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Original poster

To say house prices have to fall?

69 replies

Mushroo · 21/10/2022 12:12

We’re planning on moving house in the next couple of years and in London so prices are mad.

we were looking at borrowing £550k which previously was about £2500 pcm. This was affordable for us and gave us a budget of c.£700k.

just had a look and the monthly repayment under the new rates is about £3600 - completely unaffordable so our new budget for a house would be £550k - £600k to make it affordable.

I know were in a very fortunate position but it will be the same across the board. A £200k mortgage was about £800pcm and it’s now £1,239pcm, so the people who were buying a £200k house now have a budget of £150k.

will we finally see a drop in prices?

OP posts:
ComtesseDeSpair · 21/10/2022 12:25

Probably some sort of drop, yes. That doesn’t necessarily mean that FTBers hoping to luck out on lower prices will actually be able to benefit from them: an uncertain market means lenders will become far more cautious about who they lend to and much stricter on LTV and affordability testing, if they’re worried that the asset they’re lending against may drop in value.

Youdoyoutoday · 21/10/2022 12:26

I think they are slowly coming back down to realistic prices. I have one agency emailing me property alerts for my local area and I've noticed a lot of them are slowly dropping in price because they simply aren't selling.

Youdoyoutoday · 21/10/2022 12:28

but obviously that's just my small view in to the property market!

Same of the previous prices were just ridiculous and I've been looking for 3 years no on and off.

Singlebutmarried · 21/10/2022 12:29

They will do.

We’re starting to see valuations from surveyors come back at less than the property has been marketed at.

Most of the time the vendor won’t budge, and the buyer doesn’t have the extra 20k laying around to increase their deposit.

It’s a shit show.

DoodlePug · 21/10/2022 12:29

Probably but slowly. For prices to fall you need forced sellers, so people who can no longer afford their mortgage or need to move.

Most people have 2 or 3 year fixed term mortgages so many will be ok for a while.

Then there's always a chance the gov will do something to support those who can't afford their mortgages if there's a hard recession, like with covid.

Overthebow · 21/10/2022 12:30

They don’t have to fall as long as there is still high demand and short supply. Plenty of people will still be able to afford it and others will have to go for a smaller house then before. However I do think they will drop a bit, and that will probably be a good thing. A few years ago before covid they were much more affordable so they could get back to those levels. I doubt they will completely crash though.

maddening · 21/10/2022 12:33

I think they should bring in caps for mortgage rates and rent rates for houses under a certain value. There could be staggering and regional variations as well to target the approach.

GasPanic · 21/10/2022 12:40

In short, yes.

It takes time for sellers to get common sense beaten into them by the market.

Once their 3rd potential sale has fallen though they begin to realise that something is afoot.

I think the real mind focus will happen after the next MPC meeting (early November). Rates will almost certainly rise again, and possibly by the largest amount yet. This will encourage the people who really want to sell to make some tough decisions.

MidnightMeltdown · 21/10/2022 12:42

My guess is 10% but I think it will take a long time.

There will be lots of gimmicks to prop up the market. We're already seeing the start of 50 year mortgages. People will be passing their mortgages down to their grandkids!

Cornettoninja · 21/10/2022 12:47

They have to fall and stabilise at some point unless something dramatic happens and the cost of living drops whilst wages rise, the maths just doesn’t work out indefinitely.

ComtesseDeSpair · 21/10/2022 12:50

Then there's always a chance the gov will do something to support those who can't afford their mortgages if there's a hard recession, like with covid.

Honestly, whilst I couldn’t say what form it might take, I can’t see there not being some level of government intervention. The last time there was a comparable financial crisis several decades ago which led to repossessions and people handing their keys to their lender, there was much greater availability of social housing and less pressure on housing stock generally. Whilst the general anti-Tory rhetoric is that the Tories want to see all poor people starving and sleeping on the streets, the reality is that there’s actually no appetite for this (as much as anything, who wants to have to step over hordes of rough sleepers on the way home from the opera?) and if hundreds of thousands of people are at risk of defaulting on their mortgages and facing repossession, the government is aware there’s no capacity in either the social or private rented sectors to pick up the pieces.

toulet · 21/10/2022 12:52

I agree, even if you have the extra £1000 a month it's a big shift to get your head around the fact you are paying an additional £12k a yr in interest.

toulet · 21/10/2022 12:53

But I think it will be a slow process

toulet · 21/10/2022 12:54

They don’t have to fall as long as there is still high demand and short supply.

cost of borrowing makes a difference

toulet · 21/10/2022 12:55

I can’t see there not being some level of government intervention.

They have already tinkered with stamp duty

HangOnToYourself · 21/10/2022 12:56

I hope so, I'm quite invested as I have a shared ownership and I am wanting to buy the other half of my house and currently taking the gamble to wait and keep paying rent in the hope the prices fall over the next year or so (if they do I will buy the other half while prices are lower as I dont want to buy now and immediately lose equity)..

ComtesseDeSpair · 21/10/2022 12:58

toulet · 21/10/2022 12:55

I can’t see there not being some level of government intervention.

They have already tinkered with stamp duty

Sure: but I meant to help people who are finding their mortgage payments unaffordable and potentially facing repossession and homelessness. The UK’s housing stock is a different animal to back in the 80s and 90s when friends of my parents who were being repossessed went straight down to the council and were given a council tenancy within the month. That’s not going to happen nowadays.

toulet · 21/10/2022 13:03

won't people switch to longer terms, part interest only or just interest only. I don't see a raft of repossessions

user1487194234 · 21/10/2022 13:08

Most people will just stay put, extend their mortgage term etc

APurpleSquirrel · 21/10/2022 13:10

Locally, prices are coming down - many houses are sitting on the market & then being reduced. Other are disappearing (under offer) & then reappearing a few months later, sometimes at a lower price. Even the house builders are starting to reduce the price & offer more incentives. Market has definitely slowed here.
We'd like to move into something bigger (need wfh space) but we're holding off whilst everything is so volatile.

GasPanic · 21/10/2022 13:15

ComtesseDeSpair · 21/10/2022 12:50

Then there's always a chance the gov will do something to support those who can't afford their mortgages if there's a hard recession, like with covid.

Honestly, whilst I couldn’t say what form it might take, I can’t see there not being some level of government intervention. The last time there was a comparable financial crisis several decades ago which led to repossessions and people handing their keys to their lender, there was much greater availability of social housing and less pressure on housing stock generally. Whilst the general anti-Tory rhetoric is that the Tories want to see all poor people starving and sleeping on the streets, the reality is that there’s actually no appetite for this (as much as anything, who wants to have to step over hordes of rough sleepers on the way home from the opera?) and if hundreds of thousands of people are at risk of defaulting on their mortgages and facing repossession, the government is aware there’s no capacity in either the social or private rented sectors to pick up the pieces.

Good post.

My belief is similar, that if people are forced out of houses they have to be housed anyway, so from a government perspective it makes more sense just to keep them in there rather than have the negative publicity.

However I think the support given will be a lot more minimal than in the past, for example the government may pay to keep you in your house, but will demand a part share of the house as compensation for that.

This will effectively pull money out of the market, but over a longer timescale, so if it does happen there will be less of a crash and more of a slow decline. it's waves of forced sellers that lead to crashes.

Yabado · 21/10/2022 14:00

I don’t think the government will do anything
they didn’t in the past and they have fucked about with the housing market so much with low interest rates help to buy and shared ownership there isn’t much more they can do

Most likely they will expect owners to go interest only or extend the term of the mortgage

They may pay the mortgage for a set amount of time in return for a charge on the house when i gets sold in the future - but I would imagine the first two options would be what they expect you owners to do first

last time it happened in the 90s my DH had two properties that he owned repossessed

Him and his ex wife immediately got rehoused via the local council within weeks
and when they split up he got a a council house as well as he said he had the kids living with part of the week

This wouldn’t happen now you would be expected to go private
you would have more chance of winning the lottery than getting a 3 bed council house where I live

Volhhg · 21/10/2022 14:07

No I don't think they'll fall significantly. Some parts of the property market will keep on going up. As long as property is a way for wealth to be kept in assets it won't change

No10codswallop · 21/10/2022 14:11

I don't think they'll fall. Demand is insane. I'm an architect and the busiest I've ever been.

However, I want to move back to London and can't afford to so I wish they'd start to fall...
Please 🙏

sst1234 · 21/10/2022 14:12

Why do they have to drop? Are you planning on building a couple of million homes in next year?

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