at the price they need to. A larger percentage drop wouldn't either be good for the economy or indicate a healthy economy. Without other structural intervention people who can will just wait out the dip before selling. If interest rates rise significantly people will be repossessed, providing cheaper housing but at a high social cost.

Where are you?

East Midlands. Lovely village, close to 3 big cities for work and 1.5 hours on the train from London (DH works from London a couple of days a week, the rest in local city)

Oh look, another thread where people think the conditions in the housing market in the SE is typical of those accross the whole country.