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!

In the last quarter of 2023 I sold one of my properties, estate agents valued it at 280k but my research of the current market put it around 260k.

So I listed it at 260k and had 7 viewings, two offers, over a 5 week period - I accepted £255k from Ftb.

My neighbour with exactly the same house size and layout (but in worse condition) put hers on in January for £290k! She knew mine had sold for £255.

She reduced in Feb to £280.
She reduced in March to £275.
She's reduced in April to £255 - of course she's never going to get that now because it looks bad with all the reductions.

Guardian finance quoting RICS this morning that there will be house price growth in next 12 months

Wouldn't surprise me @sickofbuilders I know a few people who are moving at the moment due to us all having to apply for school places in Autumn. Everyone has sold very easily and got multiple offers on there houses. All going for over asking price.

Even though we have committed to buying somewhere now I actually still think it would be good if prices did drop a bit. Or continued on this stagnation trajectory whilst wages catch up. It's not good that all of the country's wealth is being plunged into housing when it could be being spent on generating a better economy - going to gigs, cinema, theatre, buying coffees in cafes, meals out, sending your kids to nice activities, creating community gardens and activities to help get older people out of the house etc... I mean that's all the stuff that makes for a better place for us all to live. It's better if people have money spare to spend on that stuff in my opinion.

We are lucky that we will still have some money to spend on that stuff because we're borrowing about half what the bank tells us we can. But not everybody can do that. Some people have to borrow the maximum mortgage they're allowed just to get a small home. Excessive housing costs just ruin the economy.

I agree @LGBirmingham the stagnation we are currently experiencing is not a bad thing while wages catch up a bit.

Big house price rises creates problems for society as well as big prices falls. On an individual level it may suit certain people if things go in one direction or another, but on a societal level it seems better for prices to remain pretty static.

Totally agree with your post.
My view on house prices is that years ago you could buy a 3 bedroom semi in South East of England on one salary (this is what in laws 1st home was) and law meant women could return to their jobs after having a baby, it became the norm to need 2 x salaries and more to buy a home.
I have nieces and nephews in the north east whose 1st homes are 3 bedrooms so house purchase is still relatively easy there.

@Twiglets1 I think house prices staying more or less static for a good ten years would be the fairest thing. It would save people from losing homes that they've plunged money into and also gradually make it easier for others to buy.

I'm not sure if there is a way for a government to engineer that situation though? They sane very good at forcing the price of houses up but I'm yet to see a policy on housing that doesn't do that.

@LindaDawn you're not wrong. Although I think it's also because of shortage in housing and growing population too. Two income families were able to offer more to secure a house than single income families. But if there was abundant housing stock it wouldn't have been necessary and their extra income would have gone into something else. Now though due to two income families being able to offer more we all have to be two income families in order to get a foot in the door.

The main issue I see in my city is landbanking. I've seen prime city centre plots getting cleared when I first moved here, nearly 20 years ago, that still haven't been built on. Just have signs saying 'luxury housing coming soon' all around them. I mean when is soon, another 20 years!?

More fool the EA. They'll go out of business if they keep on doing that. They are their own worst enemy sometimes. They should just politely decline the business.

DT article published yesterday posed the question, "what is happening to house prices?"

House prices fell by 1.8% over 2023, according to lender Nationwide, and dropped by a total of 6% between the peak of the market in August 2022 and December 2023. This was a much smaller drop than many analysts had been expecting, with some having forecast falls of as much as 30% from peak to trough.

More recent data from Nationwide for the first three months of 2024 shows that the average UK house price has increased by 1.4%. There are signs that the house price falls, fuelled by soaring interest rates, have stalled.

Lucian Cook, of Savills, said: “There has been an earlier recovery in the market than people were expecting. That’s been underpinned by inflation falling back and we’ve had more stability in the mortgage markets, with the cost of mortgage debt certainly easing from the back end of last year.”

Property analysts now believe the final three months of 2023 marked the bottom of the market, with prices likely to remain flat or increase very slightly by the end of the year.

https://www.telegraph.co.uk/money/property/buying-selling/house-price-falls-bottomed-out-now-time-buy/

As always it really depends on what happens to the cost of borrowing. Its very hard to pick through all the noise and the vested interests on this subject though.
My feeling now - is that we may not see any reduction in base rates this year. Its even possible they may have to increase slightly.
Overall I think most people accept that we have to roughly follow the US because the £ has very limited international demand compared to the $. Basically the vast majority of our imported goods are still purchased in $ - that importers have to buy with £. So if the BOE doesn't keep in step with the fed and reduces - it directly imports more inflation in a big way.
I'm far from convinced that inflation is under control in the US. Several prominent economists are now predicting no rate cuts this year and a couple have shifted toward further increases being required. We would either have to follow, or suffer further local inflation if this happens.
I wish I had a crystal ball. Its such a complex and heavily interconnected situation.
Two silver linings though. Firstly we dont seem to be heading in to any kind of significant recession at the moment. Secondly if base rates do increase again so will savings rates.

Yes I agree it is dependent on the cost of borrowing. And agree with your silver linings so as a saver it would benefit me if base rates did increase or at least stay the same.

However, I still believe that there will be base rate falls this year. Although it now seems more likely that the first one won't be until August whereas previously analysts were saying June was more likely.

We can't expect a big fall in the base rate by the end of 2024 so the effect on house prices won't be dramatic. It will however have a positive effect on buyer sentiment even to see the first 25% reduction in the base rate. Overall, I agree with the statement in the article that prices are "likely to remain flat or increase very slightly by the end of the year".

Today's the day ... yahdeeyahdeeyahdee.......

Improved to negative 0.2% annual from negative 1.3% annual last time. But interesting to note that they reported negative 0.6% annual last month and revised it down to 1.3% now as more data arrived. Indicative of how wary you need to be about trusting the first dibs.

UK House price Index February data shows:

• on average, house prices have risen 0.4% since January 2024
• there has been an annual price fall of -0.2% which makes the average property in the UK valued at £281,000

As always, regional variations are interesting and the regional data for England indicates that:

• the North East experienced the most significant annual increase with a movement of 2.9%
• the North East saw the greatest monthly price growth, with a rise of 3.2%
• the North West experienced the greatest annual price rise, up by 1%
• London saw the lowest annual price growth, with a fall of -4.8%

https://www.gov.uk/government/news/uk-house-price-index-for-february-2024

Reuters (a proper news organisation) of course have a dedicated report in 10 minutes. The BBC (a useless organisation we're virtually forced to pay for) has nothing as yet.

This month's complaint is in. I have asked them to explain their policy about refusing to publish the official data whilst happily publishing the partial data from Nationwide and Halifax. Let's see what they come up with. Don't hold your breath - they still haven't responded to last month's complaint.

Keep calm and carry on @XVGN with your one person crusade to hold the BBC to account

Bit harsh Twiglets1, at least they bother to make the effort

The BBC are pretty useless nowadays aren't they @XVGN. A real disappointment. I think they are petrified about their funding and the constant criticism and are just towing the line as a result, rather than producing good reporting and analysis.

Haha. It's ok. We have a mutual teasing arrangement. I return the favour when she gets over-excited by Charlie.

Eh? Wasn't my intention to be harsh at all. Glad to see that @XVGN took it in the light hearted spirit it was intended. I actually think they are right to challenge the BBC if unhappy with their coverage, after all we pay for it.

What a thought - me getting over excited by Charlie😫

Financial Times article: Larger properties drive UK asking prices to near-record high

Asking prices rose to a near-record level in April, driven by larger properties, according to data that points to a continuing recovery in the UK housing market despite recent volatility in mortgage rates. The main driver was the increase in the pricing of four-bedroom, detached properties and larger houses, which recorded a rise of 2.7% month on month.

“The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move,” said Tim Bannister, Rightmove’s director of property science innovation.

The average asking prices for properties of up to two bedrooms, which Rightmove classifies as being for first-time buyers, was almost flat month on month at 0.3%. The bracket for three- and non-detached, four-bedroom properties recorded a 0.9% across all property types, the highest annual rate in 12 months, according to the portal. Rightmove said the number of new properties coming on the market was up 12% annually, with a similar increase for sales agreed. Much of this activity was also at the top end of the housing ladder sector.

https://www.ft.com/content/22e7a7a4-1b46-41c2-81b7-85a07dd08e8d

^ Two thoughts. I wonder if there is a correlation between house size and greed? And (initial) Asking Prices are not the same as Completed Prices.

I don't think so @XVGN but then I do have a fairly big house 😉