Did the market peak in summer 2022?

[Areyootakingthepish]

If so, what would you be offering now in the current climate?

I know each market has its nuances, but ultimately given that people just can’t afford to borrow now at the rates they used to, at what level are prices at?

My concern is that EAs are still pricing high to win the business. We are under offer, and given the current climate we don’t want to over offer

I like to use PropertyLog to keep up with the housing market, stock market is more tricky to read.

Yes, nominal asking prices may still seem high from some sellers, but real asking prices have already fallen over 10% - i.e. adjusted for inflation. Most owners will not be forced to sell given the stress testing placed on them when applying for their mortgages. My own mortgage is set to rise £400pcm next year - which although is unpleasant, it’s within the realms that, if I had to, I could switch to an interest only mortgage for a bit and not be paying any more than currently. We still have very high employment, rising wages, a rising population, and lots of pressure on rents pushing first time buyers to consider that a mortgage is still cheaper than rent. Whilst some of the types of homes (countryside, detached) that were in high demand in lockdown may fall in value, I don’t see that there’s scope for a large and sustained drop in nominal house prices. If I wanted to buy I would buy now before buyer confidence starts returning as mortgage rates stabilise.

Interest rates are likely to "stabilise" at more historically normal levels (historic average UK base rate is 7% ) that means most buyers do not have anything like the buying/borrowing power they did a couple of years ago, and with mortgage applications down 30 or 40% I don`t think we will see a buying rush any time soon, we are entering a new era where the housing market goes back to how it used to function before cheap credit became the "norm".

This. The amount our family can borrow is more than £100k less than a few years ago. That's the main thing right now - affordability trumps everything else.

Small wage rises aren't going to offset this, because they're mostly eaten up by cost of living and inflation anyway. Unemployment is increasing too.

I'm very hesitant about buying in the current climate.

Exactly, and FTB`ers are propping up chains all over the place, there is no doubt that prices need to come down for the market to function.

Agree that the stable rates will be higher, I just think if you look back at the 2008 house price crash, that was preceded by many people borrowing much bigger income multiples at higher interest rates (base rate was about 6-7%) than now, and thinking nothing of it - mortgages now are still a lot more affordable than in 2007, although credit is harder to access. While there was then a temporary crash, that occurred because of a wider financial crash which currently we are not in, and only lasted a year or so before prices started rising again. None of us has a crystal ball, but I wouldn’t be surprised if house prices are more resilient than some people here expect. On a personal note, I had a flat that I put on the market 18 months ago, had one offer in two months that I turned down, then relisted it a month ago and had the same offer within a week, which this time I accepted. No drop in value from the buyer’s perspective in that time.

@Bristol2021
But the government was able to reduce interest rates drastically after 2008 which they can't do now.

Agree about the crystal ball - there could be some completely unforseen event that changes the market completely. But in the absence of that (and such an event could push prices down as well as up) I expect prices to fall for a while, just on the basis of interest rates being so much higher than they were for a long time.

Prices round here are also similar to 18 months ago, but they were rising then and now they're falling.

Houses were much cheaper in the run up to 2008, people were only borrowing bigger multiples if they were taking 125% loans, "Liar Loans" or really stretching themselves for a large house (admittedly a lot of people stupidly did this) if you were sensible back then you were a lot less exposed with less debt to interest rate spikes.

Prices didn`t just starting rising again without help though did they, rates were cut to near zero and the biggest monetary experiment, QE etc., in history kicked off encouraging people to just keep borrowing and end up in the mess we are now in.

I think it definitely did peak in 2021-22. It caused houses to over inflate in price. I think since September 2023, It's officially a buyer's market now but also we are in a bit of a housing bubble because of sellers' unwillingness to accept reality. EA are panicking.

My experience is that Sellers in a chain can't move home because they are agreeing to over-priced houses, so they are also over pricing their own homes. No one can afford these and no one wants to pay for them especially FTB who are the ones with the deposits that get everything moving. The key is that buyers don't think these properties are worth their current prices.

FTB and buyers in general are aware that they have choice and can demand more for their money especially if houses are over priced in the first place. No one wants to or should be spending more than 30% of their income on a property/mortgage and so buyers are demanding price drops.

I think if anyone wants to sell, they should think about doing so soon and at a much lowered price. Houses are depreciating as we speak. Sellers need to be realistic now else face an even slower market in the next few months and even year.

You basically have said your flat is the same price as it was 2 years ago, which means a price drop and that you're lucky if your buyer doesn't realise this before exchange. Most buyers are noticing this now and feeling it - that it's a buyer's market and acting on this. Your flat is actually worth less, your buyer just doesn't know it yet

Russia invading Ukraine in Feb last year marked the point when things started to shift. Before that, the massive jump in gas prices had worried people who were concentrating, but that hadn't fed through to prices yet. Interest rates have gone up in the last 14 (?) months straight, and each time they rise, it puts downwards pressure on house prices. Until last summer, most of the sold prices would have been dictated by pre-invasion sales, so I think mid 2022 prices will turn out to be the peak. The current prices are being slow to feed through partly because the Land Registry is such a mess.

Good advice.

I’ve never sold a house, but do a lot of people really just ignore the agents’ advice on price?
I suppose if you don’t really need to sell you can just wait a few years on the market.
I search rightmove and sorted by oldest on market and there were places listed from 2019!