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.

I did something similar using Python to scrape Rightmove data and cross checked with the land reg and found similar. There were a few that sold for under asking but that was rare!

Different ball game now though perhaps. The proof, as always, will be in the data...

@Housingdestressnotdistress

i feel that the government are acting in the interests of corporate landlords who would be able to weather the storm and snap up lots of cheap properties in the recession. they would also be able to upgrade the EPC and deal with any legislation the government throws their way because they have the resources.

We would probably end up with a set up like in America where corporate landlords own the whole building and provide long term rentals often with facilities like gyms and concierge and perhaps even a maintenance team to sort out any issues 24/7. My only worry is that while such flats are great for DINKY couples, they would be too expensive for the low income.

My take is that its very area dependent, taking into account local market.

Bloody hell though, I am an old bag FTB with 5% deposit finally, need 3 bed house as have kids. Will buy if I can get a good price as plan to stay for at least 5 years but worried rated will increase so much we won't pass affordability.

We have just finalised our mortgage for our first home - luckily we got a decent rate and the seller accepted our home report value offer (which myself and DH were very shocked at) as we expected it to go way over report value. It will be our forever home though so we don't need to be too concerned re equity unless it causes us remortgage issues when we remortgage in 5 years

I also wonder to what extent that 10% fall includes the ridiculous price jump that happened during the pandemic. I think it is more a case of house prices stabilising after the insanity during the pandemic, rather than a fall more generally.

If prices stagnate for the next 2 years and inflation runs at 5% p/a theres your 10% decrease right there
If they fall 10% and you factor in 2 years worth of quite optimistic inflation its 20% less

Negative equity is only a problem if you need to sell relatively quickly, also this has been touted for years and doesn't happen. Demand will outstrip supply for a very long time, that has an impact.
Also where do you live? Some areas eg home counties, the markets are very very resilient

My son just bought his house. He bought it live in and won't be selling it so won't be losing out. In ten years it will be worth more than it is now and he won't have been paying rent. Negative equity is only a problem if you sell for less than you paid to buy. If you are going to be living there and don't want to sell there is no problem.

i think the thing is a lot of people do compromise to a certain extent esp when it comes to a first house. Like I ideally would have liked a 3 bed flat when I was a FTB in 2019 but at that time my budget was really too small to accomodate that unless I wanted to live next to the motorway or in an ex council flat! So I bought a two bed and it was probably the right decision given that i have lived in it for nearly 4 years (would not have been fine renting or living with in laws for 4 years).

If you had told me then i only had to wait 1 or two years to afford the 3 bed, i would have been fine with waiting even though i was desperate to get out of MIL's house (and she would probably have understood). Sure if someone is buying their ideal forever home in that perfect location, then go ahead and buy if its affordable for you. But in reality, almost no one I know bought the 'perfect' property. Even for higher earners i know, their expectations are far higher.

We have been looking since last Jan and that article didn't surprise me. I have felt things feel overpriced by more than 30% a lot.

I saw a house on Rightmove today where the price has been dropped 75k to around 280 since February!!!!!

That’s so interesting! Which area are you in?

I have been looking all over. Lancashire, n Yorks, w Yorks, c Durham, I could go on! Probably across eight counties.

This particular overpriced house was in a village outside Chorley.

I’ve fallen for a house that’s £725k but a year ago a similar house sold for £565k. I think prices are massively inflated right now.

Luckily we are happy enough in our current home that we can stay and it’ll be fine in the end.

Can you tell me more about how you achieved this please? I do all mine manually and it's a PITA because we are considering loads of counties.

I'd buy if you can get somewhere you can stay for a good while. Gives you some insurance to ride out anything tumultuous. So think about your long term plans - children, work etc and if you can find somewhere that allows you to go for what you want then go for it.

It's so hard, we've ruled out moving altogether.

Sometimes they never do. Few of my colleagues ended up selling into loss as they bought at the peak before 2007 crash. I’m sure there were more, but no one likes to “brag” about it.

Its depends on your circumstances. Im self employed and have been waiting until I buy a house to start a LTD company, even if the house drops 10% in 2 years, I will have saved more than this in tax and you get to move on with your life.

And how are they measuring this drop, are they comparing it to the peaks of last summer or are they also going to account for inflation?

Stop obsessing over a starter house . You’re buying a home ! Problem solved

You can’t sit and procrastinate when buying in the UK. The market moves too fast for that. Think about what you want or need now . You cannot afford your forever home now but that’s okay . Focus on what actually can have now .

• on what you can actually have now.

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.

Flats in London have definitely seen price falls.

There are demographics changes to be aware of for any future FTB. London primary schools have a surplus of spaces in many areas, this will have an knock on effect of wider catchments.

It's forecast there will be a lot of downsizers over the next 10 yrs as the older generation need/want to release capital. They will be targeting the 3 bed house & be in competition with families trying to upsize, there aren't enough of these houses.

More hybrid working means bigger spread of areas to chose from.

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

Agree with this.

I live in Edinburgh and I don't believe that prices will ever fall significantly here. Places are still going for over valuation, but maybe just a few per cent over these days. I'm going ahead with my plans to buy because ideally I will be staying in my next house for 10-12 years and no way do I want to still be renting then.