House prices are starting to fall

[Greenfairydust]

In the news this morning: house prices are falling. Property prices fell 1.1 per cent in February, the largest decline in a decade and this is expected to continue for the next few months.

www.ft.com/content/c09efd19-9920-4f4c-876b-d1e1a0235852

How will this affect the market I wonder and buyers/sellers behaviour?

As a buyer viewing houses at the moment, It won't put me off buying but it means that I am giving myself a strict budget and expect sellers to be reasonable and price their house accordingly.

What do other people think?

Sellers who don't need to sell will hold. Buyers will buy but not over pay.

@AllWorkYoPlait · Today 09:04
Sellers who don't need to sell will hold. Buyers will buy but not over pay.

That sounds reasonable.

The market will slow right down....both sellers and movers will stay put whilst they see what is going to happen

There will be less on the market. People will stay put mostly. Those that have to sell debt, divorce, death may have to accept less.

The market will slow while people wait to see where prices go, and then will maybe stagnate for a while with almost no new properties coming on, until prices pick up again.

I've already noticed that properties for sale in my area are now largely probate properties or probably rentals. But, the vendors are still expecting a lot of money for them (in some cases even more than fully renovated properties went for during the stamp duty holiday madness).

I'm divorcing. But we're in a very fortunate position. We don't have to sell. I'd love to sell because I really would like to move on and just start again with new walls. But I guess we'll just stay put. Properties for sale on my road in West London aren't shifting, which has confirmed what I already knew: It's unlikely we'll sell the family home.

I think it’s great. Anything that means my kids have more chances of buying. most of the over 40s I know have so much equity a drop won’t matter, and it only matters if you are buying / selling anyway.

That’s already starting happening here, an area with historically solid prices. Prices have broadly followed the trends of the market but they’ve not seen the huge peaks and troughs. Much less housing stock on the market and staying on for 6-8 weeks rather than going SSTC within days.

This is true, and those that have to sell debt, divorce, death will have to sell However, prices are set at the margin, therefore those sales, at lower prices, set the market.

Saying that, I can never understand why people say they will stay put and "wait it out" instead of moving if prices are lower? Lower prices are excellent news for everyone that wants to trade up, as the price of what you want to buy drops to a greater amount using percentages, meaning less debt. It's exactly the time I'd trade up.

I dunno, a 1.1% drop after 10+ years of rises doesn't seem much, yet. But let's see.

Most people will sit tight and just not sell.

Generally the government and Bank of England manage ir so there is no crash. All that happens in reality is thought is that anyone who doesn’t need to move doesn’t. They hold. So housing stock available reduces right down. Which means those who need to buy struggle to find anywhere and are competing for the sake few properties. Which makes the price rise again. It always rights itself

As a buyer viewing houses at the moment, It won't put me off buying but it means that I am giving myself a strict budget and expect sellers to be reasonable and price their house accordingly

that only works if there is a glut of properties available and few buyers . If little on the market, and more buyers, which will be the case, then you will just be competing with others to buy the property

Gordon Brown “No more boom and bust!”

Because if you are trading down you won't sell for less unless you have to and if you are trading up, you can only buy at lower prices if someone will sell for less. And the only people who generally will are forced sales. And they will probably be advertising at the historic 'higher' price so buyers already on the ladder will believe that they need to sell for a certain amount in order to move up, so won't accept lower offers. The lower prices will eventually become apparent once this all works through, but will take time.

And that's a good thing IMO. The only winners in a crash are the wealthy.

THIS. I don't have kids or skin in the game, however I would like everyone to have all the opportunities and chances at the rite of passage at life, that I've had.

I've seen parents crow on about their house price gains, only to realise they have to remortgage and take on the equivalent debt of their "gains" to help their kids out. At which point the penny drops.

Mmm, but if I have lived in my house for ten years, say, a small reduction this year on last is dwarfed by the 'gains' I have had to date.

The increase in prices because of the pandemic has not been reasonable.
There are places in the midlands etc going for huge amounts compared to what the local demographic earns.
I feel sorry for the people who bought during this time, but hopefully they like their homes.

''@Littleflowerseverywhere · Today 10:00
As a buyer viewing houses at the moment, It won't put me off buying but it means that I am giving myself a strict budget and expect sellers to be reasonable and price their house accordingly

that only works if there is a glut of properties available and few buyers . If little on the market, and more buyers, which will be the case, then you will just be competing with others to buy the property''

I disagree.

The trend in my area for the past couple of months has been houses not shifting/being reduced.

Landlords are selling up and quite a few properties being sold by older people who need to move due to health issues so there are properties on the market. There is not much ''competition'' for these.

Also houses are being sold but then come back on the market a few weeks later because the potential buyers could not secure a mortgage or got quotes for refurbishment work that were so high (due to cost of material/workmanship going up) that they had to withdraw.

I think this is going to be replicated in quite a few places.

The properties that are selling are either the ones that are priced realistically or the ones that are really desirable/have already been nicely refurbished.

Average properties/properties that need work that have been priced 'optimistically' by agents/owners are not moving.

I think the suggestion that sellers will just 'sit it out' until prices rise again is based on what happened in 2009, when the financial crisis led to sharp falls and Governments around the world then responded with QE and ultra low interest rates.

This time round it's largely interest rates returning to normal which is causing the downturn. If you need a mortgage to buy - as most FTBs and second steppers do - you now have much less purchasing power.

We are looking to move but can now borrow 30% less than we could as recently as early 2021.

If those higher (normal) interest rates are here to stay I think it will be more like the 1989-1995 period when prices fell/stagnated for much longer.

Market was obviously stuffed once IRs started going up. UK rates are nomally approx. equal to the Fed, normally a bit higher (+1%?) - atm Fed is about 1% higher than the UK, so we could have some way to go yet IMO. This is going to pull more money out of buyers pockets and along with the cost of living increases is going to stuff the property market.

The smart money was probably moving about the first half of last year. Now you're starting to see the increased "can't afford to sell","my house is my pension","accidental landlord" and all the other posts associated with people who are starting to realise they could be sitting on a big loss, but are going to attempt to find some way to desperately defying gravity and not crystallize it. This of course is just postponing the inevitable. I think if I was in the market to sell atm I would be looking to get ahead of the curve by lowering the price below current market value.

Interesting to read this. We have offered on a probate property this morning having completed last autumn and waiting to hear if accepted. It needs work and I think a lot of people have been put off by cost of work as we cited this as not going to make an offer but agent said put offer in taking that into account.

Part of it funded by my share in a probate sale, wonder what our buyers will think. They are moving area though to be near family round the corner and have jobs lined up so hopefully will go ahead. We accepted 55k under what we were offered in spring last year and next door completed at 100k more in the autumn.

Very little is coming on the market where I am (SE London). Nothing has come on in my actual area in several weeks. You need to borrow so much to buy a house around here - assuming you don't have £100s of thousand of pounds in a bank - that the interest rates will be massively impacting decisions.