House prices

[Twiglets1]

Hi Guys, we got to the end of the last thread so need another one on this controversial topic!

And to respond to @CrashyTime I don't say "demand is strong" over and over again. In fact, I rarely comment on demand at all. My posts are more focussed on house prices and interest rates/mortgage rates.

And I don't deny economic "reality", I just don't exaggerate how bad the house price correction is likely to be. I have a running bet with @XVGN that property prices generally will fall about 5% in 2023 and another 5% in 2024 so I do believe prices are falling in most areas. Just nothing like the 30-35% crash predicted by some!

So what will house builders do if they're not building houses 🧐

A choice between less profit or no profit 🤷‍♀️

Honestly, I’d rather have this one. £185k and far more charming.

Interesting. BOJ seem to be making noises about rate hikes again, could have big implications for mortgage debt costs if it happens.

Here's another house price data site sourced from LR. Pick your own area of interest. Some interesting observations with the caveat that recent months are just a sample of completions registered so far.

https://www.home.co.uk/guides/house_prices_report.htm?county=somerset&startmonth=11&startyear=2022&endmonth=12&endyear=2023

Crikey, another site with pretty graphs and regional and home type breakdowns. It's good to see why articles quoting "average" prices can be discounted. They are not close to the median/middle prices paid.

https://jamestwallin.github.io/house_price_plots

And here is an example of why some folks are claiming that prices are still rising. Because they are in some areas and house types.

Gosh Derbyshire is cheap @XVGN !

We are looking at semis mainly, and they're anything from £300-500k ish around here. Sometimes more. It's ridiculous.

@CrashyTime But there is a housing shortage though.
I don’t know what major city or town you’ve seen that hasn’t had a massive inflow of immigrants and I say this not to be racist.

The government relaxed immigration laws as an outlet to make money, everybody and their dependent could come in, not to speak of the many boat crossers and refugees of warring countries.
They took all these people in without making plans for accommodation.
And we had a rush of FTB’s in the market who managed to save deposits in lockdown.

I personally know so many people who struggled to find places to live in 2021/2022 and I thought they were exaggerating till I experienced it myself.

The reason house prices and rent shot up so much after lockdown was because we had an influx of buyers/renters on the market and not enough homes so people were bidding to secure a home.

If the government allocated money to building affordable homes consistently over the years rather than looting public funds, then we won’t have had things turn out so bad.
There are so many economic factors at play when it comes to the market but your theory on ponzi scheme debt junkies just makes no sense. The only thing I can agree with you on is house prices are still very high and need to be adjusted for inflation.

The banks have said no to Jezza's solution to trying to stop falling prices, they know it will leave them immediately exposed to negative equity customers. It's telling that even the banks didn't think this pumping policy would be enough to make rising prices a safe bet.

www.telegraph.co.uk/business/2024/02/29/hunt-scraps-99pc-mortgages-backlash-banks/

I think it’s a good thing that he’s letting that idea go.

Might feel differently if I was a FTB struggling to save up a sizeable deposit alongside paying rent. But it would have put them at risk of falling into negative equity in the short term if they had to sell the property.

These are really good. We do need to remember that the data is from the land registry figures so these charts are looking at sold price in Summer 23. I'm sure prices have fallen several more % on average since then.

Some areas/ types have fallen > 10% even going back 6 months. Greater London detached, for example were, on average, back at Jan 21 levels In Summer 23 and flats were lower than they were at the start of the pandemic. On the other hand, prices for detached properties in Worcestershire were still rising last Summer. Overall, semis have retained their prices much better than detached (presumably due to better affordability).

Thank goodness. It was a ridiculous idea, just the kind of thing the current government would dream up. Perhaps we should expect HTB 2 in the budget instead because they always want to 'help FTB' right.

I'm glad the banks said no to 99% mortgages. Apart from the potential negative equity, if people can't save the 5% how are they going to afford if things go wrong in their home?

This is a graph I posted on another thread, essentially it shows that mortgages at the new rates are no longer cheaper than rents. So this whole idea that people can save on a mortgage is a thing of the past.

It may be more nuanced than that. Rents for people who have been renting for a while are probably substantially cheaper than rents for new renters (LL's are typically slow to raise rents for existing tenants as they prefer the certainty of the known rather than potential voids).

But I'm not sure if a mortgage for a FTB is necessarily more expensive than starting a new rental. The UK Property Market Stats show on YT has started including some interesting rental data showing how much they have shot up in recent months.

In my relatively affluent part of the south coast according to the prices on the page as linked to by @XVGN shows some interesting variations. Whilst detached houses have gone down by 22%, semi detached have gone up by 34%! In actual figures this means detached have gone from 1.25m to 980k and semis from 696k to 934k. Terraced houses have stayed the same and flats have gone down 9%. The overall picture is it has all gone down by 9% but the detail (with semis rises 34% and terraces staying the same) just shows that averages are not the best measurement.

I have no idea why these figures have varied so widely but maybe because of the higher mortgage rates the detached houses have become more out of reach for some and semis have become the more affordable next level down - whilst they still have gardens and space. Also the semis stock in this area varies quite widely from large and expensive 1930s houses close to the seafront to more affordable 1950s and 60s properties further out of town (but close to the secondary schools).

It makes sense as a lot of older people are downsizing so they can afford to take a drop in price on their detached house, but are then all fighting over the semis and terraces.

Which unfortunately is outpricing the ftb yet again.

@XVGN I'm sure there's a lot more nuance to mortgage cost and renting than is shown in that crude graph. But I found the change with the higher rates quite striking. And I'm really wary of the government incentives for FTB, as I think they push people to overextend to buy things they cannot afford.

By far the biggest issue with renting is insecurity. People will pay over the odds to not have to deal with a landlord.

So if the government didn`t build the homes, where do all the people live?

https://www.plumplot.co.uk/South-East-property-transactions.html

Why have house sales plummeted in that case?

Too funny, the desperation is palpable now, they will just have to hope that the FED starts cutting rates soon.......

https://uk.finance.yahoo.com/news/odds-no-interest-rate-cuts-224232690.html

I think you are definitely right about this @happinessischocolate. Not a good suggestion for FTBs/ families again.

'The reason house prices and rent shot up so much after lockdown was because we had an influx of buyers/renters on the market and not enough homes so people were bidding to secure a home.'
No, that's not the main reason why prices shot up in 2020-22.
It was because a lot of people saved money and received lots of state money during the pandemic, rates were dropped to zero and banks were lending freely and some fool who is now our PM decided to instigate a SDLT holiday at the same time as all this stimulus so massive FOMO developed too.

If you read everything I wrote I never once said it was the only or main reason.
It was one of many reasons.

I commented back on crashys silly logic on Ponzi schemes & how everyone is debt mad 😂

You are seriously saying that large portions of UK society are not debt mad?