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

Late 20's and both in the care sector.

https://www.nationwide.co.uk/media/hpi/reports/nationwide-house-price-review-and-outlook-for-2026-slight-easing-in-affordability-pressures-helps-underpin-buyer-demand

I suppose nationwide as a lender have an interest in prices increasing but it does look like rather than allow prices to fall, lenders are just going to make borrowing easier. I feel like no lessons are being learned here!!

Still plenty of time then. Could they look to increase their income by getting more qualifications?

Exactly. No lessons learned! They all assume bail outs as it's happened several times before, especially in 2008. It might not be possible this time, despite the governments and central banks always wanting to protect bankers over normal, working folk, as the financial system has exploded since then.

They are both pretty focused on improving and widening thier options however they can yes. Hence the worry about getting into negative equity. They recognise the costs of moving and would weigh things carefully and accept its expensive to move. Significant price falls though could mean they get stuck. They are sensible young people who think things through carefully and plan.

How much do starter homes cost where they live / where they want to live?

Yes, there will be short term falls, but history tells us that the long term trend is up, albeit not as fast as the era of the "Lawson Boom". The market is of course driven by supply and demand, when more people need to sell than want to buy, prices fall, more people wanting to buy forces prices up. I say "need to sell", because there are many owners who list property for sale, but the transaction may not complete, perhaps they can't find a suitable onward property (is this because agents restrict viewing, if your own house isn't listed for sale), they've recalculated the finances and decided that private school or a luxury holiday is preferable, or they weren't serious about selling.

I didn’t suggest anything of the sort, However what they’ve increased by is irrelevant. It’s what my wages have increased by that matters.
If the house was still worse, 50 grand and I can earn that in a year then interest only was still a prudent move

• House was worth

Apologies it was your interpretation of the data that was incorrect

every single £ you spend on rent is wasted you could be paying off your own mortage

Supply and demand is the simple answer, but the truth is more eye-opening. A paradigm shift has happened in the last 30 years where normal multipliers of 3x median salary have shifted to 6x plus. You could build thousands more homes but if the FTB's cannot afford them then you haven't fixed anything. Another paradigm shift is required. What happened in the past ("history tells us") cannot be relied upon to indicate what will happen in the future.

This video can help explain what happened.

They do very sensible and should therefore be better off than many. Good luck to them!

Of course it's not irrelevant!!
This is what you said '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'. You are assuming that prices will rise significantly compared to the initial loan.
The word 'if' now seems to be doing a lot of heavy lifting in your latest comment. As I said, you were lucky. It doesn't follow that today's young people will also be lucky.

That's only very recent history, the bit that people can remember. It's due to the massive increase in credit (debt) due to deregulation plus women entering the workplace, which helped fuel the massive creidt bubble even further. Of course, they will keep trying to inflate it but there are limits. Plus there are demographic limits and, even more importantly, resource limits.

If there is a crash there will also be limited mortgages available. Their 10% may well not be enough - in 2008 you could only get mortgages with 30%, for a while. Of course things recover in time, but I'm not sure I'd risk waiting much longer if they can buy now. Their priority should be finding a good deal on somewhere they're happy to stay long term.

The same people get attracted to these threads over and over again and they repeat over and over again as they have been for at least the last two years that I’ve been watching their house price crash predictions

We bought in 2016 and there were endless threads about an imminent crash then. Prices have risen dramatically since!

It's always possible, but you can't live your life expecting it. Having a 10% deposit rather than 5% is sensible though.

I can't see how the long term trend is anything but upwards. The population of the country has risen faster then the rate of new building for years now.

The market is depressed right now as the government is making property rental a less desirable investment so landlords are selling up and increasing supply but eventually those properties will come off the market and we'll be back to business as usual.

The only thing that can change that is if the government gets serious about house building, but there is no indication that anything is going to change much on that front within this parliament.

Do you understand how it works with the initial capital that you borrow?

The capital amount remains the same, The interest is paid monthly. The value of the capital is inflated away
The on paper gains that we’re gonna call equity in this case makes no odd to my ability to pay back the original loan to the bank.
Very disappointing, thought you had more of a grasp on it.

As I said, further down people have been predicting this crash for 23 years that I can remember

And even if we had a 30% crash as you mentioned we are 50% up on 2016 so at some point people just need to ensure affordability and jump in
The banks bend over backwards to help people these days. It’s incredibly difficult to remove somebody from an even a rental property, never mind and owned one.

Nice way to evade the valid criticism @kittywittyandpretty
It's people who express views like yours who encourage others to make potentially devastating decisions wrt their borrowing.

By 'business as usual', do you mean an increased level of demand?
I'm not sure that will happen if we do slip into recession, which seems likely, with large numbers of job losses. That is likely to result in a tightening of lending, especially when we get the inevitable, major issues in the financial system.
House prices aren't chiefly related to population numbers/ house building but to credit and wages.

If we go into a recession with a large number of job losses then I agree prices won't keep going up.

I'm not sure why you'd expect that to happen though. Economic stagnation and perhaps a technical recession yes, but large scale job losses seems a bit doomerist to me.

I think most people who bought in last 20 years really didn't buy house proced the way that they can just put on credit cards when needed....