To think there must be a fall in house prices?

[Explaintome]

And not really understand why it hasn't already?

I understand people with existing fixed mortgages aren't affected immediately, but anyone buying now is.

Or is the stamp duty thing enough to negate the interest rates effects?

I'm not necessarily saying a crash but surely there must be some fall in prices?

Oh, and also the same smaller properties that landlords/investors are usually after. I think people may find it hard to cut costs by downsizing.

I agree @GasPanic.

Just from reading this thread, it’s clear to see that the housing market is incredibly complex. The papers also frequently mention how impossible it is to predict where the housing market’s going, because it can change so suddenly and is connected to so many other societal and economic factors.

I do agree with you here though, because we have never seen an economic situation like this before, and it looks pretty serious. While it is impossible to predict the market, I can’t see how house prices won’t drop in the long term, given the way our economy is being impacted. I’m sure there’ll be further government intervention to prop them up if they drop, but I think they will drop nevertheless.

No they won’t. They’ll be bought by oversees investors as the pound is cheap at the moment.

Only 28% of property in the UK is owned with a mortgage, so we’re less susceptible to rate changes than you’d think.

I actually do think house prices will fall. Of course there are investors from abroad that will help to inflate prices, the majority of properties are still bought by people with mortgages and these have just got way more expensive. So, I expect a correction in prices.
Long term though, house prices will only ever rise.

I guess we were probably viewing ones that weren't worth the value - hence them being sold for less than asking.
People got greedy I think.

In my area (SW) I’m seeing a lot of houses
on RightMove being reduced. Estate agents are telling me houses are being slower to sell, especially larger more than expensive ones. 3 beds they said are still selling quickly as more people can afford them.

They might stall, they won't fall, at least not where I am. The market is still moving very fast.

House prices haven't been related to incomes for a very long time, so I don't know why people think that changing economic conditions is going to cause a crash.

Have we ever had low wages, high housing & high borrowing & high living costs?

I'm looking atm and a large number of houses have been reduced just today. Quite noticeable - usually I see one or two reductions a week in the area/price range I'm looking in. Today alone there are seven

Also quite a few BTL properties on sale now, which is new.

Rince "Let's not forget that the Tories have just announced they're relaxing planning regs"

shit. How much more relaxed can they be? This is horrendous.

I can't see the market full on tanking but I don't see how it is possible for it to remain as buoyant as it is.

We were looking at buying in the next few months but we won't be now.

Give it a few months.

That’s the other thing- people are much more likely to sit back and watch rather than jump in and buy now aren’t they?

Yes absolutely- people already borrowing up to 5 x their salary - combined with a 7% interest rate its not sustainable. That being said the housing market corrects itself, less people selling= prices go back up.

It'll vary depending on region - cities with overseas purchasers, anyone with savings in dollars just got a big discount on uk housing. But yeah, borrowing limits being reduced as banks price in interest rate growth, it's going to have an effect particularly in areas where demand isn't as strong and competition isn't international/there aren't a lot of people moving in.

YANBU, but it won't help many people as mortgages will get much more expensive and hard to get, and no one will be selling unless they really have to or perhaps a small number of people who are downsizing having been somewhere a long time, to whom it'll be less of an issue.

This

Ive already heard of US buyers trying to buy in student areas as the £ is so weak

add in the new wave of highly paid Hong Kong people arriving at the moment who are in a good position to buy

there might be more for sale as people can’t pay their mortgages - very worrying

Someone else mentioned that if interest rates rise than savings rates rise. If they got to a certain point, it would be better for existing landlords to put their money into a higher yield savings account rather than have any of the stress relating to landlord responsibilities.

although many of the landlords in London at the lower end are people who are buying with debt and relying on rents only to pay it off so I don’t know if they will be able to sustain increases without passing it on to tenants

I think it's an incredibly complicated picture.

I expect they will drop. I doubt they will plummet

-construction costs are rocketing which will auffect the ability of developers to deliver more housing
-borrowing costs will rise for developers as well as for homeowners

• a lot of people saw the rises coming and are on long term fixes so won't be affected for many years
• the pound dropping may encourage overseas investment in UK property

For avoidance of doubt, I see my house as a home not an investment so would love to see prices drop enough that it made a real difference to people wanting to buy, but I just don't think it is that straightforward

I don’t understand the idea of foreign investors rushing into buy U.K. property when the £ is dropping. They are affective Lu losing money from the off.

I think they might try and work out the bottom date and then pile in - like the vulture funds did in Ireland after the 2008 crash.

Although the Irish govt seemed to protect ordinary homeowners to some degree. Speculators got caught.

There are whole shopping units/ streets in rural Irish towns that are owned by international groups that have just gone to ruin. I don’t know what their plans could be - with a little bit of leeway they could open them up to young artists/ produce makers, etc and make a lovely area to spend time in.

I think it will have an impact. Last recession (the credit crunch one) interest rates fell quickly. Anyone not stuck in a one bed flat with negative equity was ok, although people wanting to buy a first home were stuck too. But the lack of supply, as everyone sat tight, and the sudden fall in interest rates, cushioned the impact on house prices. They still fell by about 20% and took a few years to recover (varied hugely by region).

This will be more like the late 80s recession with high interest rates (not as high but combine with other costs of living). Of course they bounced back after a few years as the economy recovered. They fell by 34% in real terms, although 20% in nominal terms.

So… more than 20%? How long until they rise again might be the bigger question.

It just takes time to flow through. People buying now had their mortgage offers already. Others are cash buyers. Youngsters don’t have any experience of high interest rates and might not have realised until now how exposed they are.

Hi OP, I'm obviously not adding anything here by pointing out the complexities of the housing market :)
I had friends who held on to their homes during the 2008 crash and came out the other side 2 years later having made money (admittedly in desirable London areas). That 'crash' was pretty short-lived, all things considered.
It all depends what sector of the market you're looking at, but in the long term in my lifetime property values have only gone up.
The core reasons for this: people want to own; renting is always more expensive than a mortgage (because the landlord has a mortgage to pay!); there is limited supply of desirable homes in desirable areas...
Whatever madness Trussonomics is creating in the markets, these core factors don't seem to me to be in much danger of changing any time soon.
BTW, I do think reform of the market is needed and that we should do much better at housing those in need than we are currently doing. But how we get there I don't know.

Mortgage deals being pulled now by lots of banks and building societies. If interest rates go to 5.25% as predicted next summer then house prices shall definitely fall. The market is always behind the event though, so it will take a while before you notice prices falling significantly