House Prices

[LGBirmingham]

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

We definitely due a crash because my bil has just bought a house and my fil is about to sell one. Both of them have totally mistimed the market every single time.
Bil bought one in 1992, then upscaled, overpaid in 2006. That marriage went horribly wrong, finally sold just before Covid sent isolated, country properties through the roof.
He bought a rural do it upper start of last year, proved to be a money pit and not actually very suitable for what he needs.

FIL bought bang on in 1979, peak price, just before interest rates shot up and had to get extra family loans. He's delayed selling an inherited property but is going for it next year.

Clearly the market is about to plummet.

What makes you so confident the government won’t introduce new measures to support the housing market in the future if they feel it really needs it?

Haha well I can’t argue with that! 😂

I’m looking to buy a house, but I don’t know whether to wait it out a bit or not. I imagine I am like many many others…

Because we’re already over 100% GDP and can’t afford to borrow much more at these rates as 1/4 of our debt is index linked making it one of the most expensive in the G7 to service. Our GDP per capita went off a cliff in the early 2000’s.

https://amp.cnn.com/cnn/2023/08/22/economy/uk-government-debt-inflation/index.html

We don’t produce enough stuff and have far too few taxpayers whilst having a bloated public sector that’s index linked and will be incredibly difficult to service going forwards with pay/pension rises.

Most the country now doesn’t pay tax and over 50% (60% in some regions) are on some kind of state support.

The government will be worrying more about keeping themselves solvent than propping up indebted BTL/mortgage holders.

OK, looking forward to buying a family home at 80s prices soon.

That's a great result, how long did it take from offer to completion? What area was that ?

No one said house prices would drop to 80’s values that’s ridiculous. You’re being facetious ignoring the currency devaluation and salary increases since then.

Reversion to the mean of 80’s affordability in line with earnings and interest rate levels back then, quite possibly.

Problem is with the housing market is that for the last few decades it has been used as an asset for economic gain/income not just for housing which has pushed it into bubble territory. Anything that is used as a ‘financial instrument’ is open to wider global economic factors.

Lots of people have lost a lot of money in their pensions in ‘lifestyle’ funds these last couple of years due to gilt yields rising and how the funds are automatically allocated at what stage in life.

That’s market forces for you as that’s how it works, not hopes, dreams, unicorns and rainbows unfortunately. A few hundred thousand over leveraged people falling in negative equity will just be another unfortunate casualty of that.

I have just heard versions of this so many times and seen home owners grimly holding on until the next boom so many times also. Property availability drops and rents always increase at these times and the amount of people needing housing constantly does too. Big house builders stop building new which drives up demand further. Whilst I agree it is precarious for some but not at all the majority of home owners economic conditions change and pent up demand is released. If I have listened to the market is going to crash advice in the past I would never have bought a home and be much worse off now. I have an issue with the certain prediction of market activity based on stats as it is rarely correct. Waiting for a housing market fall impatiently is quite nasty really given the issues it would cause. People foolish enough to listen to the confident predictions miss out. I know of a family who lost their only chance to own selling the only house they will ever own now and waiting for a crash decades ago. Mortgages take a long time to pay off and the idea of holding off is risky. The idea that those that couldn't buy in normal market conditions will be able to obtain finance in market crash conditions is concerning. That is why I have an issue with the predictions

You're not wrong. House prices in West Midlands are generally staying steady or slightly increasing, when other areas are decreasing.

"In England, the May data shows that, on average, house prices have fallen 0.4% since April 2023.
The West Midlands experienced the greatest monthly price rise with an increase of 0.5%."
https://www.gov.uk/government/news/uk-house-price-index-for-may-2023

Ah the housepricecrash crew are here and hoping that this time, finally, finally, they can get their huge crash! aka... back to 2019 prices. oh no.

Are you saying it’s better to buy than wait for a “crash”

I'm also West Midlands, and I search Rightmove every day, 3 miles radius of home town (just out of curiosity) and I'm finding nothings shifting, very few STC, and lots of reductions! Many previously STC coming back on again months later....I'm actually looking to relocate to Cornwall and the houses I'm watching threre are not shifting eithet and are being slowly reduced.

Such a big decision will have so many individual factors. What works for CountryCob might not work for you.

You always get these sort of defensive posts on here, maybe from people who are over leveraged or anxious about house prices falling.
Instead of engaging with the discussion and looking at the macro economic data, some people just lash out which is a shame.

I think some of your assertions are incorrect or likely to be incorrect this time around.
While some people have definitely missed out by sitting around waiting for a crash, other have also ended up in huge financial difficulty because of buying at the wrong time, ending up in negative equity, losing jobs in recessions, etc. Some who lost homes in the early 1990s were never able to find their feet again. Some were lucky and were bailed out by family or were able to avoid selling but not all, by any means. It works both ways and any predictions can be wrong. Most official predictions have been very wrong, historically.
Imo, it is far more nasty to take great pleasure in ever increasing house prices or to buy up multiple properties, pushing prices out of reach of many, mainly younger people. Denying people a necessity such as affordably housing is really nasty and is not the mark of a civilised society.

@Lightscribe has explained how the current juncture if different to previous, how the UK has worrying levels of debt which are also index linked (I think this is unique to the UK and puts us at greater risk). What seems to be a significant risk, as I have said before, is that the UK is not thought to be credit worthy, increasing the cost of debt and that the £ falls, forcing more base rate increases.

The whole situation is really worrying but the politicians and MSM feed us lots of rubbish about how it's all temporary and we just need to hold our nerve and lot of people seem to believe them.

I do suspect that, at some point, we will see more QE, maybe a lot of it. Whether that will be pre election when everything is falling apart or after that, I don't know but I can see it happening. We could therefore end up with hyperinflation and collapse of the currency which will only make everything far worse. No option is good at this stage.

Because if you borrow a lot when rates are low and the price of the thing that the debt is held against (property) is high you leave yourself vulnerable to much higher monthly debt costs when the interest rate on that large debt goes up, many people stretched themselves at low rates, they can`t afford their property debt at these levels after fixes end.

In my area nothing is shifting either. We live in a relatively cheap part of the country which didn't really experience post Covid price boom.
As an example of how cheap (or not according to some) my area is a typical two up two down would cost between 195K and 220K depending on how much work was put into it.
Yet, market is stagnant. Some people would say it is because houses are no longer affordable given the rate hike.
Now, I ran some numbers and with 10% deposit this old Victorian terrace is definitely affordable for 2 people even on min wage.
Example. HSBC (my lender so I chose it) 5 year fix 5.79% (no fee)
House 220000, 20K deposit.
£1136 for 25 years term
Min wage £10.42/hour, listentotaxman gives £1,486.76 after tax (x2 = £2973) therefore the potential mortgage payment a bit over 30% of take home pay. Affordable or?...

Which means people are holding off/scared to fall into negative equity/scared of redundancies/waiting for a big crash/etc
What will happen when all of them stop being scared?

Ah gotcha. That makes sense.

sadly, I think that’s happened to a fair few people.

I’m not on housepricecrash.

I had exactly the same responses like yours when I explained how yield curve inversions work and that inflation was coming with the following consequential interest rate rises on here over two years ago.

People on here constantly repeating what they was reading in the media at the time. There would be no inflation, interest rates would never rise etc etc.

Come back in one year from now and see how it’s going then.

Thats definitely the sort of prediction I trust. Some people are just destined to time it wrong.

August next year should be good to buy then. Makes note in diary 😁

I think no UK government will allow a big house price crash. It is predictable that they will intervene to prop up the property market if things look really bad even if they shouldn't.

You and certain others may disagree and that's fine, no one knows the future for sure but time will tell anyway.

"What will happen when all of them stop being scared?"

The recession will be over and the crash will have happened.

Bond market reaction to Truss budget says No, Bond market says NO, all the interventions were done when central banks globally were coordinating to bring rates down, now they are all competing to get rid of inflation in their own economies, the FED for example doesn`t care if people in the UK who borrowed too much for property lose a lot of money. See China for how ineffective desperate interventions in the mortgage market are in the face of a full scale property crash and collapse in sentiment.