How far will house prices fall [volume 4]

[mike74]

robinessex said:

mike74 said:

I just mentioned in another thread, had a message from an EA mate of mine earlier, their phones haven't stopped ringing all morning with buyers withdrawing or reducing their offers.

Interesting times.

Trying it on ? What sound financial reason backs this up then ?

Don't shoot the messenger!

Who needs sound financial reasons when you've got sentiment... and the property market more than any other is governed by just this.

[mike74]

walm said:

mike74 said:

I just mentioned in another thread, had a message from an EA mate of mine earlier, their phones haven't stopped ringing all morning with buyers withdrawing or reducing their offers.

Interesting times.

Whereabouts out of interest?

North West

[TheLordJohn]

mike74 said:

North West

Manchester NW or Carlisle NW?

[T1547]

Also in the difficult position of have had an offer accepted to purchase (we're FTB) and now deliberating whether to move forward. We made our offer in April just at the tail end of the SD changes rush and think we offered slightly high, although competition at the price was fierce. Vendor has not been able to find anywhere suitable for them to buy since we offered (or that's what they say - they may have been waiting to see what would happen with the referendum which has suited us too really tbh - even more so that we are rent free currently and putting away £2k every month).

Thinking of getting in touch with them and seeing if they would like to hold fire for a few weeks/months and then we can both see how the land lies. They're buying somewhere bigger so may be having the same concerns as us, although I/they may be worried about the 'agreed' sale price of their place being at April prices and we're now at post-Brexit June prices!

Sorry bit of a ramble, just reading this thread made me think out loud.

[TheLordJohn]

You do realise that an EU referendum has been on the horizon since the Conservatives entered into power...?
This hasn't just come out of nowhere... It can't have taken you by surprise?
If you like the house and think it's worth what you've offered, then go for it.
Or find an excuse not to go through with it, it's up to you.

[Al U]

TheLordJohn said:

You do realise that an EU referendum has been on the horizon since the Conservatives entered into power...?
This hasn't just come out of nowhere... It can't have taken you by surprise?
If you like the house and think it's worth what you've offered, then go for it.
Or find an excuse not to go through with it, it's up to you.

While that is true, I don't think that a lot of people thought we would actually leave the EU. To be honest I have no issue with us leaving the EU but the impact on the housing market is unwelcome at a time I'm buying a house. While that's a selfish thing to say (as I've already mentioned) as the vast majority will not be in the middle of buying a house at the moment, there will be even more people that have bought in the last 2 years that should now be biting their nails come remortgage time. But again they are in a minority compared to the majority of the older generation that are at practically no risk of going into negative equity and the majority of the younger generation that have not managed to get on the ladder yet.

Edited by Al U on Friday 24th June 16:49

[anonymous-user]

If the house you're buying was your perfect home last week, surely it still is this week?

[SilverSpur]

robinessex said:

Once you've bought your houes, if the value drops, the Mortgage company couldn't give a toss as long as you keep your payments up. That's what happend to me when I first purchased my house.

Actually in this day and age yes they do care. You have to have a certain level of value in your home to get the best mortgage rates/offers. You wont get the best rates unless you have at least 75% LTV.

You wont be forced back to the SVR, you just wont get the most choice rates. I re-mortgaged yesterday, and can confirm this is the current state of affairs with mortgage applications, even for straightforward mortgage applications to get back onto a favourable rate (with no further borrowing).


The bigger issue is if rates go up and house values go down. If you no longer meet the lending criteria you wont be able to re-mortgage at all, and you'll be forced to accept staying on the SVR rate at the end of any discount period. People could go from an affordable mortgage cost to an unaffordable one and yet be not able to do anything about it by moving to a cheaper offer because they no longer meet the lending criteria. you don't have to be in negative equity - just outside the current strict lending criteria.

[Al U]

garyhun said:

If the house you're buying was your perfect home last week, surely it still is this week?

It was and still is, albeit not in the perfect area by any means as I am priced out of the area that would be ideal for both my partner and myself.

The thing is as silverspur has quite rightly put above, can I comfortably afford the deposit and the monthly payments? Yes. Am I now worried about buying a house at for example £300k to find out in 2 years time when I need to remortgage that it is only worth £250k? Yes.

It's all ironic really because if none of the high profile figures were saying that prices would go down if brexit happens then when brexit happened there wouldn't be the uncertainty now. If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way.

[NRS]

garyhun said:

If the house you're buying was your perfect home last week, surely it still is this week?

That's a bit simplistic. Think about the amount of time people spend looking for the best price for clothes, a computer etc. That is all a complete waste of time if in the next year or two you lose 10% of the value of the house you bought. That would easily be £10 000+ of money gone, and is likely to mean people could work 1/2 year + for effectively no pay due to the house price dip. If I was buying now I'd just sit it out for a while and be patient.

[voyds9]

NRS said:

That's a bit simplistic. Think about the amount of time people spend looking for the best price for clothes, a computer etc. That is all a complete waste of time if in the next year or two you lose 10% of the value of the house you bought. That would easily be £10 000+ of money gone, and is likely to mean people could work 1/2 year + for effectively no pay due to the house price dip. If I was buying now I'd just sit it out for a while and be patient.

But that is just not true, you only lose (or gain) money on a house when you sell. The rest of the time it is a potential loss.

I live in a house that I bought for £125k
At the height of the boom it was valued at £300k
Now it is worth £225k

So have I made £100k or lost £75k (from its max)

[NRS]

voyds9 said:

But that is just not true, you only lose (or gain) money on a house when you sell. The rest of the time it is a potential loss.

I live in a house that I bought for £125k
At the height of the boom it was valued at £300k
Now it is worth £225k

So have I made £100k or lost £75k (from its max)

Yes, but if making a big loss it will be much more likely to hold you down to one place, and so you have less flexibility. Maybe there is a great new job you want, but because of negative or very small equity you may not be able to afford to move. The other thing is we are at very low interest rates, and one of the scenarios now is increasing inflation, which will push interest rates up. If you cannot afford this you may have to sell, and thus you have to realise the loss on the house.

Plus just by waiting a bit longer you are (very?!) likely to make a lot of money by just being patient. Why bother with bank interest or stock markets when you can make a big saving by just not buying until prices have dropped? Of course this depends on prices dropping, but I think the situation in the UK along with public panic sentiment means this is about as certain a time as you can be in for guessing/predicting these things. We'll see over the next months.

[cashmax]

Al U said:

garyhun said:

If the house you're buying was your perfect home last week, surely it still is this week?

It was and still is, albeit not in the perfect area by any means as I am priced out of the area that would be ideal for both my partner and myself.

The thing is as silverspur has quite rightly put above, can I comfortably afford the deposit and the monthly payments? Yes. Am I now worried about buying a house at for example £300k to find out in 2 years time when I need to remortgage that it is only worth £250k? Yes.

It's all ironic really because if none of the high profile figures were saying that prices would go down if brexit happens then when brexit happened there wouldn't be the uncertainty now. If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way.

I understand you're a FTB and it's ok to be nervous when making such a big commitment. Most people are the same when doing so, but there is never a perfect time and the value of your house will go up and down while you are living there. Even in your example above, it could quite easily go the other way and price you out, intrest rates might move, the lend criteria might change or any manner of other things *could* happen. If you buy now and the value reduces by 50K, you still need to live somewhere, so what difference does it make.

If you knew for sure that values were going to dip, but not by how much or for how long, what would you do then?

[V6Alfisti]

voyds9 said:

But that is just not true, you only lose (or gain) money on a house when you sell. The rest of the time it is a potential loss.

I live in a house that I bought for £125k
At the height of the boom it was valued at £300k
Now it is worth £225k

So have I made £100k or lost £75k (from its max)

The situation is a little different now. Using London numbers and the supposed 18% drop. (Obviously no-one really knows how far property will drop, and it wont be consistent against all areas e.t.c)

Buy now £500k (and £15k stamp duty) = £515k
Sell in 2 years £410k
Sell in 5-10 years when interest rates are higher = No idea, but I wouldn't say positive.

Edited by V6Alfisti on Saturday 25th June 00:15

[V6Alfisti]

Al U said:

It's all ironic really because if none of the high profile figures were saying that prices would go down if brexit happens then when brexit happened there wouldn't be the uncertainty now. If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way.

No offence but really? You wouldn't have an inkling that property would be affected?

[Burwood]

V6Alfisti said:

voyds9 said:

But that is just not true, you only lose (or gain) money on a house when you sell. The rest of the time it is a potential loss.

I live in a house that I bought for £125k
At the height of the boom it was valued at £300k
Now it is worth £225k

So have I made £100k or lost £75k (from its max)

The situation is a little different now. Using London numbers and the supposed 18% drop. (Obviously no-one really knows how far property will drop, and it wont be consistent against all areas e.t.c)



Buy now £500k (and £15k stamp duty) = £515k
Sell in 2 years £410k
Sell in 5-10 years when interest rates are higher = No idea, but I wouldn't say positive.

Edited by V6Alfisti on Saturday 25th June 00:15

God man, I've never read such crap. Yep, gather round folks, this guy just told us . 10 years negative. Loll lol.

18% was mentioned by one journalist. Did the house gods tell him that figure?

Here is some sound advice, don't buy a house if there is any chance you may need to sell in 2 years. The odd bargain may come up but if anyone thinks there will be landlords leaping out of their semi then you're deluded. Out here in surrey there is low stock and firm pricing.

[Pork]

Wasn't it Osbourne/the treasury that mentioned the 18% as a part of his Remain scare campaign?

[red_slr]

NRS said:

garyhun said:

If the house you're buying was your perfect home last week, surely it still is this week?

That's a bit simplistic. Think about the amount of time people spend looking for the best price for clothes, a computer etc. That is all a complete waste of time if in the next year or two you lose 10% of the value of the house you bought. That would easily be £10 000+ of money gone, and is likely to mean people could work 1/2 year + for effectively no pay due to the house price dip. If I was buying now I'd just sit it out for a while and be patient.

If its your primary home then it really does not matter. When you come to sell if you made a profit then generally speaking the next house you buy will be more expensive also. If you made a loss the next house will generally be cheaper.

If you are buying property to invest then I suspect you will be playing a different game all together.

[V6Alfisti]

Burwood said:

V6Alfisti said:

voyds9 said:

But that is just not true, you only lose (or gain) money on a house when you sell. The rest of the time it is a potential loss.

I live in a house that I bought for £125k
At the height of the boom it was valued at £300k
Now it is worth £225k

So have I made £100k or lost £75k (from its max)

The situation is a little different now. Using London numbers and the supposed 18% drop. (Obviously no-one really knows how far property will drop, and it wont be consistent against all areas e.t.c)



Buy now £500k (and £15k stamp duty) = £515k
Sell in 2 years £410k
Sell in 5-10 years when interest rates are higher = No idea, but I wouldn't say positive.

Edited by V6Alfisti on Saturday 25th June 00:15

God man, I've never read such crap. Yep, gather round folks, this guy just told us . 10 years negative. Loll lol.

18% was mentioned by one journalist. Did the house gods tell him that figure?

Here is some sound advice, don't buy a house if there is any chance you may need to sell in 2 years. The odd bargain may come up but if anyone thinks there will be landlords leaping out of their semi then you're deluded. Out here in surrey there is low stock and firm pricing.

Can you read?

Who said 10 years of drops? I said it is not likely to be a positive situation as people will start to get hit by interest rate increases.

The 18% was the gov figure, but like I said make of that what you will.

The 2 year figure is important for the point of neg equity and remortgaging.

Landlords have already been selling up in London, or certainly the north west. A number in Bristol too, due to the stamp duty and upcoming tax changes, now there is the increased risk of asset value drops. Each area is affected differently.

So in Surrey no-one pulled out of chains or required discounts? In London there are low stocks but pricing is everywhere. Maybe Surrey is different and can ride out any storm with firm prices, not entirely convinced but if it's what you have seen...

Edited by V6Alfisti on Saturday 25th June 08:39

[Al U]

V6Alfisti said:

Al U said:

It's all ironic really because if none of the high profile figures were saying that prices would go down if brexit happens then when brexit happened there wouldn't be the uncertainty now. If all the newspapers were saying brexit will have and has had no effect on the market all of the buyers in this thread me included would be continuing on our merry way.

No offence but really? You wouldn't have an inkling that property would be affected?

Can you read?