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?

[user85963842]

@Didyousaysomethingdarling I suppose it would be difficult to do a 6 month stamp duty extension whilst starting to raise taxes. I'm sure that'll be a huge relief to many.

[LadyfromtheBelleEpoque]

So that will take us into the summer when property sales are typically at their highest level. Perhaps they think it will all be back to normal come autumn?

[WombatChocolate]

I’d agree that it isn’t a great time to buy if you’ll need to move again in less than 3 years or have very high loan to value.

Best ways to mitigate threat are only to move if you can stay for 5+ years and also buying somewhere which needs work and you can add value to, also helps mitigate risk.

Worst kind of places to buy at moment in terms of threat of declining value being greatest are new build flats without gardens, anything new build, and those recently done up and being sold at a premium and top end of the ceiling price, for their shiny new features.

Go for the property where you can add a bit of value, even if you won’t do it for a while. It will give you some security and a bit of a cushion.

[Sprockerdilerock]

Surely they need to extend the stamp duty for people only if they have exchanged by 31st march or something.

Otherwise its going to be the same situation six weeks later where some people narrowly miss out again!

I remember when we bought our first house (a two up two down starter home type) it seemed like everywhere in the news experts were screaming HOUSE PRICES TO FALL BY UP TO 30%. I was convinced we were going to be in negative equity soon enough and never be able to climb the ladder like we planned. Anyway 3.5 years later we sold for a few K more than what we paid. Moral of the story - Nobody actually knows.

[rabbitcarrot]

Do you think when comes to middle of May, they will extend another 6 weeks to help people nearly miss the deadline by then?

[rabbitcarrot]

At the same time, very keen to see how long they will extend furlough & mortgage holiday further? Another 6 months or the end of 2021?

[user85963842]

@Sprockerdilerock I think, if this is proposed, this is just to catch the people who should have reasonably completed by 31/3 but had delays due to all the issues going on atm so very much budgeted on the basis of no SDT. Though some people get very unlucky, generally speaking, anyone who isn't likely exchange in the next 12 weeks when this potential extension ends wasn't ever likely to meet to the 31/3 deadline anyway and should have budgeted for the prospect of paying SDT. They did warn people as far back as 1/11/20 that chains would need to be set by then to stand a chance. They have to set a cut off somewhere.

[BettyCarver]

Long term changes in working patterns - more people WFH now that it’s been proved viable - will probably make property in more rural and coastal areas more desirable. New build city centre boxes aren’t going to be in such demand with fewer people needing to be in the office, but people will still need to live somewhere and it wouldn’t surprise me if prices continue to rise in other areas. Also the lockdowns have really highlighted the importance of outside space and work space. I predict a demand for rural locations.

[Smallgoon]

@CountessFrog

I think It depends on location.

A house I know what’s on for £425k, didn’t sell, reduced to £390k and still took a long time to sell. It was overpriced.

The sale has fallen through and its back on for £450k.

Classic!

[RainingBatsAndFrogs]

Bigger houses have been in huge demand in London to accommodate WFH. And I know as many people who want to move closer to town to avoid public transport and be within cycling distance as I do moving out. Actually I only know if one family moving out.

So.., hard to predict, really.

[GETTINGLIKEMYMOTHER]

People inc. the odd ‘expert’, have been predicting a house price crash for ages, certainly since before 2008. Around here (SW London) they did dip a bit after the summer 2016 peak, but TBH I’ll believe a major correction when I see it.

[Yazoop]

I think the 6 week extension would give most people in the process a chance to clear the line - most of these would have been in train for months now but have been backlogged due to Covid slowdown of e.g. searches, probate processes etc. Appetite has slowed in the last couple of months as people realised they wouldn't get a new sale through by the 31 March.

So I guess a short extension would clear the decks of most people in the queue. But there'll still be some unlucky people at the tail end that would miss out.

[Yazoop]

It'll be interesting to see if the much maligned suburbs get a further boost - for the past decade (or more) people have typically wanted to forgo space, and a lot of cash, to live in inner-city areas with lots to do, easier to get around etc.

Recently there has seen a bit of an about turn on that, in London at least - with the outer zones becoming more desirable due to increased space for money, more green space, but still easy to get into central London and more amenities locally in areas that previously had been mostly residential (driven by creative people / small business owners forced more towards the edges due to the price of inner London rents).

With lockdown forcing people to really consider their connection to their local area, I can see, rather than a severe correction, that house prices level out more across London - where inner London stagnates a bit and outer London has steady (but perhaps not spectacular) growth. This had already started with Brexit etc but I think the lifestyle adjustment with Covid could make this a more permanent thing - it is the middle option for people ready for more space but don't want to jack in the towel and move out of London altogether. It would mean that working from home, plus working "in town" a couple of days a week, would be an easy balance. Being in zone 4/5/6 would still mean being on the relatively cheaper TfL network (not £££ for transport from commuter towns or further afar) and an easy commute.

But they are so many variables - including a potential growth from people moving here from Hong Kong who may increase the demand overall. Balanced by the fact it may become harder for people to access a mortgage given the wider economic picture. It is such a mixed picture at the moment.

[Viorela]

It is very interesting to read this thread after two years since first posted and to see how wrong many of us here have been to believe that a correction in house prices will take place. I wasn't looking to buy at that time but am looking now and can imagine that prices are nothing like 2 years ago. I have a pretty good depozit but I think that I am completely out of the market if I want to buy a home which I like :( There are still people around me who are predicting a dip next year but I just can't believe this could happen ..... prices will continue to go up and houses will become out of reach for so many like myself ..... this is so frustrating when you are saving what you can each month and paying rent in London

[Yellownotblue]

Hi @Viorela, thank you for reviving this thread. I agree price drops don’t seem to happen anymore. What happens when prices drop is that no one puts their house on the market, leading to constriction, which again pushes prices up.

Anyone waiting to buy on account of a predicted price drop will have to be very lucky to time the market. Real price drops happen once in a decade, if that.

Good luck with your search ☺️

[AchillesLastStand]

I can’t see how prices will ever drop when there’s a housing shortage. We are lucky that we bought last year. A house round the corner from us has gone to market for 55k more than we paid and it has one less bedroom. We’re talking about national average house prices in the area I live in, nothing crazy. I saw the front page of the Mail today (don’t read it, I just checked out the front pages on BBC News this morning!) ‘The housing bubble is about to burst’. I can’t see it happening and those waiting for it to happen will find themselves priced out of the market yet again, like we would have been if we’d waited any longer.

[Nothappyatwork]

The way I’ve always looked it is, is buying cheaper than renting even when I calculate and include the loss of interest on the deposit that I’m going to put down.
and sometimes even when the answer to that question is no it’s still worth it for your mental health and your stability.
we were renting a really nice flat and the owner suddenly wanted to sell it so we had to get out with two months notice and unfortunately we couldn’t find another really nice flat so I ended up renting one literally next to the noisiest train station in the whole of the UK like it was relentless, the trains didn’t stop.
and that is the trouble with renting houses that are you never know when you might have to move and be you never know what choice will be available to you when you do, so for all it’s bad points the house I’ve bought is a little bit more expensive (30 a month) but the only time will move is when I decide to do so.

[AshRJ]

This is an interesting read. We've got our house on the market in West London (East Acton) and its so frustrating to read articles like this. We've had 3 offers fall through, due to finances of individuals or the buyers backed out last min because they believe that prices will drop (their words not mine). It sets unrealistic expectations, no seller is going to want to lose money, especially if they are like us and need the money to buy our next property.

I honestly think a lot of this is media driven, all around me prices are either steady or going up. @Nothappyatwork so true, renting to me is money down the drain, buying is slowly building your equity.

@Viorela @Yellownotblue - this is so true, the only difference in London is the prices just go up slower OR people take their property off the market. Honestly, if we didn't want to move, I'd be tempted to take ours off the market - its very frustrating when it falls through.

[Nothappyatwork]

The other argument as well that the landlords paying for maintenance and you’re not when you rent it is completely out the window these days the landlord simply just do not maintaining the property’s, what’s the even as a renter you end up paying for decor and upgrading fixtures and fittings that no you shouldn’t have to but you do because you need it to be comfortable.

[Pyewhacket]

House prices to fall 14% next year : how many times have I heard that ?.

[SD25]

@Pyewhacket

House prices to fall 14% next year : how many times have I heard that ?.

well the article was two years ago so you've heard it before ;-)

[JenniferPlantain]

Well, I guess that article (from 2020) was a load of bollocks.

[StageRage]

ZOMBIE THREAD

Which nevertheless demonstrates the pointlessness of prediction, and the maintenance of high prices.

The Halifax said today that the market is ‘cooling’. By which they mean prices are not rising as fast as they have been. NOT that they are falling.

Which they said was unlikely while demand outstrips supply.

As a pp said.

[Saz12]

I feel the house market is partly set by interest rates & mortgage availability, and partly by expectations/ speculation! If people think prices are going to keep increasing in 12 months time, then they’ll offer more, if they feel prices are going to start falling within the next 12 months then they’ll offer less. So then prices do actually start to fall because everyone is offering less and buyers are being told to expect less. Based on nothing whatsoever.

[Aop]

Good areas never really suffer. They freeze for a period & nothing much moves, then they thaw & carry on.