UK house prices falling as property experts predict more gloom ahead

[qwertyflirty]

Continued from:

www.mumsnet.com/Talk/am_i_being_unreasonable/3250736-To-think-that-big-house-price-falls-finally-on-the-way?pg=1

As I predicted at the start of the last thread, two weeks ago, house prices are continuing to fall nationally month by month and in London and the SE we are now seeing annual falls.

www.independent.co.uk/news/business/news/uk-house-prices-property-may-nationwide-index-mortgages-a8376961.html

www.cityam.com/286273/london-house-prices-see-worst-annual-slowdown-nearly-decade

Experts predict these price falls will continue as sales volumes fall (which always precedes a dip in prices), given the interest rate rises on the horizon, low wage growth and increases in the cost of living.

The prices in the cheaper parts of the UK are still rising and I suspect those parts that didn't rise much or even fell in recent years will be largely unaffected. But logically, if your house price doubled in the last few years and local wages went up by say 10% in the same time, then those price rises are ultimately unsustainable.

It's definitely a buyers' market at the moment in London and the SE.

"London property experts say buyers are “sensing blood in the water”, with sellers forced to cut prices steeply"

www.theguardian.com/business/2018/may/23/uk-house-prices-fall-by-02-for-march-says-land-registry

I think it’s awful how you post these repeat threads over and over in the hope presumably of worrying people

Quite. An OP with an agenda. At least this thread is in an appropriate place now much no doubt to the OP’s disgust.

Back to the topic - and no, childish offensive insults are not going to make me run away and cry, they are going to make me more determined that anyone considering what is probably the most expensive purchase they will ever make has access to intelligent and open discussions of the topic and to all the evidence currently available.

I'm afraid posting this and then linking to the Daily Mail has a certain sort of irony.

In terms of the talk guidelines, given that trolling is determined as "posting inflammatory messages" I would say some of your posts and responses to others when they respond with things you don't like firmly fit into that category, both in this thread and your previous.

To be clear, I would not class many newspaper articles as fair and intelligent discussion of the topic, newspapers have inherent bias. An independent study from a body with no interest in a certain angle would be where I would look for fair and intelligent information.

No sign of it here. House prices are going up and up, it’s fucking ridiculous.

WhatMakesYouHappy - I don't think that posting about house prices falling is "posting inflammatory messages" - I am careful to post links to sources of what I say, and while you may dislike house prices falling, for example if you recently bought an expensive house, it could hardly be called "inflammatory" to suggest that this is indeed happening in London and the SE.

Just because you personally don't like the news, it does not make it biased. I am baffled as to why you think that the Daily Mail, the Guardian, the Independent, the FT and the other newspapers I have linked to are all likely to suffer from "an inherent bias" in favour of reporting falling house prices. They cover the whole political spectrum and include the most respected voices on economic affairs. What evidence do you have that they are all, collectively, lying about the direction of house prices in London and the SE??

What they are doing is reporting data from various organisations, such as Nationwide, the Halifax, the ONS, Rightmove, RICS etc, which have been used to measure house prices rising and falling for many years.

But if you have other data that prove that all these newspapers are in on some secret conspiracy to bring down house prices and that on the contrary house prices are really rising in London and the SE, contrary to every single piece of published evidence in recent months, then please feel free to post away below.

ThroughThickAndThin01 - you have accused me of "having an agenda", as apparently reporting the truth to you = having an agenda.

What is your agenda, and why are you so keen for the truth to be hidden? Why do you not want anyone to know that house prices are currently falling in London and the SE??

Nothing wrong with with interest only mortgages. If they haven’t saved up enough to pay the capital ( which would have whittled away with 25 odd years of inflation) they can sell up and pocket 25 years worth of house price inflation and rent like everyone else that chose not to buy but rent for a life time. They will of course be in a much better position than if they rented all their lives because they couldn’t get an interest only mortgage and couldn’t afford a repayment mortgage.

As for house prices being too high, well we just have to accept that not everyone will be able to afford their own home ( especially if there are no interest only mortagegs) and will have to rent for the rest of their lives. And maybe that number is going to be greater than in the recent past.
Those that can’t afford a house now, probably won’t be able to afford one in 2 years time even if prices drop a little, as rise in mortgage rates will mean the banks will say the lower mortgage sum is no longer ‘unaffordable’ with the new mortgage rules ( even though they pay more to rent ).

SleepFreeZone - interesting, are you in London or the SE?

LondonMischief - you're absolutely right that so far those with interest only mortgages have done very well out of it in the last 25 years in a (largely) rising market.

The question though is not so much how they will cope if prices go into reverse and they are unable to remortgage, as in most cases, selling up should cover the outstanding loan. The interesting issue is the impact on the wider housing market, if a large number of what are effectively forced sellers suddenly appear on the market at the same time - could that exacerbate any existing falls?

www.ft.com/content/4e0377e6-6ad4-11e7-bfeb-33fe0c5b7eaa

"As regulators have cracked down hard on interest-only loans, if borrowers cannot satisfy affordability tests, or demonstrate how they will repay the capital, then selling up may be their only remaining option."

The article also makes the interesting point that "Owners of buy-to-let properties frequently use interest-only mortgages. “Virtually everyone with a buy-to-let property has interest-only,” says Mr Anderson."

So the potential numbers of people who might all need to sell up at the same time if house prices continue to fall in London and the SE is high. And that obviously adds extra volatility and an unknown factor to the housing market.

probably the most expensive purchase they will ever make has access to intelligent and open discussions of the topic and to all the evidence currently available

I can make these purchases every few months and I do my own research. I research areas, even streets and individual houses.
Not some headline of some newspaper.
Have you ever sat down and researched anything rather than relying on what the papers say.

In my area the time I was on your last thread there were 3 houses for sale and 2 new build houses. 2 of the "lived in" houses have gone replaced with another 2 that have just come on the market. New build houses stuck purely because of their position on the estate.

I have forecast every down turn in the markets since the early 80s.

I think Brexit, interest rate rises, all being tiny rises and the new rules on btl for people who bought with a mortgage can make people jittery. But people have children and new jobs on the other side of the country. They move house and life goes on.

In my area if a news reporter was reporting it would say nearly half the housing stock is stuck on the market for more than 6 months.

In reality it is just 2 badly situated plots that even the builder knew would be difficult to sell. Everything else is going

Can you not see how newspapers scew the headlines.

Even on one of your newspaper reports the headlines would have you believe house prices are crashing but actually in the article it says it has risen

Also I have an interest only mortgage. Selling later this year well within the time limit of our mortgage.

With that we are going to be buying another bigger house just a little further out and a holiday home for cash.

For us and I suspect many many others interest only mortgages have been great. Yet we would be included in the dire headlines.

Of course printing a headline sensationalising interest only mortgages is better than saying actually they might be quite good for some people

Hello Everyone
Can anyone help me .how to buy a property in Edinburgh or surrounding .I know they have bit different system to London? bid sealed? (Bit confused)
Many Thanks
Nadiyah77

Yes, prices are still rising in some parts of the UK.

In others they most certainly are not. I don't see what's wrong with stating facts. If anyone doesn't like those facts that is a different issue.

There will always be conflict over this. Those who have bought recently, and/or who have over leveraged themselves, or taken out a mortgage they wouldn't be able to afford if interest rates rose more than a fraction, will be worried about values dropping.

Those who are priced out, and at the mercy of landlords good or bad, those who have no vested interest but wish for the sake of their own children and everybody else's that housing would be more affordable, will welcome lower prices.

Not to mention those who think cheaper housing would be better all round for the economy - more invested into business and industry instead of bricks and mortar, and people with more to spend generally because so much is not eaten up by rent/mortgage.

IMO it's significant that in 'dropping' or stagnant areas, even the estate agents are often urging people to drop prices - unheard of not so long ago, at least around here (SW London). Not much is shifting locally, and if they don't make sales, they don't make any money, so better x%of a reduced price than x% of sod all.

A more indepth article on interest only mortgages. When we first got a mortgage 20 years ago the Bank were still desperate to sell us an endowment and / or a pension mortgage. If we had taken this route we would be part of the peak happening in the next 5 years but we would have sufficient assets from the insurance policies plus 25 years of house price growth. There seems to be very little market risk from people in this position.

However there are also those who increased the size of their mortgage with every equity rise, either by moving or just remortgaging. The FCA also think there is a sizeable cohort who took out interest only loans just prior to the credit crunch in 2006 / 2007 and with wage stagnation in that time and house price stagnation outside of London and SE there is likely to be far more exposure from this.

BTL is the other source of interest only but this tends to be at lower risk LTV levels of about 60%.

www.independent.co.uk/money/spend-save/interest-only-mortgages-house-owners-eviction-lose-home-fca-debts-repay-providers-a8189211.html

nadiyah try starting a separate thread for some more detailed info?

The property market is hot in Edinburgh just now. The Home Report for any properties you are interested in will give you a valuation guide but your solicitor will advise you on what you will need to bid. You put in a note of interest on the property and if there are several interested parties it goes to a closing date where you submit your best and final offer.

I’m now SE England and no sign of prices dropping here. Not rising as fast maybe but certainly not stagnant or dropping.

Those with interest only mortgages are actually in much better position than those with capital repayment mortgages in a situation where house prices are falling or interest rates are rising.

We have always had interest only mortgages because they give you maximum flexibility. If necessary you can drop your payments right down to the interest element alone since thats all you are obliged to pay each month. Its a no brainer as long as you are then disciplined enough to overpay/save/invest so that you can pay off the capital at the end of the mortgage life OR downsize and never even have to do that

Prices are going up where I live, but I don't think many people are buying them. Obviously people aren't desperate to sell. I'm not sure if brexit will make them less desperate, more desperate or the same - my guess is, more desperate.

cloudtree - absolutely when you say "Its a no brainer as long as you are then disciplined enough to overpay/save/invest so that you can pay off the capital at the end of the mortgage life OR downsize".

The difficulty will be for those who couldn't or chose not to do what you did and take out a repayment vehicle. They may have no choice but to sell into a falling market. And it is forced sellers who matter in a falling market - non-forced sellers will simply stay put.

I am not down sizing I am upsizing and getting another property

Hi Buteo
Many Thanks for the advice .

Us too Olivers. We’ve hugely benefitted from an io mortgage. Everybody should have over the last 10 years. The people who have no idea that they were on an io and upshitcreek are daily mail fodder and in the minority. That’s why housepricecrashers have been rubbing their hands in glee for the ‘interest only mortgage crash’. Well.....it ain’t going to happen. Year on year these mortgages are coming to fruition and being dealt with. There will be no interest only Armageddon crash (as much as the op would love it to be thus).

Around here there are a lot of houses that stick on the market for a year or two, but they are the more expensive ones £1M+. I don't think there are enough cheaper houses still for demand - and lots are being bought and then massively extended.

We've been looking for a 4 bed family home in the Midlands for over a year. All the agents say the market has massively contracted in terms of available properties - down about 50% from two years ago - but, probably as a result, prices certainly haven't fallen.

OP I didn't take out a repayment vehicle. We overpaid on our interest only mortgage and have benefitted enormously to the extent that we have just paid off our very large mortgage entirely in our mid 40s. I suspect a great many of those with interest only mortgages have done as we have done yet we would all show on the stats as being foolish people with interest only mortgages and no investment product to back it up.