Property prices thread

[Tamas]

Yeah with renting I have definitely discovered that viewing makes a big difference. You can "feel" if a place is right for you or not far better if you are standing inside it.

[Tamas]

I have to say though, we haven't even started house-hunting in earnest and I am already tired of estate agents.

[garbon]

I have to say though, we haven't even started house-hunting in earnest and I am already tired of estate agents.

Then they are doing their job.

[Sheilbh]

I have to say though, we haven't even started house-hunting in earnest and I am already tired of estate agents.

Truly the worst

There's a reason why, in polling on trust, they're in the bottom five between government ministers and journalists.

[Tamas]

It was off to a great start right from the get-go. I called this agency about the above property. Some lady answered and while I was starting to say why I was calling, a big background noise started, I assume by a group of people going out to lunch since I did call just before noon. The lady, however, was quick to handle the situation, by hanging up on me without a word.

Normally this would have been the end of my business with any company doing that to me, but its not like I can go to somebody else for this particular property, so I re-dialed and this time the kid I have been dealing with answered, and to his credit he was eager to be of service.

Still when today we confirmed the viewings, to my request of receiving the phone number of the guy who'll actually meet me at 6PM deep into some estate I have never been to, he suggested if something does come up I call their generic number and they'll rearrange. I am inclined to stand them up but I need the viewing-experience and who knows they might end up having the property we want.

[Tamas]

https://www.theguardian.com/business/2023/jan/28/why-uk-house-prices-could-plunge-by-20-after-the-latest-interest-rate-hike

Why UK house prices could plunge by 20% after the latest interest rate hike
Larry Elliott
Economics editor
Property market has defied gravity for years but analysts say rising mortgage rates will mirror the 1980s price crash

dark cloud above a for sale on a house
Dark clouds are gathering over the UK property market after years and years of prices defying gravity. Photograph: Christopher Thomond/The Guardian
Sat 28 Jan 2023 08.00 GMT
Britain's estate agents normally radiate optimism but they will be watching anxiously at noon next Thursday when the Bank of England is expected to announce the latest blow to a rapidly weakening property market.

Crunch time has arrived for a sector that for years has appeared to defy gravity. Threadneedle Street's monetary policy committee (MPC) is poised to raise official borrowing costs for a 10th meeting in a row, with mortgage approvals already running 30% below their pre-pandemic levels and house prices down by 4.3% from last August's peak, according to the Halifax bank.

Further falls are inevitable as borrowers adjust to an era of persistently higher interest rates. The City is braced for a half percentage point rise, to 4%, and for the rate to remain at least as high until the Bank is sure inflation is sustainably on course to hit its 2% target.

How should you fight inflation? (Spoiler alert: not with interest rate rises)
Joseph Stiglitz
Joseph Stiglitz
Read more
Analysts are agreed that 2023 will see further falls in house prices, with one predicting a peak-to-trough fall of more than 25% once inflation is taken into account.

There are structural reasons why house prices tend to go up in the UK – tough planning laws, a tax system that rewards home ownership, a sharp fall in the number of new homes being built since the 1950s and 1960s – but occasionally there are breaks in the trend.

This year is on course to be one of those break periods. A long boom driven by record-low interest rates has run its course.

The party was always going to end sooner or later as, even with rock-bottom interest rates, finding a deposit for a home and meeting mortgage payments became more and more of a struggle. Figures from the Halifax this week showed a first-time buyer was paying just over £300,000 to get a foot on the property ladder and needed a deposit of £62,000. More than 60% of mortgage completions were in joint names last year.

But two other factors have contributed to the rapid cooling in demand: the steady increase in official interest rates since late 2021 and the impact of Liz Truss's brief premiership, which involved mortgage rates rising to almost 6%.


Andrew Wishart, a property economist at Capital Economics, said average quoted mortgage rates had climbed from 1.4% at the end of 2021 to a peak of 5.7% in November last year. While the effects of Kwasi Kwarteng's budget had worn off slightly, mortgage rates were still likely to be just above 4.5% by the end of the year.

"While the current level of house prices was affordable when interest rates were 2%, that's not the case with mortgage rates at 5%, 4% or even 3%,' Wishart said. "Higher mortgage rates mean buyers will be less able and willing to borrow, reducing their budgets and putting downward pressure on house prices. To return affordability to a sustainable level by year-end would imply a drop in the price-to-earnings ratio from almost eight times income now to below six, consistent with a drop in prices of around 20%."

George Buckley, a UK economist at Nomura, said house prices would need to fall because rising interest rates had made it more expensive to service home loans. The extent of the fall would depend on how quickly this adjustment happened. According to Nomura, to return the mortgage repayments-to-income ratio to its long-term average by the end of this year would require a drop of 20% in prices. If the adjustment took place more slowly between now and the end of 2027, the decline would be just under 10%. Nomura's central forecast is for prices to fall by 15% by mid-2024.

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Kallum Pickering, the chief UK economist at Berenberg, said the scale of the correction in house prices mattered because the wider UK economy was sensitive to large swings – either upwards or downwards. Judging by the latest bulletin from the Royal Institution of Chartered Surveyors (RICS), he said, the imminent downturn was likely to be on a par with the early 1990s, when interest rates peaked at 15%, and the global financial crisis, when the UK banking system teetered on the brink of collapse.

"In contrast to the recent string of surprisingly positive data for the economy as a whole, the December RICS housing market survey makes for grim reading," Pickering said.

The headline house price balance – the gap between RICS members saying prices were going up against those saying they were going down – stood at -42.0% in December, compared with -25.7% in November, the lowest monthly balance since October 2010 and the third largest annual drop going back to 1978.

"The biggest annual drop happened in the late 1980s, before the early 1990s housing market crash and recession, while the second largest fall occurred during the global financial crisis in 2008. Although a housing market downturn was widely expected by economists (including us), the monthly drop in the December survey far exceeds our and consensus' expectation," Pickering said.

In the early 1990s, a doubling of unemployment prolonged and deepened the house price crash, as people who lost their jobs had to sell their homes in a falling market. While the low level of unemployment currently makes a repeat of the record repossessions unlikely, Wishart says there will still be a sizeable fall in prices.

"Overall, even in the absence of forced sales we think that higher mortgage rates will lead to a severe repricing in the housing market this year. The nominal peak-to-trough house price fall of 12% we expect is shy of the falls of almost 20% seen in 2007-09 and 1989-92, and only takes house prices back to their March 2021 level. But note that in real terms it amounts to a 27% drop, on a par with those episodes."

[Josquius]

Apparently analysts reckon us house prices are near the bottom and UK prices are flat after 4 months of decline....

Is that it.

[Tamas]

Apparently analysts reckon us house prices are near the bottom and UK prices are flat after 4 months of decline....

Is that it.

One bank reported something like -0.5% the other reported stagnant at their avg prices down like 30 quid.

As I understand, however, there's easily 3-4 months (often 6) before an agreed deal gets completed AND shows up in these statistics. So we haven't even seen the effect of Truss' mini budget yet.

Inflation is far from over (In the US they just reported 0.5% increase month on month after a (revised) 0.1% increase in December). The fact that UK mortgage rates have not followed the last 0.5% hike by BOE tells me the banks need to compete on a drying up market.

It's not done yet.

[Gups]

The Times had a piece on how all three major reports were effectively useless because missing significant data (e.g. based on mortgage approvals and thus missing cash buyers) or months out of date.

[Gups]

I'd add that flatlining is equates to significant decline when there is high inflation.

[Sheilbh]

Fwiw I'm getting a lot of emails about fairly hefty reductions. But I'm not sure how much that is a real shift or just something that happens with estate agents going in too high.

[Tonitrus]

I keep getting this idea that if I moved to the UK, and started a real estate/property management company that was ethical, honest, and treated both owners/buyers/renters all decently...I could corner the market.

[Josquius]

I keep getting this idea that if I moved to the UK, and started a real estate/property management company that was ethical, honest, and treated both owners/buyers/renters all decently...I could corner the market.

The questionable assumption being that's what owners want.

I do think there's room for an ethical company, not all landlords are cunts, but they'd be niche.

[Tamas]

The annual percentage change for average UK house prices was 9.8% in the 12 months to December 2022, compared with 10.6% in the 12 months to November 2022 and 12.0% in the 12 months to October 2022.

The average UK house price was £294,000 in December 2022, which is £26,000 higher than 12 months ago. Average house prices increased over the year to £315,000 (10.3%) in England, to £222,000 in Wales (10.3%), to £187,000 in Scotland (5.7%) and to £175,000 in Northern Ireland (10.2%).

On a non-seasonally adjusted basis, average UK house prices decreased by 0.4% between November and December 2022, while average UK house prices increased by 0.3% during the same period 12 months ago.

So I am not getting how going from 10.6% to 9.8% (a decrease of 0.8) translates to a change of -0.4% but I am sure they have their reasons.

I am assuming, if these are deals completing in December, the Truss Effect is still not visible in this.

[Tamas]

Industry members declare worst is over based sales completed in December (the -0.4% in a month thing), except that Charlie Lamdin fellow who is I think is the only one on this list not financially linked to the market being propped up (he has a good Youtube channel which I may be basing my opinion too much on)

Following the Land Registry December HPI published this morning, Newspage asked brokers and property experts for their thoughts.
Sofia Jones, Managing Director at London-based independent mortgage broker, Penny House: "Though annual price growth is now back in single digits, and prices fell by 0.4% in December, I think we will see less of a property crash than many have been predicting. A correction is looking increasingly likely. With inflation edging down more than expected, we're now likely to be near the top of the current base rate increase cycle. Once inflation is back to target, we may even see the Bank of England cut rates to stimulate the economy, which will support house prices and reignite demand. That being said, though demand has fallen since the mini-Budget, it has by no means dropped off a cliff. The start of 2023 has been very busy for estate agents and mortgage advisers, and there's still a lot of competition for property. Given the lack of supply, prices are unlikely to fall as much as we all felt back in October when the fallout from the mini-Budget was intense."

Charlie Lamdin, property expert at Moving Home With Charlie: "Everyone is underestimating how many downward pressures there are on house prices, and how long they will remain in place. Even if there is the occasional month of 'stabilisation', we are at the beginning of a long downward trend in average house prices. Land Registry figures only include around 40% of transactions so they are not an accurate measure, and are subject to revision for up to 13 months. Prices will not bottom out until 2024 at the earliest. There is very little transparency on what is happening at the coal face of transactions, but we know that transaction numbers are around 15% down on their pre-Covid 5-year average. It's not a lack of demand that's the problem, as there is still plenty of interest and desire for property. It's a lack of available finance to pay last year's prices, which is what sellers are holding out for."

Sharon Hewitt, MD at Beaconsfield-based relocation company, Chiltern Relocation: "Prices may be nudging down but we are not witnessing the sharp slowdown many predicted. On the contrary, we have received more enquiries at the start of the year than last year and, in our daily conversations with estate agents, they are happily reporting a strong start to the year with higher viewings levels than they expected. Our enquiries are from downsizers, clients relocating for job moves and clients moving out of London due to the ongoing working from home trend. Rumours of the property market collapsing 20% are so far unfounded."


 
David Conway, director of Woodford Green-based mortgage broker, Clayhall Financial Services: "December was juddering, but the property market was buoyant in January. There's almost a 'feel good factor' emerging as buyers are surprised at being able to access fixed rates of around 4%. Mortgage rates are on a downward spiral. Lenders are actively competing for buyers' business and they are also being innovative in the buy-to-let market. With affordabilty and lending calculations expected to improve, unemployment now predicted by the Bank of England to not rise as much as expected and inflation slowly getting back under control, 2023 should be a year of recovery not carnage. The projected house price drops should be nothing but a blip."

Zaid Patel, director at London-based estate agents, Highcastle Estates: "Though this data shows that prices are slowly edging down, properties are still selling and the market hasn't collapsed. We just sold a property 4.4% below the asking price, which isn't too bad at all in the current climate. There are fewer first-time buyers in the market, though. Vendors are more open to accepting offers slightly lower, as long as it's reasonable and feasible for them. There is still activity but estate agents and mortgage brokers need to play a big part to educate sellers and buyers on the housing market's current status to manage their expectations."

Austyn Johnson, founder at Colchester-based Mortgages for Actors: "There shouldn't be a house price crash, as over the years, lenders have been adapting their processes to make sure there is a buffer to minimise struggles caused by rising rates and employment issues. People are also getting savvy and a lot of people who have been made redundant have gone self-employed to keep some money coming in. This is a correction, and bit by bit, the corrections should smooth over the wobble and create some stability. Here's hoping anyway. When the McDonald's drive-thru is empty every day, then I'll worry."


 
Rhys Schofield, managing director at Derbyshire-based mortgage advisers, Peak Mortgages and Protection: "Adam Smith popularised supply and demand in 1776, a concept that most of us understand. At the core of our broken property market is that there are not enough houses to go round and the gap gets worse each year as we don't build nearly enough new ones, which means prices can only really go one way. Those doom-mongers talking up a crash are likely to be disappointed this year in what just feels like a normal pre-Covid market. Business is brisk and rates generally aren't as bad as people had actually feared for normal residential customers."

m

Director of Benham and Reeves, Marc von Grundherr, commented:


 
"A combination of economic turbulence, increasing mortgage rates and a squeeze on household finances has been the perfect recipe for a reduction in the rate of house price growth and that's what we've seen since the closing stages of last year.

When you also couple these factors with the usual seasonal slowdown that hits the market during December, it would have been more of a surprise had house prices continued to climb.

However, what's important to note is that the rate of decline has been far more marginal than many predicted and this should stand the property market in very good stead for the year ahead."


 
CEO of Alliance Fund, Iain Crawford, commented: "The property market has gone through a transitional period, whereby buyers have had to reassess their purchasing power, while sellers have had to come to terms with this reduction and make the necessary adjustments to their asking price expectations.

This has caused house prices to fall gradually over the last few months, but there's already signs that having found a new middle ground, the market has stabilised in 2023."

Managing Director of Barrows and Forrester, James Forrester, commented: "It's been a long cold winter, with harsh economic headwinds battering the UK on all fronts, so it was only inevitable that they would breach the usually impervious walls of the UK property market at some point.


 
The good news is that while house prices have started to cool, the damage has been less severe than forecast and although we're not out of the woods just yet, we can now see the sunlight through the trees."