House Prices

[LGBirmingham]

House prices still seem to be rising? Does anyone else think this?

Good guess. A generous 150% out. Agreed, smaller/cheaper homes, and those in the North, will generally be less prone to falls.

Hey! We won’t know who is out and who is close in their predictions for 12 months!

Agree - that statement - because they know no better - undermines crashy's post/entire series of posts for that matter. I thought this was a discussion about the real world market. Crashy has betrayed his value-judgement position. Of course folks in london pay the prices they do for rent because they have to. And there are mega numbers of people chasing each rental. That's just the way it is.

My bad. I just meant to indicate that you think they are a factor of 1.5 out versus me thinking they are a factor of 5 out. Time will indeed tell, but I'd wager that one of us will be closer than the "experts".

But thousands left London to WFH elsewhere, so my point is valid, people are waking up to the fact that they are basically being exploited in London, that implies though that previously people just accepted it?

How much did your last rental cost you?

...how is that relevant?

As relevant as me asking how much did your last property cost you?

Agreeing with you here Twiglets. I wonder if the average price will be around the Q1/Q2 2021 mark into Q1 2024.

Local estate agents in my area are reporting that more buyers are returning to explore the market (viewings are up) and they have a slight increase in seller enquiries/valuations. Conveyancing wise, chains seem to be harder to keep in tact though.

I've seen a few larger properties around here still being listed at ambitious prices. Quite a few first time buyer/investment properties in popular areas (priced £250k and under) are going for asking price or slightly over so that section of the market seems more robust.

As @CrashyTime didn't further respond after asking what area I was referring to I'll offer a very typical example of exactly what I'm seeing.

Sold in 2021 for £89k, the new owners have done nothing apart from partially dismantle the existing kitchen for some odd reason.

Back on for £120k and sold in a week, so 33% more than when the market was gripped by covid madness back in 2021.

www.rightmove.co.uk/properties/140558366?utm_campaign=property-details&utm_content=buying&utm_medium=sharing&utm_source=copytoclipboard#/&channel=RES_BUY

In Hampshire (not commutable town) and definitely falling here, hardly anything selling at all.

I'm looking in Sussex. A small area. The same two dozen properties have been on basically since spring (some longer). Very little new on. Next to nothing sold. And noone is shifting on price.

I'm in no rush and not even viewing until I see some sense in pricing.

Shout out to tradingeconomics.com a wonderful resource enabling access to stats within and across countries. Here's a few favourites.

UK Mortgage Approvals

It's quite clear that the market broke after the 2008 GFC. Mortgage approvals have been around half the level since the GFC. Will it get even worse or can something happen (falling house prices?) that will bring the figure up to historical norms?

https://tradingeconomics.com/united-kingdom/mortgage-approvals

Base Rates - UK-v-US

UK tracks the Fed. We don't need to pay a panel of independent experts to pretend to target a 2% inflation rate (how well did that go?) when all they do is necessarily track the Fed (apart form Black Wednesday!).

https://tradingeconomics.com/united-states/interest-rate

Cycles

We have reached the end of the most recent 40 year cycle in interest rates. These were hiked very high to kill off 70/80's inflation the US, and have been falling ever since. But now the cycle has turned - or is turning. What will happen to future rates and can global governments service their enormous debt levels?

https://tradingeconomics.com/united-kingdom/government-bond-yield

What is happening with the markets, as has often been mentioned, is that people are not putting their houses up for sale. Houses prices may be dropping a bit/ leveling out, some houses are up for sale for a while and asking too much in the current climate. Most just won't budge, that is why the house crash people want sellers to be forced into selling through high repayments. Interest rates appear to be leveling out and the unfortunate people who have high gearing at the moment are not the majority. Sooner or later their will be another boom, post Covid was ridiculous mostly because people had faced up to how unsuitable their homes were. It was always going to drop from there. People need somewhere to live and there aren't enough suitable homes. This may well be the best buyers market in some time if you can use it.

@XVGN the market broke after 2008 because that was a credit based crash and models such as securitisation were regulated. Lending criteria was tightened up to protect buyers apparently but in reality increased costs and reduced supply. As an aside on prices I sold in 2010 a house which had been rented out for 2 years to avoid selling at an undervalue. The tenants bought it and I ported the mortgage. Sold in good condition for £153, it has since been sold for over £255 with no extension but updating over time. Zoopla says it is worth £335. It isn't for sale. Over the last few decades, never mind the boomers, property has increased enormously and the issue is supply above everything.

I just want to clarify. According the UK Property Market Stats show, the number of properties coming to market are the same as the 3 years prior to Covid. So when you say that people are not putting their houses up for sale, are you referring to some other period?

People who can afford to not budge will not budge. But house prices are set at the margin, and typically the 3 D's will always discover the current marginal price. A non-budger may think that their home is still worth X but the market will have fallen away under their feet.

I think (and some people here will disagree) that interest rates are no where near back to normal (see base rate chart above) and will continue to rise in fits and starts.

There will be another boom but it could be in 50 years time.

You may well be right that there is still movement. But none budgers will be fine in the long run and they know it. In the meantime they have secure housing which is what they really need. Locally I see less for sale and the house builders have stopped building again mostly, they haven't opened up new sites anyway.

How far do you think it will continue to rise in fits and starts @XVGN ?

As you know I’m someone who thinks the interest rate is either at the peak or very close to it (could see it going slightly higher to 5.5% in the near future but definitely expect it to start falling by mid 24).

Just interested really how high people taking a different view expect it to go and by when?

That's not correct. There are more houses on the market than during the pandemic period, significantly and back to previous rates.
Yes, some won't budge and won't sell, of course. This simply means that they are not part of the market. The market is set at the margins so the people who do sell for whatever reason, including forced sellers. It's impossible to predict the future but it is possible that there will be more forced sellers as unemployment rises and the economy shrinks more.
Imo, there is the potential for a larger downturn than there was after the GFC for a number of reasons. The BOE also won't have their previous 'tools' available so I can't see a basis for a recovery and this future boom that you foresee. What do you think will cause this?

I see that @XVGN has said something v similar to what I just wrote.

The thing I think will cause increases is the very low supply of housing and the extremely reduced volumes of construction of new housing.

Falling prices will get people out buying again I would say, people in the UK just love their house buying, that is why they were so easily exploited when the bankers wanted them to load up on deb, but next time around hopefully they will be more cautious with the debt loads.

That isn't what causes increases in house prices.
It is the supply of credit which involves incomes, rates and the willingness of lenders to lend.
All the above are on a downward trend.
The world economy is also on a downward trend.

Housing is a basic human necessity and people are desperate, in real terms our housing stock dwindles annually and the rental market supply is contracting. Obviously supply and demand for an essential is going to influence pricing. I don't believe prices will continue to rise as they have recently but its a huge leap past that to say they will be falling significantly. I think this is problematic but it's my genuine opinion and yours may be different which is fine.