House Prices - what are they going to do over the next few years?

[FlyingPirates]

AS the title asks. Are we now at the bottome of the market, and therefore it is a good time (if you can get a mortgage as they are so hard to get atm) to buy?

Or should we wait a few months and try then?

What do the 'experts' predict atm?

I think I saw on here a few weeks ago someone quoting from the economist that prices are set to rise 21% over the next five years?But that seems crazy!

So basically, do we jump or do we wait?

London - go up a tiny bit.

The rest of the country, stay the same or go down.

(not an expert, just my hunch).

Thanks Meglet. Do you think they will go down HEAPS? So you think we should wait? How long? What about London commuter villages? Will they rise because people are trying to move out of London and high prices?

I don't think they will crash spectacularly, well not yet unless they do a few interest rate rises. I think it will be a slow decline for a few years. We are waiting to buy anyway - I don't believe the market has even started to fall much yet. I do think many sellers are deluded as to what their houses are actually worth. I also think banks are asking for such high deposits to protect themselves against house price falls.

Having bought at the top, bottom and middle of the markets in the past I would say to you that if you need a new home and you find a nice one, go for it & pay a fair price for the location/size. Short-term you might win a little or lose a little. That's life. Long-term you'll kick yourself if you let a lovely property go just because you prevaricated in an effort to beat the market.

WE have found a home we love. Right size for now. Ticks all our boxes. They have already dropped it £20K fro original price. Been on the market over a year so are desperate to sell. Surveyed fine. Just panicking now. But really, we would have to either extend or move in around 5 years anyway. So it is in no way a forever home. But then, we could possibly fit with an extension for another 10 years. Making the older ones teenagers and ready to almost move out...

First house I bought in a middling market and sold a year later for about 25% profit. Second house I bought at the top of the market and sold a couple of years later for a 10% loss. Current house I bought when the market was at rock bottom in the nineties and its value didn't change for five whole years. Higher now.

Buy the house because you like it and want to live there rather than as an investment. If you don't see yourself wanting or having to move house in the near future property prices are rather immaterial.

Hmmm. I shall be brave and suggest that house prices will crash bigtime and we will be looking once again at the prices of 10 years ago, or further back. I say this for various reasons -

a) there is a global recession and people are afraid to spend
b) banks are taking the mickey with deposits
c) fuel bills will make large properties less attractive (resulting in more flats)
d) housebuilding projects springing up everywhere
e) immigrants migrating back out of the country
f) more people prepared to rent as rental prices come down due to housing benfit cap.

I'd love to put my head in the sand about it and be optimistic, but just can't.

I agree with realhousewife

and g) they have to put interest rates up soon surely, what if they go sky high - how many who got huge mortgages or are on interest only can afford it if rates go to 10% or god forbid 15%.

I must admit I am waiting to buy but going to give it a couple of years at least - prices near me have gone down about 20% (many asking prices haven't mind you)

I don't think the crash as even begun to be honest

I keep expecting house prices to go down more. They haven't yet, not in this area - but they've not gone up either. It's been about the same here for the past few years. We fixed our mortgage 2 years ago as we expected rates to rise - and again, they haven't yet! So I have no idea....

I'm expecting them to stagnate for a while and then crash when interest rates rise and force reluctant sellers into the market.

At the peak of the market credit was easy, banks allowed people to borrow larger multiples of salary than ever before, often to 125% of the property value and there was the rise of the self-certification mortgage, which many used to exaggerate their income.

Credit is now much harder to come by, banks have reduced the multiples they offer, and now insist on larger deposits. There are tighter checks to ensure that people don't mislead banks about their income. In the wider economy, unemployment is up, wages are stagnant and inflation is a problem. We could be heading back into a recession. There's less money, less job security, and tighter lending.

Houses in my area of London have very high asking prices but there are few sales. Owners don't need to sell, so can hang on hoping for a good offer that won't necessarily materialise. Even when properties go SSTC they come back on the market fairly quickly, possibly because the prospective buyer can't get a mortgage.

Low interest rates have probably staved off repossessions and forced sales for the time being and may continue to do so for some time. But when they go up it could be nasty.

I agree they have been kept artificially high for years with low interest rates and QE. Unemployment hasn't even kicked in yet and some people will be forced to sell with even a tiny increase. Rates were kept low for years which supported these prices and that made people feel rich and spend but this can't last as we are seeing now. I think there hasn't even been a crash yet.

I agree with realhousewife and would like to also add that 'real wages' have not risen very much for the last 15-years. What noddyholder mentions about low rates has made people feel rich is also true and such wealth was generated by housing not earnings. Also, one could argue that disposible goods have come down in price, but at the end of the day, they are disposible goods. Jobs and wages, have stagnated and with increased expectation and competition for job candidates and the cost in training, these factors all weigh-in. It may seem as if I have gone off in a tangent, but there just seem to be so many factors. At the moment, we are happy renting.

So, fwiw, I would say that prices will dip and stagnate

I wish I knew. I'm trying to sell mine. I live in a reasonably new house (10 years old), which is in immaculate condition in a small town in commuter belt in the home counties. It has been on the market since March. I received one offer well under the asking price, which I accepted but the chain collapsed & the purchase fell through. Having been watching the market in my area like a hawk for the last 6 or 7 months, it seems very, very slow & definitely hasn't picked up but hasn't plummeted either.
I think it will be a couple of years before we see prices start to rise again - but that is just my best guess.

I think it will be at least 5 years before prices start to pick up again. The main reason for this, is if you bought just before 2008 you could get a 100% mortgage leaving a lot of people with no equity in the house in the first place. Fast forward to today and house prices are either the same as they were or about 10% lower than they were compared to the peak of the market. Depending on your credit status a 90% mortgage is about the best you can get now. Which means there is a hell of a lot of people out there who are either in negative equity or still building up to the 10% they need to move. Thats without counting the squeeze on income.

BUT there is such a demand for property that prices are unlikely to drop much further than they are. Equally, people simply won't sell / can't sell for so much less than they paid for the property as they need the equity to go somewhere else. Repossessions on a large scale aren't likely at the moment, people are just getting by - this is only going to change if we hit another very bad recession or if interest rates rise (but they are unlikely to for a while for this very reason). If houses do get repossessed, there are a lot of people ready to jump in there very quickly with reasonable offers.

Mortgages are not 'hard' to get at the moment. You just need the deposit. We've just bought the second half of a shared ownership property at the end of last month. They were biting our hand off for the business as we had the deposit. They don't really want to make it hard for you.

The most likely scenario in my opinion is simply stagnation and the market not moving as there are so few people looking to move at the moment.

If you have the funds for a house, and you can think about the mortgage and maybe overpaying slightly on it, to build up equity and be able to take a slight loss on the property if it does decline a little, buying now isn't terrible. The alternative is renting which is going up in price and is likely to continue to do so for a while. I don't think waiting is going to save you a great deal in the long run.

Out of 17 houses we have viewed since july 2 have sold. 5 we offered lowish on subsequently sold to other buyers but all 5 fell through and 4 came back to us saying they would take our offer now. I viewed one on saturday with a guide price between 280-330????? It was a complete wreck and I told them it was worth about 225 and they didn't seem horriifed. The last time things were like this prices started to fall quite sharply but the govt intervened twice they have nowhere to go now so I think prices will fall. I think asking prices will come down at least 10% over the next year and then you can offer another 10% below so a substantial reduction.

Of course I forgot to factor in the savings you make by owning a property - savings on rent.

My opinion we are on the downward slop of the double dip and house prices will drop. I think interest rates will drop to 0.25% for a good period next and they will only start to rise in 2013. This is due to manufacturing really suffering and if they put up interest rates UK business will really struggle. If you are trying to borrow for a business currently it is really hard.

It depends on where you live too. Some places are suffering a lot less than others.

Of course I forgot to factor in the savings you make by owning a property - savings on rent.

Exactly why we just bought second half of our property. Even if prices drop, we were better paying into the house and slowly building up our equity rather than loosing it in rent. It works out about the same monthly payment anyway.

If we can put more into the house than it looses in the next five years, then we still will end up with more in equity. And equity is the big deal now, not necessarily what your house is actually worth. As long as you have enough to move, you have the freedom to do so and to remortgage and if house prices do recover you'll recoup the money you loose long term. Its easy to look at house prices and just see them as short term investments.

Given interest rates at the moment if you are in a fortunate enough position to put the extra into a mortgage do that, rather than put into either a pension or an ISA if you haven't got one. We know people have paid more into pensions than they are currently worth due to fees, poorly performing market etc; complete waste of time. In our personal circumstances we went for a 90% offset mortgage. For comparison I think it worked out, my husband would need a pension with a return of 9% for it to be more financially viable!!!

We thought about waiting, but by the time you factor in what you would spend on rent and the fact we could get an offset mortgage instead of our current deal it doesn't necessarily work out as worthwhile even if the market drops in price in the next two years.

Its a swings and round abouts argument to an extent. It doesn't necessarily depend purely on the cost of the property. You should take into consideration the rest of your financial position, the flexibility the property offers you (if you can upgrade the property its worth considering, as in a depressed market its one of the better ways to beat drops in the market and increase your equity), and what your long term needs are going to be.

The only thing you can predict about house prices is that they're impossible to predict. The experts may claim they know what's going to happen but they're all talking nonsense. Take one of the experts on the LoveMoney website. He sold up because he expected prices to crash several years ago. He was going to buy when they hit rock bottom... I imagine he's still waiting.

My prediction, not that it's worth anything, is that prices will remain stagnant for quite a few years. Low interest rates are making houses affordable and stopping a crash.

1990 brought our house for 36K
2000 brought the house next door for 35K ( there was a price crash after gulf war etc)
2007 had both valued for 70K
2009/2010 a lot of houses on our road and around going for 95K to 110K
2011 brought a house on our road for 72K

Future.. will be getting another one! hopefully lower

I'ts confusing and just save up a massive deposit and check out the previous purchase prices on rightmove and other sites. Knowledge is power.

Moneyweek is good.

Did the Economist really say they would be rising 21% over the next 5 years? I thought the Economist's line was that UK property is about 20% over-valued atm.

We're definitely not at the bottom of the market. I think there will be a general downward trend over the next 5 years or longer (haven't Japanese house prices been falling for about 25 years?), maybe even a very slow fall for 10 years or longer rather than a quick crash and recovery.
The conditions which enabled the high prices of the last few years (ie cheap credit) have gone and won't come back again in the immediate future.

Nationwide yesterday said that the bottom had fallen out of 1st time buyers with a huge drop in new mortgages taken out last month. Even though rates are at a low deposits required and the fact that property is 25% overpriced is adding to this. Their words. Banks cannot risk lending atm so they require huge deposits which generally reflect the way prices are seen. I am renting atm and the market here is crazy deals falling through and prices dropping all over the place.

I don't think its just a question of what the market will do - its a question of what YOU will do and what you want for yourself (and your family). We sold at the beginning of 2008 because we were moving areas and could see that prices were falling, and went into rented, but bought again at the start of the year. I think location is key - prices have been static where we are simply because its a sought after area due to very good education / transport / cafe culture etc. We were in a position where we had quite a low budget for prices in the area so when properties came onto the market that we could afford, there were lots of prospective purchasers in a similar boat (wanting to move to the area but only being in a position to afford the "cheaper" properties) so going for asking price / going to sealed bids. After 2 years, we'd have enough of renting and purchased.

The mortgage is more expensive than the rent, but we are paying down the loan and are slightly better off than if we'd have been saving the difference between the rent and mortgage. Thats on the basis that the value hasn't changed.

Whether we're better off or not, I wanted the security of owning the property - making it our own, changing things, in a way putting down roots. Its not all about whether its a good investment or not, its a home too.