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!

Were you spitting when you said "apparently"? It clearly has based on the Otta data - there is no apparently about it. I notice falls of around 5% on average. Do you see something different?

What do you mean, was I spitting? I never spit, so uncouth.

I’ve noticed a couple of houses that went SSTC at top dollar come back on the market after quite a long time. Both need extensive modernization, they haven’t had anything spent on them in 30 years by the looks of it. Looks like the maths didn’t work out. All things being equal, they will need to drop the asking by 15-20% to get another bite.

Definitely Demand is there, but probably failed on the Ability to Pay factor - perhaps couldn't secure the mortgage or the mortgage company didn't agree with the agreed price and downrated the property.

It's not my definition - it's the people on here who were talking about 20%+ 'crashes'.

What is 'London West'??

From Rightmove:
Overall, sold prices in West London over the last year were 4% down on the previous year and 2% up on the 2020 peak of £1,191,690.

London West Post Code (see Otta analysis of LR data by post code). I'd guess that RM are not adjusting for the low percentage of high value properties distorting the indices. Otta attempts to do this by using the geometric mean - although I preferred it when they listed median prices.

The Acadata House price update came out yesterday.

They suggest, where I am interested, that South East price average is now 446k
down from a 482k peak in Jan 23.

RICS Monthly Survey. Slight dip back down but growth on the horizon - yah-dee-yah.

This has got to hurt:

"For the aggregate new buyer enquiries series,
the latest net balance reading of -8% is down
from a figure of -1% beforehand. As such, this is
consistent with a modest drop-off in demand over
the month. Furtheremore, the latest return marks
the softest reading for this metric since November
of last year. When viewed at the regional level,
the most noticeable decline in buyer enquiries
came in the South East and South West of
England (exhibiting net balances of -27% and -23%
respectively)."

https://www.rics.org/content/dam/ricsglobal/documents/market-surveys/5._WEB_May_2024_RICS_UK_Residential_Market_Survey_tp1.pdf

Just to colour those SE figures in a little the -27% net balance means that (roughly) of all the SE EA's asked, 36% reported an increase in new buyer enquiries, but 63% reported a drop off. (Then 36% - 63% gives the -27% net balance reported)

Prices will be higher in 2030 than they are today. One property company has predicted 26% increases alone by 2028

Savills five-year UK forecast has "nudged up" (their words) from 17.9% to 21.6% over the years 2024-2028.

Including this year an average rise of 2.5% though that's actually a small fall in real terms of course (taking inflation into account). And regional variations exist.

But yes, I agree it seems a "no brainer" that prices in 2030 will be higher than they are today.

https://www.savills.co.uk/research_articles/229130/359399-0

Ok. It's quite likely but not a "no brainer". Both the 1989 and 2007 crashes required 7 years for prices to recover. We shouldn't mislead anybody who doesn't have the wisdom of our experience.

I'm not attempting to mislead anyone, just agreeing with @Lm1981 that it seems a no brainer that house prices will be higher in 2030 than they are today.

We don't have the same conditions now as we had in 1989 or 2007 or a dramatic crash to recover from.

But I will happily accept your preferred phrasing of house price rises being "quite likely" by 2030 if that makes you happy.

You are correct. The conditions are not the same. I fear that they are worse. We have never seen the level of government, corporate and personal debt that we see now. Demographics will be acting against us for the next 30 years or more. There are fewer productive workers to fund a greater number of unproductive benefits (I include my SP in that) . It really isn't sustainable and I see no party willing to grab the bull by the horns to fix it.

Ever the cheery soul, eh?

I'm perfectly happy Twiggers. I'll be dead before the SHTF. 😄

Always look on the bright side of life (& death) 😂

Good to see someone write an opinion based on some relevant facts rather than just quoting the obviously biased opinion of a large firm of estate agents repeatedly.
Realistically, it is pretty unlikely that real house prices will be higher in 2030 than now. Nominal house prices may be higher if we have extremely high/ hyper inflation, both of which are definitely possible but it's not much use your home being worth 1 million if a loaf of bread is £100,000. It's gone down massively in real, relevant terms.
I know lots of people, particularly those with a keen interest in property prices rising, assume that house prices will rise once the central bank cuts interest rates. I suspect the opposite is more likely; it will signal a major recession, significant falls in global stock markets, a more rapid rise in unemployment, all of which would have a negative effect on asset prices.

Come on lads, don’t start arguing about whether house prices rising by 2030 is “quite likely” or “pretty unlikely”.

UK House Price Index for April 24 published today:

Average UK house price annual inflation was 1.1% (provisional estimate) in the 12 months to April 2024, up from an increase of 0.9% (revised estimate) in the 12 months to March 2024.

The average UK house price was £281,000 in April 2024 (provisional estimate), which is £3,000 higher than 12 months ago. Average house prices in the 12 months to April 2024 increased in England to £298,000 (0.6%), increased in Wales to £208,000 (0.4%) and increased in Scotland to £190,000 (4.5%). The average house price increased in the year to Q1 (Jan to Mar) 2024 to £178,000 in Northern Ireland (4.0%).

On a non-seasonally adjusted basis, average UK house prices increased by 0.3% between March 2024 and April 2024, compared with a increase of 0.1% during the same period 12 months ago.

Of English regions, annual house price inflation was highest in the North West, where prices increased by 3.8% in the 12 months to April 2024. London was the English region with the lowest annual inflation, where prices decreased by 3.9% in the 12 months to April 2024.

https://www.gov.uk/government/statistics/uk-house-price-index-for-april-2024/uk-house-price-index-summary-april-2024#economic-statement

Zoopla House Price Index: June 2024

Key takeaways

1. House price inflation was flat at 0% in May 2024, but UK house prices are on track to be 1.5% (£3,900) higher by the end of 2024
2. UK house prices are currently 8% “overvalued” but will be “fairly valued” by the end of the year due to rising incomes
3. House prices have risen across all regions over the last 3 months
4. Annual rate of house price growth remains negative across southern England but is rising elsewhere
5. Home buyers and sellers largely undeterred by election campaign
6. Demand (6%) and sales agreed (8%) are both higher than this time last year
7. 75% of the 1.1 million sales projected for this year are either complete or in the sales pipeline

https://www.zoopla.co.uk/discover/property-news/house-price-index/

The BBC is starting to introduce some context behind its Nationwide advertising. Today,

"Nationwide's figures are based on the building society's own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.
The impact of higher borrowing costs can be seen in the fact that transactions involving a mortgage are down by nearly 25% over the past year, Nationwide said.
Meanwhile the number of cash transactions for properties is about 5% higher than pre-pandemic levels."

So you can ignore Nationwide figures if you want an accurate picture of the market. I'll leave it to others to post their index if they want to.

For anyone interested in the Nationwide House Price Index, (despite its limitations), the main headline from its data is that house prices have risen in the North over the last year but fallen in the South, with the exception of London.

I have linked to an article that lists the regional variations but as a rough guide, prices have risen most in the North West, Yorkshire and Northern Ireland over the last year and fallen the most in East Anglia and the South West.

Prices in the outer South East have fallen by 1,1% but surprisingly London prices have risen an average of 1.6% over the last year, according to this index.
As with all indexes, the Nationwide one has its limitations such as excluding cash buyers and the lack of a breakdown depending on the type of property.

House prices rise in the North but fall down South as mortgage squeeze hits expensive homes (msn.com)

RICS monthly. Everyone was waiting for GE result.

www.rics.org/content/dam/ricsglobal/documents/market-surveys/uk-residential-market-survey/June-2024-RICS-UK-Residential-Market-Survey.pdf

David was one of the more pessimistic respondents:

"David Hickman, FRICS, , [email protected], South Devom

• There hasn’t been a spring rush. Properties are coming to the

market at below last years levels and quick reductions are needed to snag a buyer. Also long chains and long completion times. Redundancy adds to slow down and repossessions where higher fixed rates can’t be serviced. Too many new houses."

@XVGN ’Too many new houses.’
That’s good to hear. There’s so much dross on the market that hasn’t been maintained for 25 years, but asking a smidgen off top dollar, it’s no wonder a lot of people plump for new build despite some drawbacks.
A lot of vendors seem to add up raw materials of 4k for a bathroom and 10k a kitchen at old prices, instead of the true cost being a lot closer to the 60k mark installed.