UK house prices post biggest fall since October 2008 - Halifax data today Weds 7th Dec

[jimmyjammy001]

Just a quick note for anyone looking to buy, in particular first time buyers who run the extreme risk of running into negative equity if buying with a low deposit

UK house prices post biggest fall since October 2008

Also its important to note that "Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels (+£46,403 vs March 2020). "

I suspect there will be bigger falls yet still to come as well

Ok then - you try go and buy a recently sold house for a recently sold price.

Always one step behind ... LOL.

BTW - mine isn't for sale. But when I'm next looking to add to my portfolio, I'll be sure to ask for your opinion on how to get what I want at a good price. I've heard that patiently explaining to sellers that they are idiots, living in a slave box, are hooked on debt, and that they have no choice but to sell to me is a great strategy.

I don't have a crystal ball but looking at the past sometimes helps. I bought my house in 2016 for 1.5k more than the 2007 price so 9 years to recover in my area. I suspect it will be worse this time especially in rural areas that massively gained , the government don't have QE to fall back on to stoke prices. This recession will be worse than 2008 because I don't think the economy ever truly recovered they engineered fake growth using QE. It will recover at some point but who knows when. Each area has its own housing market.

i would sell my flat at a lower price than what I paid for it in 2019, so that I can buy a bigger flat at a lower price. Less stamp duty and less estate agent fees and cheaper overall

I have no idea why you are trying to make this personal.
Insecurity? It seems that way.

Not the point you were trying to make, I know, but in a way you have hit the nail on the head. It is personal. Every house sale or purchase is extremely personal to the people involved. Trying to generalise this to some kind of commodity-based rule generated from slavish adherence to an index is foolish. An index can indeed tell you what the average sales prices were last month ... but they cannot predict what the actual sales price will be for any single specific house next week, next month, or next year. It's like driving a car looking in the rear view mirror.

I don't think anyone is seeking to predict actual sale prices of specific houses on specific dates. The discussions relate to the housing market in aggregate. Of course, there will be significant variations between regions; I don't think anyone would disagree with that.
I agree with you that the data is all 'looking in the rear view mirror'. However, to me, that means that the data relates to transactions from 5 or 6 months ago and that, in fact, things are worse than the data suggests (not just house prices, general economic data). These things tend to be cyclical and this cheap money cycle has turned.

Well, if we were Rishi Sunak or the Bank of England's monetary policy committee, or the CEOs of a group major housebuilders, then fair enough. But for most Mumsnet forum readers, we're not interested in the market in aggregate. We're interested in the likelihood of our house selling, and the possibilities and opportunities that will be available to us. For that, I don't need to know what the aggregate price of a three-bed of four-bed is ... I don't even want to limit myself to regional variation; If I'm interested in selling then I'm acutely interested in the potential significant variation between similar houses in the same suburb - even the differences between successive viewings on the same day. Those differences aren't determined by any house price indices published by lenders, or the economic data from last month or last quarter.

Most households only have the one house to sell ... and it's the price that house fetches (coupled with the price of the place they are looking to buy) that determines whether they can afford their next move - so drilling in to the detail and the significant variation it reveals matters greatly.

Just because things seemed scary for a while back there, doesn't mean we haven't already bottomed out and the market has already turned ... nobody can possibly know. (By the same token, we may also have several quarters of further falls in the indices ahead ... who knows?)

@Mark19735 but I was saying similar only the other day, that regional variation and anecdotes are also useful, not just official figures which have a time lag. I think you are agreeing with that.

What you don't seem to take into account in general is buyers as well as sellers. Most of the people on MN who want to sell a property will also be looking to buy a property. As prices fall, they may well take the pragmatic view that they will accept a significant price reduction on their current home and negotiate a similar one (possibly more in real terms) on their future one.

Everyone except the very last link in the chain - who are, in effect, funding the discounts for everyone below them. If it's a probate sale, then perhaps there's no-one who cares all that much - although my experience has been those who stand to inherit a windfall are often the most deluded of all when it comes to valuing granny's flat - although they can also usually afford to wait things out.

Probably one for a different thread, but I'm reminded of the ruse used by motor insurers when they offer you a settlement price for a total write off. They insist that a like-for-like replacement can be bought for the amount they are offering - even though the Parkers and Glass guides say your car was worth a couple of grand more. But in the end you accept, and then find you have to spring for a one-way train ticket to the other end of the country and a taxi to get a similar model with slightly higher mileage, and even then you find it isn't the same colour, doesn't have the same spec and still costs £500 more ...

I'm yet to be convinced that there are charitable sellers out there willing to let me have a 5-bed palace for a song, paying it forward so to speak, just so that I will do likewise to anyone looking to buy from me and thereby contribute to the downward trajectory of prices. Someone, somewhere, is always paying for it ... there's a sucker in every deal, and it's seldom the already wealthy.

If you should buy my house out of probate @Mark19735 , I'm sure you'll be asked the full going market rate for it as my heirs will need the money to fund whatever they have in mind. But it's not a palace, and lacks a fifth bedroom so maybe not of interest.

'I'm yet to be convinced that there are charitable sellers out there willing to let me have a 5-bed palace for a song'

I understand your point, of course. The people in these sort of large houses are often those who bought them for a song 30 years ago. Then they really were available for 'a song'. Not the case now, they would have to fall by more than 50%, much more in some areas.
I doubt these people are any more charitable than anyone else, possibly less so, in fact. However, they are just as much affected by market forces and likely more so by old age and health problems. They might not be in a stronger position to bargain than anyone else in the chain, who knows.

My dad bought a 5000 square feet home for a song during the Asian financial crisis in my home country. Price had fallen 40% from peak. Owner was an indonesian businessman who wanted to use the money to save his business. My dad always told me the steepest discounts can be found for the homes of the rich as they have significant and more important assets to save rather than their residential home. There are plenty of reasons why people might sell their home for a lower price.

There are people who may be in such a predicament in the UK in the coming year. Furniture sales tend to fall in a recession; and I recall reading about a managing director of a luxury furniture company in a telegraph article who had a massive IO mortgage on a 5 bedroom London home. He is already worried about the rising interest rates. I suspect he took the IO mortgage so he has more money to invest in the business. I would expect if the business needed a cash injection, he would sell his house even if the going market rate was low. After all between the family business and the family home, its probably better to save the family business as you can always buy a better house when you have more money.

Thats right, some people always sell up in recessions/house price crashes for a multitude of reasons, and that lowers the value of nearby similar properties, you can hold out all you like but the value of your houses is still dropping, the people on here making up a million and one reasons why it cant be so are just fooling themselves TBH.

"and that lowers the value of nearby similar properties". No, it doesn't. It really doesn't. You really need to stop thinking like this - it'll prevent you from ever acquiring a house of your own.

The price that some aggregation of other houses sold for last month has absolutely no impact at all on the price that I'd be willing to sell my house for. You keep arguing that I'll have no choice but to accept 'the market price' and I keep telling you that I won't accept it. As an owner, I have 100% autonomy and control over this decision. That's why I became an owner - so I wouldn't be beholden to the whims of others. If you want to buy my house, you will have to make it worth my while. If not me, then I am pretty sure every other owner will have the same approach to their house. (See the comment by @XingMing above ...)

If you cannot accept that the onus is on you to make selling worth someone's while, you will find that you remain a non-owner for a great many years to come.

For clarity - I am not saying that 'making it worth my while' necessarily means paying the same crazy HPI premiums over the last sale in the street. I fully accept that the amount that I'd be willing to accept could be lower than a similar house sold for, or possibly even lower than I myself might have paid. Times change, and needs change. I can easily imagine many reasons why a person might value cash over real estate and be willing to accept a lower price than some arbitrary valuation. But I absolutely reject the idea that you, or any index, can tell me what my house is worth to me. And if you want to acquire it, you will have to meet my valuation ... not anyone else's.

@DeadHouseBounce is one of your other beliefs that THERE IS A CORRELATION BETWEEN USING A DIFFERENT FONT TO EVERYONE ELSE AND BEING RIGHT ABOUT HOUSE PRICES?

Yes, that is fine, but I am not trying to tell you what your house is worth to you, I am telling you that if you want to sell your house a buyers lender is going to tell you what it is worth to THEM, and that will be based on recent sales in the area and their perception of the economic risks at the time, even if you recruit every potential seller in the UK into a Sellers Strike you wont change the lenders mind, and eventually the banks make the market because the margin sales are always happening for whatever reason.

Still not getting it, are you?

The person who last month went to the bank with a deposit of £Xk needing a loan of £Yk to buy a house isn't the same person who is going to be buying that house next month.

The person the banks will now only lend £Yk -20% to, is now going to be looking for a different house that costs £(X+Y)k -20%.

When the earlier sale falls through, the house whose owner required £(X+Y)k in order to sell will find that a new group of people will now be looking at their house ... people who have saved a bigger deposit or who earn more. They had previously been looking in a posher area, or at bigger houses, but since rates went up they can't afford that any more, hence they are looking at a cheaper house. Their bank will still happily lend them the difference between their deposit and £(X+Y)k, at the higher rates, because their credit risk is acceptable to the bank. That is because they are richer than the person in the first scenario.

"Ahh ... but what happens at the very top of the ladder, where there are no more even richer people to still pay these crazy prices" you ask? Well ... these people aren't buying with residential mortgages anyway. They are investing private family wealth funds and laundering money across tax jurisdictions to optimise inheritance and capital gains tax liabilities. They simply don't care about mortgage interest rates. Their negotiating positions are beyond the comprehension of anyone who frequents these forums ... but I'm sure they'll be OK in the long run.

"But what happens to the people struggling to get on the first rung of the ladder" you ask? They remain renting ...

Quite, @Mark19735 . NO first time buyer is going to look at our house unless they just won the lottery. Postcode valuations are not going to help much because ours is mostly a long terrace of Edwardian houses, with five individual houses, all very different. When I talked to the estate agents who gave our last valuation, they demurred to start with because they saw a terraced row, and we ended up with a "we don't know, but at least...." valuation. I was slightly staggered.

@DeadHouseBounce the value of houses in my post code is unlikely to affect the value of the house I (or my heirs) will sell. Because, of the 25 properties in the code, there are 19 pleasant Edwardian terraced 3 beds with lovely views, and six others. One of which is owned by a personality with local family ties and another similar owned by someone who just did well in business and four modern that the owners bought 25-30 years ago as family homes as they were built. We bought ours from the guy that built it 25 years ago. It isn't a cookie-cutter valuation job.

"Well ... these people aren't buying with residential mortgages anyway. They are investing private family wealth funds and laundering money across tax jurisdictions to optimise inheritance and capital gains tax liabilities. They simply don't care about mortgage interest rates. @Stoner.com Their negotiating positions are beyond the comprehension of anyone who frequents these forums"

Like a furry pussy cat in your house has no comprehension of a Great White shark? I think Im getting it man............unless of course the cat watches nature programs on TV, then maybe it could comprehend.........?....but Im getting the vibe about different house, different people, man that makes sense.........interest rates don`t matter at all do they?

You are a wind up and I`m calling it...........Time Out.........ding dong!

In that case how much people are willing to pay or borrow affects your value.

Sorry @DeadHouseBounce it's entirely about how much they want to buy the house. It's a one-off. There isn't a second choice or an alternative. It's my house or somewhere else. The six fab houses change hands once every 30 years. The terraced houses are bought and sold more often. Your model works for some houses not all. But of course, I am not expecting to sell for pandemic money in the short term, just most of it, because it's not a forced sale.

"It's my house or somewhere else."

I do believe you are starting to grasp this housing market thing!

I do understand that in a falling market, nowhere is worth what the estate agent told you six months ago. But if you want to buy my house........ I do not need to sell it.

You've lost it, dude.

One last thing - before you implode.

<metaphors>

When industries closed down and the entire populations of some towns lost their jobs back in the 80's recessions there was a lot less money going round, right?

So the local spend on a basket of goods will have shown a decrease in the various indexes, right? But did, Sainsbury's and M&S drop their prices to reflect this change of income? No - the posher stores closed, and the discounters of that era (like Bejam/Iceland) gained market share. But the shoppers - the ones who now had less money - were now buying turkey twizzlers whereas previously they'd been buying prawns and marie rose sauce.

That's what happens when people have less money. They spend less. But they also get less stuff. The number of prawns being processed didn't reduce ... they just got eaten by other people who still had the money to pay for them.

Same goes for everything else. Front row tickets at Wimbledon. Designer clothes. Custom-built cars. Houses. The only thing that changes is which people get to enjoy possessing them. I guarantee you that there will be a Men's Singles final next year and the year after that - no matter how bad the recession is - and there will still be people watching it live, eating strawberries. Your obsession with house prices is no smarter or more economically literate than if it were an obsession with the price of a punnet of strawberries at Wimbledon. It will always be someone richer than you enjoying that experience ... right up until the point where you put your hand in your pocket, pull out your wallet and spend the money to join them. And if you don't ... just admit that it has nothing to do with them being stupid and everything to do with you being poor.

</metaphors>