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.

Sorry 3BSHKATS but you are wrong to say the law has changed. Below is the Limitation act for land debt details;
How long can I be pursued for a mortgage shortfall debt?
The legal position under the Limitation ActThe Limitation Act 1980 sets out the rules on how long a creditor (who you owe money to) has to take certain action against you to recover a debt. Limitation periods for debts are important. This is because if the creditor has run out of time, you may not have to pay the debt back. If, by law, your creditor has run out of time the debt is 'statute-barred'.
There has been some confusion in the past about mortgage shortfalls and the Limitation Act. However, the Court of Appeal has now decided that the following limitation periods apply to mortgage shortfall debts.
If you owe mortgage capitalMortgage capital is the money you originally borrowed. For this part of a mortgage shortfall debt, the lender has 12 years to use court action to make you pay. This is under section 20 (1) of the Limitation Act.
If you owe interestMortgage interest is the interest you were charged to borrow the money. Your lender may also charge interest after your home is sold. For this part of a mortgage shortfall debt, the lender has six years to use court action to make you pay. This is under section 20 (5) of the Limitation Act.
Check whether you owe mortgage capital or interestYour debt will probably be capital. This is because the money from the sale of your house will usually be taken by your lender to pay the interest that is owed before the capital that is owed. So, unless the sale price is not enough to cover the outstanding interest, the shortfall debt will be all capital. This means that the 12 year limitation period will apply.

Well i wish id known that 5 years ago for evil reasons 🤣

As someone who has moved a lot/purchased a lot of properties over the past few years...I can tell you that housing market predictions are usually pretty rubbish.

I'd recommend working out if you can afford to buy/will continue being able to afford the mortgage and base your buying decision on that, not on what the may or may not do.

Most housing predictions since 2008 have been based on what should have happened without historically low interest rates, QE, help to buy and the ridiculous stamp duty holiday.

Interest rates are now up and look like they will stay up, and all the other props have now stopped. House prices are going down and there doesn't seem to be any valid reason for them not to continue. Even with an election next year there is very little the government can do without making inflation 10x worse.

As you say, the most important thing is making sure you can pay your mortgage, stress test to the worst case scenario and don't overpay. There's certainly no longer any hurry to buy through fear of being priced out. Also avoid the new trend of 35 year mortgage, it makes very little difference to the monthly mortgage repayments but will cost thousands more in interest.

I think it’s better to extend the term and overpay than to not overpay and keep the term low. The difference between a 30 and 20 year term for me is £300ish. I’d much rather keep a long term and have the flexibility to overpay, or not overpay if I need more money that month

@Housingdestressnotdistress that's what we do so that we have some wiggle room.

Go for it. Once you're off the ladder it can be a nightmare getting back on.

I would say there are plenty of reasons house prices might not continue to go down. One is massive lack of supply to demand. Second is people will stay put if they can at all as need somewhere to live. If possible buying or investing in current property n a recession if you can find the right place and afford it is an excellent idea IMO, the difficulty is calling the bottom of the market. Everyone needs somewhere to live so unless discussing separate investment properties that needs to be remembered, also if waiting to buy won't be starting the crucial task of paying down decades of mortgage. Always buy if the property is right and you can, I say.

So how are you to know when you've hit the bottom of the market and need to buy now? It's always a risk.

When everyone is telling you not to buy a house buy a house. I just dont see it happening

Judging by previous house price crashes it doesn't just hit the bottom and then start going straight back up again, it plateaus for a few years as no one is bothered about buying then eventually it starts rising again in line with inflation.

In the 90s my house stayed at the same price for 4/5 years.

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.

That is not the typical FTB though, for one most go for a 2yr fix.

All great points.

I guess the housing market is slightly easier to predict than things like stocks and shares, but it is all still a guessing game.

Affordability should be the primary concern, followed by getting the best deal possible...then trying to time the market if you really want to.

The problem with housing market statistics/forecasts is that they only look at the average sold price. That's two problems for the price of one when it comes to making a decision:

• Average - local market conditions can mean that on the same street one property drops 15% in value whilst another gains 5% because no one buys the "average" house.
• Sold price - when forecasts say that property prices are dropping only the desperate sell, so it becomes a self-fulfilling prophecy.

You buy what's right for you at the price that's right for you when it's right for you. If you're buying property only looking 5 years ahead you will always lose, unless there's a freaky property boom - which you should never bank on.