The impending UK house price crash!

shortbread

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While real/official data in the UK has a massive lag and takes time to trickle down into definitive reporting..... all signs point in one direction ie. DOWN!

There are two arguments that it can fall of a cliff ie. crash (which I think is likely) or a correction, following the post pandemic jump.

While the sector is important to any nation, the implications are especially massive for the UK. No other developed economy is so heavily reliant on the property sector.

This is ongoing and I think in the coming months the fall will be more conclusive.

House prices fall at fastest pace in nearly 14 years

UK house prices fell at their fastest annual pace for nearly 14 years in May, the Nationwide has said. The building society said prices in the year to May dropped by 3.4%, the biggest decline since July 2009.

It also warned that more rises in mortgage interest rates could hit the housing market.

Mortgage rates have risen recently on expectations that the Bank of England will have to lift interest rates again because of stubbornly high inflation.

As a result, the Nationwide said "headwinds to the housing market look set to strengthen in the near term".

House prices edged down by 0.1% in May itself, the Nationwide said, and the average property price now stands at £260,736.

Average prices are still 4% below their August 2022 peak, it added.

A drop in house prices would generally be welcomed by first-time buyers, who have watched property values continue to climb in recent years, even during the pandemic.

However, rising interest rates means that mortgage costs are now higher than many people looking to get on the housing ladder might have planned for.

New figures from the Bank of England showed the amount of mortgage debt borrowed was at its lowest level on record in April, excluding the period since the beginning of the Covid pandemic. Overall, borrowers repaid £1.4bn more on their mortgages than banks lent out.

The Bank also said net mortgage approvals for house purchases fell to 48,700 from 51,500 in March.

_129951253_optimised-housepricemay2023-nc.png.webp


Official figures last week showed the UK inflation rate - which charts rising prices - slowed in April by less than expected to 8.7%.

That led analysts to predict that the Bank of England will have to raise interest rates above their current level of 4.5% to as high as 5.5% to try to slow price rises.

In the wake of the inflation data, a range of lenders increased their mortgage interest rates, with Nationwide making the most significant move with a rise of up to 0.45 percentage points.

According to financial data firm Moneyfacts, the current average interest rate on a two-year fixed-rate mortgage is now 5.49% compared to a year ago when it was 3.25%.

A five-year fixed-rate deal is currently 5.17%, above a 3.37% rate this time last year.

https://www.bbc.co.uk/news/business-65774620
 
While real/official data in the UK has a massive lag and takes time to trickle down into definitive reporting..... all signs point in one direction ie. DOWN!

There are two arguments that it can fall of a cliff ie. crash (which I think is likely) or a correction, following the post pandemic jump.

While the sector is important to any nation, the implications are especially massive for the UK. No other developed economy is so heavily reliant on the property sector.

This is ongoing and I think in the coming months the fall will be more conclusive.



https://www.bbc.co.uk/news/business-65774620

Given the state of inflation and BOE rises rumoured to peak at 5.5%, seems like the market is also reacting to this, interest rates priced this in recently.

Historically speaking, the current interest rates are not meant to be alien, but the country has not been able to adjust to this, as we’ve been use to low credit for a long time.

How long will banks keep the rates around the 4.5% mark? will an imminent correction impact the interest rates at all?

I agree the market had been pumped, I’m seeing more houses for sale around me lately….
 
Given the state of inflation and BOE rises rumoured to peak at 5.5%, seems like the market is also reacting to this, interest rates priced this in recently.

Historically speaking, the current interest rates are not meant to be alien, but the country has not been able to adjust to this, as we’ve been use to low credit for a long time.

How long will banks keep the rates around the 4.5% mark? will an imminent correction impact the interest rates at all?

I agree the market had been pumped, I’m seeing more houses for sale around me lately….

Consecutive Westminster governments have got the country addicted to QE, the young generation have never seen 'realistic' interest rates. People keep asking when will interest rates go back to 'normal', not realising that this is what normal interest rates look like.
 
Dear OP - you recon this is a good time to buy house in UK or wait?
 
Dear OP - you recon this is a good time to buy house in UK or wait?

Depends on one's situation and the exigency of owning a property.

If you are able to postpone the purchase without impacting your personal circumstances, then it's best to wait and watch at least till the calendar year end. You do not want to catch a falling knife. This is especially true if you are looking to trade up or upgrade.

If you are looking to trade down, ie. moving to a smaller property and sell your current house, it will make sense to expedite this process. You want to get maximum value for your current property before it falls any further.

If one has to buy, then make sure you do not overpay and take into account a likely house price fall when putting forward an offer. This is imperative in order to avoid negative equity.
 
Depends on one's situation and the exigency of owning a property.

If you are able to postpone the purchase without impacting your personal circumstances, then it's best to wait and watch at least till the calendar year end. You do not want to catch a falling knife. This is especially true if you are looking to trade up or upgrade.

If you are looking to trade down, ie. moving to a smaller property and sell your current house, it will make sense to expedite this process. You want to get maximum value for your current property before it falls any further.

If one has to buy, then make sure you do not overpay and take into account a likely house price fall when putting forward an offer. This is imperative in order to avoid negative equity.

Thanks. I am looking to buy but Mortgage prices are just astronomical.
 
Thanks. I am looking to buy but Mortgage prices are just astronomical.

For cash buyers, I think there are still some good buys out there. On my street there’s a house which is like 10k cheaper than what I paid.

But if you’re getting a mortgage, it’s probably best to see what happens by end of 2023
 
Consecutive Westminster governments have got the country addicted to QE, the young generation have never seen 'realistic' interest rates. People keep asking when will interest rates go back to 'normal', not realising that this is what normal interest rates look like.

We will never go back to sub 2% for some time.

When do you reckon we will hit 3.5%, 3% seems like a fantasy now.

I plan to go on a tracker when I remortgage which allows me to change my product if needed.
 
Thanks. I am looking to buy but Mortgage prices are just astronomical.

Perhaps cooling prices will help reduce your borrowing. Regarding the interest rates, it's not a permanent phenomenon, ie. even if you purchased at lower rates, you can only secure yourself inside a 5 year window in what is likely a 40-50 year mortgage period. Removing any emotion involved in the process, Ideally you want your asset price to grow for it to make financial sense.
 
UK house prices experience annual fall for first time in decade, data shows

Price of average home in May was 1.1% lower than in same month last year, according to Halifax figures

UK house prices have experienced their first annual fall in more than a decade, according to Halifax, in a sign that the impact of soaring interest rates on household budgets has brought a halt to the country’s long housing boom.

The price of the average home last month was 1.1% lower in May than in the same month last year, marking the first time that prices have fallen year-on-year on the lender’s monthly report since December 2012.

The slump in the market has been precipitous over the past year – last summer Halifax had the annual rate of growth was running at more than 12% – as rampant inflation, which remains at 8.7%, and 12 increases in a row in the UK base interest rate wreak havoc on the mortgage market.

The monthly change in the average price of a UK home remained almost flat in May at £286,532, the lender said – in April they fell 0.4% compared with March – with prices down about £7,500 on average compared with last summer’s peak.

“Further downward pressure on house prices is still expected,” said Kim Kinnaird, the director at Halifax Mortgages. “With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take the base rate above 5% for the first time since the start of 2008. Those expectations have led to fixed mortgage rates to start rising again across the market.”

More than 100,000 households are due to come to the end of their fixed-rate deals this month, according to the Financial Conduct Authority. Homeowners are facing the stark choice of choosing deals with hefty rates or face soaring costs by being moved on to their existing lender’s standard variable rate.

A record 19% of all loans taken out by first-time buyers in March were for terms of 35 years or longer, with more than half taking a loan of more than 30 years, as house-hunters seek to make the soaring cost of loans more affordable. This is the highest proportion since records began in 2005.

Halifax’s figures come after a separate index from Nationwide Building Society reported in March that UK house prices had dropped at their fastest annual rate since the aftermath of the financial crisis in 2009, sliding 3.1% to £257,122 over a year.

May Halifax 07.06.jpg

https://www.theguardian.com/money/2023/jun/07/uk-house-prices-halifax-data-may
 
House buyers currently face ‘perfect storm’ despite prices being set to fall up to 30%, say property experts
Property prices could fall by 30 per cent from their highest point, though buyers are currently facing a “perfect storm” of challenges due to high mortgage rates and relatively high prices, experts have told i.

House prices have started to dip according to Halifax and Nationwide, but housing experts have said further falls are to come.

A new report out today suggests a typical home in the UK costs 6.7 times the average annual earnings of a full-time worker, compared to 7.3 times a year ago. However, Charlie Lamdin, founder of Best Agent, has said that buyers at the moment are facing a “perfect storm”, because mortgage rates have risen – meaning monthly costs are expensive – but prices have not dropped dramatically and remain in his view “unrealistically high”.

He has said 2024 will be a “very much more of a buyers market” and has predicted falls of around 30 per cent, with regional variation of between 15 and 50 per cent.

Charlie Lamdin, founder of BestAgent: “The market will drop 30 per cent or so peak to trough, hitting a low at the end of 2025. It’s critical to say that there will be large regional variations, and that’s a national average expectation. Some places only -15 per cent, some -50 per cent.

“Unfortunately, there’s currently a perfect storm of challenges facing home buyers. Firstly, high mortgage rates are making affordability worse, and this is unlikely to fall significantly any time soon. Secondly, unrealistically high house prices, and thirdly, unusual competition for cheaper properties from savvy downsizing cash buyers. And finally, the likely shrinking of credit availability as the economic outlook continues to worsen.

“The overall wage picture is looking gloomy as job losses look set to rise and consumer demand falls. There will be no universal sweet-spot for the market as a whole, but there will be at an individual level. The only light at the end of the affordability tunnel is that more and more homes are coming to the market, bringing prices down. The market will feel very much more of a buyers market come early 2024, even if mortgage rates haven’t fallen much.”

I think Charlie's youtube channel 'Moving home with Charlie' is brilliant for anyone in the residential property business or looking to buy or sell. Warning: It's very very pragmatic and never sugar coated. But what makes him stand out is that his information is always backed by data and thorough research.
 
Prices dropping by a whopping 30%, really? But with that inflation and those skyrocketing mortgage rates o_O. For anyone thinking of getting their foot on the ladder or chucking some quid into property, this is both a 'jackpot' and a 'think twice' moment.
Eyes peeled on this one.
 
I am beneficiary of the house price boom but its bad for the common man. Too much income goes to mortgage repayments and that leaves little to live life.
 
House buyers currently face ‘perfect storm’ despite prices being set to fall up to 30%, say property experts




I think Charlie's youtube channel 'Moving home with Charlie' is brilliant for anyone in the residential property business or looking to buy or sell. Warning: It's very very pragmatic and never sugar coated. But what makes him stand out is that his information is always backed by data and thorough research.
Not going to happen unless there is another war, pandemic or some unknown black Swan event. The UK economy would crash if that happened
 
Not going to happen unless there is another war, pandemic or some unknown black Swan event. The UK economy would crash if that happened

It is happening now. The media do not report on the reality of the UK economy for the sime reason the facts would lead to run on banks and sheer panic.

  1. GBP is heading south.
  2. Circa 5% interest rates are here to stay.
  3. Government debt liabilities are on the rise
  4. Consumer debt (excluding mortgages) is on the rise.
  5. Business are going bust.
  6. FTSE 100 is the worst performing stock market in G7

All of the above (and more) can be verified via Bloomberg, ONS, etc - but the most important thing of all, TAXES! Taxes are just going up, and every square inch of our existence in the UK is taxed meaning less disposable income to spend or service debts.

It is a slow motion crash. A war or black swan event will only speed up the process.
 
Not to mention, fixed rate mortgage deals during ZIRP will be ending in a 5% interest rate era - which will cause havoc and unaffordability on renewals.
 
It is happening now. The media do not report on the reality of the UK economy for the sime reason the facts would lead to run on banks and sheer panic.

  1. GBP is heading south.
  2. Circa 5% interest rates are here to stay.
  3. Government debt liabilities are on the rise
  4. Consumer debt (excluding mortgages) is on the rise.
  5. Business are going bust.
  6. FTSE 100 is the worst performing stock market in G7

All of the above (and more) can be verified via Bloomberg, ONS, etc - but the most important thing of all, TAXES! Taxes are just going up, and every square inch of our existence in the UK is taxed meaning less disposable income to spend or service debts.

It is a slow motion crash. A war or black swan event will only speed up the process.
No doubt the facts are facts but house prices will barely move. The UK has lived beyond its means for many years. The benefits system is perverse and incentivises worklessness. The politicians are scared to make unpopular decisions but will not have a choice.
 
I am beneficiary of the house price boom but its bad for the common man. Too much income goes to mortgage repayments and that leaves little to live life.
Absolutely! you've hit the nail on the head. While a few benefit from these housing booms, not saying that they are evil or something just in better position. Home doesn't mean sacrificing other important things in life, peeps are really feeling the squeeze of these repayments.
 
No doubt the facts are facts but house prices will barely move. The UK has lived beyond its means for many years. The benefits system is perverse and incentivises worklessness. The politicians are scared to make unpopular decisions but will not have a choice.

House prices have moved, but the media is not reporting the facts, because drop in prices also leads in rise negativity which will burden the banks.

Real life example - my neighbour has put up her house for sale 6 months ago. She has not found a buyer because every offer is at least 20% below the asking price.

It is not the politicians that are scared, it is the banks in my view, which is why the bank are hell bent on lobbying Parliament.

UK was finished post WW2. Since then we have been propped up by debt and corruption. UK's time is now up.

If you have not seen this doc, please do:

 
House prices have moved, but the media is not reporting the facts, because drop in prices also leads in rise negativity which will burden the banks.

Real life example - my neighbour has put up her house for sale 6 months ago. She has not found a buyer because every offer is at least 20% below the asking price.

It is not the politicians that are scared, it is the banks in my view, which is why the bank are hell bent on lobbying Parliament.

UK was finished post WW2. Since then we have been propped up by debt and corruption. UK's time is now up.

If you have not seen this doc, please do:

It depends on where you are. Houses are still quickly where I live.
 
Not going to happen unless there is another war, pandemic or some unknown black Swan event. The UK economy would crash if that happened
I have actually seen a 30% correction where I live during the post 2014 oil price crash, I live in the NE of Scotland where the North sea oil and gas hub is based.

It doesn't happen overnight, house price changes are like a large oil tanker turning around, very slowly. We see a 30% fall/crash/correction, whatever you want to call it, like a sudden phenomenon. No, this happens over years, a few years of 5-6% falls and we're there. It's very difficult for people to accept their house prices have fallen.

The impact especially on the UK banking sector and the economy will be massive. No other major economy is so reliant on the property sector, apart from perhaps China. The latter is for the housebuilding sector to keep constructing to keep the economy bouyant. The UK on the other hand needs inflated asset prices to prop up the economy.
 
It depends on where you are. Houses are still quickly where I live.
It also depends on affordability! People just cannot borrow sums as they used to during the ZIRP era.

More and more buyers are failing the affordability tests since rates went up!

All of this has a knock on effect.
 
It also depends on affordability! People just cannot borrow sums as they used to during the ZIRP era.

More and more buyers are failing the affordability tests since rates went up!

All of this has a knock on effect.
True but with high rates of migration will keep demand high.
 
I have actually seen a 30% correction where I live during the post 2014 oil price crash, I live in the NE of Scotland where the North sea oil and gas hub is based.

It doesn't happen overnight, house price changes are like a large oil tanker turning around, very slowly. We see a 30% fall/crash/correction, whatever you want to call it, like a sudden phenomenon. No, this happens over years, a few years of 5-6% falls and we're there. It's very difficult for people to accept their house prices have fallen.

The impact especially on the UK banking sector and the economy will be massive. No other major economy is so reliant on the property sector, apart from perhaps China. The latter is for the housebuilding sector to keep constructing to keep the economy bouyant. The UK on the other hand needs inflated asset prices to prop up the economy.
On the other hand prices have risen massively over the last few years. Rents have also nearly doubled in the last 10 years.
 
Agreed but people won't sell unless they are desperate.
Hundreds of thousands of people will be facing with re-mortgaging at much higher rates and many will decide that they cannot afford their property. Decades of artificially low interest rates or QE have got people addicted to cheap loans/credit, so much so most people still think these high rates are a temporary phenomenon and this will come down back to zero rates sometime next year. When reality hits whenever, 1-2-3 years, people will be forced to sell simply because they cannot afford to service their debt anymore.
 
On the other hand prices have risen massively over the last few years. Rents have also nearly doubled in the last 10 years.
House prices have shot up since the 2008 financial crisis because of QE - Quantitative easing, ie. artificially low interest rates and money printing. Has the UK seen the sort of economic prosperity or wage growth to see this sort of house price rise over the last 15 years, no. But mortgages have been very very cheap, creating demand which in turn pushes up house prices.

HTB schemes, low down payments, 10k covid grants, tens and hundreds of thousands covid loan schemes...... a huge chunk of all this money printing got parked in properties, this UK house price boom was living on borrowed time. Now this bubble is deflating, pray it doesn't pop!
 
House prices have shot up since the 2008 financial crisis because of QE - Quantitative easing, ie. artificially low interest rates and money printing. Has the UK seen the sort of economic prosperity or wage growth to see this sort of house price rise over the last 15 years, no. But mortgages have been very very cheap, creating demand which in turn pushes up house prices.

HTB schemes, low down payments, 10k covid grants, tens and hundreds of thousands covid loan schemes...... a huge chunk of all this money printing got parked in properties, this UK house price boom was living on borrowed time. Now this bubble is deflating, pray it doesn't pop!
Can't disagree about the reasons for inflation but they are far more resilient than you say.
 
Can't disagree about the reasons for inflation but they are far more resilient than you say.
You are right, house prices move at a glacial pace especially the decline. A major reason is reporting in the UK is very very slow, it takes 12-18 months for the reports to show the change. It will interesting revisiting this thread come 2024.
 
True but with high rates of migration will keep demand high.

Migrants will not get a mortgage, they will rent small rooms in properties owned by rich landlords or large firms. Such entities do not need to borrow to buy or if they do , they will receive huge loans from banks because of their assets.

The crash will happen as most people will simply not afford and not given mortgages.

This has been the plan of governments and WEF for years now. Remember their slogan 'You will own nothing and be happy'.

Those who are still paying should pay off their mortgage asap. Property is only a great asset now if you owe nothing on it.
 
Migrants will not get a mortgage, they will rent small rooms in properties owned by rich landlords or large firms. Such entities do not need to borrow to buy or if they do , they will receive huge loans from banks because of their assets.

The crash will happen as most people will simply not afford and not given mortgages.

This has been the plan of governments and WEF for years now. Remember their slogan 'You will own nothing and be happy'.

Those who are still paying should pay off their mortgage asap. Property is only a great asset now if you owe nothing on it.
Migrants create demand for housing, people buy up houses to rent to them, this keeps prices high. In 2002, the same issue and then .5m Polish people arrived and the housing market became buoyant and prices doubled.
 
You are right, house prices move at a glacial pace especially the decline. A major reason is reporting in the UK is very very slow, it takes 12-18 months for the reports to show the change. It will interesting revisiting this thread come 2024.
Unless planning laws are relaxed, the increase in population, which in the UK has been the biggest in recent history will keep demand high and supply short.
 
Migrants create demand for housing, people buy up houses to rent to them, this keeps prices high. In 2002, the same issue and then .5m Polish people arrived and the housing market became buoyant and prices doubled.

Different now. Those came with family, rented homes from ordinary homeowners and landords. Buy to Rent was huge.

In the future they will be living in accommodation owned by groups or the rich and this wont be nice 3 bed houses but flats and special buildings in poor areas.

The crash will enable them to buy up the properties which have been repossessed.
 
Different now. Those came with family, rented homes from ordinary homeowners and landords. Buy to Rent was huge.

In the future they will be living in accommodation owned by groups or the rich and this wont be nice 3 bed houses but flats and special buildings in poor areas.

The crash will enable them to buy up the properties which have been repossessed.
Maybe but I don't see any great correction.
 
way too much doom and gloom, rents have sky rocketed, real wage growth is outpacing inflation, when eventually inflation subsidies, which it will, house prices will leg up, its a simple hunt for yield. prohibitively expensive mortgages means this is a cash buyers market, i see some cash deals which are giving 10% to 15% discounts for bulk purchases simply because developers cant roll over their financing, those kinda deals will make people a lot of money in 3 to 5 years.
 
Wasn't Brexit supposed to the panacea fro all of Britain's problems? how is that working out?
 
It’s a tough market for Millennials and Gen Z’s to purchase properties; solely relying on their savings source of incomes.

It’s a very messy and unfortunate situation for us. I don’t see myself losing the financial independence or flexibility by committing myself to a mortgage. I only see it as an asset if mortgage is paid off and I don’t see that realistically happening lol.

I know a mate of mine recently purchased a property with his mrs, they have a 6 year old. The issue they are finding is that there are no young couples or young couples with children in their local area - slowly you will see communities facing issues like this where it will impact the children socially.

The strategy for many in my circle is clear, if your field gives you the blessings then move out of the country.
 
Well if prices come down and our young docs and nurses can afford to get on the property ladder then I am all for it.
 
..real wage growth is outpacing inflation, when eventually inflation subsidies, which it will, house prices will leg up, ..
What your saying is counterintuitive isn't it? Wages growing with inflation means more money supply, leading to higher inflation! The first directive BoE announced once they understood this 'transitory inflation' isn't happening is that employers should resist from wage growth to control inflation, and here we are today. This will only mean one thing, we will see more rate rises in coming months making borrowing even more expensive. Even more expensive mortgages will only mean one thing for house prices.
 
Well if prices come down and our young docs and nurses can afford to get on the property ladder then I am all for it.
Ultimately this is what will happen, we will be dealing with more realistic borrowing rates, ie mortgages at 5-6%, but properties will be much cheaper as there will be a massive correction. Previously the government would have intervened with some sort of massive housing stimulus to boost prices eg. HTB, but now they're broke and neck deep in debt.
 
What your saying is counterintuitive isn't it? Wages growing with inflation means more money supply, leading to higher inflation! The first directive BoE announced once they understood this 'transitory inflation' isn't happening is that employers should resist from wage growth to control inflation, and here we are today. This will only mean one thing, we will see more rate rises in coming months making borrowing even more expensive. Even more expensive mortgages will only mean one thing for house prices.
not necessarily, the uk didint drive inflation, it was a global trend because of a perfect storm of conditions, i.e covid money printing, the suez canal shut down, Chinese supply shortages, the ukraine war driving up energy costs, etc, primarily exogenous drivers.

wage growth on top of those factors would exacerbate inflation, but given how everything from our energy, to consumables, and luxuries are primarily imported, the UK wage bill does not have enough of an effect on its own to be a solo driver for broad global inflation.

central banks also stated that their profligate easing during a period of virtually zero productivity would not have a long term effect on inflation, for the most part they have no idea, no one can predict the intricacies of the economy, they simply project like they know whats gonna happen.

as long as wage growth outpaces inflation, the growth in rents is sustainable, the expectation for interest rate increases will not stay high forever even if inflation is stickier in the short term, and when that turns the higher rents will be the first port of call for safe return for institutional investors which will drive up property prices.

unfortunately only cash buyers can really leverage the current situation, which makes it even harder for joe average in the long run.
 
Well if prices come down and our young docs and nurses can afford to get on the property ladder then I am all for it.
It's not just the doctors and nurses who can't get on the ladder - no one can. My friend working in construction earns around £45k all told in a year and buying a very average 2 bed flat is just a dream at the moment. He is not extravagant with his money, he tells me for the last 7 years since he got married he's been saving on average 8k a year for a deposit. So putting aside mortgage, survey and conveyance fees etc he'll have around 50k for a deposit. Here in the midlands the price of a 2 bed house ranges from 150k up to and over 250k depending on various factors. Let's assume he gets an offer accepted for a house at 200k.

Rough maths means at the current interest rates for a 2 year fixed :Monthly mortgage payment of £950.

£950
for a 25 yr mortgage for a 2 bed house! That too for someone with a healthy deposit. In what world does this make sense? I was lucky I bought my house when I did - I was also proudly very stingy and overpaid almost every year. Insha'Allah I will be able to pay off my mortgage in 9 years rather than the 25 years. Then I'll be able to relax. However I feel for so many especially the people who don't even have a deposit to put down.

We don't just need a house price crash - we need a total collapase. If the average salary in the UK right now excluding London is 27k, then the average 3 Bed Semi detached house should cost around £115-£120k not £240k.
 
It's not just the doctors and nurses who can't get on the ladder - no one can. My friend working in construction earns around £45k all told in a year and buying a very average 2 bed flat is just a dream at the moment. He is not extravagant with his money, he tells me for the last 7 years since he got married he's been saving on average 8k a year for a deposit. So putting aside mortgage, survey and conveyance fees etc he'll have around 50k for a deposit. Here in the midlands the price of a 2 bed house ranges from 150k up to and over 250k depending on various factors. Let's assume he gets an offer accepted for a house at 200k.

Rough maths means at the current interest rates for a 2 year fixed :Monthly mortgage payment of £950.

£950
for a 25 yr mortgage for a 2 bed house! That too for someone with a healthy deposit. In what world does this make sense? I was lucky I bought my house when I did - I was also proudly very stingy and overpaid almost every year. Insha'Allah I will be able to pay off my mortgage in 9 years rather than the 25 years. Then I'll be able to relax. However I feel for so many especially the people who don't even have a deposit to put down.

We don't just need a house price crash - we need a total collapase. If the average salary in the UK right now excluding London is 27k, then the average 3 Bed Semi detached house should cost around £115-£120k not £240k.

That is just disgusting.

My heart goes out to the young people and those not in the fancy professions.
 
just an fyi to those waiting on a property price collapse, the entire system is reliant on property prices staying high, a collapse in property prices means the banks go under, pensions go under, which means the gov steps in to cover the gap because they cant allow that happen. whether you pay by choice or by compulsion you will end up propping up the market on some level.
 
It is clear as daylight the property market is being propped up through rigging. Everyone involved from the surveyors to the mortgage brokers to the banks to the media are collectively colluding to prop up a lie.

Plus without first time buyers the property market is at best stagnate, and first time buyers are not cash buyers, they can barely save for a deposit, and the bank of mum and dad is done too.

Inflation isn't heading south anytime soon, especially if you factor in real inflation instead of the BoE malarky.

And be warned, never buy brand new property, for 2 reasons - the moment you buy it, the property drops in value because it's not new anymore, and the quality of new builds is a joke. Some real horror stories out there.

I am all up for higher interest rates, nice side income on savings and time to teach the greedy debt owners a lessons!
 
What your saying is counterintuitive isn't it? Wages growing with inflation means more money supply, leading to higher inflation! The first directive BoE announced once they understood this 'transitory inflation' isn't happening is that employers should resist from wage growth to control inflation, and here we are today. This will only mean one thing, we will see more rate rises in coming months making borrowing even more expensive. Even more expensive mortgages will only mean one thing for house prices.
Plus wages have not risen in line with the average property price, and assuming they do, it will drive inflation further up.
 
You know many were saying that 2025 would be the year to buy. I don’t think so. It’s either only going to get worse or we will see minimal corrections which in hindsight won’t make much of a difference.

Tough times ahead. Too much unpredictability.
 
On a side point, do not be deceived into believing the Ukraine war has contributed to inflation.

Years of QE was bound to result on inflation and further proven by the fact interest rates and inflation were rising BEFORE the Ukraine war started.

You reap what you sow.
 
On a side point, do not be deceived into believing the Ukraine war has contributed to inflation.

Years of QE was bound to result on inflation and further proven by the fact interest rates and inflation were rising BEFORE the Ukraine war started.

You reap what you sow.
The Ukraine war didn't contribute to the inflation the stupidity of the west by implementing self sabotaging sanctions did. You could say if there was no Ukraine war then the collective west would have implemented these dumb sanctions that hurt themselves.
 
not necessarily, the uk didint drive inflation, it was a global trend because of a perfect storm of conditions, i.e covid money printing, the suez canal shut down, Chinese supply shortages, the ukraine war driving up energy costs, etc, primarily exogenous drivers.

wage growth on top of those factors would exacerbate inflation, but given how everything from our energy, to consumables, and luxuries are primarily imported, the UK wage bill does not have enough of an effect on its own to be a solo driver for broad global inflation.

central banks also stated that their profligate easing during a period of virtually zero productivity would not have a long term effect on inflation, for the most part they have no idea, no one can predict the intricacies of the economy, they simply project like they know whats gonna happen.

as long as wage growth outpaces inflation, the growth in rents is sustainable, the expectation for interest rate increases will not stay high forever even if inflation is stickier in the short term, and when that turns the higher rents will be the first port of call for safe return for institutional investors which will drive up property prices.

unfortunately only cash buyers can really leverage the current situation, which makes it even harder for joe average in the long run.
But COVID money printing did exacerbate property inflation, in fact it was the sole cause. This has nothing to do with external factors. The rise in wages negates the primary motive of higher rates, ie. quell demand. We continue to import and buy, meaning the BoE is under constant pressure to defend the pound.

Also are interest rates high or have they simply normalised? Because what was artificial was ultra low rates. Say inflation normalises to 2%, does this mean we will once again see BoE cut down to 0.25-0.5% ?


just an fyi to those waiting on a property price collapse, the entire system is reliant on property prices staying high, a collapse in property prices means the banks go under, pensions go under, which means the gov steps in to cover the gap because they cant allow that happen. whether you pay by choice or by compulsion you will end up propping up the market on some level.
How can the govt. step in, it has no room left to borrow? The govt. already owes the BoE billions due to bond sale losses and on top of that have to pay interest servicing current debt. They can no longer afford to provide housing stimulus.
 
But COVID money printing did exacerbate property inflation, in fact it was the sole cause. This has nothing to do with external factors. The rise in wages negates the primary motive of higher rates, ie. quell demand. We continue to import and buy, meaning the BoE is under constant pressure to defend the pound.

Also are interest rates high or have they simply normalised? Because what was artificial was ultra low rates. Say inflation normalises to 2%, does this mean we will once again see BoE cut down to 0.25-0.5% ?



How can the govt. step in, it has no room left to borrow? The govt. already owes the BoE billions due to bond sale losses and on top of that have to pay interest servicing current debt. They can no longer afford to provide housing stimulus.
More money was created during Covid compared to post 2009 Financial crash.

Anyone who claims external forces contributed to rampant inflation doesn't understand economics, let alone inflation, moreover has zero grasp of Western fiscal policy that is based on the Keynesian doctrine.

Western governments have no bullets in the chamber other than their stooges promoting property (leveraged debt) as the only method of gaining wealth.

These Muppets are asset rich cash poor.

 
The Ukraine war didn't contribute to the inflation the stupidity of the west by implementing self sabotaging sanctions did. You could say if there was no Ukraine war then the collective west would have implemented these dumb sanctions that hurt themselves.
100% true.

Western fiscal policy and sanctions towards Russia backfired royally.

Though the reality is if there were no Western sanctions then inflation would still ramp up, proven by the fact rates and inflation were heading North before the Ukraine war.

Typical UK, must take lead from its Amreekan counterparts. The BoE has no independent policy, other than wait and see what the Federal Reserve does.

But no, pile into leveraged debt, Mortgages, because these Western fools sell the myth that debt is wealth, and clearly the majority are falling for it, and paying the price.
 
Remember one thing folks, went it comes to making money, the Western (UK and USA) psyche promotes property.

This myth that property is the only way to make money is exactly that, a myth, perpetrated by those who are narrow minded and risk averse.

If you had invested £1000 in the stock market in 2009, it would be worth £10000 today based on index funds and dividends reinvested. If you had invested £1000 in the stock market during the height of Covid in 2020, it would be worth £3000 today.

No investment in property has had such gains in the same time frame. Fact.

Most people are unaware of the alternatives to property investment!
 
But COVID money printing did exacerbate property inflation, in fact it was the sole cause. This has nothing to do with external factors. The rise in wages negates the primary motive of higher rates, ie. quell demand. We continue to import and buy, meaning the BoE is under constant pressure to defend the pound.

Also are interest rates high or have they simply normalised? Because what was artificial was ultra low rates. Say inflation normalises to 2%, does this mean we will once again see BoE cut down to 0.25-0.5% ?



How can the govt. step in, it has no room left to borrow? The govt. already owes the BoE billions due to bond sale losses and on top of that have to pay interest servicing current debt. They can no longer afford to provide housing stimulus.
i dont know how to split the quotes so treat ill split the points and hopefully it makes sense

i was talking about general inflation not resi inflation, the gov doesn't cares about property price inflation, the ideal scenario for them is low general inflation and high property inflation, nearly two thirds of brits are home owners, the government want property price inflation to outpace general inflation as net wealth for the majority increases, and they keep getting voted in.

if we are talking about covid money printing, it is not the sole cause of property price inflation, property price inflation has outstripped wage growth for nearly three decades because this is gov policy, it has happened because of loose monetary policy, financialization of the real estate market, and incentives to increases buy to lets, among other things.

we have been importing to buy for decades now, and the pound will slowly lose purchasing power, what the gov want is for it to be slow enough that no one notices, i.e. like halving against the dollar over the last fifty years, no one even notices that kind of decline in their daily lives, and tbh i would not be surprised if gbpusd hit 1.10 by the end of the decade.

the point re the natural interest rate is very difficult, i could write whole paragraphs on it, but in a nutshell their is an argument that when demographic growth is virtually zero, and long term economic growth is barely 2% in the developed world interest rates above 2% are unsustainable, which is why we see so much pain when rates are high.

If inflation fell to 2% i would reckon the BoE would like interest rates to be in the 1.5 - 2% range. anything lower and u have no room for monetary policy action to deal with crises short of money printing. UK house prices nearly tripled from the mid 90s to mid 00s, and interest rates were much higher, obv that was from a lower level, but the 1.5% - 2% is very manageable for developers, and investors, esp given how much rents have increased over the previous year.

the gov will make room to borrow, the same financiers who threw a wobbly over debt fueled stimulus will happily espuse the virtue of greater borrowing when its to save their own interests.
 
Jumping ship?


The number of Britons holding Irish passports has risen sixfold in a decade, new figures show, boosted by a rush of people seeking dual nationality post-Brexit.

There are now almost 160,000 Britons living in England and Wales who also hold Irish passports, according to new figures from the 2021 census published by the Office for National Statistics (ONS).

It compares to just under 26,000 UK-born people who held dual British-Irish nationality in 2011 when the last census was undertaken.

The ONS said the increase could “indicate greater uptake of dual citizenship following the end of free movement when the UK left the EU”.

Brits with at least one Irish parent or grandparent can apply for dual nationality. Claiming an Irish passport gives them the option to move or work anywhere in the EU.
 
UK house prices shrink at fastest pace since 2009

Average property price fell 5.3% annually in August as rising borrowing costs dent market

UK house prices contracted at the fastest annual pace since 2009 in August as the impact of higher interest rates hit the property market, according to the mortgage provider Nationwide. The average house price fell 5.3 per cent last month compared with the same period last year, down from a 3.8 per cent contraction in July and the sharpest fall since July 2009, new data showed on Friday. House prices were down 0.8 per cent between July and August, taking the average property cost to £259,153, down from a recent peak of £274,000 in August last year.

Robert Gardner, Nationwide’s chief economist, said the rise in borrowing costs “has resulted in activity in the housing market running well below pre-pandemic levels”.

Data released by the Bank of England on Wednesday showed that mortgage approvals fell nearly 10 per cent between June and July. It also showed that the average mortgage rate increased to the highest level since 2008.

The increase in mortgage rates comes as the Bank of England has been battling persistently high inflation, increasing interest rates 14 consecutive times from a record low of 0.1 per cent in November 2021 to the current 5.25 per cent. Markets expect the central bank will increase rates by another quarter point at its next meeting in September.

Alice Haine, personal finance analyst at the investment platform Bestinvest, said the increase in interest rates “means mortgage affordability is now a major challenge for first-time buyers and existing homeowners looking to refinance”. It is also a challenge for those emerging from cheap fixed-rate mortgages taken out in 2021 who now face significantly higher repayment levels that put stretched disposable household incomes at risk, she added.

Nationwide’s analysis of official data suggested buyers are looking towards smaller, less expensive properties, with a smaller decline in transactions for flats in the first half of this year compared with 2019. It attributed the trend to the ending of the Help to Buy scheme, which helped those with a smaller deposit purchase a newly built home. Flats have also remained relatively more affordable, it noted, with average prices up by only 13 per cent since the onset of the pandemic, compared with 23 per cent for detached properties.

Andrew Wishart, senior property economist at Capital Economics, said that with mortgage rates set to remain between 5.5 per cent and 6 per cent for the next 12 months, and second-hand supply on the market becoming less tight, “the August data marks the start of a significant further drop in house prices”.

However, Nationwide’s Gardner thinks “a relatively soft landing” for the property market is still achievable because of the unemployment rate, which is expected to remain low, and the high proportion of borrowers on fixed rates.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time,” he said.
(behind paywall)
 
Many who bought property recently will no doubt fall into negative equity.

Pain, pain, and more pain in coming years.
 

Pound to plummet as house prices sink, warn analysts​

The pound will plummet this year as Britain grapples with falling house prices and rising unemployment, according to analysts.
Sterling will fall against the dollar to $1.22 by the end of October, which would be the lowest since March, according to investment bank Nomura.

It would mark a 3.7pc drop from its current level just below $1.27.

It comes as Nationwide revealed that house prices have fallen by 5.3pc since their peak in August last year, with Capital Economics predicting prices will slump 10.5pc from that level by the middle of next year.

Nomura analysts said it is rare for the pound to rally when house prices suffer and that sterling also traditionally suffers when the global economy weakens and unemployment rises.

In a note to investors, Nomura FX strategist Jordan Rochester said: “It’s rare to have GBP perform well, when it’s housing market is like this over the past 15yrs…another reason why GBP could head towards 1.22.”

DT
 
UK house prices fall for sixth consecutive month
UK house prices dropped for the sixth consecutive month in September, according to mortgage provider Halifax, laying bare the effect of high mortgage rates on the property market as Britons struggle to afford new homes.

The average UK house price was down 0.4 per cent between August and September, extending the slide that started in April.

The fall is a further sign of how raised borrowing costs, linked to higher interest rates, have damped people’s ability to buy homes and dragged down property prices.

Weakness in the property market has rippled through the wider economy, as it hits confidence and households buy fewer home related goods and services, such as furniture or painting.

Compared with the same month last year, house prices were down 4.7 per cent, a steeper fall than the 4.5 per cent contraction registered in August and the largest drop since 2009, Halifax said on Friday.

Kim Kinnaird, director of Halifax Mortgages, said amid the backdrop of higher borrowing costs, “homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market”.

House prices boomed during the Covid pandemic, boosted by record-low interest rates, but they are now declining as fewer households can afford a mortgage as the country grapples with a cost of living crisis. “These factors are likely to keep mortgage rates elevated in comparison to recent years, constraining buyer demand and putting downward pressure on house prices into next year,” said Kinnaird. The average house price dropped to £278,601, down £15,000 from its peak of £293,500 reached in June last year, but was still £39,200 above the pre-pandemic level of February 2020, according to Halifax.

All UK nations and the nine English regions registered a decline in house prices on an annual basis. Prices are under the greatest downward pressure in the South East of England, falling by an annual rate of 5.7 per cent. London registered the largest drop in cash terms, falling by about £26,514.Northern Ireland had the most resilient house prices, down by just -0.2 per cent compared with September 2022, a fall of less than £400.Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages, said: “There are plenty of properties coming on to the market, but at the moment there are not as many buyers.”
 
More surveyors report falling UK house prices than at any time since 2009

Rics survey shows demand for homes and sales volumes also contracted in September

A greater proportion of surveyors are reporting falling UK residential property prices than at any time since February 2009, with demand and sales volumes also contracting, according to a closely watched survey. The Royal Institution of Chartered Surveyors on Thursday said its house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in home prices, fell to minus 69 last month from minus 68 in August, missing forecasts.

The Rics figures suggest the weakness in the housing market seen in other data will continue in the months ahead. Mortgage providers Nationwide and Halifax reported in September that house prices were falling at the fastest annual pace since 2009. The Bank of England said mortgage approvals dropped to a six-month low in August.

Tarrant Parsons, senior economist at Rics, said the “subdued” property market was the result of “mortgage affordability still incredibly stretched”.

The Bank of England left interest rates unchanged at 5.25 per cent in September after increasing them at the 14 previous meetings. Economists and markets expect interest rates will remain high for some time, which for Parsons means “there is little prospect of [housing] trends deviating much from the recent picture in the immediate future”.

Tom Wilson, a panellist of the survey and director at the consultancy King West, said: “Sellers are having to be pragmatic and realistic if sales are to be agreed.”

The downturn in the housing market affects the wider economy via lower construction output, lower sales of housing-related goods and services and lower consumer confidence. With fewer households able to afford a mortgage and landlords passing on their higher borrowing costs, rents continued to surge last month, the survey found.

Mark Killeen, a panellist in Coventry, said: “Landlords are feeling the pinch between tax thresholds, lack of stability and interest rate increases, this is pushing rents into higher brackets due to lack of rental stock.”
 
Mortgage defaults have risen at their fastest pace since 2009 as lenders warn over plans to restrict the supply of deals.

With inflation continuing to be stubborn, I cant see how BoE can turn away from in .25% hike in two weeks time. This will continue to pile pressure on mortgages.
 
I know it could be difficult for many - but guys if you're a fixed mortgage put as much as you can in. Almost all lenders let you overpay by 10% each year. If you have a choice between a holiday or overpaying your mortgage. Overpay. Overpay and get rid of your mortgage as fast as you can.
 
I know it could be difficult for many - but guys if you're a fixed mortgage put as much as you can in. Almost all lenders let you overpay by 10% each year. If you have a choice between a holiday or overpaying your mortgage. Overpay. Overpay and get rid of your mortgage as fast as you can.
Smart advice get this death tax paid
 
I think it will be a lot worse and definitely into two digits, but unlike the OBR I'm no expert.

OBR forecasts UK house prices to fall by 7.6% by end of 2024
The Office for Budget Responsibility (OBR) has released its central forecast for the UK housing market, projecting a nuanced trajectory for house prices in the coming years.

According to the OBR, house prices are expected to grow marginally by 0.9% in 2023 but then face a significant downturn, decreasing by 4.7% in 2024.

This decline is anticipated to bring the price of the average UK home to a low of approximately £266,000 in the final quarter of 2024.

The OBR’s forecast outlines an overall decrease in nominal house prices by 7.6% from their peak in the fourth quarter of 2022 to their lowest point in the final quarter of 2024.
 
Mortgage defaults have risen at their fastest pace since 2009 as lenders warn over plans to restrict the supply of deals.

Well this bleak outlook could be attributed to UK government itself. They are the ones who are doubling down on offshore property holders and thus are responsible for waning interest in property business in UK. Otherwise, the real estate has remained a booming sector for investors abroad and local ones. The mortgage default ratio has also arisen owing to this factor
 
Well this bleak outlook could be attributed to UK government itself. They are the ones who are doubling down on offshore property holders and thus are responsible for waning interest in property business in UK. Otherwise, the real estate has remained a booming sector for investors abroad and local ones. The mortgage default ratio has also arisen owing to this factor
Investors come if the returns justify the money spent, apart from the Russians oligarchs who find it difficult to their dodgy savings in London due to the sanctions. Plus they make a miniscule percentile of house buyers in the UK.

The UK property crisis stems from interest rates not being artificially low anymore and the government being broke is unable to afford any form of spurious stimulus measures so that the Tory donating house builders can continue to profiteer (Albeit I do not discount a pre election stunt from Sunak & Hunt to deceive the voters and keep the party donors happy). This slow deflation is necessary and will prevent a property bubble explosion in the future.
 
Investors come if the returns justify the money spent, apart from the Russians oligarchs who find it difficult to their dodgy savings in London due to the sanctions. Plus they make a miniscule percentile of house buyers in the UK.

The UK property crisis stems from interest rates not being artificially low anymore and the government being broke is unable to afford any form of spurious stimulus measures so that the Tory donating house builders can continue to profiteer (Albeit I do not discount a pre election stunt from Sunak & Hunt to deceive the voters and keep the party donors happy). This slow deflation is necessary and will prevent a property bubble explosion in the future.
Yeah, agree to the extent that this situation is averting a future property bubble explosion that would have generated another drastic downward property spiral in future.
 
‘A buyer’s market’: average £18,000 knocked off UK property asking price
Homebuyers are in the strongest negotiating position for five years with an average £18,000 knocked off asking prices to land a deal amid a choppy housing market, research has shown. Research by the property website Zoopla showed the average discount to asking price for completed sales grew to 5.5% in the first half of November, up from 3.4% across the first half of 2023. The discount was even greater in London and the south-east of England, at 6.1%, which equates to £25,000.

The UK’s property market has been in flux since Kwasi Kwarteng’s disastrous “mini-budget” – which ultimately led to the departure of the then prime minister, Liz Truss – sent mortgage costs soaring. Despite signs of mortgage rates easing, pressure remains on those selling homes to accept lower prices. Zoopla said that conditions were the best for buyers since 2018, when Brexit uncertainty hung over the market, though financing costs were lower back then.

The company said there was now “greater realism on the part of sellers” in the price they were willing to accept, allowing the number of transactions to rise by 15% on last year. The number of homes for sale is at a six-year high, with a strong supply of three- and four-bedroom family properties. Buyer demand is still 13% lower than 2019, before the pandemic caused a boom in property demand.
 
There is a small change but nothing big. It may happen but demand remains stable and people are waiting for bargains. Whether they come or not will be the billion Pound question
 
UK house prices fall at fastest pace in more than a decade
UK house prices fell at the fastest pace in more than a decade in November, driven by a sharp decline in London, according to official data that reflects the impact of high interest rates on the property market.
Average prices contracted 2.1 per cent in the year to November 2023, down from a 1.3 per cent fall in the 12 months to October and the largest annual drop since June 2011, the Office for National Statistics said on Wednesday.

House prices were down 0.8 per cent between October and November, taking the average property to £285,000, some £6,000 lower than in November 2022.

London was the worst-performing UK region, registering a 6 per cent annual contraction, the biggest since 2009. But the capital remained the most expensive part of the country, with the average home costing £505,000.

The fall in prices reflects the effect of elevated mortgage rates on the housing market after the Bank of England raised interest rates from a record low of 0.1 per cent in November 2021 to a 15-year high of 5.25 per cent in a bid to tame high inflation.
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