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!

Guardian today: Mortgage repayments up 60% since 2021, reports Zoopla

Zoopla has calculated that the average home buyer taking out a 70% loan to value mortgage now face annual mortgage repayments that are 61% higher today than three years ago (in March 2021) before mortgage rates started to rise. That’s because mortgage rates are around 4.5% today compared to below 2% in March 2021, meaning average annual mortgage repayments have risen from £7,100 to £11,400.

However, only two-thirds of this increase is driven by higher mortgage rates, with a third down to the fact that house prices are 13% higher than 3 years ago, Zoopla adds.

Zoopla’s data also shows that house sales volumes are up 12% year on year, in the four weeks to 21 April, putting the market on track for 1.1m sales in 2024, up 10% on last year. But prices dipped by 0.2% month-on-month, while almost two thirds (64%) of all homes are in local markets where prices are lower than a year ago. Factors including higher mortgage rates and stamp duty are behind ongoing price falls across the south of England, Zoopla reckons.

Richard Donnell, executive director at Zoopla, says the market is adjusting to higher borrowing costs; he doesn’t believe prices will start to rise as buyers face much higher mortgage repayments than in the recent past, so sellers should remain realistic.

https://www.theguardian.com/business/live/2024/apr/29/uk-house-prices-downward-pressure-zoopla-mortgage-payments-jump-growth-gdp-ireland-business-live

Downward pressure on prices likley to continue in my opinion for at least the rest of the year. I think relatively speaking though it will continue to be area dependent and a smallish downward adjustment rather than a crash.

The rates are ticking up again !

https://news.sky.com/story/money-latest-personal-finance-mortgages-brexit-sky-news-blog-13040934

Interesting... the same article asks Where will the base rate go this year? and says "the majority of the bets, according to LSEG data, are on the first cut coming in August (previously this was June) and the second in December.
This would take Bank rate from the current level of 5.25% to 4.75%".

(more relevant to the mortgage rates thread but could be linked to future house prices)

April sees slowing in annual house price growth – Nationwide

Average house prices fell by 0.4% month on month in April, new data from Nationwide's Monthly House Price Index has revealed. The annual rate of change also slowed to 0.6% throughout the month, down from 1.6% in March. The average house price stood at £261,962, compared to March’s £261,142.

Robert Gardner, Nationwide’s chief economist, said: “UK house prices fell by 0.4% in April, after taking account of seasonal effects.
“This resulted in a slowing in the annual rate of house price growth to 0.6% in April, from 1.6% the previous month.
“The slowdown likely reflects ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.
“House prices are now around 4% below the all-time highs recorded in the summer of 2022, after taking account of seasonal effects.”

https://theintermediary.co.uk/2024/05/april-sees-slowing-in-annual-house-price-growth-nationwide/

More rate rises announced this morning by Halifax, BM Solutions and Virgin. For all three this is the second time they have raised in only a week ! Also joined by Nottingham Building society.
Not looking good. Not good at all.

Savills says UK house prices will rise this year in U-turn on earlier forecast - Guardian.

The property company Savills had forecast in November that it expected the average price of a home to fall by 3% this year because recent rises in the Bank of England base rate had heightened the affordability pressures on would-be buyers. However, although the base rate remains at 5.25%, competition among mortgage lenders has forced the cost of borrowing down since, prompting more activity in the market. As a result, Savills now expects the average price to rise by 2.5% in 2024 to £292,000.

Although it has adjusted some of its longer-term forecasts downwards, it said it expected growth every year up to the end of 2028, when it predicts average prices will have risen by £61,500, or 21.6%, to £346,500.

Lucian Cook, the head of residential research at Savills, said: “The outlook for 2024 has improved since our last [November 2023] forecasts as mortgage costs have nudged down slightly and are much less volatile. The outlook for economic growth has also slightly improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.”

In London, where prices are at their highest, Savills is predicting a 14.2% rise in prices over the next five years, while in the north-west of England and Yorkshire and the Humber, where prices are lower, it is suggesting growth could be about double that.

https://www.theguardian.com/money/article/2024/may/07/savills-uk-house-prices-rise-this-year-u-turn-forecast

A lot more detail re the Savills 5 year forecast from their own website for the property geeks amongst us, including regional variations.

https://www.savills.co.uk/insight-and-opinion/savills-news/359581/savills-upgrades-five-year-forecast-for-uk-house-price-growth

It's rather amusing that they think that anyone would pay attention to their 5 year forecast after completely reversing their forecast from 6 months ago.

It demonstrates that no one knows what will happen with prices - neither experts nor Mumsnet punters - including me.

I don’t agree that they have completely reversed their forecast from 6 months ago. They have revised it slightly but didn’t take an extreme position to begin with so it isn’t a big revision. Surely better to be willing to admit that the evidence suggests you revise your opinion than stick doggedly to forecasts you gave previously that new data suggests were too high or too low?

Talking of extreme positions, I note that Charlie Lamdin is still standing by his silly forecast of house prices falling 35% in nominal terms in 3 years from mid 2022. Would be better if he was willing to accept he was wrong but I guess he won’t do that until 2025, if ever.

I don’t mind accepting my forecast of a 5% fall in house prices in 2023 & 24 is likely to be proved wrong. Though I will still win our bet as you of course were predicting a 10% fall both years 🤷🏼‍♀️

Just received an email from Acadata containing the following summary

Just had an apology from the BBC for failing to respond to my complaints about last month, and the month before, about not properly reporting the official house price index while happily advertising Nationwide and Halifax.

I'm a patient person, so I'll see if they fix their issue next week (22 May) when the next index gets published. They have already reported on Nationwide and Halifax this month, so are setting themselves up for a third complaint. If they fail to respond to that one then I'll take all three to Ofcom to see what they think.

Just to repeat. I don't think there is anything sinister going on. I think that they are probably just too timid to call out the official index as being not fit for purpose.

Good for you getting an apology out of them 👏

^ It's just an auto-generated response sent on a timer. I'm not sensing any personal treatment! lol

Don’t they know who you are?

Haha

Haven’t been on for a while but saw an article about house prices rising over next 5 years - I am not surprised in slightest

The area of the NW I look at, which is not a high employment area, the number of 500k asking price houses seems to massively outnumber the 500k buyers. I don’t see any reason for house prices to rise. Rents increase? Yes, immigrants need to rent, at least until they get settled, so that’s an upward pressure ( at least where there is employment, so the SE). The rest of the country still seems to be dizzy on the free Covid money, which has stopped, and now needs to be paid for. Next 10 years looks shitty, IMHO.

The endless news articles about rising house prices.
It’s the asking prices that are rising, but nothing is selling.

Property is still selling if its priced right, it's simply that the perception of the buyer has changed. Back in the good old days of ultra cheap borrowing - you didn't need to be overly concerned about paying a little over the odds as your property was sure to increase in value quickly and would catch up to what you paid. Now, you need to factor in the possibility that the property may not increase at all - or may even drop a bit going forward. Add to that the fact that you now need to pay massively more per month to borrow the same amount, plus the cost of living increases.
Property values are slowly resetting compared to income ratios. It's a very slow process as many sellers want to still believe that values only go up. It's also a very slow process because many sellers actually can't afford to move if they don't get "X" price to cover their outstanding mortgage debt, because that has become so much more costly.
If you can afford to price your sale appropriately it sells quickly. That's where we are at the moment.

Mine went for over asking price after first lot of viewings. Some houses we looked at had been on a while, usually over priced. Others got 10+ offers in the first week.

BBC: UK house prices in surprise rise in May

UK house prices returned to growth in May after rising by 0.4%, according to Nationwide, as buyers' confidence was buoyed by wage growth and lower inflation. The average house price reached £264,249 this month, compared to £261,962 in April, the building society said.

Mortgage rates in the UK have been comparatively high because the Bank of England is not forecast to cut interest rates as quickly or as steeply as initially predicted at the beginning of this year. May's gain reverses a 0.4% drop in the previous month.

Andrew Harvey, senior economist at Nationwide, said: "I think we have been a little surprised actually by the resilience in the market because those affordability pressures have been quite significant."

Over the year to May, house prices rose by 1.3%, said Nationwide. That compares to 0.6% growth in the 12 months to April. The building society said that consumer confidence had "improved noticeably over the last few months, supported by solid wage gains and lower inflation".

https://www.bbc.co.uk/news/articles/cw55v1e1ppzo#:~:text=UK%20house%20prices%20returned%20to,April%2C%20the%20building%20society%20said.

Every market (home) is unique and their own figures showed half of property prices falling by up to 4% (typically South) and half increasing by up to 4% (typically North). So any general assessment of optimism or pessimism is pretty redundant.

But if we take their index, based on 10% of the mortgage market but no BTL and no cash transactions, people did better keeping their money in an easy access account (assuming living at home).

I was correct when I said prices would go up , it’s all about supply and demand

Prices still going down in my area (expensive city in the south west).

I've been monitoring this on Rightmove plus theadvisory website. When I started monitoring at the peak in 2022 the housing market "temperature" was 70° and it's now down to 49° which reflects a price reduction of around 8% according to nationwide HPI. We're also getting good interest on our deposit savings. Not buying has been the right decision for us so far.