House Prices going into 2025

[Twiglets1]

We often refer to House Price Indexes (HPIs) in discussions re house prices but there are several out there so which to use?

If you want to know average asking prices use the Rightmove HPI and the price will be for the entire-market in England & Wales.

If you want to know average selling prices it's either the Halifax or Nationwide HPIs but they only have data on buyers who have mortgages approved with them in the UK, so cash buyers for example will be excluded.

The Office for National Statistics HPI is arguably the most accurate as it publishes sold prices on all transactions in the UK (mortgages & cash). However, there is a delay so the data is at least a couple of months behind.

Anacdata HPI also covers mortgage & cash transactions and is the first to report regional monthly selling prices, but only covers England & Wales.

Seriously, I expect house prices to continue their slow downward trend in nominal terms that they have since mid-end 2022. Of course, all the lenders and agents will predict HP rises, because it is their business to do so.

I expect we will see a significant reduction in sales from April 25 when the SDLT goes back to the previous rate (unless Labour introduce a new incentive).
I expect this will mean that the likely early 25 increase in sales/ small increase in prices at the lower end (higher end doesn't seem to care and is still falling), changes to price falls too.
If, as I expect, we end up in a recession this year, with unemployment starting to rise significantly, the falls in HP would obviously be greater.
There could be various 'black swans' on the horizon, which would also worsen the forecast.

I know some on these threads expected much lower mortgage rates in 2024, which has happened. They also expected HPs to be heading up by now as a result. Neither of these things has happened but we may get the first in 2025. However, it would be accompanied by a general deterioration in the economy.

Interesting @kirinm. Whereabouts are you? Are you in an area where lots of Londoners are moving to or in London in an area where the bank of mum and dad is propping up the market? It seems to be very area specific in London.

@rainingsnoring I think I'm in an area where people are moving from other parts of London because they can buy more for their money here.

We have been in the area for the best part of a decade and having now sold our flat are up against east Londoners generally. In respect of houses, it is definitely people moving up the ladder rather than FTB.

It's zone 2, south east and apparently extremely desirable now!

Which: What will happen to house prices?

There is a consensus among experts that house prices will rise in 2025, with predictions far more bullish than a year ago.

Knight Frank and Zoopla predict modest growth of 2.5%, while Savills and Rightmove both forecast increases of 4%.

Halifax estimates house price will rise by up to 3% next year and Nationwide predicts that they could increase by as much as 4%.

News agency Reuters asked 21 UK housing experts for their predictions in November. On average, experts predicted a 3.1% rise in 2025, with individual forecasts ranging from 2% to 6%.

https://www.which.co.uk/news/article/whats-happening-to-house-prices-aVCwI8I22pBe

Interesting to see house price predictions from a Reuters poll in this article dated September 23:

The survey of 18 market experts from Aug 14 to 30 suggests average home prices will decline by 4% in 2023, slightly worse than the 3% predicted in June but not as dire as feared earlier. The most pessimistic forecast is a 10% fall, despite an expected 7.5% rise in consumer prices this year.

Prices are predicted to stabilize in 2024 and increase slightly by just over 3% the following year, similar to previous expectations.

In London, prices are expected to decline by 5% this year but rise faster than the national average in the following two years, with increases of 2% and 5%, though performance varies across boroughs.

www.londonproperty.co.uk/en/london-property-news-bulletin-5th-september-2023/

Thanks @kirinm
It does seem that East London has been having a boost in recent years, whereas more expensive North and central London have fallen more. I guess FTB can't afford your area anymore unless they have the bank of mum and dad available!

That is interesting. The September 2023 predictions were not far off what has happened

Yup we did indeed see a small decline in prices in 23 (following the spike in prices in 22 due to government incentives introduced during Covid to get the market moving). Then a pretty stable/stagnant year in 2024 in most regions. And a small increase predicted for 2025 in most regions & property types.

Though like Rainingsnoring I can see a potential bump in the road around April when stamp duty reverts to the higher rates. Wouldn’t be surprised if the government introduces some new incentives after that for FTBs. They aren’t exactly popular at the moment & housing is a big issue for young voters in particular.

I don't think Labour will be throwing any money around. They are firmly sticking by many unpopular policies.

I'll be listing soon, at the top end of our local market, and it's really hard to judge how to price it at the moment.

The best advice in a stagnant market like this one seems to be to price realistically rather than trying to be aspirational. EAs always seem to value on the optimistic side, they want to win your business and many people go with the highest valuation.

It may work in a sellers market to aim as high as possible, but in a buyers market anything priced too high will just sit on the market for months being reduced by 5% every few months.

Far better to price realistically in the first place for a quicker sale. If you’ve priced it too low you will get competing offers which will push the price up anyway.

Twiglets is starting to sound like Charlie! I agree with her @TrigPoint.
The more expensive homes (detached, 4+ bedrooms) have definitely fallen in price in the great majority of areas. The bottom of the market seems to have done much better. Estate agents are being very unrealistic in the areas that I follow and those type of homes very rarely get marked STC without at least one reduction, often two and often they get taken off, without a sale. I expect lots of the same, familiar ones will pop up again in Spring.

I wish reductions was what I was seeing. Things are on RM for a long time but that's not because they aren't sold, it's because agents are keeping them on until they've completed.

I bought a 4 bed detached in midlands for 375 in 2021 , its now worth at least 435k , possibly 450k as same house with not the same refurbishments went recently for 425k

@rainingsnoring ”I expect lots of the same, familiar ones will pop up again in Spring.”

That’s what I’m seeing on the Fylde Coast. It’s a large area admittedly, with many mini-markets rather than one large market, however last summer/autumns stickers have reappeared at the same price they failed to sell at last year.
Also a lot of once new builds (1 to 2 year old) now on for more than the initial purchase price, with only decorating been done. With the huge amount of building going on, there is a lot of choice/competition for buyers for these 4 bed detached.

Many sellers continue to be very unrealistic! I have no idea why they think that listing in January 25 will produce a different result compared to Summer 24.
I guess they all believe the false narrative that house prices can only ever go up.
Admittedly, I have seen a lot of reductions in the past couple of years and many still don't sell. Perhaps it will take a period of real economic hardship for reality to hit or perhaps it will take 2 or 3 more years and a period of enforced, extremely high interest rates (post QE on steroids). We'll see!

There are regional variations and some areas still performing strongly - you are probably in one of those areas @kirinm

Most areas seem pretty stagnant at the moment however, hence the general advice to @TrigPoint to price their property realistically to generate that early interest sellers like to see in the first few weeks.

All I'm really saying if if they get 3 EAs round to do valuations, don't necessarily pick the agent that gives the highest valuation. Maybe pick the middle one instead if their valuation seems more realistic. Agent 1 could be valuing highly to win the business, knowing it is likely that the house won't sell and then they will suggest a price reduction in a few weeks.

Do your own research into your own area and pitch the house at a price that means it can compete with similar houses on in the area at the same time.

We definitely won't be going with the highest valuation, but there basically aren't any comparable properties to help with pricing. It's a (sort of) 6 bed, listed, detached property in an area where there are not many of those around.

Does anyone else thinks mindsets may have changed or is it just me? I want to move in the next few years but I’m not prepared to take on the level of debt I assumed I would. And it’s not just the cost of servicing that debt, it’s the utilities & food prices that are never coming down again. The fact I’ll likely be paying more tax for the foreseeable as the country is broke & that I need to save more for retirement as the state pension age may move out/means test etc. maybe Im just pessimistic though!

You sounds really sensible and realistic @Radishknot. If more people thought like you, things would improve faster wrt house prices reducing so that less people are forced to get into huge amounts of debt and then face old age in abject poverty.
I think some people's mindsets have changed, yes. This seems to be even more the case in the US, where property sales have fallen massively.
I hope more mindsets change but this will likely be over taken by events imo.

Thank you, maybe I’m just getting old 😆

That is tricky actually to value a house with no direct comparables. We had the same thing once when selling a converted barn in an area that was full of standard Victorian houses. It was easy to compare prices of those houses but not ours. Even the EAs who saw it it admitted it was hard to value.

In the end I think they based the valuation on square footage & how much prices had risen generally in our postcode from when we purchased it. However it did take longer to sell than more traditional houses we’ve sold. I think some buyers had the same feeling of not being able to judge if it was worth the asking price because they had nothing to directly compare it to. With houses like that, you need to wait for the right buyer who falls in love with the place.

With energy prices the way they are, and the move towards ASHP, people have a keen eye on running costs. Add in maintenance, and a 6 bed grade 2 property needs to be very desirable, or priced very keenly, to shift. Other opinions may vary.

But would they though? If people don't move from the smaller houses to the bigger ones then there are no smaller houses available for first time buyers or downsizers.

I really enjoy and welcome a multicultural community, it's why I haven't moved back to where I was brought up. But even I can see with the levels of immigration vs houses being built that we currently have it is clear that we have an issue.

I don't think people staying put will bring prices down. It isn't going to magic up more houses which is what might solve the affordability issue. I think it is just a symptom of the market personally.

@LGBirmingham I meant if more people refuse to take on massive amounts of debt then house prices inevitably fall. This also happens when lenders reduce lending massively, as happened during the GFC, or when stricter financial regulation precludes huge lending. Generally, people tend to 'max out' and buy the best house the can with the greatest amount of money they can borrow. @Radishknot was querying whether this attitude is changing because of finances being squeezed in every direction. Maybe it is slowly but, as I said, I think it's more likely that people will have theirs hand forced by recession leading to job losses or 'events' in the financial system.

I agree with you that the smaller properties have kept their value better; I said so in an above post. The larger, detached properties have definitely come down in price more overall. I guess it's very area dependent, as some areas have had a lot of new building and others, much less so, despite in being needed. There isn't an overall lack of housing, despite the huge amount of immigration, but there is a lack of it in some areas and of some types of housing.

I imagine the COL has forced people to be less aspirational when upsizing. How hard and for how long the big, dark cloud of financial doom is going to hang over most of our heads, is almost impossible to forecast and outside of our control.
For example if a young family needed more room, (and not working from home) it could be prudent to have 3 good sized bedrooms rather than 4 small ones. Each family has different needs obviously, but I suspect the above example applies to many.