Do you think house prices are going to fall?

[PurpleNailVarnish]

I'm asking because I'm not sure.

I don't want this thread to turn into a bun-fight about whether people want them to fall or rise. I'm just wondering what others think.

There's no doubt that interest rates are rising which may cause the market to stabilise or drop.

OTOH demand outstrips supply which may mean the market continues to rise.

Then there's Brexit and who knows what that will mean for the economy?

I know that prices always rise in the long term but we're in our 40s so we won't be able to get a mortgage in the much longer term!

I wish I knew! I’m in the SW and they’re still rising steadily - if not quickly - despite our city being nothing great. Bought our house 12 years ago and even if we drop the price to sell quickly we’ll make a 25% profit. It’s not at all an expensive house (2 bed) and even that seems ridiculous to me.

We're in the South West too in a 'desirable' area. Even though we live on a fairly standard estate.

A house like ours but a less desirable plot sold the same day it was put on the market last Friday for the asking price.
Ridiculous.
Prices are still rising fast here, it feels to me like a bubble.
I've lived through two housing crises so I'm very wary.

I read that prices are falling in London.
One of my best friends lives in the North West, her lovely home has stayed the same price or decreased slightly in recent years.
Whereas ours has increased 30% or thereabouts in just over 2 years.
Other friends live on the Devon/Cornwall border and theirs have increased over the same time period but only by about 10%.

I can't work out what's going on and what will happen in the longer term.
It matters for us because we don't want to be stuck in negative equity in retirement.

You will only be in negative equity if you still have a mortgage. Aren't you planning to have it paid off by retirement?

We are planning to pay the mortgage off by age 60 user but it would be better to pay it off sooner and retire or reduce our work earlier.

If you had asked me 6 months ago I would have said yes, the market was dead. However, since the New year, here in the South East - just outside London - everywhere I look I am seeing sold signs. It seems people have adjusted their prices and now things are moving again.

Yep rising here in east mids we brought our new build last year the prices have increased by 30k in 12 months. We sold our 3 bed semi for 210k house prices that street in our old village now around 225-240k mark. Housing selling quickly here.

We sold up and left just before the Brexit vote and I’m so glad we did as prices are falling now in our area of London. There’s so much uncertainty right now that I’d be wary of anyone who claims to have a crystal ball. Things could go any number of ways at this point... if it were me, I’d pick something you would be happy/willing to sit in for a while to ride out any ups and downs in the next 5-10 years with payments that you can comfortably afford to pay regardless of the market and be done paying off by retirement age.

I think it really depends on the area - and I don't think you can even generalise by "London" or "South East" etc - it comes down to towns or villages etc.

We're in a pocket of the NW where property prices held in the last crash whilst other parts of the country were dropping by 30% - mainly due I think to desirability of schools and demand outstripping supply within fairly small catchment areas. No signs of family house prices slowing down (up to about £750k maybe), it's the £1m+ price bracket that is taking longer.

That's what we've found namechange the price of our house is rising fast but the prices of houses that we are looking at, the next level up are not shifting or taking a long time to sell.

Wages around here seem to be very low, especially when compared to house prices, which could explain why the more expensive houses aren't selling.

I looked on our local property website last week and was shocked at how affordable some houses are now compared to two years ago. There's no change in our income, just houses in our area seem to have slumped considerably. Which would be good for dcs saving for deposits but I doubt they'd buy here as it's too far from work.

Purple it depends why you want to move and what the differential is. There's a similar post about the impact of a general price drop. If your house is worth £500k and the market drops by 20% you stand to lose £100k. If you buy a £1m house, you stand to lose £200k, possibly more as more expensive houses are usually harder to shift in a downturn. That's quite a big difference - and if you're relying on any of the equity for retirement etc then you're banking on the market goung thriugh thd cycle and back to increasing prices in less than say 15 years? I know that's over simplifying the economics but I don't think I'd be stretching myself for that big expensive house at this point unless there were good reasons for taking that risk.

Sorry for typos!!! Argggh, hate my phone!

I would suppose it only matters if you're planning on selling in the short run, or, if the new value of the house (after prices have fallen) won't cover your mortgage so you're short a loan without a matching security. If your house price is rising fast, and the house you're planning to buy (for the long run/retirement) is not rising /as fast/ that would mean you're the winner, wouldn't it?

namechange we don't need any equity for our retirement, we both have good pensions.

I'm not sure whether I've seen the thread you're talking about but one I saw became an argument between people who can't afford to get on the housing ladder and people who already own and don't want to go into negative equity.

Our house is what I'd call middle band value trying not to out myself, a good sized family home on a naice estate. We have just over 60% equity as it stands today.

According to affordability I checked with a broker we could buy something more than double the value of our current home but realistically we'd be looking to increase by another 50% maximum.

I'm just not sure whether to move now or stay to ride out the potential Brexit storm and wondered what the general consensus is.

It depends where you’re based. I’m in NI and I don’t think they’ll fall here- they’ll probably rise a bit but that’s because the property market is at a sensible level again after the crazy prices of 2007 and then the crash a few years later.

The government will do everything they can to keep house prices stable, in order that the country doesn't end up with a huge number of people in negative equity. It would be disastrous for the banks if people ended up in negative equity and started defaulting on their mortgages; the banks would be unable to recoup the money because the houses they repossessed would be worth less than the amount owed.

Also, most people won't sell for less than they paid unless they're forced to. If prices fall they'll just sit tight and wait for them to go back up, causing the market to stagnate. Prices will only fall if there are a large number of forced sellers who have no choice but to sell for less than they paid; for example if there's a recession and people lose their jobs so they have to sell because they can't afford their mortgages. For house prices to fall the whole economy would literally have to crash, with large numbers of job losses and forced sellers.

I think no. If there is any fall t will be alongside a wider collapsed economy so there wouldn't be any advantage.

No, I don't think they will fall. I'm also in the SW. Prices have rocketed here in the last few years!

The fallout from brexit will likely last decades, there’s no point factoring that in.

One factor that might be affecting the housing market is the changes to rules around landlords:

In 2016, Buy-To-Let stamp duty rates were increased, by relatively small percentages, but obviously a 3% increase on something worth over 250,000 is a lot of money!

In 2017, tighter rules were put in place on lending Buy-To-Let mortgages. The new rules say that a landlord's whole portfolio must be viable. There's also a new stress test on Buy-To-Let mortgages- the landlord must be able to make repayments, even if interest rates go up to 5%.

From 2018 onward, there are changes to how landlords can use their mortgage interest payments to offset their profits. Landlords who are higher rate tax payers won't be able to offset this at all, while basic rate tax payers will have to take a basic rate tax deduction, rather than a deduction from profits.

None of these factors on their own are huge, and I don't imagine they will cause a large sell off by landlords. However, some of these factors may stop landlords buying more property (reducing demand) and in some cases, they might be looking to sell less profitable properties or may decide to sell for tax reasons (increasing supply). It's not enough to cause a crash, but in some areas with high numbers of rental properties, it might cause a slow down. In June 2017, the council of mortgage lenders reported that the number of Buy-To-Let mortgages they were issuing had nearly halved since the same month in 2016.

I don't know enough to make predictions about house prices, but I do think this is a factor to bear in mind when thinking about house prices over the next couple of years. Obviously Brexit will have a much larger effect, but that's harder to predict.

I think it depends on where you are.
I'm in the outer reaches of SW London, and prices are definitely coming down here, but then they had become so ridiculous and unaffordable that it was inevitable sooner or later.

Prices in more central London have been coming down for a while now, but again, that was from stratospheric heights, so about time too.

Over the long term, say at least 10 years, I think they will always go up, but at least for the foreseeable, I can't think we'll see the enormous rises that have been common in the past decade.

I'm asking because I'm not sure.
Join the club!

I don't want this thread to turn into a bun-fight about whether people want them to fall or rise.

I’m just wondering what others think.
Whenever I think the madness can’t continue, it does. Now that I think it will, maybe it won’t.

demand outstrips supply which may mean the market continues to rise.
That’s certainly conventional wisdom…

I can't work out what's going on and what will happen in the longer term.
Congratulations, you’re just as qualified as Mark Carney to be governor of the Bank of England. (It's a big club.)

I agree about landlord sell-off very likely affecting the market. In the two areas I watch most - part of SW London and parts of Oxford -I see a lot of what we're obviously rentals for sale - presumably landlords hoping to get shot before the tax changes really affect their cash flow.

Also, although it's not so widely known, the taxman is now targeting landlords, many of whom have been getting away with not declaring their rental income for years. Some of them have definitely got the wind up, IMO.

Maybe in London/South east, but honestly, every where else, not massively.

Not yet, there seems to have been a mini boom in my area of the south east. One of my neighbours, plus one of my friends have sold within the last two weeks, both having been on the market for over a year. Strange.