property price forecasts...this way please

[SlightlyMadSpook]

I know nobody knows for certain, but in English, in general what are the forecasts for property prices (outside London - east/east mids) over the next 18-24m.

I know that it makes no difference if you sell to then buy straight away, but that is not the scenario I have in mind.

There is a graph & report somewhere - will try & find link - that shows prices would need to come down 20-30% to return to long-term trend. Drops in the market generally overshoot (go further) before stabilising though.
The thing is, everyone who can possibly have an ounce of influence is doing their best to support the current situation and until interest rates go up to anywhere near normal levels, the drop may never come.

Who can tell!

i think the market is going to be sluggish, but prices aren't going to shift much. there seems to be slight increae in my area.

There was a recent thread on this issue suggesting a 20% drop by 2013 based on a report by Capital Economics.

The chart you may be refering to is the one in the Capital Economics Report showing the average house price as a multiple of average income since 1950.

It shows that average house prices are currently some 5.2 x average income and in past periods where house rices fell they typcally bottomed out at around 3 x average income.

On that basis house prices need to fall by 40% relative to incomes before the housing market bottoms out. Wage inflation is very low at the moment so unless we get a sharp increase in wage inflation, most of the correction will have to come through falling house prices.

The danger is if wages start falling (wage deflation) because of austerity measures and Govt spending cuts. In that case, house prices would need to fall more than 40% - which has happened in Ireland and some parts of the USA .

If that happened it is likely the UK would have a second major banking crisis and I beleive it is the main reason that the Bank of England is currently so reluctant to raise interest rates despite strong signs of increasing retail price inflation.

I'm not convinced that looking at historical data on multiple of incomes is valid. There have been significant changes in the mortgage market during this period.

I also think that price increases and decreases are going to be very regional in the next few years. In areas that rely on public sector spending and work there will be the biggest decreases and in London/south east the least.

Also types of properties will vary in price increases/decreases - flat and first time buyer properties are already really being hit. However, prices are better for family homes in the catchment areas of good schools.

Real wages (average wage increases are less than inflation) are already decreasing but property prices haven't slumped mainly due to low interest rates and people not yet realising that wage deflation is actually taking place.

The significant changes in the mortgage market where interest only (without proof of income/financial plan in place to pay off capital at term). 100% and 125% mortgages were quite readily available to over 4x income, is now reverting back to a far more traditional approach to lending based on affordability.

There will always be regional/housing type variations. Family houses in good catchments may fair better than not, but prospective buyers of those houses will still need to sell their home and get a mortgage to trade up to these, so by no means immune to a change in the market.

Unemployment s rising, inflation is rising, interest rates are currently at an historic low (although mortgage rates are someway above this - will they continue to rise well above base rate if base rate moves??), wages are not rising.

So it looks to be fairly static, possible decline.

House prise rises over 18m-2yr look unlikely?

Decline of 7% from start 2011 to end 2012.

What is going to be really interesting is the level of transactions. I think we will see very significantly fewer people move house.

I would say down 20% overall factoring in inflation over the next 2 yrs.I think there will be def 10% drops by xmas and even now sellers seem open to offers.Once interest rates start to rise however slowly it will inject another stress in to the market and people will panic sell if tehy are already stretched

I am hoping that 'values' don't fall, just asking prices at the moment!! I'm looking at houses which a year ago may have been on the market for £100-£150k what they are currently (20-30%). A few houses we have been to view have had no offers at all, although plenty of interest, because prospective buyers (like us) feel that an offer at a level they feel about right would be dismissed out of hand.

I don't want anyone to be forced to sell, I just want a bit of sanity!!!!!

should have been a 'less' in there somewhere! Apologies. Very frustrated, real-estate-wise.

low rates have kept mortgages affordable and house prices high. once rates start rising, the bottom will fall out and prices will drop for a prolonged period.
it could just be a slow and steady decline though, depending on the general economy.

Prices rising slightlymadspook - yes that would be a mad assumption

from what i'm seeing, people just aren't desperate enough to sell to drive prices down significantly. Rent revenue is so good that when a property sits on the market for a bit, the result is it gets let rather than flogged at a lower price.

this fels lie the end of the last recession...long slow slip rather than dramatic crash. even possible there will be marginal increase due to the low level o interests making a property a good 'bank' for a large cash sum.

Interesting that none of the posts above have mentioned demographic change. In particular, it's now the norm to have both partners working and contributing to household income. As recently as 20 years ago, that wasn't the case. I therefore don't think the old historical comparison is valid.

I also think that price changes will happen on a very local level. Eg the area in which I'm looking to buy is now more expensive than it was in 2007, because of improvements in transport, infrastructure, and local schools. Where my parents live, OTOH, prices have fallen 20% and could fall further.

The chart showing average house price to average income's all very well but it fails to address the very real problem that renting isn't an affordable alternative.

Housing is far too expensive in this country and it affects those who rent as much as those who want to buy. Once the Saudi princes and Russian oil magnates stop propping-up the very top of the market with their SDLT-free purchases, the froth will be taken out of the market and it will trickle down to the rest of us.

People keep talking around interest rates rising but if that happens people will be sleeping under bridges, I cannot see it happening the bank of England have been failing to meet targets for a long time and nothing happens as a result, why are they going to suddenly start putting rates up when the banks are making so much profit already. I really don't think the tories are that stupid.