House prices to fall 14% next year

[GreenestValley]

www.thetimes.co.uk/article/house-prices-forecast-to-drop-by-14-next-year-lbj77clv2

What does everyone think? I’m looking to buy my first home and this makes me very nervous. Stamp duty reduction is obviously a benefit but if prices drop by this much waiting would be a far better choice... Eek. Anyone else in same position?

[TheEmojiFormerlyKnownAsPrince]

They never go down round me. They just go up. I’ve never known them drop.

[TheEmojiFormerlyKnownAsPrince]

I think some areas may fall, but popular and up and coming areas won’t.

I remember negative equity in the past, but it seemed to affect less desirable properties

[AntiHop]

We bought our first property in 2007. Just before the 2008 crash. So prices went down and we were probably in negative equity we had a 95% mortgage. But we didn't regret buying it as DH lost his job and mortgage criteria got tougher, so we wouldn't have been able to buy in 2008 or 2009. We stayed there for 10 years and had plenty of equity on it by the time we sold it.

[Standrewsschool]

My dc wants to buy from November onwards. Now not sure whether he should wait, or buy, and spend his money on a mortgage rather than rent.

[Pipandmum]

As usual its location dependant. Market is hot near me - I've just gone under offer to a cash buyer for a flat in Portsmouth - first viewer!
But as people are still not all back in the office its prudent to do the searches yourself for a sale then pass on the cost. Otherwise things get held up.
Despite all the noise though and fewer mortgage deals the rate of sales not completing is the same as normal.

[TheMarzipanDildo]

Oops sorry I keep misreading posts today, need to go back to bed

[yellowymellowy]

@GreenestValley- I think that house prices are very likely to fall by next at some point but haven't yet for all the reasons given in the article. The government are currently doing their best to prop up the housing market as it benefits them and their donors.

As to whether you buy or wait, it depends on your situation in terms of job security, current living arrangements and cost, how much deposit you have and therefore what sort of mortgage you can access and what sort of mortgage you may be eligible for if prices drop and more products are withdrawn.
If you have a healthy deposit, a secure job and are lucky enough to be able to live cheaply with family, for example, you would be wise to wait. However, you might not want to risk waiting if your deposit is low and current rent would be higher than a mortgage as you may be unable to get one by next year and will continue to pay high rental charges. Consider that interest rates are also likely to rise at some point and also trying to get a fixed deal for a few years if you do decide to buy.

@NotSuchASmugMarriedNow1- people who sell won't necessarily be making a loss if prices fall. They may be people who bought many years ago and will still be making a huge profit, just not as big a profit as if they sold the previous year (house prices obviously go down at times as well as up just like any other 'investment'. I use the word investment as many people in this country think of property as an investment in the same way as shares, etc. Some people are rather greedy about the amount of profit they feel they deserve to make and won't accept the downs as well as the ups). There is always the three Ds too which leave sellers with no choice, debt, divorce, death.

[Lightscribe]

@NotSuchASmugMarriedNow1

I've said it before but i'll say it again. In the long term, property increases in value.

The type of people who are going to lose their jobs when furlough ends, ie, retail and hospitality, are not traditional homeowners anyway. Furthermore, high property values and low interest rates are the only thing keeping the tories in power and they know it and will do everything they can to keep it that way.

In order for house prices to drop people will have to sell their houses for less money than they paid for them. Can I ask you who you think is going to sell their house for less money that they paid for it - genuine question.

It's not just retail and hospitality, as it all has a knock on effect. I personally know an air conditioning engineer, that he an 70 others in his company have been made redundant.

A lot of city offices long term strategy for their staff is to now work from home and are not returning. That then has a knock on effect, for city property demand, and those that service that demand through construction, engineers and service industries.

Over-leveraged BTL landlords will become increasingly forced to sell, through S24 tax and now not being able to evict for a year due to rental voids. Millions of flats cannot be sold due to fire safety certificate requirements and banks won't lend against them.

We've been in a disinflation cycle since 1980, that is now ending. Do not think whats happened before will always be.
www.investopedia.com/terms/d/disinflation.asp

[notheragain4]

If you're a first time buyer you won't pay stamp duty anyway, even after April. Prices may well drop, but if they drop as much as that and lending gets tighter you could find little on the market and struggle to get a mortgage unless you have a sizeable deposit and squeaky clean.

There are always predictions, are you looking to invest or buy a home? If it's the latter I wouldn't obsess too much about the market, particularly if it's a long term purchase.

[WombatChocolate]

It’s not good for anyone to pay more than they need to anytime. So if a £250,000 property could be had in 6 months or a year for £200,000 regardless of whether they are there long term etc, buying at £200k would clearly be preferable.

The thing is, no-one knows for sure when the pal or bottom of market is happening. Certain situations make you more vulnerable if you buy in a market about to fall and should be avoided;

• new builds esp Help to Buy ones. They are over-priced and usually worth less than paid for a couple of years anyway, but if prices fall generally,they could be worth a huge amount less And give significant negative equity.
  
• buying for the short term. If you only plan to be there 3 years or suddenly need to sell in the short term, prices probablywon’t have recovered.
  
• borrowing at v high LTV it’s why mortgage cos have pulled many of these as so many people might have negative equity otherwise ...and if a long recession it can last years.
  

So if you buy now and prices fall, you are in a worse situation than if you wait a year (or whenever)and are able to buy at the bottom of the market. This is still true if you buy a doer-upper, but long term or have low LTV, but these things mitigate the falling price and mean the effects are probably not longterm negative equity. However if someone had waited and been able to buy in a year, the lower price they bought at will always be an advantage they have.

It’s not unreasonable to expect prices to fall. Quite when it will happen, for how long and by how much, we don’t know and will vary by property area and type. Most people don’t NEED to move right now - they can wait a year and see what the situation is and probably benefit from falling prices (assuming they are trading up or starting out) so they should probably wait. Some people must move now because of work or other issues so should just try to mitigate the falling price which is likely after buying - don’t buy new, try hard to avoid really high LTV by not over-stretching and look for properties where you can add value.

[Sitdowncupoftea]

At the moment house are high due the stamp duty. EA are overvaluing. Plus many newbuilds builders are on furlough so housing estates are not being completed. If there's a housing shortage prices go up.

[notheragain4]

@Sitdowncupoftea really? I doubt that's everywhere. New builds are flying up here as demand is so high, HTB changes next spring so lots of people trying to get in while they can. Certainly no furloughing going on with the he estates we looked at. Our new build is being brought forward by 2 months.

[Sitdowncupoftea]

@notheragain4 Due to furlough and a lot of manufacturers not open theres a shortage on building supplies. There are lots of newbuild estates but many are on hold at present. There's a shortage on lots of materials at present.

[Bluntness100]

Generally the government steps in to stop this happening, so I’d say it’s unlikely.

[BeijingBikini]

Mortgage offers are being withdrawn and rates being offered are terrible

Really? We got a 1.9% offer on 15% and can now get 1.63% on 20%, or 1.5% on 25%. I think that's the best the rates have ever been.

Also, it won't just be retail and hospitality staff losing jobs, what a stupid comment. What about the head offices of all these companies? My employer has just laid off hundreds from head office. Lots of professional jobs are going down the toilet rn, as well as small business owners.

[Gatr]

@BeijingBikini
When was that? With a 10% deposit?
As i say sister had a reasonable offer in june. Offer today is 25%more per month for the same terms etc.

[Gatr]

@BeijingBikini
Sorry just seen youve said 15%. Ive heard the rates are better at 15% but unfortunately thats out of their reach right now

[LooseMooseHoose]

@Gatr my experience is like @BeijingBikini's. 1.99 for 15% deposit right now. In Feb you could get 1.49% for the same thing, so there has been an increase but rates are still very low.

[Gatr]

Ah i think its the 10% deposit that is particularly affected which i think is the most common for ftb. Her mortgage advisor stated that there used to be approximately 400 deals pre covid for 10% and now there is approximately 20-30.

[Gatr]

Sorry just googled and seen that its very regional for the past most common percentage deposits!

[Lightscribe]

@BeijingBikini

Mortgage offers are being withdrawn and rates being offered are terrible

Really? We got a 1.9% offer on 15% and can now get 1.63% on 20%, or 1.5% on 25%. I think that's the best the rates have ever been.

Also, it won't just be retail and hospitality staff losing jobs, what a stupid comment. What about the head offices of all these companies? My employer has just laid off hundreds from head office. Lots of professional jobs are going down the toilet rn, as well as small business owners.

Those rates will be on a 2 year fix. Up until a couple of months back you could get 1.99% on a 10 year fix. HSBC and First Direct have now removed their 10 years and the only one available now looking recently was Barclays with a sizeable admin charge.

I wonder what could be happening to inflation and interest rates in the next 5-10 year period to make banks withdraw their low rate 10 year fixes....hmm

[BeijingBikini]

@Ligtscribe they are actually all on a 5 year fix, I wouldn't get 2 year fix rn because of negative equity risk.
@Gatr yes unfortunately it seems like 5-10% deposit rates have basically all but disappeared atm. Whether that's due to impending crash or to their official reason of "too much demand and not enough staff", who knows! If it is possible for them to save for a few more months/year to get 15% then that's the safest bet. We have been saving for 5 years now so have a good deposit, but I am also a terrified picky buyer who hates the entire idea of risk/housebuying/mortgages/debt so if my husband wasn't in the picture and I had my way, I would just save 100% and buy in cash in 25 years time lol.

[Requinblanc]

Things are not looking good with either Covid and Brexit...

So it would seem likely that this will have an impact on the housing market at some point. More redundancies coming for sure.

Plus there is a huge problems with flats at the moment and mortgages being denied (cladding scandal growing every day) which will eventually lead to less buyers.

Estate agents have raised expectations and prices after the stamp duty holiday (which defeats the purpose, no real savings for buyers...) but I think eventually reality is going to bite.

[GreenestValley]

I’m looking to buy for the long ish term so not expecting to / thinking about making any money on it. However, if I could wait a year and get something bigger for the same price, that would be a bigger saving to me than the stamp duty cut! My job is secure and we have a pretty decent deposit. We’re kinda just ready to get on with our lives - hoping to get engaged etc.

To the person saying it’ll be reduced beyond April - where do you get this from?