House prices set to fall 10% in 2 years

[treesareyellow]

We have a 5% deposit but as other posters have pointed out on my other thread, seems that might be very high risk for negative equity especially given a credit agency have reported this morning that house prices may fall by as much as 10%! It does not look good. I really pity the people selling, and other FTBs in the same situation as us where we just can’t buy right now.

We were looking to buy recently and have decided not to. It's just not worth it at the moment until we get a clearer picture of the market. I would be gutted to buy right now and find it had deprecated 10% in the space of a year or two. People will say that prices will go back up but could take a good 5 years or so before they get back up to the price you'd pay now. Maybe longer.

Appreciate that some people do need to buy right now, so hopefully they can get a realistic price and both sellers/buyers are pragmatic. Where we are people are still clinging onto inflated valuations and the property just sits on the market.

It does seem to be too much of a risk now. Especially if you’re looking to buy a starter property that you will need to move from. It’s okay if you’re going straight in for a bigger property but how much is that going to then cost you.

That’s happening where we are too. I do feel sad as we were hoping to TTC this year and I have it in my head that we can’t do that until we buy a house. We are HA so we have the security, but I just don’t want to be looked past by lenders when we have a child if the market is say better in two years and we’ve got a baby by then. It’s going to affect so much for so many.

We’ve just sold and bought. Will be moving in a few weeks. For us we had to move for the location and wanted our forever family home. We’d put off moving for a few years but it just became that choice of it always feels like the market is doing something. Either it’s high or it’s crashing. Couldn’t wait around for a perfect market forever! Appreciate we are moving into a forever house though so I feel it’s a bit different because we have no plans on selling! We were advised to fix for 5 years though.

We are in the process of buying. We sold last year and are renting in our new location. My head says sit tight and wait for prices to fall but my heart has won and we’ve gone for it. We plan to stay for 10+ years and just want to get on with life. I think if we’d bought last year we may have had to pay 5% more but can’t be sure.
We are in a different position though, semi retired and don’t need a mortgage. In your position, with secure reasonable rent I think I would wait and save.

I want to upsize from a 2 bed flat to a 3 bed flat in my area. Should I wait or go for it as soon as my current flat is under offer? Thank you

No expert but I’d say go for it if you can afford it. So long as you can stay there, you’re fine. House prices dropping are only going to affect those who need to sell / move on, and of course first time buyers.

@socialmedia23 Generally upsizing is beneficial in a falling market as the price differential is less. The difficulty may be that there’s not much on the market and your flat could take longer to sell. It’s also worth making sure you can port your current mortgage if it’s on a good rate.

thanks for the advice. would it still be easier when mortgage rates climb even higher, would the price fall at the level needed to upsize without paying a very high mortgage

They've been saying for years that house prices will fall. I'll beleive it when I see it.

Unfortunately no-one knows what will happen to house prices in the next 2 years. Martin Lewis's podcast was talking about mortgage rates this week (Wednesday 7th June) and they touched on house prices and where they might be going. On this sort of major decision listening to the experts is a much better plan than asking random people on the internet.
www.bbc.co.uk/sounds/series/p02pc9xt?partner=uk.co.bbc&origin=share-mobile

I think there will be a correction to pre-pandemic prices at the very least.

You need to weigh that up against the cost of continuing to rent, as well as the area you live in. If you pay £2k a month in rent you are paying £48k over 2 years. That money is gone. If you want to buy a £400k house, it ‘may’ be £40k cheaper in 2 years (£360k) but it may not - even if it was still available. Houses close to good schools or in property hotspots (e.g. places like London or Winchester) may or may not drop at all. If you really really like a house and can afford it now, I’d not wait. Over the long term, property is usually an excellent investment.

It means we can’t buy a starter home as we will end up in negative equity. Anything worse than 10% would be a catastrophe for many

It needs to go down much more than 10%. House prices have lost all connection with reality, its about bloody time they go down.

On this sort of major decision listening to the experts is a much better plan than asking random people on the internet.

Actually I disagree that any particular weight should be given to the advice of anyone who claims to be an expert at predicting house price rises or falls. If we learned anything from 2007 it was that economists and other "experts" could only predict financial events after they had happened, and even then they could not really predict what would happen next.

The truth is nobody really knows, and randomers on the internet are just as likely to guess right.

I don't think demand for housing is going to go down any time soon. As a PP said, they've been saying house prices will drop for ages but there really hasn't been any country-wide meaningful decrease since the global economic crisis some 10-12 years ago.

I would guess that there'll be local movement in price because of mortgage rates slowing demand. Some areas never seem to fall in price really - eg parts of the SE, certain cities and London - so properties and areas that are always popular and at a price point that's always going to be in demand.

Ultimately, house prices go up. They may drop a little but if you plan to live there longer than 3-5 years you'll probably see an increase in value. If you see the property of your dreams, you can afford it and you're prepared to live there for at least that length of time then I would go for it.

House prices will always climb though.

Even a reduction in house prices is only ever a temporary measure and will only affect the people buying and selling in the moment.

And a reduction affects the market because the people who will be falling into negative equity just won’t sell and so there won’t be houses to buy for the first time buyers who want to take advantage of a drop. Only those people who have to sell will, and once the economy rights itself the prices will go back up.

Something tells me that even if house prices will fall down 10% the interest rates will rise 20% so its all "even".

There are so many considers to ins to make, current property size/rent cost, age, size of prospective property employment, interest rates etc.

We upsized last year, had a healthy deposit but probably bought at height of market.

If we bought today the mortgage cost (interest) would be about a third higher, we overpay anyway but it goes to capital and not purely interest.

IMO there isn’t a good time, you just have to balance what’s right for your circumstances.

Haha spot all the youngsters!
My first house dropped by over 25% (late 80s early 90s).
Top tips:
Buy somewhere you wouldn't mind being stuck. Look at potential neighbours VERY carefully, as they can make your life utterly miserable.
If it has a bedroom you could let out, that's a plus. Lodgers paid off our negative equity so we could move.
What are your backup plans if you lose your job, get sick etc? Can you insure against those?
The bigger the deposit, the greater your freedom to move or withstand economic hits.
Do not assume everything will go well.

my mother in law's flat dropped 40% from 1989 to 1996. She says its the big reason why she could move and live in the house she currently does (3 bed terraced in north london). I am hoping to do the same, we also own a flat in north london (which we also bought in our late 20s 4 years ago).

We bought this house in 2007/2009 right at the top of the market then the housing market crashed. We were in the situation where we had put a large deposit down from the previous house sale and it has taken quite a few years for our house to regain the value we lost and it wasn't great watching similar house sell for less but it was our home so we had no real pull to love again. Now 15 years later we are moving and again it looks like we are buying/selling at an awful too and probably will be over paying for our house if things fall but this time we are mortgage free and will be probably be the last house we buy. The housing market is always turbulent but it does recover whilst the price of rent currently is probably the bigger concern

Anyone seen this? Asking prices against actual sold prices

https://www.thisismoney.co.uk/money/mortgageshome/article-12168341/amp/Asking-prices-22-higher-homes-sold-estate-agents-overvalue.html