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.

House prices will never fall, people have been saying they will for years so have sat tight and then found that they continued to climb and then are priced out and unable to buy.

Even if they fall 10% in 2 years, by the 5 year mark they will be up 15-25% again anyway. Also if they fall lenders will hold back on mortgages or need even bigger deposits, which will still stop the average Joe bloggs from being able to buy.

@Leftcoilingsnail Say you bought your house for 220k, put down 20k deposit, mortgage for the rest of the 200k. In 5 years at an interest rate of 4% with a 30 year term the remaining balance on mortgage would be around 180k.

In that time the house has dropped 20% and is worth 176k.

If you wanted to move your house is in negative equity. You owe 180k on something worth 176k and essentially lost any money you have put in (deposit etc)

It's also bc a lot about the type of house and location. We're in West London and 3+ bedroom houses with gardens are still selling almost instantaneously. The only thing that's stopped is the continuous price creep but prices certainly aren't falling and buyers are there. My parents are selling a flat in Teddington with a garden and got an offer in 3 days for asking price. There will always be houses and places that don't lose value.

Oh definitely house price falls benefit FTB or people with good equity who want to upsize!

But if you bought your first house with a small deposit, have the price fall by a quarter, and want to move, you can't, until you've saved up the money to add to the sale price to pay off the mortgage. You CAN go for a part exchange scheme, but IME they're only offered where the houses or flats are so unattractive that they won't sell at all otherwise.

Despite my own experience I'm not a fan of things like Help To Buy and stamp duty holidays as they just artificially inflate house prices.

Rates are forecasted to fall in 2 years to the point that many banks and building societies are building their strategies based on that. So I don’t believe average house prices will fall by that amount.

You also need to understand that average house prices don’t really cover all areas. If you live, like I do, in an outstanding school area with easy access to 2-3 train stations and bus routes you will find house prices are actually increasing as fewer properties are going on the market. So it’s a good idea to keep abreast of your local market.

This is why we are still going ahead with buying. We are FTBs in our 40s and don’t want to delay any longer. It’s unfortunate that the market has gone so haywire just when we’re finally ready, but we’d rather pay our own mortgage rather than continue to put money in someone else’s pocket.

There are places where prices haven't risen since 2008. Places with an Influx of cash rich foreign buyers who don't care. Etc .
Don't worry about general house prices look at your own area and of course thank you the COVID boom anything coming down is a correction rather than crash

To be honest, it’s about time. We own our house and will not move up the ladder again, so house price rises benefit us personally.

but, the way things are currently it’s really difficult for others to get that first step in the ladder

I would assume some of the tightening up of lending is because prices are going to drop.

I think it depends how long you plan to live there. We bought last year for 500k our house is probably 470k ish atm judging by other houses in the area but I don’t really care as we plan to be here at least 10 years. If you wanted to buy and sell witching say 2-3 years then yes I’d hold off buying atm.

Depends on the area, ours hasn't really moved that much, they didn't go up much at all even during Covid, our house has been worn around £300k, going by others in the area for a few years now.

Our first house went up to around £55k in the late 80s /early 90s and had dropped to around £30k when we sold it in 1997, fortunately we had only paid £15k for it originally but some people lost a lot of money. Nothing in life is certain apart from death and taxes.

I would be surprised if the drop is only 10%. I think 20% down over the next two years is more likley. To be fair though that would only take off the covid froth. As always, prices will rise again in the longer term.

You need to weigh up falling house prices/rising mortgage rates/current housing situation. Look what happened when truss did that mini budget and overnight many mortgage products were removed.

Even buying a starter home if you get the right one you should be able to weather the storm you just need to ensure it meets your needs even if it's not as spacious as you'd hope for. Once house prices fall it will be very hard to buy and once prices start rising again and people start selling then they could rise very fast. Which ever way you choose it is a gamble in the short term but it does ensure a roof over your head even if you can't afford to upsize exactly when you want.

100% agree. Predictions on most things are worthless they are wrong most of the time. The odd time they are correct (luck) you never hear the end of it. A stopped clock is right twice a day.

I agree we need a correction. But if inflation runs at roughly 10%pa then even if house prices stand nominally still they have effectively dropped by 20% in two years.

I think a fair chunk of the correction will be achieved just by inflation.

i’m confused about same prices and the picture looks awful for renters. If landlords are selling and I know of a few doing this, can prices really fall so much?
And why isn’t the government doing something with tax so landlords can cope with interest rates and continue to provide homes or don’t they care

House prices have (temporarily) been forecast to fall 1%. I doubt that will even happen.

I bought a house recently. Got my mortgage at 4.14% and I think 67% LTV.

Went £27,500 over market value but really like the house.

My plan is to extend (big back garden) rather than move if I want more space later.

Don't buy a starter home.

At the beginning of the month I was looking at a cheap one bedroom flat to buy in cash.

In the end I bought a house at three times the cost - but I'll likely stay there for years, if not life. Perfect location.

That chart does not ring true in my area. In 2021 and 2022 if you didn't offer at least asking price you wouldn't get a sniff at a property. You'd also complete at that price too as you were reminded how many you competed against to "win" the house.

I would t scrape money together to buy a one bed flat right now if I was young and likely to want something bigger in the next 5 years. If I had the deposit for a house that would last 5 years then yes I would.

Same here for Q3/4 of 2021 and Q1/2 of 2022. We bought last year And have since compiled a list of asking (from my Rightmove saved properties) vs sold prices (from land registry) and out of 45 only 4 went for asking, none below. The three bed semi’s (our target house) were average 16k (approx 5%) over