Is this a house price blip or a house price crash?
The BBC report that…
Home sellers cut asking prices on more than 3,000 properties a day on average in Britain during September, according to figures from Rightmove shared exclusively with the BBC.
The property website said the total was the highest of any month for 15 years and was driven, in part, by a glut of homes on the market and some sellers setting unrealistic expectations.
The proportion of listed homes that eventually had a price cut peaked in 2023 and has remained relatively high since.
Property portals say buyers are now having to be choosy, with many working to a tight budget as mortgage rates have risen to three-year highs.
“Once a home has been on the market for a while and then has a price reduction, some buyers start asking questions, even when there is nothing wrong with the property,” said Colleen Babcock of Rightmove.
“In a market with so much choice, first impressions matter.”
That sounds like a property agent promoting its marketing rather than the over-ambitious of others. If that is the case what we’re seeing today is just a blip, but it’s a blip that started three years ago (if Rightmove data is correct).
Rightmove data said the average price reduction was nearly 7% – the equivalent of nearly £21,000 cut from a typically valued home.
Its data showed that homes that had a price reduction typically took 119 days to find a buyer, compared with 39 days for those listed at one price.
The proportion of listed homes that had a price reduction stood at 34% in last month, only slightly lower than the recent peak of 36% seen in September 2023.
Rival property portal Zoopla said that buyers were in the driving seat, and were being more cautious and selective about the properties they viewed.
This sounds like it could develop into a property crash. The last I can remember of real concern was with the ending of dual MIRAS and then MIRAS altogether. These were tax reliefs on borrowings up to £30,000 and it was back in the 1980s and early 1990s when the impact was fealt.
I’m not saying this with a smug grin on my face, my family has property, I have property. I know the worst hit property values and they are in London and are leasehold (flats). I have been writing a lot about property prices on a pension blog because many of us still see our house as a pension (we can remortgage if we run short of income).
You can’t access liquidity if the valuation doesn’t stack up for what you need.
I’m sorry to go back to my favorite bit of financial advice , given to me in 1984.
Affordable housing?
A purchase is not at a fixed price if bought with leveraged finance. If we are borrowing more than 90% of the purchase price our purchase is hugely leveraged and those who think that we can increase pension contributions need to consider the impact of mortgage rates on those who are are paying up to three times the rate five years ago.
With mortgage rates at a three-year high, Zoopla said buyers needed to keep monthly mortgage payments affordable.
So, while the number of homes for sale was up 5% in September compared with a year earlier, the number of sales agreed had fallen by 9% over the same period, its figures showed.
September also tends to be the month with the most cuts to asking prices as sellers often want to complete a sale by the end of the year.
There’s a lot in this BBC article that is advice for buyers and sellers to protect themselves, But this looks like a crash for many
The history of British equity release predates your old boss’s comment in 1984 by nearly two decades, Henry. The first home-reversion plan appeared in 1965, and mortgage-based home-income plans were being offered by 1972.
The crucial difference is that today’s products generally offer protections and options that were not reliably available in 1984, including safeguards against negative equity in products meeting Equity Release Council standards.