House prices in a market with rising interest rates

Sarah1Mitty2

inkydolphin said:

Sarah1Mitty2 said:

inkydolphin said:

Alderbank said:

Deleted_User 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.

I'm pretty sure they meant higher interest rates cause current house prices to fall, rather than higher interest rates cause current house prices to become lower than they were at any point in the past when interest rates were lower.

I would expect them to go back to the last time rates were 4.5% (talk now is of 6% base rate) wages have not risen enough across the board to make up for the cheap credit going away.

It doesn't happen though - if that always happened house prices would be the same price they were when rates were at 4 5% at any time in history.

No, that doesn`t really work, you have to take into account credit availability and wages/inflation plus the prevailing sentiment at the time and possibly a lot of other factors, we couldn`t compare wages from say the 80`s to now, and availability of cheap credit to an ordinary person in say the 70`s couldn`t possibly compare to the last couple of decades? Where we are now is uncharted, it has never happened before and we don`t know the outcomes from the reversal in the central bank cheap money policy yet, but when I said the "last time" rates were at 4.5% I did mean the last time, not previous historical times,

MobileSaver

Sarah1Mitty2 said:

inkydolphin said:

Sarah1Mitty2 said:

inkydolphin said:

Alderbank said:

Deleted_User 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.

I'm pretty sure they meant higher interest rates cause current house prices to fall, rather than higher interest rates cause current house prices to become lower than they were at any point in the past when interest rates were lower.

I would expect them to go back to the last time rates were 4.5% (talk now is of 6% base rate) wages have not risen enough across the board to make up for the cheap credit going away.

It doesn't happen though - if that always happened house prices would be the same price they were when rates were at 4 5% at any time in history.

No, that doesn`t really work, you have to take into account credit availability and wages/inflation plus the prevailing sentiment at the time and possibly a lot of other factors, ... Where we are now is uncharted, it has never happened before

Whoosh, that's exactly the point!

There are a huge number of factors that affect prices and yet you claimed to know where prices would go based on just one factor (interest rates), can you not see the irony in what you're saying?!?!

moneysaver1978

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

MultiFuelBurner

moneysaver1978 said:

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

It depends how invested you are in the property you are purchasing. If you aren't bothered too much you can play whatever game you like. However morally that may be frowned upon.

Have you had a survey?

What are similar properties now listed at?

What sort of amount are you expecting to reduce your offer by?

CSI_Yorkshire

moneysaver1978 said:

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

What would I do?  Stand by the offer that I made and that the seller accepted in good faith.

Sarah1Mitty2

moneysaver1978 said:

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

What current news in particular are you thinking about?

gazfocus

moneysaver1978 said:

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

We are kind of in the opposite situation...accepted an offer on our house back in Feb, £1k over asking price and comparable houses are now in the region of £20K+ more...it's a bit annoying but I wouldn't dream of pulling out or trying to renegotiate this late in the game.

RelievedSheff

moneysaver1978 said:

Our offer (12.5k down from asking price) was accepted in Feb and we expect to exchange next month but now we are wondering - given the current news, what would you do at this stage?

You made an offer based on what the house is worth to you.

What has changed since February to your situation?

moneysaver1978

The houses in that area are not often on the market so we haven't been able to check what sort of prices are being sold/offered.

That said, we are happy to stand by our offer - our thinking was that this isn't a a BTL or investment, and this is our first home and we wanted to get out of the renting. We will be living in the house for at least 10 years so not too worried.

But good to see that I am not alone in thinking this.

MultiFuelBurner

moneysaver1978 said:

The houses in that area are not often on the market so we haven't been able to check what sort of prices are being sold/offered.

That said, we are happy to stand by our offer - our thinking was that this isn't a a BTL or investment, and this is our first home and we wanted to get out of the renting. We will be living in the house for at least 10 years so not too worried.

But good to see that I am not alone in thinking this.

Not at all its a good idea to see house purchases in a 5 year or a decade period.