To think property prices will go down in next year?

[WagathaChristieMystery]

With the ongoing cost of living crisis and the possibility of a recession, I wonder if house prices in the UK will fall over the next couple of years?

I know we have a really serious shortage of houses in the UK, which is one of the reasons house prices are particularly high, but I’m wondering whether the cost of living crisis will lead to house prices dropping.

I’m not sure, maybe in the short term. Houses by be are stalling.
a few months ago you couldn’t even look at a house because it would be sold before going on the market. Now, especially four beds, are up for sale for months and are gradually being reduced.

They keep telling us this will happen in Ireland too and I don't believe it. There are just not enough houses. Demand is in excess of supply. The ukrainians coming in to the country mean that there's nothing affordable to rent (there wasn't anyway) so more people with a bit of money behind them will be forced to buy further afield perhaps but they will have to take the plunge and buy somewhere because there is NOTHING to rent in the cities. Mortgage lenders won't lend if they're not happy I know, but anybody who can buy something because they need a roof over their head. Even if that's a one bed flat 60 miles from where they work.

Well with inflation at 7% to 10%, even if house prices don’t rise then in a few years they will have dropped by 20/25% in real terms. I think that’s a more likely outcome than a sharp fall.

The thing is if it does happen London and surround will be only minimally impacted but the rest of the UK would be impacted greater for longer, the areas that have not driven the huge rises and not seen anything like the SE has. Outside the SE does not get the investment in local economies etc

If we go into a recession I think house prices may dip slightly and it will be much harder for first time buyers to show they can afford mortgage as so much money will be going on to utilities. In the long term property only ever goes up. I got a small inheritance from my Mum of £26.5k in 2013. I wanted to use it to help my children get on property ladder when older. I knew putting it in buying society would not hold its value so I bought a btl property for £103k putting £25.5k as deposit. It has been let out all of the to time. The mortgage was £350 but now gone up to £429. It was rented out for £550 but now £700. House next door sold for £185k and there garden is much smaller than mine. I have saved up the rental money and given my eldest son £8.5k towards a deposit 2 years ago. He bought a house in Hull where prices are very cheap. I put £500 into his account twice a year to help towards his council tax. My btl now has less than £35k left to pay on it. I am thinking of selling it off now my youngest son is almost ready to leave home and buy a house of his own. I could sell it, pay off mortgage, pay capital gains and gift younger son £10k then share our between them what is left which should be about £100k between them. My sister got the same amount of inheritance as I did and also wanted her dd to have it to pay for a deposit when she was older. She put it into an ISA and today it is worth £36.5k. Now she wishes she was a little braver and invested into property like I did. Her dd got £36.5k and my two sons will have got about £60 each so £120k in total. That is what investing in property can achieve.

My mortgage is at 2.99% , with stamp duty and re-mortgage fees and the fact my intrest rate would be higher it makes no sense to down size, it would cost more than the increase in energy.
We just won't use heating as much (just once a day to warm the house on a morning)
The rest of the day we will just wear warm cloths and blankets.
We are having more 'picnic dinners' which my DS thinks is amazing ☺️ so we don't use the oven. Also will be having more porridge for breakfast if we need to have a bit of warmth

It will be a slump/stagnation rather than crash.

People have been predicting a housing crash for over 20 years....

We sold and bought during the last slump in 2011. We got a good price as it was a building company selling a part ex house.

However, we accepted less for our house and we only had the choice of 3 mortgage products. The lending criteria was super strict.

So imo it'll be much harder to get a mortgage, les choice of mortgage products and house price reductions (indeed, I'm seeing that now locally to me).

RTB's analysis is very good.

I think the froth will come off the top end of the market - it is probably already doing so. Very few people will take on a huge mortgage next year when fixes are much more expensive. Older properties won't be popular with BTL because of the energy efficiency requirements coming in.
Where I am in London they are still building v expensive flats but will the young urban professionals be able to afford the mortgages necessary and will they want a garden. There appears to be a bit of a mismatch between what is being built and what people are likely to want.

Property prices will stagnate but they won’t go down.

There are too many people for too few properties. Then you add in all the people who have or would like second homes and …no, property will be fine.

Many btl owners are selling up 1 btl a year due to new housing reforms. There will be a massive shortage of good rental properties and that will mean the ones left will increase rents. A recent survey found I think it was 61 Percent of btl LL are considering selling in next year- 18 months as new legislation comes in.

I think landlords will continue to buy houses as they know there'll be more renters during a cost of living crisis. So maybe not a huge downturn in prices at the lower end.

Definitely the USA , Australia, NZ and China are already dropping we follow them. I don't predict massive falls probably at most to prepandemic level the market will stagnate. I'm not sure why people think we are immune to a global event.

I think it will affect different areas differently (I think there are areas of the north where house prices only just recovered from the 2008 crash) and also different property types. Starter homes and energy efficient homes will be less affected than larger and draughtier homes. I wouldn’t buy a house with an EPC worse than D, ideally C.

Fwiw, the crucial point here is about affordability not value of homes.

The value of homes isn't going to decrease due to the sheer demand.

Where the problem is, is in terms of affordability. And thats concentrated in the bottom and middle of the market and for mortgage holders.

Retired couples living in big houses have been able to keep them after the kids left and they retired because of cheap energy prices. This is about to change and its a fundamental big change to the market which will screw any hopes of the market improving for those buying with a mortgage. This is a huge group who have stayed put for many years who suddenly may change their behaviour. That's a big shift in the market.

Lenders are going to be much stricter with their terms and thats the issue. There will be a squeeze on borrowing as lenders are more exposed to defaulters.

The top of the market is where I think its dead interesting. Houses aren't going to lose value due their square footage - if small properties are in huge demand they can't, simply because in theory you could split these properties in two or they can be shared by two households.

But they are going to get much harder to sell. Older couples may be desperate to sell free up their equity and to avoid huge bills they don't have cash for. So I do think there will be good deals to be had for some moving up the ladder. Others older couples may seek to downsize themselves with what cash they have, but will rent out, perhaps at a more favourable rate because they struggle to sell. Large properties are likely to take longer to sell as there just won't be the number of people to buy. But crucially they won't lose a huge amount of value either. Around here large 4 bed detached properties are now going for around £700k. But a 2 bed half the size is going for at least half that, and there's the rub.

I think we will see more large proporties repurposed into two or more smaller ones in certain areas by developers for this reason. But that won't happen everywhere and is subject to planning permission that many councils will be perhaps reluctant to approve due to things like parking and provision of local services such as schools and healthcare facilities.

In practical terms places which are NIMBYheaven will now face a dilemma between giving planning to divide houses and giving planning for new builds. I also think its going to shift the market in terms of what developers build and what buyers (and voters) want. The trend has been towards the large detached executive house because that's what makes the most profit. I don't think that's going to hold true going forward. It will be much more towards cramming in townhouse semis or terraces on the same footprint. Which again I know NIMBYville areas don't like. That is until many realise they want to downsize but can't...

What the potential downsizers want and need is the real thing to watch here. That's what's going to drive market forces.

Not overall market prices, because its all about affordability not value now.

OP, so you think people will sell because they can’t afford to live? They still need somewhere to live. Your theory doesn’t account for the fact there is simply not the supply of housing.

UK net migration stands at around 200k a year, not slowing even since Brexit. Housebuilding has dropped to all time lows since the pandemic. The country builds 37k new homes in the year to April 2022. We needed to be building 300k even before the pandemic.

Just to add to the mix, the Evergrande crisis in China means that property prices are at risk of collapse there. The Chinese simply have refused to pay for these overinflated properties that sit there completed or in some cases not even yet built in their own country. Couple that with the weak pound, they get more for their money in UK now than before.

Then you have the strong rental market in this country. Even despite the higher taxes, it’s a a good time to be a landlord for corporate outfits. If property prices drop, landlords will swoop in. And it comes back to the demand, people still need somewhere to live.

In short, for people looking to buy somewhere to live, trying to time the market is a fool’s game. Many have been waiting for it 25 years, losing out by paying rent or missing the opportunity to build equity.

There's inflation, that means costs go up. That will include housing, sorry, it's a scarce resource. In the short term some properties in undesirable areas might lose a bit of value, in the long term they will all increase in value.

I think the market is slowing at the moment, we are looking for house at the moment and have noticed not much is coming on the market and a lot is being reduced. I don’t expect a massive crash though!

The other trend will be middle age couples moving parents in with them into larger properties. Or moving in with parents in larger properties.

Mainly out if neccesity as neither the parents nor the family can afford the energy costs alone.

It makes sense in terms of an aging population and actually is a return to what was normal a century ago.

But it isn't going to be popular or make people happy.

Prices might stagnate but property will always increase in the long run. I have seen people posting on here every year saying the same thing but genuinely believe there will never be a house price crash. Back in the day in London, property used to double in price every seven years.

In 1993 I was trying to sell a three bedroom house in East London. I had paid £73k for it in a couple of years earlier and it was valued at £58k even though I had refurbished it. Everyone was saying that I should reduce it and get shot of it and I remember being terrified that it would be almost worthless and a noose around my neck. It didn't sell so I had to get a BTL mortgage and rent it out. I still have it and it's now valued at £650k. The only other time I can remember when property reduced slightly in value was 2008.

I was actually reading Mumsnet 2008 about the correction. What happened there was a stalemate between sellers and buyers until reductions had to happen. I'm noticing many properties sitting in my local area which wasn't an offers over area but boomed in the pandemic. I'm predicting London and other city centres won't suffer much but rural areas which boomed will.

Global events don't have uniform impacts. Most of us believe that in the medium to long term property prices will rise in the UK, so they will.

I say this as a homeowner I'm not really bothered if my property loses money it was never money I directly made anyway just luck. If anything if prices fall your onward purchase becomes cheaper. My house has increased by 80k since I lived here if it dropped to what I paid for it I've still paid a lot on my mortgage and I will still get a good LTV.

We moved last year into a 4 bed detached. It was the crazy time when you basically bought as soon as you saw it. 3 bed houses. But when dh dies (he's older, it's a given) I'll downsize. Probably full circle and into a flat, like when I had my first job. By then, it won't matter if prices have dropped.

I don't know where everyone who is supposedly downsizing due to costs are going to live. Where we are, there appear to be no 3 beds to either rent or buy. Plenty of hmos though.

They’re already falling here, hold tight….