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?

"One way of determining how much house prices will decline in response to rate rises is by looking at the historical relationship between the two. This is what a new ECB working paper does. It finds that, what matters for real house prices is where the real interest rate starts. The lower the level, the larger the price declines. With real rates coming off their lowest levels ever, the results from the paper imply unparalleled declines in house prices in advanced economies."

so many insane new builds in east, crazy prices all so ugly and soulless

The thing for me is we have a substantial budget for even our bit of London, and nothing I am seeing is making me feel remotely excited. With such a big purchase you’ve got to actually want to buy it!

prices have just climbed to a silly level, and surely people just can’t afford to borrow at this level given the interest rate rises.

The thing is. I am following a market in another EU country. They never had 0.2% mortgages, they always had rates like we do now, 25% deposit is standard.
The prices still risen. Looking at that, it may just be question of "being used to it". So I wonder if there might be stall in prices, drop in some areas, for year or two and then it will continue on it's merry way up again in here.

Bristol market is still absolutely insane. We bought in the 2009 ‘mini dip’ - sold our previous property for the same amount we paid, which felt like a loss, but gained substantially on the saving to upsize. We were priced out of the area 5 years later. Houses would need to fall by 70% to take us back to those times.

@sixfoot my old neighbour in bristol ( I don’t live in bristol any more just sold but last year had it up for 375 would have easily got 400k sold it a few weeks ago for offer in the region of 300k.

a Bog standard 2 bed Victorian terrace with absolutely terrible access

my dSs accepted an offer of 20k less than the asking price on his gorgeous 3 bed Victorian terrace in bath only last week
New builds are high but lots of incentives

havent Noticed a drip in Manchester. Tried to book a viewing yesterday and the house already had 6 viewings and an offer.

Nearish to that and it's also not stopping in my postcode. I did realise that some, including my house seem to sit there for few weeks, but that's just because agents are taking an age to mark it as sstc. We got viewings booked in within hours of going on market and offer same day of first viewing. We were priced ok though and got quite a few k above asking, the overpriced stick around, disappear, come back.

Lots of interesting heat maps online showing what is happening in every postcode. Some popular areas will take longer to feel the affects of the cooling market but are unlikely to remain unscathed eventually. As everyone says, a changing market is like a tanker turning.

I guess it depends a lot where in bristol, it's such a divided city. Terraces for 800k-1m are totally normal in some areas.

The heat has gone out of parts of it. I am involved in sale of my Grandmother’s house. It went on last May at 450k and went to sealed bids and accepted offer of 480k. Just as we were exchanging my Aunt sadly died so the buyer bought next door for 525k as unable to wait for probate completing in July which was in slightly better condition.

My cousins are waiting for probate and we recently accepted an offer of 425k, so 100k down on the slightly better condition one next down 7 months later.

@donttellmehesalive that's interesting, do you have any links for that, as I have no idea where to look?

I think it must depend very much on area, as I see where pps are saying properties are still selling fast in eg Bristol and Manchester, yet from where I am in the East Midlands nothing much seems to be moving at all.

I think some kind of crash is probably inevitable now though, unless the government intervenes to prop the market up. They probably shouldn't though. I would like more young people and people on lower incomes to be able to buy and prices to be more 'normal'.

Can't bear property hoarders and dodgy private landlords, a few decades ago they weren't a thing. In the 80s and early 90s I worked in an office, just bog standard non degree level stuff with bog standard wages, and many of my colleagues as single women were able to buy their homes, perfectly nice terraces or flats in decent areas, on one wage. Nowadays people like that would probably be paying a huge proportion of their wages to some landlord, and liable to be evicted at a whim. Life has got worse for ordinary people, the property boom only benefitted a minority.

I was looking at one this morning but it was in the Express and know mn hates that newspaper! I'll have a look...

This is the one I was looking at in the Express here

@donttellmehesalive thank you, off to study that!

That is interesting. Is it an Eastern European country? I think more of the Western European ones have followed a similar trend to the UK.
In E Europe wages have risen far more since the GFC compared to W Europe and particularly the UK. Their economies have experience much better growth and now the Polish economy is expected to out perform the UK's very shortly.
House prices will grow with inflation (and deflation of the currency which we have seen a lot of). However, prices are mainly related to affordability and access to cheap credit is a huge part of that in the UK where wages have not grown in real terms for a large part of the population.
I can't see this bounce that lots of people seem to be expecting at all unless we get hyper inflation and then, frankly, we will all have much bigger problems than the price of our houses.

@rainingsnoring central. They were all absolutely shocked at 5% deposits here.
Sadly when it comes to affordability it is like here. Younger ones have massive issues getting on the ladder due to rapid price rises in last couple of decades and the aforementioned high deposit.
I just looked at a 3 bed house in comparable city to where I am in uk (infrastructure and population) and cheapest house on the major reality website is twice the price of mine. Ok, it has bigger garden a bit BUT it's approx 6x further away from city centre than mine is.
It's fucked everywhere

@FTStheFirstTimeSeller the 5% are pretty crazy. I think there are less of them now. I think prices in France, for example, have been held back a lot by larger deposit requirements.
The housing market is in a massive mess in far too many countries.

On a separate but related point. I was thinking about how high property costs are in the UK and if it actually damages our economy. In that people have to spend so much on housing themselves or their businesses that it doesn't leave as much over for other spending or investment in the economy. I'm not an economist but does anyone know if my thoughts carry any weight?

I think so, if mortgage costs are so high firstly due to high purchase costs and now to higher interest rates (and renting, costs are high due to the same reasons for landlords), it leaves much less money for everything else. Housing costs hoover up any spare cash that could be spent on other things, which has an impact on the economy and high house prices deter investors from investing in companies as they get a better return on property, affecting productivity.

I agree that it's damaging. UK governments have based the economy on rocketing asset prices which make people feel wealthier and so they spend more in the real economy (the wealth effect) and also borrow against the value and spend more. It has created the illusion of wealth and distracted people from the fact that their wages have stagnated and their standard of living has fallen for many people, renters in particular, of course. If governments had concentrated more on real goods and services, the UK economy wouldn't be in so much trouble now.