Will these price falls continue ?

[DrySherry]

So last year (late 2024) I was partly instrumental in the decision made by some younger family members to hold off buying a first property. They were worried about overpaying for a small first house and regretting it, becoming stuck, if values started to come down. With only a small deposit they could quickly be in negative equity, complicating the reality that both want to keep the financial flexibility to move house if better job openings appear in a different area.
I too thought that it was more likley than in has been at any point for the last couple of decades that prices will come back down in line with affordability. They didnt have a great deposit - so my advice was that they should focus on increasing that for a year or two. Giving them the option of more favourable lending rates when ready, and hopefully more house for the money if prices soften. We have since seen some falls in some areas but not as much as hoped for. They have over the last year done really well on saving and now have a good 10% plus deposit - instead of struggling to reach 5%. They are fortunate that they had, and still have, the option to stay put and continue to build a bigger starting fund and that's what they decided to do. Fortunately they rent from another family member and get a very reasonable deal.
After reading this latest rightmove report I have become hopeful for them that they may have made the right choice. I'm interested to hear what others expect to happen in the housing market in 2026 ? Do you think falls like this might continue or will values just dip a little again or flat line this year ?

https://uk.finance.yahoo.com/news/average-house-price-6-695-000100433.html

Likely to accelerate as mortgage rates are likely to have reached a floor at around 4% while net immigration goes into negative this year.

Everyone is obviously desperate for there to be a fall or even a crash. I guess that could happen in some areas but it definitely won’t happen everywhere. People still need and want homes. Mortgage rates are - for some - lower than 4% (mine is).

I think do-er uppers will still struggle to sell as people are starting to understand how expensive construction is now.

I guess we will get a better idea in the New Year. The lack of changes to stamp duty will have calmed some fears for sure.

It's really area dependent.
In some areas houses have held or risen, in others they fell.
It's always been like that. I sold within days when others in different areas sat on market for months.
Decision to sell/buy should always be imho based on local area not national numbers.

It will be area and property type dependent so we can't really give a good steer. There is also the possibility of a Black Swan event (spanner in the works) that none of us could predict.

I'd generally ignore the data from RM. I'd focus on actual results ( houseprices.io ) and Area 360 Profile to see 10 year trends in their area (the trend is your friend?). For sentiment check the RICS survey each month.

Very few areas are seeing house price growth greater than wage growth meaning that prices are getting more affordable all the time. Waiting isn't a significant risk.

One strategy I'd adopt is to look at the prices of the property they would aspire to. Then calculate how much their mortgage would be on that allowing for their deposit and current interest rates +1%. Use as short a term as possible (15 to 20 years) and don't get suckered into looking at 30+ tear terms. Then save the difference between that and the rent they currently pay, so that when they do buy they will be used to making the mortgage payments.

Good luck. I'd buy as soon as I could find something I could comfortably afford and be happy to stay in for 10+ years.

Yes I think an uptick in rates next year is more likley than more reductions, though it looks likley a small reduction coming this month - hopefully. Good point about net immigration.

"I'd generally ignore the data from RM. I'd focus on actual results ( houseprices.io ) and Area 360 Profile to see 10 year trends in their area (the trend is your friend?). For sentiment check the RICS survey each month."

This is useful XVGN. I will pass along. Thanks. Also good point about about Black Swan events. I fail to see we have capacity to deal with another without severe consequences.

Not sure about everyone being desperate for a fall or a crash Kirinm. I think equally a lot of people would be really hit hard by falling values - particularly recent entrants and those with high loan to value ratios. Businesses too that hinge on a healthy market would be negatively impacted and we seem to have an awful lot of those these days :/
Your right about not all areas though I think.

You shouldn't be "not looking for a house and saving".

What you should be doing is looking for value all the time. And maybe putting in lowball offers.

Sure many will reject but there may be one that will accept.

The problem with people is they get into a mindset where they HAVE to move once they start looking and failure to find a place quickly is looked on as some sort of failure. This is no way to get good value.

The way to get good value is to have awareness of the market all the time and take the opportunity when it arises. Moving shouldn't be a boolean process, where you are either doing it or you aren't.

Peoples own impatience and their inability to wait for opportunity is their own worst enemy on getting good value.

Once you get your mind set on moving and even worse your mind set on having a particular place you can pretty much throw getting good value out the window. Estate agents if they are good at their job can smell that at 50 paces.

Hmm, no. Everyone is not desperate for a fall or a crash. We need to build more housing for people and if there is a significant downwards movement building will grind to a halt.

Lots of landlords are looking to offload X rental properties which in theory is a good thing for first time buyers but there will be a lot of very poor maintained houses I would imagine rather than turn key ones
And of course, a lot of first time buyers will pay a premium for a a turnkey one. ie new builds
It’s the three bedroom semi detached with a garage that’s going to hold its value and that will depend on what happens with stamp duty and affordability and interest rates.

The market next year is predicting small growth according to sources that my company use for tracking these trends,
This may be driven my landlords off loading.
However I would say with nothing stimulating the housing market such as significant drop in interest rates or changes to stamp duty many people wont move if they dont need to. That drives a shift in the market itself. If I NEED to sell im more open to offers. But if there isn't a huge selection around then supply outstrips demand for FTB or others who NEED to move. I dont expect house prices are going to drop significant more than we are at currently.

There are multiple people on this forum who are actively hoping for falls or a crash. Telling people to hold off for a year is only sensible if the area you’re buying in is definitely going to fall and if you’ve got some proof of that. Otherwise they risk being priced out - especially with a small deposit.

Property is a gamble but if you want to buy a home buy a home.

I am no expert, in fact haven’t a clue but I think prices will tend to flatline ie not increase with inflation. There is too much of a shortage of housing in this country and also I think good houses will always sell. Also the more house prices stagnate then the more people leave of buying but there will be lots of people who eventually cannot put off house buying any longer and buy.

"There are multiple people on this forum"

It's not some sort of secret activist club.

Pretty much all buyers want prices to fall. There are some owners as well who want them to fall (for example they want their kids to be able to buy) and some crazies* who actually believe high house prices are ruinous for the economy and need to fall irrespective of their own ownership status.

*sarcasm.

I hope construction costs go down... it's absolute madness in London.
Not enough skilled workers... (cheers Brexit) and cost of materials through the roof.

We bought our house intending to do so much...just cannot afford any of it.

Who is saying that? I think the general consensus is that they will fall although not below 3%. I hope so at least, I've gone onto a tracker!

Interested to know - Is that a prediction of a small growth nominally, or a small growth above predicted inflation ?
I think Advocodo made a valid point in that it could be that real values just continue to be eroded by higher inflation by flatlining. I can see why any government would try to steer things in that direction as it also erodes the government debt.

Same but equally nothing bad is happening by us holding off so when eventually We learn how to do it ourselves or the market is flooded with labour. We won’t be any worse off., Potentially, we will be better off with more savings or equity

Can’t see that happening. In fact I prepared something for work yesterday saying it’s likely to be further increases especially for imported materials due to tariffs.

So why did two posters suggest that people don’t want falls when it’s obvious that they do?! I’m only responding to the responses I got when I suggested people are hoping for a fall in prices.

Advising people with a small deposit not to buy in the hope that prices fall is a gamble. What sort of drop in prices are people expecting that suddenly everything becomes affordable?!

People have been expecting and predicting this house price crashed since 2002
I have paid off entire houses in the time that they’ve apparently been waiting renting with their deposits at the ready for when Price is drop back to pre-millennial prices that they considered to be fair

Pantheon Resources Plc are forecasting a little down next month and again early next year and then back up to 4% base by the end of 2026. Your right they do seem to be an outliers with that, though have an uncanny knack of getting right which is why they are so successful.

We bought following the 2008 crash. Intuitively you would expect prices to fall but instead owners sat on their hands and hardly anything came to market. An estate agent told me that he did lots of valuations but as soon as potential vendors had a disappointing figure, they just decided to wait it out. Consequently prices weren't dropping. It wasn't like the 1992 crash with repossessions and forced sales.
I understand your rationale for watching and waiting but make sure you keep your finger on the pulse and talk to agents.

Bugger. Guess I best fix 😀