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

🙄 not everywhere HAS fallen that’s the point! Even the article the OP posted said there had been reductions of c£6k max over the last year. 6k is not a huge amount when you’re also paying rent.

That £6000 figure is a monthly drop, ie less than just one month ago not the last year.Like all averages though some will be more some less.
While not everywhere has fallen the general trend is down, which is a long way from what you had written about missing out if prices go up, not going to happen.

Prices can be increasing but still getting more affordable - if increasing more slowly than wages - so don't fixate on simply whether prices are up or down.

Houseprices.io is a good guide. Pick the town or area you're interested in. If you see lots of red then people are selling for less than they paid. If you see lots of yellow then prices are probably not increasing as fast as wages. Worry if you see lots of green. These prices have increased greater than wages (or RPI) since bought. This isn't a technical measure but will give a good gut feel about the health of the market you're looking at.

Also look at the number of completed transactions in the last 6 months. Is it very low for the size of the area. That could indicate that the market is toppy and cannot be afforded by locals.

If you’re talking the price difference in a year or 2 then yes it could drop. Over 10 years, unlikely. There can’t be many people who regretted buying a house in 1970, 1980….2000, 2010….as 99% will have increased in value (save coastal erosion etc).

You’re only in negative equity if you can’t afford to pay your mortgage and have to sell. If you sit tight you’re ok, it will increase in value.

And the more you pay, the higher the amount of equity it will eventually gain.

Relatively speaking it won’t be a very large sun though will it? As I say I could just put it all on my interest free credit card now if I had to.
And then move it from one interest free card to another for as long as needed

Again, as discussed elsewhere, this is generally true about long run values. But there will be plenty of exceptions (beyond your coastal erosion cause). Three large areas come to mind. 1) New build flats - people are becoming very conscious of leasehold issues and maintenance costs. 2) New build houses - many lose value immediately as they become second hand and also people are becoming more aware of shoddy build quality, poor lot size, rigged council tax bands, and estate charges. 3) Left behind areas like Redcar, Hartlepool, Sheffield, etc, etc.

I'd probably modify your 99% to 75%, but neither of us have the data to back up our guesses. Just beware of what you buy, don't over-pay, don't borrow the max on a max term with no contingency, and prepare to hold for the long term.

Unfortunately this is the sort of thinking that goes on after prices have risen consistently for years.

In reality house prices can flatline or decrease. Especially if you factor in inflation. My place has not really risen that much since 2019 when inflation is taken into account. I have seen prices in my area for new build flats below what they were selling for in 2005 (nod to XVGN).

Looking further afield in places like Japan I believe the property market has struggled to regain prices after a crash decades ago.

Some people might say stuff like, the property market may never fall long term or stagnate in the UK, normally with random qualifiers like "they're not building any more land" and "house prices can only go up".

But some people also claimed things like the GFC was a six sigma event as well.

I have no idea where the market is heading in the UK in the short, medium or long term. But I wouldn't want to stake my life on it behaving in the next few decades the same way it has done on the previous few.

Putting the capital on credit card?
How much is your house worth😱

Given we used to have close to what 1 percent interest rates and now its, even with drops, going to be say 3.5, then prices could fall a bit still? Another risk is job losses to AI meaning some could be forced to sell, plus landlords selling.

For prices to go up, easier borrowing could help but you also need the sentiment and the jobs. But maybe with easier borrowing and interest rate cuts prices could go up a bit? but probably not shoot up.

£350,000
I paid 46 grand for it in 1997

No this was a monthly drop of 6.7k !!! That's what suprised me enough to ask on here for opinions on is that kind of market people expect going forward. The Rightmove article tries to flower it as much as possible - facilitating selling homes being thier business that's to be expected. December sometimes shows a bit of a dip. But I don't remember the last time I saw them report a monthly drop of that magnitude.

No, it wasn’t a monthly drop. It was an average for the year drop
Cant Criticise other people’s maths when yours is less than desirable

Depends where you live. My area has seen house prices grow 4-9% year on year and is now above the 2022 national peak.

So in November 2025 - the average asking price is £364,833.
In the next month, December 2025 - the average asking price has dropped by £6,695 to £358,138.

I didn't do any maths - these are the published numbers on the rightmove monthly report.

Nothing to do with @DrySherry's maths. The article she linked to quite clearly says that it was a £6.7k drop from November to December and shows a map with monthly drops in every area of the country. However, this is only Rightmove initial asking prices so a poor metric because it measures the most optimistic of all prices (they exclude all the subsequent reductions and relistings on their own website).

As to exactly what happens to house prices, no one knows for certain and it always varies with area and type of house. I agree with a couple of posters who have mentioned the economic conditions deteriorating. It has been happening very slowly but I think that 2026 may be the year of official recession and much higher job losses. That would have a very negative impact on the housing market, regardless of rates falling. Yes, the government has definitely been trying to encourage lenders to lend insane amounts to unsuspecting (or just plain foolish) customers. They all think that they will be bailed out like last time, of course. I'm not sure lenders will be quite so desperate to lending during a major recession though. There's always the assumption that house prices will rise over 10 years. As @GasPanic says, look at what has happened in Japan. I think the prices took 30 years to reach previous levels and that's in a nation with a current account surplus. Nominal prices may rise if they print billions and billions but will real (ex inflation) prices rise? I think there are lots of longer term downwards pressures on prices, demographics being one.
As to whether this individual couple should buy, it depends on their situation. It does sound as if they are v fortunate in their current rental and have been able to save ££. I would probably follow the local market really carefully next year with an eye for anything that seems like good value while continuing to save as much as possible. I definitely wouldn't rush into buying but think they should consider it for the right house at the right price. I think the chances of falls, possibly large ones are much higher than rises over the next couple of years. Even if FTB prices stagnate, they would have a better deposit in a year (if they can keep their jobs!).

Agree that not everyone is desperate for a fall.
The amount of people who already own houses (very few, if any of whom would want a fall even if they are looking to move up the ladder ) is far bigger than the pool of first time buyers who would benefit. Surely that's common sense?

Do you think that house prices are bound to increase more than 7.5 times nominally in the next 30 years? You were just lucky. Very dangerous to make such assumptions and assume that people on interest only mortgages won't need to pay much money back.

Have they got a LISA they're saving into, to maximise deposit?

Yes they have been depositing the full allowance dailyconniptions. Thanks for checking

Not everyone is desperate for a fall. Those in the business are clearly desperate for rises, which haven't been happening recently.
I do think that many people, including those who already own, realise that prices are completely out of sink with wages and general affordability and need to come down to restore some balance. At this point, the unaffordability of housing and general level of inequality is causing major social problems.

I can get rid of the "if any" part of your answer. We own a home outright. It's not an investment. It's not our pension. I would be happy to see prices fall, including our own, if it enabled FTB's to enter the market earlier and start building families earlier. That's what the country needs. I need youngsters to be earning and thriving in order to fund my state pension!

both want to keep the financial flexibility to move house if better job openings appear in a different area.

Then buying a house now is not for them. The days of just moving house easily and cheaply have gone.

Yes, funding the state pension is going to become a major problem before long!!

I missed that bit- well spotted.
That makes a difference. How old are they @DrySherry?

Yes, the trend is also pretty clear for 2025. I was thinking that 2026 would likley be worse. However having now been alerted in this thread to the possibility of the return of some form of interest only lending. I'm less than sure about that. I am starting to think that if they do go back to some form of looser lending - then the introduction of that would be the time for my relatives to get on with it. If they waited for very much longer it could start prices increasing again. A significant number of people do tend to max out when buying. Interest only may increase what they can borrow ? Historically the result of that tends to be higher prices.