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?

We bought a doer upper (completely derelict) in and it took 2 years to get planning permission through for a planned 2 year build. They had really just got started on the work about a month before the first lockdown, which slowed things down, but overall we were so lucky with the timing. By the time we'd finished, the overall project would have been at least 30% higher.

@ThankmelaterOkay

Empty homes (6 months+) need to be seriously financially punished. Then you’d see a market correction like no other. Force these fire houses into the hands of people willing to put the money in to fix them up: don’t rip them off to start with.

I completely agree with that. I'm always horrified by how many houses and new build flats sit completely unused in London. But when they do try it, they seem to manage to get it all wrong. Our house was empty for years while a developer just let it sit and degrade. We bought it and they tried to double our council tax for the four years it stood empty that encompassed obtaining planning permission and the build. Needless to say, we contested that.

We've decided not to put ours up for sale. We're planning to move up the ladder, but will hold out until the market stabilises. We don't need to move and our current house is fine for us, we'd just fancied a change.

Most people I know who were considering moving are holding off. So I think the market will slow massively and only those who have to sell will do so.

@RollerCoaster2020 -I guess there are realistic sellers who need to sell in your 'naive' Hampshire town. I think they are sensible.

@yellow13 what specifically are you worried about if prices fall significantly? Are you on a fixed or tracker, is your fixed term coming up for renewal? Are your jobs insecure.

@Spokentruth reducing the prices to the level that buyers can afford/ are willing to pay will undoubtedly result in viewings/ offers. It is when people reducing by Tony amounts and chase the market down that it doesn't work because the sale price always remains too high for the market.

@ThankmelaterOkay and @Thesharkradar I agree with you!

@kidcrazy aren’t they averages though?

We brought last summer, so in the peak. Brought a new build with HTB with a not too high, but not great, interest rate of 3.5%.

If prices plummet 30%, which is a number I see in a few forcasts, we will be in negative equity by a long way, and unable to move.

In 5 years we will have outgrown house and there's no extension potential here.
This was a first step on the ladder home for the next few years, not a forever home.

we are scared we will be stuck or in a position that financially we can't recover from

Our house was empty for years while a developer just let it sit and degrade. We bought it and they tried to double our council tax for the four years it stood empty that encompassed obtaining planning permission and the build. Needless to say, we contested that
@emmyren4
presumably because the developer knows all the angles & will lawyer up pdq if the council tries to go against them...whereas you, the ordinary person are likely to be a much easier target (except you weren't✊😃)

So you're going to wait until house prices rise again??

It must be the only market where people do that. Nuts.

Yes. Because of the LTV rate on our property. The jump between properties changes the higher up the chain you get. Falling prices stagnate a market, they don't bolster it.

Prices don't seem to have come down near me (zone 2 SE London). I don't know if actual sales prices are down. Takes so long for the land registry to update its hard to work out what things are actually going for.

So you're going to wait until house prices rise again??

It must be the only market where people do that. Nuts.

It is what invariably happens when house prices fall. The number of sales drops to almost zero, so although the few properties sold are cheaper, very few buyers benefit. Then when prices pick up the market roars away again.

I don't know if it's nuts or not but it is predictable.

That does sound really difficult @yellow13.
Before making a decision can you seek advice from a mortgage expert/ financial adviser? You could try ascertain whether it would be better to overpay your mortgage or save your money in a high interest account instead.
No one knows at this stage how much and over exactly what period of time prices are likely to fall. Some people think it will only be 5-10%.

This happ

This happened in 2009 and how it played out was no one put their house on the market unless they absolutely had to (divorce, moving to care home, etc). Sellers preferred to wait 1-2 years until the market rose.

The few buyers who were able to buy got fantastic deals but had to move crazy fast, and most buyers were frustrated that there simply wasn’t anything on the market.

So it wasn’t as good for buyers as you’d think.

Sounds like a stagnant market

People get fixated on the price of their own property and don’t want to sell at a loss. Instead of seeing the bigger picture which is that for most people, as long as you are moving up the property ladder, a falling market is no bad thing.
As long as you’re not actually in negative equity & have a deposit.

Of all the changes that need to be made to a property, picking up dog poo is probably the easiest!

Before concentrating just on rich, ask your council how many currently empty residential properties they own. They usually also own bunch of empty commercial which could be refurbished. Lots of people forget about that and so councils are also getting away with this shite

I saw a home I kind of liked until I saw the garden covered in dog poo. Put me right off. Might be minor for some but for others, it's a big turn off.
I previously lived in a house which was lovely but the everyone had cats apart from me. Every day there was cat pooh all over the path and garden which my kids kept tredding in and bringing inside and in the car. Tried everything and eventually moved. It was a big factor as it was gross and just stank.

Our previous owners here had a big dog but never saw any sign of dog mess, nor did it smell.

Do you mean that the interest rate you would pay increases because of LTV?
Surely, if the market falls, the ££ between a smaller and a larger property reduces and it is therefore preferable for people upsizing.

True.
We were lucky. Sold for less (the EA was horrified I dropped the price so much!) but bought for less.
Cash buyer (who was a wanker and really messed us about)
Our house has doubled in "value" from what we paid.
Insane.
But prices would have to fall a loooong way for us to be in negative equity.
The reality is if you drop the price enough you can sell - but if a probate sale or divorce that's more tricky.
Imo the only houses for sale that aren't new builds will be being sold because of the 3 Ds; death, divorce, debt.

Yes, exactly this. We want to upsize and our house is on the market. It has ‘gone up’ 30% since we bought it, but of course so has the next thing. So far us, even if we have to take a 20% ‘reduction’ in ours then the next thing should also be 20% cheaper and proportionally the difference between the two is smaller.

however I don’t think other vendors are necessarily realistic about this. Especially when people need to sell to divorce or clear debts etc.

I haven't seen any evidence of falling prices, but I'm in the north. I think that there are/will be regional differences.

This article suggested that prices are falling in London but rising in the north:

www.theguardian.com/money/2023/mar/20/uk-house-prices-defy-gloom-with-an-average-3000-rise

@Chiikichik I agree that some sellers are very unrealistic.

@MidnightMeltdown that article is nonsense.
Rightmove only track the asking price of new listings. They do not include price reductions in their stats which is a huge percentage of listings at present. Also asking prices have nothing to do with whether the property actually sells not what the sold price is. People whose livelihoods depend on increasing property prices will always manipulate figures to their advantage.

(the EA was horrified I dropped the price so much!)
Of course they were... it meant they made a reduced amount of £££ commission from the sale

There's a browser extension that you can get for Chrome which shows you all the price reductions for properties on right move, very illuminating 👀
( I can't remember the name of it but someone here will know it)