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!

It is here too. Properties which have been on the market for months are finally selling in the last few days l. Not sure how long it will last though!

This is the thing and most people aren't at all aware, are just focusing on a 0.25% reduction in base rate and see this as positive. The US economy is clearly deteriorating. I agree that The Fed will 'emergency cut', ie cut more than expected as they see this. I expect job losses to ramp up and that's hardly positive for the housing market.
In my area, I see reductions every single day and have done for many months. A couple of sales have also fallen through since the base rate cuts, although I'm sure this will vary.

Can anyone give predictions for North London ?

I wouldn't put much weight in anyone's predictions - including mine - especially for specific areas.

Instead, I'd say look at the relevant towns and post codes on houseprices.io to get a sense for whether the most recently completed were transacting above or below RPI and by how much.

I'd also consider a subscription to otta.property to see these sort of charts for the postal areas of interest

otta.property/may_2024_raw_data_analysis

Lots of activity in my area at moment now IRs are on the decline. I fully expect house prices to start their gradual increase in line with what saviles predicted (20% ish over next 5 years)

This is helpful - thank you.

It's obviously far too early to see what is going to happen to house prices in the latter half of this year- small cuts only so far. I think it's more likely that things will fall a bit but I could be wrong.
I second @XVGN's otta property recommendation. He's charging 1.99 a month now to access the full data which is direct from the Land Registry (so obviously a good 6 months out of date).
Acadata is also a good HPI, again from LR data with some statistical adjustments but not the same as the ONS apply. You can click on to check price changes in the last year in your area. You can see that the great majority of areas fell significantly, some much > than 10%. SE London is the exception according to this index, with rises.
www.acadata.co.uk/services/house-price-index/

Thanks @rainingsnoring . I keep forgetting about acadata. Although they speak to the different averages used they do still rely heavily on the least valuable arithmetic mean which is vulnerable to the right skew found in UK property prices. Nevertheless, in response to the London question, I found this data in their workbook

See E&W June 2024 download link http://www.acadata.co.uk/services/house-price-index/

I see even the ‘ house price crash’ people have given up again now. They will have to wait a few years to try again now!

Dammit! I was waiting for the £90k average house price Crashy promised me 3 years ago!

This .. plus energy prices are still not going to drop back when demand exceeds supply, which will be this winter. We got a who.e lot more pain going on.

0.25% rate cut is a political re arranging the deckchairs on the titanic.

It was only Crashy and I think he got banned.
Others who have been accused as being from HPC are just following the economic data which is pointing to very likely real term falls in house prices, and possibly large nominal ones too. Some areas (London/ SE mainly) are down a good 15% from peak, others much less. N Ireland has risen, I think.

Haha, they have been a lot quieter over recent months because the UK crash never happened. Though I guess they would argue there’s still time 🤔

Crashy & his wonky keyboard is just a fond memory now 😊

I miss crashy. I did really want the crash to happen. But it just plainly wasn't happening. So I'm glad we bought. Moved to weeks ago so not watching the market at all any more.

To be honest, I would say that the risks of a faster downturn are higher currently than they have been, although most don't see it. Still, it's good that if you and many others have found somewhere that you are happy with. There's a lot to be said for pragmatism.

Heavens I meant we moved two weeks ago!

Thanks @rainingsnoring I do pride myself on my pragmatism.

The thing with house buying I have come to realise is that the reason for moving is more pressing than the cheapest time to move. We bit the bullet as we wanted to be in the new house before we had to apply for school places. It also doesn't matter that that house a few streets away has been reducing it's asking price because for example (some reasons we ruled out houses) you don't want to live on that street, it's a busy road, the layout isn't suitable to your needs, it's been over extended and just doesn't work, it isn't in the right school catchment, it's not close enough to cycling infrastructure, one of you likes it but one of you doesn't, the front elevation has been destroyed by some former owner, it needs a new roof soon, you don't want to take on a project or it's been immaculately done up in a style you hate and you don't want to rip out brand new kitchens and bathrooms because it's terrible for the environment.

I found the reality of what we would actually consider making an offer boiled it down to literally the house we have bought. I felt very differently about houses once we were actively looking to move compared to what I have thought was a sound buy when I've speculatively browsed rightmove over the last few years. When you're imagining moving it's easy to think you'd buy that 3 storey, 5 bed town house, on the main road, needing a full renovation because they keep reducing the price and you can get it for a steal and make it beautiful. Once we were actually parting with cash I felt differently and remembering we will be living here for a long time I felt very differently.

It aint going to go back to the prices of 10 or 11 years ago when we bought our last house which is the sort of crash some people on here seemed to be wanting. The market has dipped slightly where we are but there were still queues of people to buy anything that was nicely done up at a fair price. Ours sold for over asking in a day as everyone on the first day of viewings made an offer. We viewed several houses like this too.

In the end for us (and quite a lot of other families with pre-schoolers we know) the need to move before school begins is far more important than overpaying 20k or so on a house that you will be in for hopefully 20 years or so.

To be honest prices really are going to tank, but there’s still so much wealth in the system that these things take a long time. You can’r extract what is being taken from the economy by taxes and inflation without there being an affordability hit, and it’s all very well people saying it’s supply and demand, but if people simply can’t get the debt or make the debt payments then there’s no demand.

Were seeing odd signs around the edges. Banks for instance insisting that anyone with a lot of rental property for example need to analyse their portfolio and see what it would cost to upgrade the EPC. They’re feeling the “risk”, and if they head for cover and back off on lending a bit it could just go.

I just think that the upside is more uncertain than the downside. And that’s coupled with the normalcy bias of the bulk of the population who, despite their protestations, never experienced real adversity - “mental health and anxiety issues” don’t count. Real adversity is no/ very limited food, and no one to turn to. Potentially that’s on the horizon as well.

@farting are you crashy? I hope so it's been a lot less lively without you.

Nope, I’m not Crashy! lol..

@Farting such a shame they disappeared!

I quite enjoyed Crashy's posts too!

@LGBirmingham -these decisions are so individual & I totally agree about pragmatism angle. Your main priority appears to have been being in the right place to access schools and buying a home suitable for a young family. The fact that you were really clear about this, has enabled you to make the right decision for your family. Someone else may have much more flexibility about timing or area and could afford to wait or drive a hard bargain or whatever. All the best in your new home.

@Farting I agree with you. There are very clear signs now of deterioration across the pond and events in Japan, both of which will impact the UK. I think it will take a lot of people by surprise. It's good to see that some people understand supply and demand!

I think they would find it impossible to resist coming back to Mumsnet to continue telling us wimmin that prices are really going to crash in the future 😉

Completely agree with this post. I’m pragmatic too and if I had to “overpay” to get my children into decent schools or to save us having to do big renovation projects with few DIY skills of our own, we made that choice over the “bargain” houses that had been reduced drastically because they were in the wrong catchment area or needed extensive work to bring them up to a good standard.

Haven’t taken much on board the last two years have you Twiggy.

Was 2008 caused by Northern Rock? No it because of its exposure to the US subprime mortgage market and the collapse of US banks having a cascading effect here.

You keep viewing the UK like it is in own bubble and what happens on a global scale is irrelevant.

Fact of the matter is the US is entering recession

https://uk.finance.yahoo.com/news/real-estate-deals-america-getting-102700324.html

The stock market is currently nosediving (worst pace in Japanese history so far)

This isn’t a ‘soft landing’ which was so often spouted. It’s the ‘hard landing’ scenario i.e. recession.

Basically with no growth, money leaves growth assets as recessions and job losses means growth reliant companies won’t be growing/making money for shareholders, hence the sector sells off. Houses are a ‘growth’ asset as the sector is linked to credit.

Liquidity instead flows to ‘certain’ returns like treasuries which are government debt. All of a sudden in a recession 5% return looks like a good deal when no growth will earn money elsewhere, yields fall (fast like they are now due to demand)

Interest rates are then cut, but this is done because the economy is in bad shape (not good). That has a negative effect on people’s ability (and banks eligibility) to borrow because of risk (debt, job losses etc)

So yes swap rates will drop slightly and there will be slightly lower rates but it will be harder to borrow (like 2008) so fewer people will be in the position to.

So overall rate cuts will cause a short term buzz, but the fundamental affordability and wider global economic conditions (like inflation) is still embedded and those conditions effect the working age population (who needs to upsize/move)