To think that big house price falls finally on the way?

[qwertyflirty]

After years or price rises, in my area (edge of London), I'm finally seeing price falls of around 15% from peak.

Lots of evidence in recent months of house price falls starting and picking up in London/South East, and usually once they start here, price falls spread elsewhere.

House prices are down on average 17K since July 2017 in London. "The average price of a home for the capital as a whole was £471,986, down from a peak of £488,247 last July."

There is little the government can do to mitigate it this time round, as interest rates are already at record lows. All signs are currently pointing to the top of the market having been reached and prices about to crash.

Such as:

www.theguardian.com/business/2018/apr/18/london-house-prices-fall-average-uk

www.thisismoney.co.uk/money/mortgageshome/article-5733321/Beware-red-danger-signs-house-prices-Young-buyers-borrow-record-sums.html

www.theguardian.com/money/2018/may/12/house-prices-are-on-the-slide-where-will-they-go-now

www.independent.co.uk/news/business/news/house-prices-fall-housing-market-rics-survey-april-a8343561.html

www.propertyweek.com/finance/house-price-falls-continue-in-london-and-spread-to-south-west/5096455.article

www.theguardian.com/commentisfree/2018/may/10/celebrate-house-prices-falling-britain-property-values

I am a RICS surveyor. I am qualified, knowledgeable and experienced in the subject of UK real estate. It is of my opinion that we entered a global recession in 2017 and house prices will crash throughout the country over the next few years. Mainly in the South East, with prices correcting to 2005 values.

Some on here have said that during the downturn in 2008 (it was not a recession), prices and the economy corrected quickly. This was mainly due to the reduction of interest rates. Ten years later, the emergency interest rates are still in place and this time around (in a real recession) are unable to be reduced. They will only rise, the BoE has no choice. I personally see interest rates rising to double figures in the next decade. Inflation to match.

Prices in my area (Essex) have reduced over the last month. Nothing is selling. Plenty of new stock entering the market via Rightmove. All noticeably cheaper than last year. Most of these are previous BLT with no onward chain. With section 24 implemented, LL’s no longer receive tax relief on interest payments. This puts most LL’s into the higher tax bracket, doubling their annual tax bill. As more and more highly leveraged LL’s are made aware of this change in legislation, more properties are entering the market.

Nobody saw the 2008 downturn coming either......

That's a pretty alarming picture you're painting there Sally!
(Although please note I am not suggesting that you are being alarmist )
Just imagine double figure interest rates 😲

Againfaster

"thousands of people who work flipping houses and making ££££"

Might not be such a good idea:

www.theguardian.com/business/2018/jan/26/ghost-towers-half-of-new-build-luxury-london-flats-fail-to-sell

Ghost towers: half of new-build luxury London flats fail to sell

More than half of the 1,900 ultra-luxury apartments built in London last year failed to sell, raising fears that the capital will be left with dozens of “posh ghost towers”.

The swanky flats, complete with private gyms, swimming pools and cinema rooms, are lying empty as hundreds of thousands of would-be first-time buyers struggle to find an affordable home.

The total number of unsold luxury new-build homes, which are rarely advertised at less than £1m, has now hit a record high of 3,000 units, as the rich overseas investors they were built for turn their backs on the UK due to Brexit uncertainty and the hike in stamp duty on second homes.

@Sally That is interesting and from a conveyancing side we are seeing and expecting the same.

Not that I expect them to but since the interest rates cannot be dropped like last time, the only way to head it off that I can see is to reverse the section 24 and the higher rate stamp duty to 'save' the BTL market.

I still think there is going to be an issue with price drops even if they try to rescue it in that way.

Thanks Sally

Good to hear from a property expert about the future direction of the property market.

Sure lots of people will be along in just a minute to tell you that you know nothing as you are just a property surveyor...oh.

What will happen to all the existing home owners if interest rates reach double figures!?

I certainly think the tightening up on landlords has slowed the market. My ex landlord (who we quite often bump into at the local pub!) has said that he’s going to sell in the next few months because it’s not profitable anymore, and our friends who bought a couple of properties around Portsmouth in the early 00s are also selling up this year because of the recent tightening of regulations. If there’s less rental property on the market, and more on the buying market then that will slow down.

To be quite honest, you shouldn’t be buying a house as an investment. You should be buying a house for its primary purpose; to live in. If your intent is to jump on and make a quick buck and then move on; the property market is a very dangerous place to do it. Long term; it will go up. But we’re talking 15-20 years long term.

I expect there will be a slowdown in prices as there has been in previous years; I think in London the house prices that will slow the most will be new build flats, there are just SO many flooding the market and I don’t think there are enough people needing that type of accommodation.

I think all new builds (flats and houses) will lose their value first. Still can’t see a major crash though. Double digit interest rates would cause a crash but how likely is that really?

I agree with Sally.I think it's a really good thing however as prices have got high. it shows the steps the Government has taken are working and it will mean those who want to move to a more expensive place and those buying for the first time will be fine. Also to buy now there is quite a strong stress test based on can you couple with interest rates a lot more than you currently pay so it should not even mean that many people can't cope in their current homes either.

On the landlord issue plenty are selling but remember if they own it for cash without a mortgage or they pay 20% tax (which was my son's position until he moved into his own house) then the the interest rate changes do not affect you (and for those who own within a company).

There are people who need accommodation but they don' t need or can afford new build 600 k plus flats... those new builds not selling will.have to be taken over by rental companies (rather than private landlords) to rent out at reasonable prices long term tenancies so we can keep teachers nurses etc in London.

There is a Huge need for affordable rental properties... if individual private landlords selling up then govt or housing assocs could buy and rent out to people...key workers young professionals ... make long term rental easier and better like other European countries

House price is only relevant if you need to sell.or buy...

Excluding the London Bubble - I expect prices to level out for longer periods of time, and I hope that they do, then it will be easier for FTBs to set a target to aim for rather than being on a hamster wheel continually aiming for a target that moves further and further out of reach.

Yes we need more houses and a a big problem is the Land Banks held by Investor/Developers - Land with Planning Permission to Build but they hold onto it to keep Demand more than Supply, and therefore Prices higher. Recently the Govt has announced plans to tackle this.

S24 and BTL LLs - great move I think - if LLs sell it's another property available to buy and will help to put the brakes on rising prices.

I find the high rents people have to pay to cover the mortgage payments, fees and profits of the Lenders, Agents and LLs quite hideous and the worst part of the current situation. Rents so high that people can hardly afford them let alone save for a deposit.

As prices stabilize, [hopefully] wages will start to rise as they are long overdue to.

All excluding the London Bubble of course.

xenia yes that’s right, they stress test you now when you apply for a mortgage. A very good thing, I think.

Of course a double figure interest rate could happen I suppose; but that would put millions out on the street... and then what?

It is of my opinion that we entered a global recession in 2017 and house prices will crash throughout the country over the next few years. Mainly in the South East, with prices correcting to 2005 values.

Hope not! That would be like a 65% drop on my road!

Sally111 Alarming indeed.

Yes I was thinking they might halt stamp duty for a bit for a final stimulus CornishMaid1.

With all due respect a chartered surveyor isn’t a market analyst or expert and whilst they will have more knowledge than the average person they are in no way able to predict the future.
Interestingly have just come out of a morning with the biggest funders of property developers (16 lenders represented) and amazingly, they didn’t appear to have the foresight that sally and the OP have and are predicting small falls or stagnation, with high hopes for other parts of the SE where property is still more affordable and the oxford Cambridge corridor and cross rail affected towns.

Amazing that they’d want to fool themselves so much they’d lose their billions of invested cash rather than read the evening standard and check RIghtmove like the OP

From an objective point of view - the wider economic conditions to foster a 50% real estate drop would be super interesting. Devastating, but interesting.

sprinkles yes, I’d forgotten about crossrail! That’s really going to push prices in places like Reading and Slough up.

Sprinklesinmyelbow When do the experts expect to see a rate rise then?

No one really wants to nail their flag to the mast. They’ve been predicting an interest rate rise for years now and been wrong every time. What’s the point in making the wrong prediction over and over?

The ‘experts’, predicted two interest rate rises this year, one for May, oh wait....

No one knows.

Re the stress testing of mortgages they are much tighter. My friend has just remortgaged and was suprised how much tighter it was. She originally got on the ladder by securing a big interest only mortgage with a tiny deposit with a low salary. Times are different now.

I am doing it, I said in pps that ive bought and sold 3 properties recently in SW London and made a fair amount from refurbing them, as have many of my colleagues at my 'proper job'.

Sprinklesinmyelbow - you astonish me!

Property developers claim property prices aren't going to fall.

In other news, bears are still shitting in woods and the Pope's not a Protestant yet.

Againfaster - from the same article as above:

Steven Herd, founder and chief executive of MyLondonHome, an agency that specialises in new-build homes for investment, says his firm is struggling under the weight of overseas investors who bought in the last couple of years and are desperate to sell.

He says hundreds of Asian investors who had bought London developments off-plan in 2015-16 in the hope of making a quick profit by selling apartments on closer to completion have instead lost hundreds of thousands of pounds. “They intended to flip [buy and sell on] the apartments and make big profits, but it hasn’t worked out like that, and now they are trying to get out at the smallest possible loss.”

He adds that in one case a Russian investor bought an off-plan property in 2014 for £3.1m, but couldn’t afford to complete and sold it for £2.55m.

Sprinklesinmyelbow So the feeling is there will be no interest rate rises for a long time?

ThroughThickAndThin01 The BoE wanted to rise them but growth wasn’t strong enough.

I think there will be a rise in the later half of the year personally but who knows. I do know they can’t stay low forever.