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

Probably sold within a family let’s hope the tax office don’t spot that and start digging

https://www.msn.com/en-xl/money/economy/update1-japan-10-year-gov-t-bond-yield-hits-2-020-highest-since-1999/ar-AA1SF4dS

This is the important one, not the BOE.

https://www.ft.com/content/e85575b1-c5ba-48e2-a40d-21b2119fe9be

The mortgage rates are very likely to continue to fall, perhaps slowly and then suddenly. As I've said on here lots of times, I think inflation, rates, etc will fall because we will enter a major recession. This reduction in IR will not have the effect on house prices that many people think it will, imo.

Definitely worth thinking about carefully and doing all the sums together. What comes across from your post is that you want to move and for all sorts of good reasons, which would likely improve your quality of life. Imo, that is more important than not releasing much money. On the contrary, it is probably worth spending money on!

I don't think we are going to release much money @rainingsnoring . The town we fancy is much more expensive than our current location because it is so well set up for older people. I think I shall miss my useful file of trusted trades most.

Can"t see mortgage rates falling very far or for long if this happens.

https://www.euronews.com/business/2025/12/19/bank-of-japan-hikes-interest-rates-is-a-global-bond-crisis-looming

Pretty sure that interest only are virtually unheard of these days and not an option for most people certainly not anything I would recommend but they’re not gonna be the catalyst for disaster that the doom sayers - like yourself are hoping for.

I see the base rate was cut again yesterday’s so hopefully nobody is listening to your pearls of wisdom or advice I saw from you two years ago, People have paid 10 grand off their mortgage in the period You suggested they should’ve waited.

No doubt they’ve paid rent in an addition.

Way to go 👏🏻

Yes, Japan is in big trouble and will end up impacting global markets but that would worsen a financial collapse as money is withdrawn from Western stockmarkets and over leveraged folk get wiped out.
Personally, I think rates go down first and then end up very high with all the money printing response but time will tell. It's not good news either way!

I never suggested that interest only mortgages would be the catalyst for disaster. Trying reading my posts rather than relying on your furtive imagination! I just dislike posters suggesting that taking on dangerous amounts if debt is just fine because 'house prices only ever go up' or 'look how much I made in the 90s', etc.
As I just said in response to @KeepPumping, I have said on here for some time that I expect rates to go down and I think this will continue further. More use of your furtive imagination rather than just reading what is written. Just to be clear, the rise in house prices that you and some of the other professionally offended posters on here expect as a result of rate falls is unlikely.
I'll take it as a compliment that you have been stalking me following me for 2 years.

Not sure they can do the same type of money printing response this time, that relied on the main central banks, U.S/UK/Japan/Europe co-ordinating and being on the same page to cut rates to near zero, they are most certainly not on the same page now politically, economically or ideologically! Japan seems to be going with a "Japan First" policy now, and as that type of economic circumstance hasn"t happened for 35 years or so, and as they basically have been "creditor to the world" in that time will we now see borrowing costs start to go back to more 80"s/90"s levels? I can"t help thinking that the BOE squeezed that rate cut in because they know it is the last one they will be able to make?

It is not "interest only" that is the problem (although no doubt many people with big house loans they can no longer afford will end up on interest only with extended debt repayment time) The basic problem is that the price of property no longer works with higher borrowing costs, anyone overpaying now will be in trouble when rates rise in the future, hence the massive drop off in demand that we are seeing?

When rates rise ? Can I borrow your crystal balls so I can see who’s gonna win the cup final?

I think they will certainly try it but I'm not sure it will 'save the system' in the same way it did last time. I also suspect that it will cause a lot of inflation, and then rate increases, which you seem to think will happen too at some point in the next few years. Those are the reasons I dislike it when some people on here encourage over leveraging in younger, unsuspecting folk.

@DrySherry you've been on these threads long enough that you know full way that @rainingsnoringhas expected property prices to crash for a very long time now. I barely look at this board now but when I do I see the same old scenario.

The market is stagnant in most areas and is unlikely to suddenly start rapidly rising or falling. The best reason for your relatives to take longer to buy was to save for a bigger deposit. If they can get a decent mortgage deal now and if they want to buy a property for a home not an investment. then there is little risk to them buying now as long as they can manage the repayments.

It's a risk whenever you buy that property prices may fall a bit in the short term and there's nothing you can do that I'm aware of that will mean no risk. However, most young people want to own their own home if they can for reasons beyond possible investment alone. It doesn't really matter if prices do fall a bit in their area if they won't want to sell for a few years.

They are enjoying low rent so perhaps have less of a drive to buy than people who are paying high rent would have. But still, I would say you have advised them well up to now (to save a bigger deposit) but at this point it is swings and roundabouts whether they should buy or not so has to be their decision.

No @Twiglets1. I've never said that I expect property prices to 'crash'. That's your word, not mine. You were also unable to find anywhere where I agreed with 'Charlie' or where I said that prices would fall 35% or any of the other things that you have accused me of saying in the past on lots of occasions. I've have consistently said that falls were likely, perhaps large ones, and they have happened, although admittedly slower than I expected and much less generalised that I expected. You, on the other hand, thought that rates would fall much more quickly because lots of experts said they would, that prices would start to rise in 2025 and that house prices always rise long term. So neither of us have been 100% correct in our predictions and neither have your 'experts' that you love to quote. Still let's see what happens in 2026 and beyond!

Not interested in engaging with you I was talking to the OP.

No. Demand is lower. People aren't moving, so prices come down. Land is still a premium and the cost of building a house is extortionate. Developers make tonnes of money due to volume, they build hundreds of houses. If you can't build a house for less than £200k, how can the price of a house ever drop below £200k?

TL;DR prices will keep going up. For now there is a temporary stall as people stop buying, and nobody wants to take on that kind of debt.

Quick update, my relatives have had a look at this thread and added the variety of opinions to their own analysis and opinions. Thanks for all the contributions.
They have decided thier way forward is to wait and continue to save as hard as possible - on balance believing the market will probably soften further.

They have a big "but if" though.

If residential interest only mortgages do show signs of being offered again in a widespread fashion. In a similar format to the way it was done previously ie without the requirement of a proper capital repayment plan - then they will use that as a marker to buy quickly. I don't mean they want to use an interest only product, they want to overpay on a fixed or variable rate deal. They do believe though, that if the government/fca is desperate enough to go back down that road, it is likley to turn around the current slump and values could quickly go from falling to increasing again. Seems sensible to me, and they plan to keep a close eye going forward on potential properties that would suit and of course the FCA's review around the rules of interest only.

Sounds sensible to me too @DrySherry

I’m glad they will keep an eye out for potentially very well suited properties. At the same time acknowledging there is unlikely to be any big hurry. Sounds like when they do eventually buy they will make a good purchase.

Good Luck to them and as you know, I enjoy an update so would be good to know what they do eventually decide to buy, even if it that time is some distance into the future.

Disingenous as usual @Twiglets1. If you wanted to engage with the OP, there was no need to deliberately tag me was there.
Perhaps this bad habit of yours is one to look at in the New Year. I live in hope!

I'm sure they know this but the goverment have already put pressure on the FCA to relax the lending rules and they have done so. They will probably continue to do this as they understand the repercussions of large falls. However, if we hit a recession, much bigger unemployment numbers, increasing defaults and bank failures, banks will become much less willing to lend which would reduce prices. Whatever they decide, they sound very sensible and well informed.

Happy Christmas to you too @rainingsnoring

If Japan keeps raising interest rates mortgage rates are going to rise, the UK banks can"t control that to any great extent, and it seems a lot of younger people are waking up to the fact that the debt system isn"t designed to benefit the person taking on the debt!

Thanks for update. I also have young relatives looking to buy on outskirts of London. They are finding that there is lots of interest on properties that are priced sensibly and have potential to extend and near good transport links, They are wanting a 3 bedroom semi, isn’t that what most people are interested in!! I don’t think that if they buy now at a sensible price that they will regret it.