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?

In my search area, a guy has just reduced from 335 to 330. Was 350 pre-Christmas.
As he’s got a shared drive, I think he has more to go. Chasing the market down.

Prices coming down in my area, which is traditionally very popular.

Houses that have been on for several months are being reduced, new stock is coming on at noticeably lower prices, lots coming back on after sstc, new builds have discounts and offers.

1% is significant because it's the annual fall, against a backdrop of everything else going up 10%. With inflation proving to be sticky, interest rates will be increasing for some time yet. Add the CoL and other affordability factors, and landlords dumping stock ahead of punitive legislation, and the outlook is pretty bad.

People are still saying 'but supply and demand'. But ONS puts UK population as falling from 2025, two decades earlier than expected.

I just sold my house- downsizing. I'd planned to buy but my purchase fell through. My house was an expensive one for the area, lovely house but I thought I would struggle to sell it as a premium property when people were getting more price sensitive. We agreed price on Aug and completed last month. I've moved into a rental and am watching with interest. If prices fall by more than 3% I'm better off to have moved even accounting for the year long rental price. Plus I'm chain free for my next purchase.

I see similar to what others are saying. Renovations or properties priced to sell are moving v fast. The rest is just stuck- many on from as far back as August but lots for 3 months plus. Small prices reductions but not moving. I'm sitting in my hands to see what happens in the coming months. I'm not worried about prices running away again- interest rates where they are will stop that I think. Hopefully they will come off a bit but I don't see the catalysts for a big crash.

Our of 10% under asking was accepted today which we weren’t totally expecting to happen. It went on near the end of January.

As someone who brought last summer I'm actually scared by this, and utterly kicking myself we didn't stick out renting for a bit longer - if things are gonna drop 35% we are utterly, utterly screwed in terms of negative equity.

to add - I know prices need to come down and I want them to come down a bit as it was PAINFUl saving and buying this house - but some commentators are saying anything from 25-40% which would utterly bugger us, tho sadly I can see some logic in their arguments. Just hoping things even out a bit before we need to sell in a couple of years.

Lots coming onto the market where I am. Area dependent I think, I think some people are wanting to jump in before a bigger correction happens. Some are still being listed for ridiculous prices but not shifting.

''@Seaitoverthere · Today 21:10
Our of 10% under asking was accepted today which we weren’t totally expecting to happen. It went on near the end of January.''

Congrats! I am about to make a 10% under as well.

I have my eye on 3 different properties and hope one of them will work out with that type of offer. They all need some work and have been on the market for a few months so I think this is not an unreasonable offer...

''@yellow13 · Today 21:32
As someone who brought last summer I'm actually scared by this, and utterly kicking myself we didn't stick out renting for a bit longer - if things are gonna drop 35% we are utterly, utterly screwed in terms of negative equity.''

I really don't think this will happen. 5-10% maybe.

At some point we are also going to get a new government and a change of direction for the country and I think optimism will return then.

I do feel sorry for those who felt pressured to buy last year. I can’t see it being a pleasant couple of years as far as prices are concerned.
Something that is worth considering is that if optimism returns to the economy, the more likely it is that interest rates will rise rather than fall.

Market is still fairly brisk near me (sw London), though definitely less on the market. The ones that do go on seem to have sold within a few weeks. It's a nice tree lined streets of Victorian terraces bookmarked by two very good primaries and parks. 10-15 walk to tube and train. The schools will keep the area buoyant.
The rental market is very competitive though. Things get snapped up immediately. My tenants gave notice, I raised the rent 15% (first time in three years) and got new tenants first day of viewings. Two bed on a busy street no outside space, but fantastic location in zone 2.

Governments can’t change anything (it’s beyond props like H2B at this point), look at Sweden, US, Canada and Australia which have already begun their corrections.

archive.ph/bWV5R

This is driven by the cost of credit supply increasing globally (interest rates rising due to inflation in response to trillions of QE money being printed and injected into the economy)

In my previous comments over the last few years on here I go into more depth about why this is happening, so I won’t repeat myself.

House prices are linked to supply, but not the supply most think. Money supply due to cost of debt, they are not inflationary assets, they are disinflationary assets.

@Lightscribe - is H2B importing immigrants to build houses a la Dubai on the cheap?

Nothing is selling in my area.

I have a BTL property which I really need to sell as the mortgage on it and the house I live in ( I had to move for work hence the BTL) have gone up so much it makes things very difficult. So it's good for my tenant as I won't be selling now. I was going to give her 6 months notice next week. However I will have to put her rent up- it hasn't changed for over 6 years and the market rate is now much more than she pays.

Mine is a cheap house in an area which didn’t rise particularly. I bought I in 2007 for not much less. I nearly sold in 2019 for £162k my purchase fell through.

I’m getting it ready to go again and there are 2 similar on for £185k that is from the 2020/21 rise.

Even if I sell for £170k it’s still higher than 2019.

I think they’ll just go back to pre Covid inflation where prices sold at artificial prices and it’ll take a long time to get back there.

Have you actually read the article you quoted? The article forecasts an 11% peak to trough forecast for the UK which is very close to the 10% potential drop @Greenfairydust mentioned.

I think it’s hugely unlikely there’ll be a 35% drop.

It's almost certain that prices will not drop 35%.

I’ve seen 2 houses for sale in the same road where I live. One was in better condition that the other and sold for £100K more.

I suspect one house sold due to downsizing or moving out of the area. But it’s slow otherwise in the area.

Prices are just readjusting. The price rises during the pandemic were crazy.

From what I can gather, it’s already dropped 10% in my search areas.
This crash is only just getting started. Tax rises and the GCT just starting, govt. reducing energy cap, food inflation 17%, going same way in EU also, and the FED are raising rates again.
Whether we get a 35% drop is open to question, but maybe in less desirable areas with houses needing full renovation with poor EPC ratings ( think end terrace, solid wall BTLs ) then it shouldn’t surprise anyone.
Location, Location, Location!

It is not true about a lack of properties overall. A lot of landlords seem to be selling up.

@Lightscribe has been predicting property price Armageddon on here for several years now.

Are you planning to sell or remortgage?

I also don't see 35% nominal drops in UK prices. The other thing go remember is inflation. For a long time house prices have been going up while other things didn't. Now it's the other way round- so if we have a period where house prices drop somewhat but wages go up that will also help affordability. Energy prices will come down and inflation will moderate.

So while it's tough right now I don't think it's a panic situation unless you are a forced seller or have a big remortgage coming up.

I think what is important is that banks are properly regulated so that loads of people don’t end up on too high variable rates (when their current fix term expires) because they cannot remortgage because their house value is down on paper and so they cannot remortgage onto a more reasonable fixed rate.
Banks are notorious for raking in profits that way.