Will house prices drop massively? About to exchange/complete - please help!

[clong742]

Due to exchange and complete on a house I love which has been in the process for months and I've planned so much for. It's been pushed back a few weeks due to lockdown. My dad is generally quite negative and always looks at the worst and tells me we will lose a heck of a lot of money if we go ahead as house prices will drop massively. For the type of house it is I can't see it dropping that much but I'm definitely no expert. I love the house and would devastate me to pull out, Id been looking for about 6-7 months prior to finding this house and have not seen a single other one that I like. Really need others advice who have more idea on this please! It's got me worried sick. We have signed all paperwork etc only thing left to do is request funds etc, we will be exchanging and completing on the same day.

In from the north east and where I'm looking there is either a ton of run down rentals for sale or there very overpriced or need loads of work done which I don't want. This house is perfect and ticks all of my boxes.

There may be a dip - but on the other hand there is going to be a lot of patent up demand released when this settles down. The fundamentals of the housing market won't change - too much demand and not enough supply. If its a long term goal I would buy.

Look at what happened after the 2008 financial crisis? A dip and then prices now much higher.

But DEFINITELY exchange and complete on the same day

The government has specifically told people not to exchange contracts at the moment.

It only matters if you are planning to flip it/move on quickly (which it doesn't sound like you are from your OP). If this is a home you plan to spend years and years in, I'd say go for it as it doesn't matter what happens to house prices in the near future as long term, they are a good investment. x

@HasaDigaEebowai hence why it's been pushed back by my solicitor for time being, for 3 weeks during lockdown and then it will be reviewed. I'm only after advice regarding house prices :)

Impossible to be certain, but I wouldn't recommend buying to resell at this time. It doesn't sound like that's your intention though.

We're buying long-term (potential forever home) and we're still going ahead.

Has the government told people not to exchange? I’d missed that.

(OP - if you’re planning to be there for the long-term then go for it. If it’s a two year doer upper and move on then I’d think again.)

This will be our first home and one which we intend to bring up a family in. I do plan on this being a long term home, not forever I don't think, but certainly long term.

My house went on the market on day 1 of ‘lockdown’ the estate agent has booked 9 viewings for when business is as usual. I don’t think people are being put off buying

I dont believe the government have told people not to exchange contracts at all. Where is the link support that statement?
If you love the house I would just go ahead.

Michael Gove said about 3/4 days ago that nobody should exchange contracts. I'm not finding links to support the statement. People can google.

The likelihood is that we are about to go into serious recession anyway OP and so generally that will mean a house price impact.

@junglerum when have they been booked for, ours is up and 3 people are wanting to come and I don't know when to say ok.

The agents are sorting mine I think they are going to wait til the 3 weeks are up and take it from there depending on whether it is extended.

I wouldn’t buy in Edinburgh as the arse has fallen out of the AirBnb mania. The poor dears have had to lower themselves and rent them to people desperate to have a home.

Some re-assuring replies here, that's what I thought as we plan on being there long term the house prices, if they do drop, should pick back up by time we want to move in the future

As a long term investment, house prices will always increase in value in the long term.

In the short term, they might increase or they might decrease.

You're welcome

I'd still proceed if I were planning to make said house my home. Why wouldn't you?

@wonkytonkwoman I would just go ahead if it were me, but my dads comments concerned me and my partners cousin is an estate agent who has advised to him she would advise not to proceed or to lower offer, which I don't think is appropriate, we already got the house for a good price and I don't think it is worth any less than what we're paying, I wouldn't want all the hassle that it brings either. So others negative comments have got him seriously doubting this meanwhile I'm trying to reassure him that as it's long term for us, it shouldn't affect us too much.

If I was selling and buying and it was my forever home I would probably go ahead because if prices drop then both what I am selling and buying will drop so the hit will be less. In your situation I don't think I would - I think house prices will drop, in fact there's potential to be a bit of chaos with people unable to pay rent and landlords having to evict or take a lower rent or sell. If a lot decide to sell it will impact prices. It's difficult but if you aren't contractually obliged I wouldn't. To look at it another way I don't think we are going to see a sudden surge in prices.

We just went under offer - the day lockdown was declared 😳. Got an extremely good offer which was well above what we were expecting, especially given the circumstances - granted it’s an absolutely immaculate, period, high spec, ‘forever home’ type property in a very desirable area, so I would assume our buyers are looking to stay long term and can absorb any market dip as it will undoubtedly recover. We are proceeding with our purchase of a complete wreck 😂 - but which we secured for a very sensible price and when it’s done should more than cover the cost of the renovation in terms of its value - again, not that it matters hugely, as we are buying it as a long term family home. I think it depends on your future plans - if, as you say, it’s a long term prospect, I would proceed if you love it, and if it’s right for you.

The general advice is where contracts have already exchanged and a complete date is set, those transactions will go ahead.

In transactions where all enquiries and paperwork are satisfied, a simultaneous exchange and completion may be possible if all parties to the transaction agree, bearing in mind the government recommendations for social distancing and hygiene - also consider whether or not removals can be sourced.

Transactions where there are still outstanding matters, i.e. a few remaining enquiries, additional required paperwork etc, then the advice is to delay for the time being. There is too much risk on everyone to be in breach of the contract (i.e. unable to obtain monies/sellers and/or buyers being ill with Covid-19, solicitors unable to provide Undertakings to the other side solicitor, unable to source required documentation from third parties etc).

Consider also that lenders are reducing the amount of products available to buyers, i.e. a buyer will need a lower LTV. Any price reduction you negotiate may mean the lender will have to reissue the mortgage offer, particularly where the LTV would change. The price reduction would necessitate the contract and transfer being amended to reflect the new price, therefore need signing/witnessing again.

Here is a link to the Law Society recommendations on residential conveyancing at the current time:

[https://www.lawsociety.org.uk/support-services/advice/articles/covid-19-and-residential-conveyancing-transactions/]]

www.lawsociety.org.uk/support-services/advice/articles/covid-19-and-residential-conveyancing-transactions/

@clong742 my dad would be the same. Not such a good idea to offer a lower price on the off chance that the market might be unstable for a while!!

In ten years time it is more likely than not that you would regret not buying it

I think prices will fall potentially quite a lot but over the long-term they tend to always rise. I think Barclays have withdrawn almost all mortgage products over 60% LTV so their economists must be expecting a big drop. Our EA is expecting a big drop if this goes on for 6 months or so which would anticipate it would. A lot will depend on how much people's incomes drop and how many job losses etc. I would expect around a 20% drop in prices but after that they will recover. So if you want to sell in 10 years you will be fine, want to sell in 3 and you could find yourself in negative equity.