House Prices

[LGBirmingham]

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

I cab just imagine the type of people in thar meeting.
Who decided market value?
Won't work if one of them has to sell, especially if someone in a neighbouring road has sold for 'below market value'.
I genuinely can't understand how anyone predicting a minor blip doesn't understand that the cost of borrowing money has gone up massively, take home pay is already stretched. The only thing that can take up the slack is the price of the house.
Prices boomed when rates went to 0%, now they will fall as interest rates revert to the average of around 5%.
My prediction was and still is prices won't go above summer 2022 peak before 2030. Caveat being that rates don't go back to 0

Or people get really big pay rises. Which also isn't going to happen because GDP has flatlined and has been pretty awful for many years.

If a few of them decided to sell at the same time they'd soon be undercutting each other 😂

Please tell me you didn't fall for this desperate attempt at marketing from Savills. They are an estate agent. Their business is doing badly.

No one, not even an independent person, unconnected with the business, can accurately predict house prices in 2028. Significant economic deterioration is likely to have taken place and black swan events which would make a nonsense of the figures.
I guess lots of people fall for the wishful thinking.

Good luck with that!

Perhaps one of them needs to look up what 'market value' actually means before making plans!

Sorry if they are disappointed with the amount it had been valued at. I do think that houses with adaptations often struggle more to sell though because they are niche.
Buyers who aren’t disabled won’t particularly want the ramp, downstairs wet room etc. Though if the right buyers come along they may be willing to pay over the asking price for a house so perfect for their needs.

GDP affects general wage levels but not the main driver for big changes in salary for individuals - usually a family gets an income increase when someone gets a new job with a higher salary. This happens in any economic climate. Then they may look for a new home.

There are significant shortages of certain types of homes in some high desirability parts of the country - 3 beds for young families and bungalows for downsizers. In my area prices are still rising for these properties because local demand outstrips local supply.

Renting is much more expensive than the mortgage cost on an equivalent property, so people still want to buy.

The housing market is not one single thing, it is made up of different types of people/households buying different types of property in different parts of the country.

I’ve heard of people doing that in the past in a previous falling market. It didn’t last when people actually put their houses on the market. At the point at which you want to sell you have to be realistic about the market you’re selling in or your property will languish unsold & sensible people aren’t going to allow that for the sake of their neighbours feelings.

Savills are particularly badly affected by international markets Kiev because they are an international company unlike most U.K. Estate Agents.

The article you posted states that revenues from Savills U.K. residential business declined by 25% to £71.6M (in the first half of 23).

But also that “To put this into context, it was still Savills third strongest revenue performance in a decade and 25% ahead of the comparable period pre-Covid (2019)”.

Sky news, the most reliable source. Savills, very neutral.
Maybe you are an estate agent also.

I bet the people leading that have no active interest in selling, but just want to feel their houses haven’t gone down in value.

If somebody puts their house on the market, they will take advice from EAs about what asking price to go for. They are not going to say “well three EAs have suggested £400-425k, but I did promise Bob Jones up the road that I wouldn’t put it on for any less than £495k, so that’s what I’m going for”.

On support should be given, absolutely not. The government already wasted 5bn of our money to prop the housing market while it needed the least in 2020 with stamp duty cut. High house prices have reduced family size to a point where population will decrease from 2025 onward, schools and hospitals are unable to find local staff and 40s and younger pay extortionate rate to get the privilege of not being homeless. Market forces need to be freed from intervention and let the affordability level rebalance. On your first part, this is complete speculation, joblessness is on the rise and anyone working can see and hear about redundancies coming. London based.

The BBC reported yesterday on a new initiative in Wales - the Help to Stay loan for struggling homeowners, an interest free government loan for 5 years.

(will link to it later but can’t right now).

It's a finger in the hole. If you look at the funds available then you'd see that it couldn't help many people at all.

Maybe - just thought it interesting in response to @Porkepic belief that no financial help should be given to home owners.
Yet it’s already about to happen in Wales which could put pressure to do the same outside of Wales.

Politics will politic. Nothing of substance can be done without triggering panic on the bond market, token initiative until next election, sure.

The country can't afford any substantial support. This is demonstrated by Wales. They want to be seen as doing something but in reality, they are powerless to do much about what may be coming. It's almost the same level of delusion as the neighbours on that street.

I think given that most mortgages are now stress tested and people have to have at least a 5% deposit the situation for homeowners won't be as dire as 2008.

A lot of people who bought recently will struggle, but the banks are much more flexible with extending mortgages and offering interest only periods. With that people will be able to either hang on or have the breathing room to sell at at reasonable price.

I really don't think government should support homeowners if they can't afford their mortgages, beyond giving them enough time to sell. And that should be possible with just the bank's help.

As promised, link to article about the Help to Stay scheme

The Welsh government will offer equity loans to people who cannot afford their mortgage payments.
It will be open to people in homes worth up to £300,000 and with household earnings of no more than £67,000.
Eligible applicants could borrow as much as £147,000 to pay off some of their mortgage and lower their monthly payments.
They will need to give evidence of the difficulties they have, and will need to speak to an independent debt adviser before receiving the loan.
Because it is an equity loan, the money that has to be repaid could go up or down according to the market value of the home at the time that it is sold.
The loan is interest and repayment free for the first five years, but recipients could be forced to sell their home if they do not repay.
Despite recent concerns about the Welsh government's budget ministers have set aside £40m over the next two years for the Help To Stay scheme.
The cash has come from a pot of money separate to that used for day-to-day government spending, and that can only be used for loans.
The threshold of £300,000 is below the average house price in two council areas.
Figures from the Principality Building Society placed the average house price in Wales at £239,378 last September. It stood at £295,991 in Cardiff and exceeds £300,000 in Monmouthshire and the Vale of Glamorgan.
Jeanne Fry-Thomas of Ebbw Vale estate agents Bidmead Cook said: "The devil will be in the detail with this scheme.
"We are not seeing repossessions at the moment and we're not seeing people coming onto the market because they can't afford their mortgage payments."

https://www.bbc.co.uk/news/uk-wales-politics-67332011

I don't want people to lose their homes and I'm glad that there is some support to give them some breathing room, but unfortunately I think this Help to Stay scheme and the government's six month interest only offer is giving people false hope.

There are still a lot of people that think interest rates will go back to their previous lows and all they have to do is ride out the storm. The six month switch to interest only is to give people time to find a higher paying job, or to give them a chance to sell their house without falling into arrears on their mortgage. It's not because in six months everything will be fine. The Help to Stay loan takes a longer term view but I'd be interested to know what the rate will be after the first five years. Ultimately this is no different than help to buy where people are being encouraged to take on/keep a mortgage they can't afford and it's unlikely that the average person's financial situation will have drastically changed in that time. Unless people take action to improve their income or maybe need to ride out temporary expenses like childcare, this is only going to postpone the inevitable or potentially make things worse depending on the rate on the equity loan.

@BraveToaster it say in the article that the Welsh government suggests the scheme could help up to 400-500 households a year, with interest charged at 2% above the Bank of England rate after the five year interest free period.

@Twiglets1 Thanks for pointing that out. So not ideal if affordability is the issue and interest rates don't go down significantly in the next five years. Unless of course you have a big change in circumstances as I mentioned.

There is an element of risk to it re interest at 2% above the base rate. Nevertheless, a five year interest free loan is exceptionally generous (too generous will be the main criticism, coming from people who don't agree with government propping up debt incurred by homeowners).

Trying to make "buying with a mortgage" always better than renting as a general rule just doesnt make sense, it isnt real world thinking, imagine two people, a private tenant with a landlord who bought years ago no mortgage, rent kept low and reasonable for years to attract long time tenants and the tenant staying for ten or 15 years in a property they like, and another person who listened to noise on forums about buy buy buy and got a fix at 2% a few years ago now coming off that fix into paying hundreds of pounds extra a month for their mortgage debt, it is obvious that the person with the mortgage debt is many times worse off.

Exactly, this will help very few people, and the money has to come from tax (BTL/Holiday homes?) or from asking central government (who might refuse as these schemes are inflationary, and the bond market won`t like that) I can see this scheme going absolutely nowhere, it is just a headline to say "We are doing something!"