News

**MSE Lawrence** · 21-01-2008, 5:00 PM

House Prices Poll Result. Massive 30% sentiment swing toward house prices dropping!
There’s been a massive shift in what people think will happen to house prices over the next year since since I ran this poll six months ago. Total Voters: 10,844 this time (9.811) Average Sentiment. House prices to drop 5.5% over the next year (drop of 0.6%). Voters predicting a rise: 17.5% of people predicted a rise (48%). Voters predicting a fall: 59% of people predicted a fall (30%). Does sentiment matter? Yes, when people think prices will drop they act differently, they’re far less willing to pay higher prices, and thus there’s the potential for a self-fulfilling prophecy. Related Articles: Free House Price Valuations, Remortgage Guide.

Poll ran between 21-29 January 2008:

Will house prices crash? What will happen to UK house prices in 2008?

A. Increase over 20% - 1% (81 votes)
B. Increase 10-20% - 1% (111 votes)
C. Increase 5-10% - 4% (452 votes)
D. Increase 2-5% - 12% (1255 votes)
E. No real change - 18% (1986 votes)
F. Decrease 2-5% - 20% (2143 votes)
G. Decrease 5-10% - 17% (1865 votes)
H. Decrease 10-20% (smaller crash) - 13% (1389 votes)
I. Decrease over 20% (crash) - 10% (1040 votes)
J. I really have no idea - 5% (522 votes)

Voting is now closed, but you can still click reply to discuss below.

IMPORTANT NOTE: This issue often gets heated; please try to be polite - everyone is entitled to their opinion. The whole point of this poll is that sentiment is a big factor in house prices; therefore it's important we weigh up people's different opinions.

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pendine50 · 21-01-2008, 6:07 PM

Seen evidence of drop already...walked past estate agent in my town today and over 50% of properties had had their prices reduced......scary

SarahNeedle1872 · 21-01-2008, 8:27 PM

I voted for E because I still think the demand outstrips the supply....

anorthosite · 21-01-2008, 11:15 PM

They're coming down over the next few years. They're in a classic asset bubble, and bubbles tend to burst...

anorthosite · 21-01-2008, 11:17 PM

Quote:

Originally Posted by SarahNeedle1872

I voted for E because I still think the demand outstrips the supply....

Does it really? If there was a shortage of homes then there would be more homeless people. The problem has been cheap easy credit and people buying property as an investment or a pension has meant there's no affordable housing. With easy credit on the way out and confidence shaken in property, prices may come down sharply

moneymare · 22-01-2008, 9:15 AM

As reported on Rightmove, there was a 3.2% drop in prices in December and only a 0.8% drop in January. As we get towards Spring, traditionally sales increase at this time of the year and so I can see prices levelling off, and so I voted E - for no real change over the course of the year.
It has also been widely reported that the BoE will cut rates in February.

nimbo · 22-01-2008, 9:37 AM

Quote:

Originally Posted by anorthosite

If there was a shortage of homes then there would be more homeless people.

but people are still living in the homes, there is just a shortage of affordable homes to buy.

i'd happily get a mortage to buy a house similar to the one i live in but where i live they don't exist unless you can view them as the come on the market.

sarah1975uk · 22-01-2008, 9:42 AM

i think its just a cycle of how things go, house prices will always go up and down over the years, just a case of being clever enough to know when to sell and when to buy, overall you will always make money on a house in the long term. Trick to ride out any down turn is to not re-mortgage to the max and dont borrow more than you can afford when first buying the house

johncolescarr · 22-01-2008, 1:14 PM

I think that the extent of any change will be dependant upon many factors, not least where you live. A change in house prices in London may not reflect what will happen in the North East for example, where house prices have not risen as much as elsewhere. Whether you live in a desirable area also plays a factor. It is widely speculated that the bank of england will cut the base rate 3 times this year to 4.75%, which will make mortgages more affordable. Ultimately, property has always been one of the lowest risk long term investments, so unless you deal in property, there is little risk in you loosing out over time. By the way, I have a 100% mortgage on my place if anyone was wondering if I had anything to worry about! I think that property will increase slightly (2-5%) in 2008, maybe not in line with inflation which arguably means property is falling in price slightly in real terms.

bulltraderpt · 22-01-2008, 2:15 PM

I'm so looking forward to large falls next year.

I think it will take at least another 12 months for sellers to realise they have their properties over priced.

This is exactly what I'm seeing in the market where I am interested in buying.

Properties are very slowly being reduced by a few percent.

Buyers must realise credit is tightening, personal debt is high, and unless you have an outstanding house, priced correctly, you better get to used to lower offers.

Good luck.

ModernSlave · 22-01-2008, 2:32 PM

Looking at all the news headlines about the market turmoil, reviewing the 2007 credit crunch, talking to people tightening their belts, looking at Christmas retail results - the boom is over and it's time for economic retraction.
Property has changed from homes to investments - it's an illiquid asset and it will, like other asset classes, be hit over the coming year. Globally. The UK may be an island but we're as vulnerable to global downturns as any other country.
Our overvalued housing market has priced out younger buyers to the benefit of those with mortgages already. So a repricing of housing isn't a negative concept anyway.
The Bank of England only has so much room to move as inflation is driven ever upwards thanks to rising energy costs, food costs etc.

andikay · 22-01-2008, 3:41 PM

The housing market relies on people buying houses at the bottom end of the market; this was the job of the first time buyer. Over the past few years the first time buyers have been replaced buy investors, unlike first time buyer they will only buy if they can make money, as their investment stops gaining value they will want to sell, first time buyer will not come to their rescue because they can not afford property at current prices, so prices will have to fall. The supply and demand argument is not a sound argument because the demand is not from people wanting a place to live it is from people who think buying property will make them money. Housing can not continue upwards for ever. In Rotherham I have seen over the past 2 years the amount of properly for sale increase whilst there as been a degrease in the number of sales and prices are coming down. maltby driving school Rotherham

glastowinebar · 22-01-2008, 7:58 PM

Quote:

Originally Posted by bulltraderpt

I'm so looking forward to large falls next year.

I bet those who will be in negative equity as a result of 'large falls' don't share that view

Ebenezer Scrooge · 22-01-2008, 8:51 PM

The government has built a false economy over the past few years, and we are now seeing the signs of this in overinflated house prices and mortgages people are struggling to pay.

Davesnave · 23-01-2008, 7:15 AM

It amazes me that, at this point, 30% of responses are still for an increase or maintaining the status quo. Almost every pundit tuned into this subject over the past year or two has agreed that a readjustment is on the cards and that price growth over, say, the last 5 years is unsustainable. Looking at the situation in the USA, the credit crunch and the overall chance of global slowdown and it all looks like a no-brainer to me. The only open question is how low will it go?
People with kids in their 20s, or those priced out in the past few years won't be losing too much sleep if the main casualties are buy-to-letters, whose empires may be the first to collapse, or at least retract. However, it's beginning to look as if the fall out will be be a lot wider than that.
Ebeneezer above is right; an economy built on ever-escalating debt is ultimately doomed.

BLOO LOO · 23-01-2008, 9:04 AM

Well, they may be hit, but thats what happens when you get panicked into buying because you will "miss out". Classic bubble mentaility Im afraid.

Martin himself has said many times, only buy if you can afford it. Even these guys, in negative equity, IF theyd followed this advice, would not fear a drop in the most expensive asset they are liekyl to buy

tryinhardtosavethepennies · 23-01-2008, 10:04 AM

Quote:

Originally Posted by BLOO LOO

Well, they may be hit, but thats what happens when you get panicked into buying because you will "miss out". Classic bubble mentaility Im afraid.

Martin himself has said many times, only buy if you can afford it. Even these guys, in negative equity, IF theyd followed this advice, would not fear a drop in the most expensive asset they are liekyl to buy

While that may be true, it doesn't help those who have found themselves in this position.

If I could go back to 2005 when we bought our first house, and were panicked into buying because our mortgage advisor said exactly that: "if you don't buy now, you may be priced out of the market", I probably wouldn't have bought. We took a mortgage based on 5x my OH's salary, more than 100% of the value of the house, interest only...an MSE nightmare! Then we borrowed more on top of that to do the place up. It was very, very stressful.

Having said that, we've been extremely happy in this home, have learned a lot from doing it up ourselves and now have a lovely house to live in. Unfortunately, we're now in the position where we're trying to sell it, and probably won't even get enough to cover the mortgage/additional borrowing.

Fortunately though, I qualify soon and get a nice pay rise which will allow us to borrow more sensibly this time round and afford a slightly bigger house in which we can "sit tight and ride out the storm"...should it come. I'm of the opinion, if we're going to get into negative equity, I'd rather be in a place that's big enough to put down roots and start a family - it'd be impossible in this tiny house.

I seem to have gone off track....?! It's a hard one to call - no one can predict the future, but my tuppence worth is that prices have started to decline (about 5% in our region since the summer) and will probably continue to do so.

luiswinner · 23-01-2008, 11:33 AM

I think that London has an additional value that we are not seeing the long term shot. The olympics in 2012. Even if we going through a 2008 with flat prices this will definitely go back to the positive track. and surpass the estimates (~10%)
then, stop the speculation, London and Britain are still target for immigration and they need housing, and if demand is higher than offer then prices will go up.
Finally, with the expected rate cuts the mortgage applications will increase.

vickyo · 23-01-2008, 3:24 PM

Quote:

Originally Posted by glastowinebar

I bet those who will be in negative equity as a result of 'large falls' don't share that view

Most people buy a house to live in, rather than make a profit - the prices will even out over time.

catstar · 23-01-2008, 4:21 PM

I think E most likely and that is what creditable bodies are saying too. It annoys me that the media paint this doom picture and actually create what they are saying, ie they say there will be a massive price drop and everyone stops buying and sits and waits for the prices to drop. I think thats irresponsible and lazy. In actual fact if people just bought normally the market will decide the correct prices, ie if too dear it wont sell or buyers bargains down; if its too cheap more people offer and seller gets more.
Noone wins when the media do this, except the investors because everyone who is waiting decides to rent and then mr buy to let gets his 2nd mortgage paid for..... The buy to let buyers can afford to buy at any time so they will be buying no matter what the market.