I am beginning to think house prices are going to dip.

[Overdon]

I found out this week that banks are pulling their cheapest mortgages (source: Sky business news) due to banks ‘forecasting’ the market.
With interest rates expected to rise due to inflation and the increased energy costs households are facing, I wonder if this could sap confidence in the market.
I am also seeing an increasing number of homes coming back on the market that were previously SSTC.
There is of course still the supply/ demand dynamic, so I don’t think they would crash, but I think the heat is coming out of the market.
Interested to hear your thoughts.

It doesn't seem to be the case where I am, it may well slow a little but I doubt it will dip. Stuff seems to be selling as quickly as ever and I've not noticed anything coming back on (SW).

Yes, there will be a crash/adjustment/realignment/opportunity (take your pick).

If you're happy with your purchase, it meets your needs for the foreseeable future and you can afford the mortgage with a 2 or 3% interest rise and other increasing costs then no need to worry.

Otherwise, hold off.

I hope the banks don't do that, I'm still in the process of purchasing!

In response to your question, they're certainly not going down where I am (London). My offer was accepted in early July, and is currently going through legals. I've been keeping a close eye on the market (i.e. refreshing Rightmove every couple of hours for the best part of 18 months).

Prices were static throughout the first lockdown, given nobody could do anything much, so only those who really had to move did. Following lockdown, I observed an uplift of a few percent, right until the start of this year. Then things went crazy in January, and have stayed pretty evenly up there until the June stamp duty holiday ended.

"My house" went on the market in mid June, so the vendor wasn't looking at capitalising on the stamp duty savings. The price has been locked in for 14 weeks and counting. Of the few houses coming on since, all the 3 bedroom houses I have seen are priced at between £25-£100k more than mine, despite mine being in good condition and in a great location. If my vendor put it back on the market, I've no doubt they could easily get £50k more (not from me as I'm already at the top of my budget).

The issue really is supply, especially in London, and particularly if you are looking for a 3 bedroom house. There are so many buyers and so few sellers that unless interest rates rise significantly (and by that I mean a couple of per cent, which is extremely unlikely to happen in the period of 6-12 months starting tomorrow), demand will likely hold firm, resulting in the high prices being here to stay. I'm clinging on to my purchase as if it falls through I won't be able to afford anything else for a year while I build up more savings.

Nope that does not hold where I am, plus banks are not exactly good at predicting the market! Interest rates will rise very slowly.
The sales that collapsed due to missing stamp duty would have already been put back on the market, and I've only seen a few do that around here in a very brisk and high transaction market.
I think things are slowing, as they always do in the lead up to the holidays. But I expect it to even out next year - still rise, but not at the rate we saw this year.

Not here in trendy east london...very few for sale...buyers fighting over wrecks still....interest rates wont rise much....there just isnt enough houses coming up...lots of unsold flats tho.

Thanks for your perspectives on this.

I don’t know how well bank forcasts have performed historically, but I think when the increased costs of living start to bite, it may have some impact on the market.

I am in West Yorks, so supply/demand not so pressurised as London. Still some mad hot spots though.
@Starseeking hope your sale goes through ok.

Yes not here either. Rural location, great commuter location but also great broadband speeds for WFH.

Plenty of people are waiting to buy here, supply is low, demand is very high.

It never was about supply and demand: there are enough residential properties to house everyone. It was about protecting creditors and asset owners from wage/productivity stagnation by circulating tens of billions of top up handouts every year into the spending economy and, when that alone wasn't sufficient, additionally literally printing money. Now all a bit more difficult to sustain as there are the beginnings of discrete wage hike pockets but as these are driven by labour/skills shortages rather than actual growth they will have an inflationary effect.

And ofc the tens of billions of top ups will now buy that bit less in general spending, while wages outside the pockets still have a long gap to make up against what they would have been without the 15 year suppression.

We are selling & buying soon, I did read that asking prices and selling prices are very out of line particularly in London. It's definitely slowed in our part of London, anything valued correctly gets snapped up though but I've seen houses overpriced by more than 200k

I’m looking to move to a bigger place and wondering if it’s best to put off the move due to inflation rising and interest rates going up. Though since I’ll be selling and buying another place maybe it won’t be worth it.

I can remember the last crash. People who were foolish enough to buy at the top of the market often ended in negative equity.

Not really. Negative equity didn't affect that many people and there were ways and means of handing the keys back, there always are. It generated a lot of headlines because newspapers love a bit of hubris and also because of those it did affect a fair few were young middle class professionals who always get lots of attention.

@Overdon

Thanks for your perspectives on this.

I don’t know how well bank forcasts have performed historically, but I think when the increased costs of living start to bite, it may have some impact on the market.

I am in West Yorks, so supply/demand not so pressurised as London. Still some mad hot spots though.
@Starseeking hope your sale goes through ok.

I'm in West Yorkshire. We met an estate agent who was very bearish about next year. Said they'll be a recession and people should sell up now. Not sure what to make of it really. I was surprised by his pessimism.

@flashbac I think no matter the market estate agents are going to try to convince you it’s a good time to sell.

How do you know you’re at the top of the market before a crush comes?

Only obvious with the benefit of hindsight unfortunately.

Some people are hoping prices dip, some people are hoping prices rise, nobody knows what will happen.

The likelihood is, houses will be considerably more expensive in 10 years time. I have known people who have been predicting a crash for 20 years, but I notice most of them finally bought houses in that time. The ones who didn't are not in a good position now, and they are still waiting for that crash.

Even if there is a crash/dip/slow in the market, you can bet that in 10 years time the house you want will have risen in price significantly more than the interest on any savings you have in that time.

@MimiDaisy11 we are doing the same but we plan to stay there a while so are going for it.

My vendor has just pulled out and relisted for £100k more. East London. Crazy times.

Generally when the context you state arises it increases prices, for very obvious reasons, people are reticent to move, they stay put, putting a shortage of stock on the market and making prices increase.

So if what you say does occur then it will increase pricing not decrease it.

For most of us ever increasing prices aren't a good thing.

I do think they will stagnate a bit in places that are already expensive. They've stagnated where I am since Brexit. Wages aren't going to grow much & we have the tax hikes next yr.

Prices outside London took ages to recover from the 2008 dip so the affordability level are still relatively contained. This and the influx of Londoners looking for space will provide support in case the interesting rates are going up significantly. Now the opposite is to be said for London, remote working and Brexit has emptied the city, the full effect of that is yet to be understood but hybrid working is certainly becoming the norm. The level of debt most buyers have to take on makes the market very susceptible to interest rate increase. For instance a 1% bump (which is where the market expect to be in 12 months) translate into a monthly increase £850 on a million borrowed, not a small amount of money to find.

Interest rates aren’t going up because banks are forecasting the housing market - they will go up to try and quell inflation and that’s why the mortgage providers are pulling the very lowest fixed rates

House prices in my area (Home Counties) are absolutely ridiculous at the moment. However, our neighbours sale just fell through as the bank said the house was overvalued and wouldn’t provide the mortgage. Hopefully that means there is some sense in the industry and property prices won’t continue to be pushed up to these astronomical heights.