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House prices in a market with rising interest rates

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  • lookstraightahead
    lookstraightahead Posts: 5,558 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper Combo Breaker
    edited 6 June 2023 at 7:32AM
    I think the market will carry on so long as prices are realistic. There's not the urgency by buyers anymore but there's still people who will buy if the vendor really wants to sell, irrespective of interest rates.
    it's safer buying now than when house prices were inflated and interest rates were low. I think when those low fixed rates come to an end it will be more difficult for some.

  • caprikid1
    caprikid1 Posts: 2,432 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    spoovy said:
    FTBers would tend to have the largest mortgages (I'm guessing), and the larger the mortgage the bigger the monthly cost increase from higher rates. So I would expect FTBer, lower-rung properties to take bigger hits.

    That being said, who knows what crazy scheme the government have got cooking to boost prices before the next election. I'd guess another big H2B scheme, but who knows, they've even looked at allowing people to raid pension pots for deposits. Whatever it is though, it will be designed to *look like* it's helping FTBers most, so will likely boost FTBer-type property prices the most.
    Actually this is often not the case, many FTB's are having single income mortgages or on low salary as we progress into our 40's many go for that dream home and stretch themselves. Consequently my first mortgage was less than £40K my current mortgage is considerably more !. The difference is though that first time buyers tend to borrow the absolutely max and have very little free cash in their income or savings leaving themselves vulnerable to interest rates. It is the affordability of the mortgage not the size.
  • Sarah1Mitty2
    Sarah1Mitty2 Posts: 1,838 Forumite
    1,000 Posts First Anniversary Name Dropper
    Grizebeck said:
    I just wonder if some parts of the house market do better as a result of rising rates etc
    The sellers prepared to reduce their prices quickly and decisively will do well, realistic sellers always beat out the competition in a downturn.
  • caprikid1
    caprikid1 Posts: 2,432 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 7 June 2023 at 11:13AM
    "The sellers prepared to reduce their prices quickly and decisively will do well, realistic sellers always beat out the competition in a downturn."

    Depends on your definition of "Do well", if you mean throw you house into an temporary uncertain market for a bargain price and achieve a sale, then yes they will do well. Everyone likes a panic seller who believes the crashy fear, but surely even you have stopped believing in the great crash ??? 

  • Alderbank
    Alderbank Posts: 3,874 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    edited 6 June 2023 at 10:10PM
    Higher interest rates cause lower house prices. 
    That's quite a claim!
    Do you have any evidence for that?

    In 2016 interest rates were 0.25%. They are now 4.5%, 16x what they were in 2016.
    So have these massively higher interest rates made house prices lower today than they were back in 2016?

    Quite the opposite, prices are higher everywhere without exception.
  • fackers_2
    fackers_2 Posts: 304 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker
    edited 6 June 2023 at 10:11PM
    Grizebeck said:
    Just a random question here 
    Where mortgage rates are rising does this in anyway drive up demand for houses at the "lower" end of the market? Is there any evidence in this from past mortgage hikes ?
    Is it wrong to assume that people lower their sights when budgets tighten

    The reason i ask if we have brought a "in between house" whilst we find what we want with cash in the bank for this new house and will either rent out or sell on the house once the new one is finished etc

    Just check out rightmove. Tons of reductions! Almost 3/4 of search now show houses that have reduced asking price. Only going to get worse for the next 18months. Recon there’s another 10%. 
    Always find comparables. You can ask, but you won’t always get what you want. 

    House prices are now falling as they were in 2008… A correction is happening - Jan 2023
  • fackers_2
    fackers_2 Posts: 304 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker
    edited 24 March at 1:07PM
    Interest rates are higher than before but by no means are they high by historical standards. The cost of renting is also high. I think people will still buy if they can, even if the higher interest rates gobble up some disposable income, because home ownership will still be the best idea for many . In the modern world, with both partners working, and in some cases with decent payrises, there is affordability. Nationally, there has been a slight downturn in prices in the past year, nothing that vendors would worry over,  and welcome for prospective buyers. In my local area, prices are on the rise.

    Nationally? Not the Uk 🤣

    Mortgage approvals have near halved in 2 years. It’s tough out there already. Some people seeing £300-800 on their mortgages. What you DONT SEE is land registry ACUTAL SOLD PRICES which is around 8 months behind time. 
    Always find comparables. You can ask, but you won’t always get what you want. 

    House prices are now falling as they were in 2008… A correction is happening - Jan 2023
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    10 Posts Name Dropper
    edited 7 June 2023 at 12:07AM
    Alderbank said:
    Higher interest rates cause lower house prices. 
    That's quite a claim!
    Do you have any evidence for that?

    In 2016 interest rates were 0.25%. They are now 4.5%, 16x what they were in 2016.
    So have these massively higher interest rates made house prices lower today than they were back in 2016?

    Quite the opposite, prices are higher everywhere without exception.

    As the latest land registry figures are for March I will use Nationwide's figures. 
    Average UK house price Q2 2016 £204,238. CPI inflation adjusted that is £261,476 in today's money
    Average UK house price May 2023 £260,736

    Down 3.4% over the last 12 months the biggest annual fall in 14 years. 

    Nationwide and Zoopla forecast a 5% drop in 2023

    Lloyds bank and Halifax bank forecast a 8% drop in 2023

    The Office for Budget Responsibility forecast a 10% drop by 2024.


    Historically
    Base rates May 1988 7.35%, October 1989 14.88%
    Over 3.5 years real house prices fell 34%, nominal house prices fell by 20%

  • JacJac1
    JacJac1 Posts: 34 Forumite
    Seventh Anniversary 10 Posts
    fackers_2 said:
    Grizebeck said:
    Just a random question here 
    Where mortgage rates are rising does this in anyway drive up demand for houses at the "lower" end of the market? Is there any evidence in this from past mortgage hikes ?
    Is it wrong to assume that people lower their sights when budgets tighten

    The reason i ask if we have brought a "in between house" whilst we find what we want with cash in the bank for this new house and will either rent out or sell on the house once the new one is finished etc

    Just check out rightmove. Tons of reductions! Almost 3/4 of search now show houses that have reduced asking price. Only going to get worse for the next 18months. Recon there’s another 10%. 

    Yes, my Rightmove alert usually sends reductions on a Monday, and there are usually one or two only. Yesterday there were 12!  Hopefully more of this trend will follow.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    edited 24 March at 1:07PM
    fackers_2 said:
    Interest rates are higher than before but by no means are they high by historical standards. The cost of renting is also high. I think people will still buy if they can, even if the higher interest rates gobble up some disposable income, because home ownership will still be the best idea for many . In the modern world, with both partners working, and in some cases with decent payrises, there is affordability. Nationally, there has been a slight downturn in prices in the past year, nothing that vendors would worry over,  and welcome for prospective buyers. In my local area, prices are on the rise.

    Nationally? Not the Uk 🤣

    Mortgage approvals have near halved in 2 years. It’s tough out there already. Some people seeing £300-800 on their mortgages. What you DONT SEE is land registry ACUTAL SOLD PRICES which is around 8 months behind time. 
    My reference point for sold prices is Nationwide year on year fall. I am fairly comfortable then that I am making reference to the National picture.

    Funny thing is I admittedly cannot see the land registry 8 months in future but you are implying that you can. Crystal ball stuff. 


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