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!

Thanks for that. I hadn't come across that one before.

Its weakness for me is the use of basic arithmetic mean average prices. These can be overwhelmed by a small number of large value transactions producing a misleading guide as to the average house price. ONS use geometric means and lots of fiddly-diddly to try to get to a more meaningful guide price. My preference is for the straight forward median or middle price - 50% are more and 50% are less.

No wonder the general public (and news reporters) get confused about whether prices are increasing, reducing or stagnating!

I think that a more exciting prospective index would be price per share metre for living space - split by home type and region. I say prospective because I see no one coming out with it at the moment. Obviously we'd see variance based on home condition and plot size.

I see that my friend on YT was having a whine about RM leeching off EA's. I have no sympathy.

The RM engine is woeful in capability, so it is not beyond the ability of a few EA's to fund something much better (NOT On The Market). I don't know why they persist in whining instead of rolling out something more superior. I guess EA's are only good at whining.

A better version would stop including Retirement Homes, Buying Schemes and Auctions by default. It would allow you to enter advanced search criteria such as within x miles of a station, Aldi, Waitrose, Seafront, etc. And would then have a map where only those meeting the search criteria were displayed (RM does NOT have that). The engine would force the entry of key data such as lease terms, council tax, flood risk, subsidence risk, etc. It would ensure the removal of ads upon completion - not months later to make the EA look good. I'm sure there are many more features it could add to make it a RM killer.

Hadn't heard of this one but agree it looks good.

"What you call “vested interests” most people see as mainstream media "

And that is a large part of the problem, although I find it terrifying that large numbers of people might not know that Nationwide or Halifax etc. are pure definitions of "vested interest". All the articles you post are spun to make mortgage borrowing still look like a great idea, the VI shines loud and clear through all of it.

It is all designed to lack transparency, that is how you keep people making foolish borrowing decisions year after year. When people can look out their window and see all the For Sale signs, when they know people struggling to sell or losing jobs, then they stop believing the numbers the "stats" are trying to get them to believe, but of course by then it is too late, the damage is done, this madness should have been stopped years ago with moderate interest rate hikes.

you must be easily terrified.

Does anyone else think the ticking up of mortgage lending rates is going to continue?
I think they will go up bit by bit now until we get a base rate cut. Which is looking questionable, or even uncertain, for this year.
https://news.sky.com/story/mortgages-interest-rates-inflation-latest-money-blog-sky-news-live-13040934?postid=7366670

@DrySherry Recent This is Money article highlighted 3 main points:

• OBR reported average mortgage rate will hit peak of 4.2% in 2027
• Markets only forecasting base rate to fall to 3.5% in 2027 and no further
• Fixed-rate mortgage pricing has already factored in upcoming base rate cuts

In a section entitled "What next for mortgage rates?" the article noted that the OBR says the market is now expecting base rate to fall this year from its current peak of 5.25% to 4.2% by the end of 2024. However, looking further ahead markets are currently only pricing in for base rate to fall to 3.8% by the end of 2025 and eventually reaching 3.5% in 2027. * * For mortgage borrowers, these market expectations are reflected in Sonia swap rates. If and when the base rate starts falling, this may trigger good signals to the industry meaning swaps could fall further. But it doesn't necessarily mean there will be significant rate cuts across fixed rate products straight away due to the fact lower rates have already been priced in because there is already an expectation rates will fall.

https://www.thisismoney.co.uk/money/mortgageshome/article-13173595/Mortgage-rates-wont-head-lower-despite-better-ONR-forecasts-heres-why.html

If economic experts cannot accurately forecast interest rates 1 year out, then why on earth would you listen to a prediction 3 years out. Frankly, they are deluded.

https://inews.co.uk/inews-lifestyle/money/property-and-mortgages/interest-rate-preduction-mortgage-costs-2871031

Update here, we sold our house last week. Sold on the first day of viewings 3 days after coming to market. Went for 10k over asking.

But you didn't think someone forecasting a property market collapse between 2022 to 2025 (a 35% fall in nominal house prices) was deluded?

Congratulations!

He's just another individual like us - with opinions on what may happen (he'd say that his forecast isn't a prediction and it's more nuanced than that anyway - 15% to 50% depending on region). We're all entitled to play the guessing game - and we have - but don't expect anybody to take action based on that.

The OBR is a completely different beast. A clue is the word Responsibility in their name! People are entitled to expect them to be believable.

Come on, his message wasn't nuanced when he made it which was my main problem with it - he spoke with apparent authority about the property market crashing by 35% and no mention was made then about "depending on region". And he's not just another individual like us, he is a person shouting his message loudly on social media & TV etc who gained a following by being controversial.

I don't think that compares to Twiglets and XVGN having (mostly) genial differences of opinion on Mumsnet as we aren't trying to monetise our opinions in any way and not claiming any special insight apart from what we read and how we interpret it. We don't have followers who get upset every time someone says anything negative about us, worse luck.

I do think the Office for Budget Responsibility is a good source of information in that they are giving an informed opinion using the best evidence available at the time. They get it wrong sometimes and obviously can't predict world events changing the outlook like Covid or the war in Ukraine but still, they are a reliable source of information (in my opinion).

'If economic experts cannot accurately forecast interest rates 1 year out, then why on earth would you listen to a prediction 3 years out. Frankly, they are deluded.'

100%!
They don't even know what will happen in 2024, ridiculous to think they can predict rates in 2027. Lots of 'unpredictable' things will happen before then.

Thanks, now to find us a house, which is hard, as it's slow out there.

"people who were hoping the Bank of England would take some form of action in the coming weeks as their fixed rates come to an end.”

If there is no "action" the money lenders will be in a right pickle.

Yes I had read that OBR report when it came out.
Im now thinking that it's overly optimistic. I think it's possible we don't see any reduction at all in lending rates and that we will end the year with higher borrowing costs than we have now, not lower.

I’m not expecting big rate cuts this year because as it says in the article, lower rates have already been priced in. But I am expecting small reductions in lending rates by the end of the year reflecting small falls to the BoE base rate.

Appreciate not everyone believes the BoE base rate will fall in 2024 & of course nothing is 100% certain so time will tell I guess.

"of course nothing is 100% certain"

Indeed, interesting times.

Bloody hope it falls by 2027 as our fixed rate of 1.29 runs out then (we will be ok if not as we won’t have any nursery fees by then but I’d rather save those than them be absorbed by interest)

Place your bets please. The old ONS House Price Index is dead. Long live the new (same methodology?) HMRC index. It's out on Wednesday. Will the BBC report it? Should I give the BBC a nudge this month that a worthwhile news story is coming up? Or shall we learn about Celebrity X's bunions as a more important/relevant story?

https://www.gov.uk/government/collections/uk-house-price-index-reports

I like a little bet as you know.

I will bet that the BBC will report it as it’s a new index 😊

Here we go

https://www.gov.uk/government/statistics/uk-house-price-index-for-january-2024/uk-house-price-index-summary-january-2024