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.

Everyone won’t move to cheaper areas. Some people will prefer to stay put and accept a smaller property for the same money or to continue renting forever because they just aren’t willing to move even a few miles away from their preferred location.
There are always cheaper & more expensive areas.

Keep saving and if prices drop, maybe uou will have a 10 % deposit in a couple of years?

Apologies for partly misunderstanding your post.
@Lightscribe has explained what I was trying to express (about there being an effective price ceiling in each area) but much than I did. Some people appear to think that landlords can continue to increase rents forever and that is incorrect imo.

Curiouslydifferent: Personally I don’t own property, have always rented, because I get far more return on investments, 6 to 9% after inflation and that gives me greater flexibility and accessibility to my money than a house would.
But that ignores the fact that if you buy you are also living in a house 'rent free'....for ever. You have to factor that in too.

Thanks, no need to apologise, I think we probably agree!

Truth is that both sides are "greedy" in that it's an arms-length transaction in which they each want the deal that's as good as they can get for themselves. Covid gave tenants the upper hand and rents went down. The current crisis gives it to landlords.

The problem currently is lack of supply. I have a smallish house that when i come to move up the ladder i wont sell, itll stay empty until the kids need it. Why would i sell at anything other than a profit.

Definitely is an issue

The vast majority of people would need to sell their smallish house before moving up the property ladder. So I don't think that's going to cause a massive issue 🤷‍♀️

If you're saying that the reason that prices are falling is that people are not selling then that really does not make any sense at all!

Prices fall because supply exceeds demand. If vendors stop selling but demand remains the same then prices go up until enough buyers drop out of the market and enough reluctant sellers are encouraged to participate.

It makes perfect sense. If you read what’s written.

Your situation is unusual though in that you can afford to let a house stay empty? Most people would need to sell a current house in order to help finance the next property purchase they are making.

The lack of supply at the bottom of the pyramid is still an issue and given people like me are highlighting the benefits of never selling a property as you better your financial position that will become more and more if an issue. Everyone i know who’s done well in life has moved up the ladder without selling, its an excellent strategy. Buy, pay it off, move, repeat

Well I only know one couple who has bought before selling their original property and they have a rather unusual approach to house buying & selling. They buy very cheap places at auction that are unmortgagable. They do them up and let them out. They are the dreaded Landlords that Mumsnet loves to hate.
They claim they don't make much money on letting them out though and they don't appreciate that much in value either over the years because they are non standard properties - built of wood or that sort of thing.

They are certainly no better off financially than us and we have followed the more traditional route of buying a house to live in, then selling it to part finance a better house and thus moving up the property ladder.

I still maintain it's a niche situation to be able to afford to buy a second property without selling the first one. Especially if you live in a more expensive part of the UK.

Well you know two of us now and given ftb will have locked in low rates for 5-10 years they can save for the next 10% deposits as the payrises continue, inflation inflates away their debt and the next step on the ladder is entirely achievable without all the expense and hassle of selling in a chain. Certainly wont be selling at a loss if they’ve any sense.

This is bizarre

Not only have you apparently paid off the mortgage on your smallish house, you have also saved enough for a deposit on a larger house so you don't need to sell the 1st house.

You also say you won't sell the 1st house if you don't make a profit? If you bought it long enough ago to have paid it off then surely the price has increased in that time and you would be in profit?

It plausible that 1 person could have done this, but the idea that it's a thing loads of people are doing is bizarre.

Yes there are too many empty houses, but these are usually due to inheritance and are rarely starter homes at the bottom of the ladder.

You are either a renter or a buyer/owner of property. If you rent then you need to invest excess money to make a sufficient income so that in the end the income pays the rent and more. Because every pound you pay in rent you might as well set fire to.
I am of an age where I have been through three house recessions and been in negative equity once. In that case the house went from a purchase price of £89,000 in 1989 to £61,000 in 1991. My mortgage was £75,000. The mortgage rates were 11% FIXED for two years. Many of my friends in the same boat gave the keys back and stated renting. They were then chased for the debt for TWELVE years as thats the statute of limitations on a land/mortgage based debt. Many went bankrupt.
I on the other hand decided to stick it out.
By 1995 I was back in positive equity and I have just sold the same property for £485,000. A profit year on year of £17,700+.
IF you intend to live in the property buying is never a profit game; only if you buy and sell excess property does that come into it; BTL properties, etc.
Buying a house to live in and paying a mortgage is quite often painful at the beginning BUT it beats renting every time. I have tenants in three other properties I now own and I encourage all of them to save and buy at the first possible opportunity. Where I live, (Cambs), the average rent for a three bed terrace property is £1,100 per month. Thats £39,600 over a three year period, which is the average length of time my tenants stay for. All of that money is wasted from their point of view.
Ignore the doom sayers, and especially that know all Martin Lewis whose predictions have been found to be wrong time and time again.

I didnt say id paid it off at all. If people were actually literate this site would be so much more interesting

@3BSHKATS

I didnt say id paid it off at all. If people were actually literate this site would be so much more interesting

My mistake, you're right, as you say you haven't actually done this.

Still a bonkers idea though, to spend 20/25 years paying a mortgage, to then leave the property empty whilst you take out a new 20/25 year mortgage on another property.

Plus you have to find another deposit and I'm not sure how you move up the property ladder to a bigger house without releasing any funds from the first property. All whilst paying insurance and council tax on an empty property that will also need to be maintained.

I do know someone who has done this, he became a millionaire overnight when he inherited his dads business, so didn't really need to sell the old house, he rented it out though, even with his millions he didn't just leave it empty.

Yours is a very unusual approach as most people need to sell in order to make their next purchase.
FTB are facing much, much higher rates currently than they were a couple of years ago so it's highly unlikely they will be able to follow your strategy, especially as more are opting for longer terms.
Whether an owner sells at a loss (presumably you mean in terms of nominal values, rather than real) is very much down to individual circumstance.

@Lightscribe 'That’s the price of not letting 2008 correct, printing trillions, zero rates and letting the assets/pension/housing flow to the top benefiting the older generation.'

This was a major mistake. Bump up assets but set us up for an even worse, global financial crash.

Martin Lewis is constantly wrong because he doesn’t account for future economic scenarios (he keeps stating that he has no crystal ball) so not incorporating i.e treasury yield curve indicators and macroeconomics into his advise.

He was indeed sounding the virtues of the lowest 2 year rates in history in 2021. He did the same with Icelandic banks in 2008.

He’s akin to an IFA mortgage broker, great for advice on the here and now, not good to base future financial decisions on (like telling students to max out student loans when they now face RPI rates).

We’ve been in a 40 year disinflation cycle. It was an easy win win even with the blips in between. Now we’re in an inflationary cycle and it will be lot more difficult for the younger generation to emulate anything like what their parents had.

The laws have changed since the 90s, all that’s statue barred after six years if you had the misfortune to be repossessed, but my god you have to put your head in the sand to get repossessed.
The banks will bend over backwards these days to avoid that scenario, and indeed, your local council would do anything and it’s power to prevent you becoming homeless, including pay your mortgage with its discretionary housing fund.

Don’t overstretch, but go as high as you comfortably can, be on top of everything, and just go for it if the right property comes up. If you wait for interest rates or house prices you’ll be waiting for ever, and it will always be offset by something else. There’s never a perfect economic time, only the opportunity that’s right for you, as long as you can ride any changes it’ll be fine.

I don’t know you & I don’t believe your suggestion is realistic for most people.