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!

Well no one really knows. But it seems like fundamentals are struggling. So on balance I think the risk is more to the downside.

Nothing is certain but, as you say, definitely more risks to the downside. The recent stock market rout was a brief warning imo.

The point being, it’s been stated on here multiple times that…

• Inflation was coming and would cause interest rates to rise (even when the narrative was that they wouldn’t)
• Inflation would drop as we move into the deflation side of the spike as the yield curve moves from the longest inversion in history - see US recession indicators now happening (even when the narrative said it would be a soft landing)
• Fed would resort to steep cuts quickly because of a possible recession hard landing (doesn’t matter about other central banks including the BoE as the $ is the reserve currency, see what happened when BoJ raised rates last week)
• We are literally here in the image below - nothing has changed from the last few years of writing on this thread. We have not been wrong in fact we’re bang on schedule. As before the directional changes are like an oil tanker changing direction
• If the Fed then prints again then it will set off a secondary inflationary wave again in the forthcoming years

Yes, that's very likely to be the pattern that plays out imo.
Panicky rate cuts by The Fed shortly, continued deterioration in the economy, very possibly some massive shocks (at least that is what they will be called), leading to QE++ and more inflation. Which is why I have been suggesting to people that they don't over borrow and strongly consider longer terms (obviously not the prevailing advice). Many people on here think that everything will be fine now, with rising HP and all round restored confidence as central banks cut. That's pretty unlikely. Indeed, the US data is showing the opposite.

What is this obsession with “The Fed” and “oil tankers turning” that you guys all share? Obviously you’re not from the House Price Crash site because raining snoring doesn’t even know what that is (though I would have thought the title pretty self evident) but they use exactly the same language over there!

Twiglets- if you don't understand the relevance of The Fed or other things that have been mentioned, go and read up. There is plenty of information out there above and beyond your C&P'd Telegraph articles.

I haven't said I don't know what HPC is. It has been mentioned so many times on here so I have looked at it a a couple of times briefly. I have never had an account, followed any threads on there and certainly never commented. You, on the other hand, appear to have done all these things and then have the cheek to accuse others, incorrectly.

Does this ring a bell "I have never used the forum so don't know what they say" - (it was you a couple of days about the HPC site).

But you do know what they say as the content is obvious from their title and you now admit to having looked at it "a couple of times briefly". One glance at that site is enough to know that it is full of men obsessing over what the Fed is doing and oil tankers slowly turning.

I prefer to focus on what the UK housing market is doing personally, as do most posters on Mumsnet I believe. And get my information from a wide range of sources including the Telegraph yes but many other places too. I'm so curious about different viewpoints I have even checked out the HPC site as you note.

I am speechless that anyone would argue that house prices have not increased over the years. It’s a very safe bet house prices will be higher in 2025 than in 2020 and higher in 2030 than in 2025.
we will likely see IR drop aggressively should any of the major economies get sluggish. This will encourage it.
while I would never encourage anyone to max themselves out , anyone waiting for a the deal of the century will be disappointed, prices are highly likely to not tumble and even if they did don’t think for a second everyone then has to sell their home , a lot to people don’t have big mortgages so under no obligation to sell

It’s really not safe at all to say that.

We have potentially enormous shocks on the horizon, energy supply, fertiliser supply, farm growth yields, de dollarisation, and a movement away from dollar pricing of oil by BRICS.. the latter, eventually has the potential to prevent the export of inflation via the west utilising the USD.. - which means we get to keep our own inflation rather than imposing it on poorer countries which everyone in here is going to applaud - until they’re cold.

It could get brutal.

You really cannot go saying that it’s a safe bet at all.

Buy a house if you can afford it and want to live in it, and look at the stresses in your life such as interest rates and job security but don’t go thinking it’s a safe bet because if you have to move in a few years you could well see your arse badly.

The problem is most of the poasters here haven’t seen true economic adversity and have substantial normalcy bias.

if you think back to the miners strike in the 70s all the way through to today - an easy dozen major events have taken place and still house prices are where they are.

The oil price shock in the 70’s could be dwarfed by what’s on the horizon now.

Ok there is a chance but you have to make choices in the here and now and with all the options on the table I still think houses are a safe bet as you are going to get. Yes that doesn’t mean their totally immune but if you had to side with one choice (keeping in mind you have to live somewhere) I’d pick house purchase every day the week. (Obviously within your budget).

But do you think that as long as you don’t have to sell for 20-25 years (and can afford your mortgage in the interim) it will be ok? I’m just so worried as we had to buy at top of market. We only owe about 50% as had equity/have renovated using mainly cash but obvs don’t want to be fucked long term(though it’s too late now as we’re in).

we can afford mortgage even with rise as our nursery fees have long ended by time we are to refix (and they are 1400 a month) so decent cushion but I still worry daily

and please people don’t be mean for the sake of being mean if you do reply to my post - we are real people with young kids (3 and 5) and so worries!

'But do you think that as long as you don’t have to sell for 20-25 years (and can afford your mortgage in the interim) it will be ok?'
Yes, especially as you have equity and haven't over stretched yourselves, so much better chance of continuing to afford the mortgage if something happens wrt employment.

Yes you should be fine. Do not let the doom and gloom mob scare you. As I said above list every major event since the 70s and yet still house prices are strong and resilient.

The biggest threat to losing a home is not external factors usually but ill health which unfortunately you can’t plan for always.

You don't need to worry. House prices can go up or down in the short term but over 20-25 years they will almost definitely rise unless there are serious structural issues with the house or unless the area declines steeply for some reason.

I've bought at the top of the market before too in the past (obviously you don't realise it's the top at the time) and it is worrying for a while as you know that technically it is worth less than you paid for it. But over time that same property would now be worth a large amount more had I been able to hold onto it. In just a few years the overpayment will be inconsequential and in the meantime your family have a secure home to live in where the exact valuation doesn't matter as you don't plan to sell it anyway.

This

also remember you have to live somewhere and paying down your own mortgage will almost certainly be a better financial bet than paying down someone else’s, whatever happens with house prices.

Thanks guys. We do love our house and love living in it - it was a process taking almost 4 years (with us stupidly selling our perfectly lovely house with nowhere to go to BEFORE the prices shot up and being stuck in rented for 18 months with being unable to find anything and a seller pulling out on us 4 weeks before sale before finding this house which then required huge amounts of work(!)). So I feel like we’ve been through enough.

I am a worrier by nature however!

Agreed.
It's not 'doomer' to read up, observe and consider potential problems before making huge financial decisions. It's what any intelligent and sensible person would try to do.

I’m not trying to be mean at all. I think the thing is that currently, don’t be obsessed with capital values.

you'll never actually see the money unless you downsize when you’re old anyway.

value can certainly help as it edges you towards better rates the more equality you have. (once you have 40% ownership then tends to be as good as it gets).
if salary’s go up also it erodes your debt away somewhat.
as I have started many times as long as you don’t totally max out generally houses are a safe bet

I suppose I’m worrying as our plan is to downsize when in our 70’s (so at least 25 years away) and use a big chunk to live off. I mean we do have work pensions and have a “plan” as far as we can to save between now and then, but we’ve put a lot into the house - mainly because we like being at home and with 2 small kids and little help, we don’t get to go out much so home is kind of our sanctuary - we cook a lot from scratch and like watching stuff on tv and reading so a nice home to do that in (and entertain in) was more important to us than other material things (we drive old bangers and rarely shop for clothes, other than for the kids) if that makes sense. I probably shouldn’t read these threads as then I worry!

ONS reports July rise in house prices and rents

The Office for National Statistics has reported that average UK private rents increased by 8.6% in the 12 months to July 2024 (provisional estimate), unchanged from in the 12 months to June 2024.
Average rents increased to £1,319 (8.6%) in England, £748 (7.9%) in Wales, and £965 (8.2%) in Scotland, in the 12 months to July 2024.
In Northern Ireland, average rents increased by 10.0% in the 12 months to May 2024, while in England, rents inflation was highest in London (9.7%) and lowest in the North East (6.1%) over the same period.

Average UK house prices increased by 2.7%, to £288,000, in the 12 months to June 2024 (provisional estimate); this annual growth is unchanged from the revised estimate for the 12 months to May 2024. Average house prices increased in England to £305,000 (2.4%), in Wales to £216,000 (1.8%), and in Scotland to £192,000 (4.3%).

https://bestadvice.co.uk/ons-reports-july-rise-in-house-prices-and-rents/

Ouch! It hurts to be renting. This is why my position is still that I think it would be good if house prices went down to enable more people to buy and not be trapped in increasingly expensive rentals.