To think a house price crash is definitely happening

[JudesBiggestFan]

I'm seeing house prices drop down and down before my eyes.
We
sold our house at 30,000 less than asking a couple of months ago but the chain has now fallen through. Three months ago our buyers sold, it fell through, they relisted two weeks ago at 20 grand less - so 275000 instead of 295000 and one viewing, no offers so far.
So we're all on hold, but I know they now won't sell at that price as first time buyers in this area just can't afford that. Every day I am seeing houses on Right Move that are hanging around for months or being reduced again and again.
I feel like the market hasn't caught up with interest rates...people just don't have the cash needed for current house prices and high interest rates on top but sellers are reluctant to reduce. Feel really stuck - we need to move for work reasons but the market is the slowest and worst I've known. Is it the same everywhere?

Prices are falling a bit near to me but it's not what I'd call a crash. I did read an article in a newspaper, it might have been the Guardian last week stating over the last year defaults on mortgages have gone up despite the 6 months clemency and being able to opt to interest only for 6 months and that next year would bring many more defaults because whilst I test rates keep going on up, people with mortgages coming out of 3 and 5 year fixed rates of about 2 percent suddenly find themselves unable to pay 6 percent. Also made worse because pay rises haven't kept up with inflation. I think over the next year house prices will fall further but might stop if the BoE stops increasing the base rate.

I disagree. We have a chronic housing shortage, prices are fuelled by demand.

Bottom end here is still going up. Anything more than a 3 bed, the market is absolutely dead - very little for sale at any price.
I'm not convinced there'll be much of a crash. End of the day, there's still plenty of people who can pay even if they'd rather not, and there's nowhere else to live is there?

It does seem different in different places. I'd say smaller properties are moving, but anything over £300,000 is taking ages to move. Likewise anything that needs work. This is in a market town in the midlands.

I disagree. We have a chronic housing shortage, prices are fuelled by demand.

cheap borrowing definitely fuelled things.

Things are generally still shifting in a few weeks where I am - modern estate on the outskirts of a large city. But apparently they were moving in days about eighteen months ago so it has cooled off a bit.

Very similar to by us. Enough FTB getting on the ladder to move the cheaper homes but the larger, family homes are just not budging at all. Many of them are in need of renovation and the cost isn't factoring in the cost to renovate - they are only 10-20k lower to more finished houses in the area. Weird vibes.

Midlands - 1hr 15 mins from Euston - you could be right

House prices fluctuate, but always increase.
My aunty and uncle bought there first home in our village in the latest 60s for £2000 and sold after 5 years for £4000.

The same house sold in 2020 for £685k.

There's lots of reductions in my area but almost all the houses were too highly priced in the first place. One house around the corner from me was listed for £550k but, I think, is worth around £450k. It's now reduced to £480k less than 2 weeks after initially listed.

I bought in 2022 as a ftb (thank god I took a 5 year fix) but I can stay in my house forever if needs be and probably will stay long term.

Whatever house you are buying or selling, the market's mood has changed. At the Covid peak our house's value was estimated anywhere between £650k and £850k. It is a capacious 4 bed detached, but there are only so many buyers with the pockets to pay for it, and there are not many local buyers. We are retiring, relocating and downsizing in this process, so we are not under pressure to sell. But two years ago, we would not have been considered proceedable in the area we like unless we had sold and were cash buyers. So I personally am quite pleased that transactions and chains are being given time to play out. I think it gives all participants a better shot at achieving what they want, but a lot of patience is required.

There is a limit to how far prices are going to fall because of the shortage of houses.

Nice houses still going up. Crappy flats going down. Draw a line inbetween

Mortgage applications are down about 40%, everyone thinking about (and now deciding not to) take out a mortgage lives somewhere, that isn`t a "chronic housing shortage". The "supply and demand" arguments that people used to trot out will have been very costly for people who took the plunge into mortgage debt on the basis of believing those arguments.

Prices were fuelled by cheap debt and sentiment (houses always go up, debt will always be cheap) people chose to show off how much they could borrow for the biggest house they could get in many cases, it is quite easy to stay where you are when the debt gets more expensive, and this is obviously what people are choosing to do now.

Its definitely softening.

Give it another year and there may be some forced sellers - landlords who can't get rent to cover a higher mortgage outlay, people who overstretched themselves/didn't plan for future costs like childcare etc.

Then you can get a cascade effect, a forced seller who drops their price, allowing a buyer to reduce their sale price etc, which allows a buyer down chain to reduce etc and has a knock on effect on the local markets at each step of the chain.

Prices won't crash though, not without building on serious scale - the like of which won't happen without state intervention.

Son sold his flat in zone 3, 2 years ago, Now they are going for 20k more. NE London. And there is literally nothing for sale in a similar price range to the house he bought in zone 6 N London. Even though we thought prices were bonkers at the time, they dont seem to have eased in this area. People are just choosing not to sell.

You don`t need forced sellers, FTB being able to borrow much less does the same job, the chain just collapses from the bottom instead of somewhere in the middle, there will never be a mass building program because they know we have plenty of housing! If the government did that all their pals who run big building companies would be out of a job, mortgage applications are down about 40% and all those people still live somewhere, maybe not their ideal home but comfortable enough in most cases. IMO what happened in the "boom" was that a lot of people were just showing off with their nearly free debt tokens (the bankers know all about human nature) they wanted to move a lot and "move up" and talk about how much they "paid" for property (now the penny is dropping that they actually "borrowed" and it is going to be very pricey to stay in the house)

Can`t see that being sustainable, eventually (as in all previous crashes) investors, 2nd home owners etc. panic and try to get out (usually far too late)

I would’ve agreed with you two months ago, but the amount of stuff going under offer in our area recently is crazy. I think people were holding out hoping for the promised crash and have now given in and started putting in offers again.

I guess the real proof will be if the sale’s actually go through, but all signs here are buyers have given up waiting for the promised crash

Can you link to the general area so we can follow with PropertyLog?

I’m in a Yorkshire village near a small town. The thing I’ve really noticed is how many large houses with big gardens have come on the market in the past year, nearly all at very high prices and needing a fair bit of work. None of these houses have been on the market before in the 15 years I’ve been here and they are not selling. We have one house on for 800k that just before Covid would have been ~550k. It’s astonishing. But again, it’s not budging in price and has been on over six months.

Any smaller houses under 300k are generally not sitting around too long.

Not where I live. We get leafletted all the time.

UK house prices are increasing again - https://www.bbc.co.uk/news/business-67342307

I agree people who have been holding off waiting for the crash are going to start moving soon. This time of year tends to be quieter anyway, so likely in the new year.

@CrashyTime assume you've resurrected this thread in light of the news that house prices rose last month?