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House prices predicted to fall by 10% in 2023

191 replies

MoHunter · 28/09/2022 14:48

www.theguardian.com/money/2022/sep/28/uk-house-prices-predicted-fall-mortgage-interest-rate

Well that's a worry when we are close to exchange and completion on our next property!? 😭But I guess even in case of a reduction next year will likely recover again within a few years?
This will be our home for a good while, probably 10 years+ until children are grown. Sh*tting myself a bit but also desperate to move! Staying is not an option as I hate the town we live in.
Anyone else at a similar stage now worrying about this??

OP posts:
mondaytosunday · 29/09/2022 12:54

Predicting the property market is a fools game. Everyone predicted a crash due to Brexit and the pandemic too.
I see the market flattening for sure. And if it does in fact fall by 10%, because it went up by that last year then we are back to 2020/2021 figures. But also those figures are an average - prices do not rise and fall equally in all regions or at all price points. Apparently the £10m plus market in London is seeing a boost due to foreign money taking advantage of the week pound.
If investing long term I wouldn't worry. I remember selling my first flat for just over £100k in the 1990s and the agent saying I was incredibly lucky as they wouldn't see that price again. He was right, but not in the way he meant. That flat recently sold again for over £780,000.

Liebig · 29/09/2022 13:01

Meili04 · 29/09/2022 12:40

I'm seeing this the government have no more tricks they can't bail out people with massive mortgages. There's no money left our economy is screwed I hope the UK can come back from this.

I can only see that working if the general economy somehow pulls out of this nosedive it’s been in for decades. Running a nation off one city’s finance sector is just about the dumbest thing you can do, especially as it has hollowed our everything else that could be productive output. Throw in a rudderless gov’t and you’ve lost confidence, which is the one thing that makes the finance side of things work.

People are happy to pay for debt if they believe they’ll get a return.

Look at Caracas or Buenos Aires. That’s the UK’s future. Some small bastions of affluence in a decayed nation or poor people.

Lightscribe · 29/09/2022 13:07

mondaytosunday · 29/09/2022 12:54

Predicting the property market is a fools game. Everyone predicted a crash due to Brexit and the pandemic too.
I see the market flattening for sure. And if it does in fact fall by 10%, because it went up by that last year then we are back to 2020/2021 figures. But also those figures are an average - prices do not rise and fall equally in all regions or at all price points. Apparently the £10m plus market in London is seeing a boost due to foreign money taking advantage of the week pound.
If investing long term I wouldn't worry. I remember selling my first flat for just over £100k in the 1990s and the agent saying I was incredibly lucky as they wouldn't see that price again. He was right, but not in the way he meant. That flat recently sold again for over £780,000.

Comparing to Brexit, pandemic, 2008 or even 1990s isn’t comparable to now. We are in an inflationary cycle, that’s the difference last seen in the 70’s when debt levels were non existent compared to now.

Debt levels can’t take high interest rates, period. The value of houses will be the least of anyones worries. The global recession will destroy jobs, businesses and the cost of living will continue to rise. Lots will default.
Keeping the economy stable and not collapsing will be the No.1 priority.

rainingsnoring · 29/09/2022 13:43

dancemonke · 29/09/2022 12:51

@TwinsAndTiramisu I totally accept that is where you are - but what I'm saying is that the financial reality hasn't hit for people yet. A lot of people are still in their mortgage fix / energy fix etc - so there will be a timelag. But when it comes, I would be astonished if you don't see a substantial shift amongst people you know. People's mortgages haven't gone up yet, but when they do, they'll suddenly have £500 a month less, so they don't go out to dinner/holiday/etc - so suddenly all those jobs are under threat, but that also takes a little while to feed through. What you're calling disposable income is what pays a lot of people's salaries - so if people stop "disposing" of it, the party stops pretty fast. And there are a lot of people on these threads still suggesting people take out big mortgages at what is likely to be the peak of the housing market for a very long time. Also do have a look at average salaries in the UK. If you're entirely relaxed about £40 here and £40 there, I would be surprised if you are actually entirely average.

Agree, we are only at the beginning of this. It will get considerably worse and fast, imo.

Cattenberg · 29/09/2022 14:22

I don’t know how this country’s public services could survive another period of austerity. The NHS is in dire trouble. Education, support for people with disabilities and the justice system are all struggling.

It would help if the Tories didn’t award multi-million pound contracts to their inexperienced mates/donors.

TwinsAndTiramisu · 29/09/2022 14:49

@dancemonke thank you for your explanation, this really interests me.

I guess I can't visualise how someone who has enough to buy a house, and have a mortgage of say, £1200, going up to £1400 will suddenly be in financial ruin and selling up. If you earn enough to get the £1200 mortgage (plus it's stress tests) then you can afford the extra £200. If you can't then you are living beyond your means, because your disposable income should be able to cover that from what you must be earning to be in the position to buy the house in the first place. If it means you can't have a £40 takeaway every week any more, or you drop your £60 gym membership, this is not the stuff of nightmares.

The other thing I'm thinking about, is that I totally get your point about people's disposable income being what funds the hospitality industry, so if one goes, the other does too....but then that's exactly what happened in the last two years with covid, and yet house prices took their biggest jump up in years. There doesn't seem to have been a recognisable feed through from that period yet?

How is this different?

antelopevalley · 29/09/2022 14:49

The country feels on the verge of collapse. Someone is making a lot of money from all of this.
There will be major changes. There has to be. But they will wait until the big money has been made.

lassingd · 29/09/2022 15:04

Lots of sticky houses gong STTC today near me. You can still (just about) get a mortgage for under 4%.

But in a month or two, if energy goes up at the same time, it does seem like there will be significant downward pressure on house prices. Which guarantee drops of course.

However a lot of prices near me seem to have 10% increase in 2023 baked into to the asking price, so I think they will struggle to maintain prices.

Cattenberg · 29/09/2022 15:35

A few months ago, someone bought a doer-upper here for £240,000. They painted the interior walls and tidied up the garden. They don’t seem to have made any significant changes that would have added value, such as updating the heating system.

A few weeks ago, they put the house back on the market for £280,000. Don’t think so, mate.

Cattenberg · 29/09/2022 15:37

A year ago, they might well have got away with that, but the market has definitely changed.

crossstitchingnana · 29/09/2022 15:46

onmywayamarillo · 28/09/2022 15:49

It depends where you live and where you want to move to.

Recessions aren't so doom and gloom, I've lived through 3! Nothing will be as bad as the 90's crash, Bank of England was different back then. And there no such thing as a fixed rate mortgage until 2005

The stamp duty thing will keep things buoyant, people still work and banks still like lending money

I had a fixed rate mortgage in 1998 so that's nonsense.

rainingsnoring · 29/09/2022 15:49

TwinsAndTiramisu · 29/09/2022 14:49

@dancemonke thank you for your explanation, this really interests me.

I guess I can't visualise how someone who has enough to buy a house, and have a mortgage of say, £1200, going up to £1400 will suddenly be in financial ruin and selling up. If you earn enough to get the £1200 mortgage (plus it's stress tests) then you can afford the extra £200. If you can't then you are living beyond your means, because your disposable income should be able to cover that from what you must be earning to be in the position to buy the house in the first place. If it means you can't have a £40 takeaway every week any more, or you drop your £60 gym membership, this is not the stuff of nightmares.

The other thing I'm thinking about, is that I totally get your point about people's disposable income being what funds the hospitality industry, so if one goes, the other does too....but then that's exactly what happened in the last two years with covid, and yet house prices took their biggest jump up in years. There doesn't seem to have been a recognisable feed through from that period yet?

How is this different?

It's not as straightforward as just a £200 increase in mortgage payments (that may be a very conservative example anyway).
People are also facing a very high rate of inflation in essential costs, most obviously domestic energy which is about to go up considerably next month, just as everyone thinks about whether to put the heating and therefore bills increase anyway. The average household with a mortgage could easily find that their essential costs rise by £2-300/ month excluding any increase in mortgage/ rent. With an increase in mortgage costs, it could be £400 or 500/month. You may say that costs of people could cope with this which is true but lots won't be able to and will default. Even those that can manage will reduce their discretionary spending. That might well be manageable for individual households- cut the Netflix, the meals out, the monthly trip to the nail bar or hairdressers, cheaper holiday or no holiday. People can survive without those things fine. In aggregate, however, that is a massive hit to all discretionary businesses. Many will not survive, those that do will need to adjust, cutting costs in whatever ways they can. Many people will face redundancy which will result in more defaults due to lower incomes and then a repeating cycle of what I have described.

The pandemic is different. A lot of businesses did fail, some of the large chains. However, there was a very large amount of government support available in the form of furlough and loans. That clearly cannot be repeated. Interest rates were also reduced to negative levels and QE was undertaken on a massive scale. This pushed money into people's pockets and persuaded them to borrow huge amounts. Rishi's stamp duty holiday was another rocket in terms of demand.
The situation now is completely different with interest rates rising and very high levels of inflation with stagnant wages in most sectors. With the government's latest fiasco, imports will now be even more expensive because the £ is so low to the $. Consumer confidence has fallen massively which will also affect the market. The last 6 months has been people desperately chasing low interest rates but that has slowed now.

MarianneVos · 29/09/2022 16:09

I've just exchanged to buy a much more expensive house than I've sold. Yes it's probably the top of the market, but I'm totally done with the stress of fitting five of us into a tiny house, and don't want to wait for an undetermined amount of time to see if I can sell and buy at a lower cost. Moving is the right decision for me now and that's all I know - I can't predict the future and I'd prefer to regret carrying on with the purchase/sale than regret not doing it.

GottaGetOutofDairy · 29/09/2022 16:23

I wouldn't worry about a 10% drop on a house you just bought and are going to stay in for years. So much could happen between now and then. Though I get why it FEELS wrong when it happens :)

But I also don't agree only the desperate will sell. So will those with enough equity.

e.g. I bought my house 6 years ago for 250k, it is now worth potentially about 350k going by recent local house prices. A 10% drop would take it back down to 315k. I still would make money on that, so why would the 10% drop mean I would only sell if desperate? Even if my estimates are wrong, that's gives a large margin for error before selling becomes a terrying proposition.

I'm not thinking of selling, just using it as an example.

Mildura · 29/09/2022 16:51

onmywayamarillo · 28/09/2022 15:49

It depends where you live and where you want to move to.

Recessions aren't so doom and gloom, I've lived through 3! Nothing will be as bad as the 90's crash, Bank of England was different back then. And there no such thing as a fixed rate mortgage until 2005

The stamp duty thing will keep things buoyant, people still work and banks still like lending money

That is definitely not the case, I had a fixed rate before 2005, and it wasn't some new radical product at the time, they have been around for a while.

rainingsnoring · 29/09/2022 17:50

onmywayamarillo · 28/09/2022 15:49

It depends where you live and where you want to move to.

Recessions aren't so doom and gloom, I've lived through 3! Nothing will be as bad as the 90's crash, Bank of England was different back then. And there no such thing as a fixed rate mortgage until 2005

The stamp duty thing will keep things buoyant, people still work and banks still like lending money

This is over confident. Of course it could be as bad or worse than the 90s crash.
A very small saving on stamp duty is not going to make any difference in the fact of such high prices relative to incomes and rapidly rising interest rates.

Eeksteek · 29/09/2022 19:11

@TwinsAndTiramisu I’m massively affected.

I let houses to students. The houses were left to me by my late husband, instead of life insurance. Students (understandably) didn’t want houses during the pandemic and my income reduced by 3/4. I used all my savings and cut back the gym memberships and the nails (well, I didn’t have either, but you get the idea. The fripperies went) to get through. I received no government help. But student demand didn’t recover. Still hasn’t, but the expenses are still the same. I am still living on 1/3 income. The increase was just enough so that we could manage this time last year when I got back on my feet a bit (or so I thought), but since January, every increase in energy prices, interest rates and fuel prices has meant further cutbacks. I can’t just pay the extra £40. I had to cut back the usage to save the £40, cut back something else, or sell something. Before this fucking awful mini-budget, I thought I could tough it out. I really did think I could be ok. Now, with my income based on property (which was never my choice) I am not sure how we will. I am almost at the point where I cannot afford to sell a house.

I’ve cut my own budget to the bone, because this is, technically, a choice for me, and there is no help (which is far enough) One tank of fuel has to last six weeks, so I drive only if it’s for my daughter or a health reason. My shopping budget is £20 a week for two people. Lukewarm showers for me, no heating if my daughter isn’t home. I do still fund things for my daughter, because she didn’t make this choice, is a child and deserves to be protected, but realistically I cannot continue to do that. And we are not talking a lot, I just haven’t cut her food and singing clubs and Netflix.

I know you will be thinking I should sell a house and get a job. And, despite the fact the I promised my husband that I wouldn’t, that the houses were to provide for us the way he would have done and to hand onto my daughter, that is what I decided to do. In June. I was far from inundated with offers above the asking price, and had to accept an offer below the asking price. It has still not gone through, and the buyer has just written to me asking for a reduction in price. I could cry. I really could. Everything that has happened in the last few years could have been designed to personally stress test me. The only bright spot has been I have houses to fall back on, if I’m desperate. I appreciate I’m lucky to have it and there are people without that safety net. I got desperate, put a house on the market. And the fucking housing market implodes. I also got a job, back in august. Only they are dicking about with box ticking so badly, I still don’t even have a start date, let alone a payday in sight.

Selling a house is not free, there are thousands of pounds of costs to find. It’s on a variable rate (because of the impending sale) and every interest rate increase is costing me. It also takes time, as does childcare with zero help and not working for an employer for the last few years means I am not exactly fighting off job offers with a stick, either. I am on my absolute knees. I really don’t think I can weather anything else.

I am not expecting any sympathy. But you said you didn’t know anyone who was affected, people were just absorbing costs. Well, I have no more capacity to absorb anything. I don’t want any help or special treatment. I just want to stop being absolutely shafted every which way to Sunday, every time anything happens. There will be other people like me, who were just getting back on their feet after covid affected them, who don’t have the capacity to just groan and pay up the increases. Or who were maxed out of other reasons, good or poor.

SilentHedges · 29/09/2022 21:59

crossstitchingnana · 29/09/2022 15:46

I had a fixed rate mortgage in 1998 so that's nonsense.

Likewise. I had a fixed rate mortgage in 1995. I remember part way through the fix being annoyed at the rate ending up higher than the variable rate.

The 90s crash wasn't doom and gloom for me or a lot of my other 20something mates. We bought houses and got out of crappy rentals. I had a lot to thank John Major for.

Cattenberg · 29/09/2022 23:59

I know a woman who lost her house in the 90s. Despite having a demanding day job, she got a second job in a shop to try to keep up with the mortgage interest rate rises. But it wasn’t enough. She’s in her 60s now and never did get back on the property ladder.

DeadHouseBounce · 07/12/2022 17:00

Cattenberg · 29/09/2022 23:59

I know a woman who lost her house in the 90s. Despite having a demanding day job, she got a second job in a shop to try to keep up with the mortgage interest rate rises. But it wasn’t enough. She’s in her 60s now and never did get back on the property ladder.

And her debt was a fraction of what people are burdened with now?

Cattenberg · 08/12/2022 14:52

Probably! I don’t like to ask…

rainingsnoring · 08/12/2022 14:55

Cattenberg · 29/09/2022 23:59

I know a woman who lost her house in the 90s. Despite having a demanding day job, she got a second job in a shop to try to keep up with the mortgage interest rate rises. But it wasn’t enough. She’s in her 60s now and never did get back on the property ladder.

I expect there will be more enforced flexibility from the banks this time so people are allowed to stay but are, ineffective, permanently renting from the bank.

DeadHouseBounce · 08/12/2022 21:53

mondaytosunday · 29/09/2022 12:54

Predicting the property market is a fools game. Everyone predicted a crash due to Brexit and the pandemic too.
I see the market flattening for sure. And if it does in fact fall by 10%, because it went up by that last year then we are back to 2020/2021 figures. But also those figures are an average - prices do not rise and fall equally in all regions or at all price points. Apparently the £10m plus market in London is seeing a boost due to foreign money taking advantage of the week pound.
If investing long term I wouldn't worry. I remember selling my first flat for just over £100k in the 1990s and the agent saying I was incredibly lucky as they wouldn't see that price again. He was right, but not in the way he meant. That flat recently sold again for over £780,000.

"Everyone predicted a crash due to Brexit and the pandemic too."

Well the Remain propaganda machine predicted a crash, hoping to scare people off voting to leave, and people still voted to leave.........very telling IMO, large numbers of people are sick and tired of the ridiculous bankers ponzi property bubble.

The pandemic was just another excuse to money print and do daft stunts like the stamp duty holiday, but the bond market won`t let this happen now, we are finally going to have to take some pain.

The time to predict a crash is when interest rates start going up, so I`m predicting a crash now, LOL.

Mark19735 · 20/12/2022 18:46

But why are you just predicting a crash? What benefit is there in simply being right or wrong on the internet? So limited in your ambition.

Much more forceful and alpha-predator would be to have the courage to say "I'm going to buy an X-bed in postcode area YY when I can get one for £Zk" and then to actually go out and do it. If there's a willing seller at that price, you'll be making someone very happy - because you'll be offering them more than every other person on the planet thinks its worth at that moment.

Or, will you get cold feet at that point, and wait it out just a little bit longer, in case prices fall even further, (just like you did last time) and miss the boat once again?

Furries · 21/12/2022 04:24

@DeadHouseBounce - the only question I have for you is - why do you have a weird mix of fonts in your posts? I keep seeing you on various threads and the font thing annoys me, but also makes me curious.

Are you just c&p from other sites, hence the font thing? Do you do it to annoy people? Are you in another dimension and have, somehow, managed to rig up an old typewriter to communicate with this world?