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

Yes I agree with you regarding long term prospects. It seems that a lot of residential landlords are planning to sell in 2026, I think if that happens and the market has more sellers competing to try and snag a buyer - some good bargains for first time buyers could be had toward the end of the year. Though this dip will likley not last more than a couple of years imo. Any government that's in power just can't afford to let that happen. Someone else on the thread mentioned though there is always the lurking possibility of a Black Swan event. For example I have been reading about the Japanese Yen carry trade. I didn't know it was a thing to be honest but now understand that Japan raising its interest rates (as they have been signalling they may continue) would have a significant global impact on the costs of borrowing for everyone.

Well that's definitely true. The exact opposite, in fact!

I think it depends on where you are.

House prices are still rising here. We were discussing it only the other day. It never ceases to amaze me how they keep rising.

What part of the country are you in @MrsZiggywinkle ? if you don't mind saying.

There are quite a few potential 'black swans'. The Yen Carry Trade already reared its head in Summer 24 but then the Japanese lowered their rates if I remember correctly. At some point, it may blow things up.
The shadow banking system is a potential source of major problems too. No one knows what is going on there but we do know that levergage is used to a huge extent. There is far too much debt in the system, unaffordable levels.
As you say though, governments and central bankers will do everything they can to try to prop up the system and continue to can kick.

Home Counties

I think it depends where you are.
I’m Home Counties too and houses/flats etc here are sticking and on the way down.
On Rightmove since Boxing Day the number of new and reduced listings were over 50 where previously the total was 250 for the town so it seems a lot have held off till after Christmas.Whether those are the ones that wouldn’t sell at previous listed price and removed from market I don’t know.

Ah okay

I think if I had a decent deposit and a decent mortgage offer I would go for it. Like others have said, you’re buying a home as a long term investment.

I always overpaid the mortgage and that was a really good strategy along with buying the most suitable property for the long haul. I thought we would move up again from our relatively small house but it hasn’t happened and that’s okay. I feel very lucky we are here. I know it’s so difficult for so many people.

I wouldn't count on landlord's selling up lowering prices considering the corp landlords buying in numbers from what I read. We would already see reductions because small landlords have already been selling up.

Otta property (raw Land Registry data, which is always behind) suggests that prices in the Home Counties have been falling overall, especially the detached/more expensive ones. The bits of the Home Counties that I know has definitely fallen for detached properties.
The odd pocket further North, mainly NE and South Wales seems to be doing a bit better:
ottaproperty.co.uk/trends

Big Corp will be watching the political winds, they are not blowing in favour of massive demand at the moment.

Yeah good plan to always overpay mortgage.I agree with what you are saying about buying for the long haul too.

Over time houses have always risen in value. There are occasional blips but they tend to be short lived. Waiting until they saved 10 percent was sensible advice. Interest rates have just come down I'd go for it now as I'd fix for at least a couple of years in their position.

"Over time houses have always risen in value"

Yes, due to inflation/wage inflation over time, same way a tin of beans has risen in value, the anomaly is the cheap debt fuelled bubble that took off in the early 2000"s and got bailed out in 2008, for many reasons already discussed this can no longer be bailed out, and interest rates went up, this is the reason people who bought a few years ago trying to add 100k because they painted the bathroom are just being laughed at by buyers now.

I think that was rather the point though, Wages haven’t increased at the same rate as House price inflation the funds have come from elsewhere not earned income.

The point I got was houses always go up, buy now?

A lot depends on Japan. These are big moves.

https://www.msn.com/en-us/money/economy/japan-presses-on-with-rate-hikes-as-bond-yields-climb/ar-AA1TC56c

It is continuing to climb isn't it? I bet their central bankers are worried! They've managed to maintain their ridiculously low base rate for forever.
If it keeps climbing, it could definitely have a negative effect elsewhere, especially in the US.

There is a theory that the proper price of money over time is around four to five percent and that is the mean to which we will tend to generally regress if things are to be balanced.

It has been the historical mean, as far as I know and logically seems a reasonable rate in general for most circumstances. The ZIRP that many countries have had since at least the GFC (longer in Japan) is because of massive central bank intervention because of deteriorating economic conditions. As you say, at some point, they will probably lose control. When that will be is impossible to say exactly but it's getting ever nearer.

Surely it’s more whether their low rent starts to rise and outstrip any potential falling prices?

I know so many people stuck renting when they could have bought. It is tricky as who knows if they will stay together, move jobs etc but I’m not sure I’d rent beyond say 28 if I was in a position to buy

And when their bond yields rise the UK follows.

The more we become split geopolitically the bigger the risk of losing control of rates I think. The ZIRP years were achieved by having all the main central banks on the same page to bail out the debt system?

That's a very valid point.