The Hargreaves Lansdown business consultancy is forecasting a 10.4 per cent drop in house prices from their peak, to take place by the end of this year.
A new assessment of the market by the consultancy suggests that while mortgage interest rate rises may be causing short term damage to individual’s finances, the longer term effect of house price falls could be more damaging still.
Sarah Coles, senior personal finance analyst at HL, says: “We’re used to falling house prices affecting how we feel about money. Homeowners tend to feel less well off, so may cut their spending – particularly on home improvements and furnishings.
“But property equity is also used as a last resort by some people to access lump sums when they remortgage. The inability to dip into growing equity will force them to make big changes to how they spend.”
Coles says a rarely-reported effect of house price falls is the impact it has on retirement plans for all kinds of property owner. Hargreaves Lansdown has conducted a sentiment survey to see how different potential house price falls would hurt the long term aspirations of different groups, such as home owners and private renters.
She continues: “Falling house prices have a profound impact on our long-term resilience … If house prices were to fall 18 per cent, later life resilience would drop seven times more for homeowners than for renters in the coming year. This owes much to the fact that in order to get a rounded picture of people’s retirement income and outgoings, [we] look at home ownership - and how much equity people have in their home, alongside pension savings and other assets. The idea is that the less equity you have when you get to retirement, the more you’ll need to pay to keep a roof over your head.”
Coles says rising house prices automatically build equity, because the mortgage becomes a smaller percentage of the value of the property. Conversely, falling house prices shrink the amount of equity you hold.
And she warns that this is coming at a time when rising mortgage rates are adding an average of £250 to people’s monthly outgoings, which hits overall resilience too.
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House prices dropping? That's really good news. It'll mean that I'll pay less CGT when I sell my rental property.
Exactly 😂 my thoughts. The housing near me is not selling, a lot are still pricing them in the “ Pre-Liz” world, tough times ahead I feel.
Asking prices are still too high locally. You can understand for property listed a while ago but new instructions still at peak pricing. Problem is people look at recent sold prices, but those would be sales agreed 3-6 months ago.
Hope that's a joke...
Couple of very interesting auctions in the next month near me, Brown & co have a lot of ex council houses now owned by Flagship housing assoc, all rough as old boots and mainly in undesirable locations, really only suitable for cash buying landlords, but will landlords be buying them ? this one won't be
Why is a HA selling properties?
Good question Tricia, maybe because they need a lot of work
I don’t like on line Auction’s it was better when everyone was present, you could see the regular cartels in groups and figure out the bluffers
I agree Michael, I suppose it's cheaper for them online, no room hire
The old houses that needed a lot of work were good and better room sizes, others couldn’t get a Mortgage on those which is why they were in the Auction unlike today’s Auctions you could get all sorts. Sometimes do better than private sale because all the buyers were there and some money rich. Probably all taking a hit now. Gut everything out all new Electrics, plumbing, heating, bathrooms, kitchens if 225mm external solid walls put 50mm insulated plaster Board internally & skim, like a new house. The trouble with buying old houses partially up graded not good, bits of electric’s added on here and there same way plumbing, nothing proper and bodging for ever trying to rescue it.
Absolutely right Michael. Electrics are not such a problem as long as clearly labelled on the fuse board, but plumbing is a different matter. I live in a 1950's house which has been added to and need to re do a lot of the pipes, waiting for hot water from the boiler can take an age.
Once I've had a bit of a sell off and finished making good some of my rental houses I will then focus on my own place!
Not sure that I can agree with this article. I will say currently those whom need to sell are doing so and those wishing to buy will get a better deal.
I think this will be short term and once the bank of England muppets stop the pointless interest rate rise then we will see a move by buyers. Historically rates are still low. Lenders will become more confident and will offer some good deals. We know that inflation is falling and this will give confidence.
I don't see a spike in prices but more of a levelling off but market, IMHO, and prices will hold.
Buy now for that bargain!
I think they are driving up Rents deliberately, the big boys are taking over and can’t compete with us, so they have to Jack up the Prices and cripple us at the same time. Have you seen their prices on those high rise.
I just Polly Neate on ITV the CEO of Shelter complaining about the High Rents that she caused.
Driving out Landlords that house 5m people people with the Rogue White Paper & a raft of other costly Regulation’s that she is supportive driving up Rents that she thinks is good and a game changer.
Incidentally Shelter houses no one and continuously complain about those who do.
Andy my friend all new electrics are crucial as well as the distribution board. All up dated cables since 1950 there’s been about 4 changes, the old led cables, the rubber covered type, the grey and the white pvc one stranded copper, the other just a single copper strand wire, more like the current one’s which are today’s colour coded cables standard for Europe, brown & blue + earth (as opposed to old red &
black). When it comes to your DEICR the 5 year one the Electrician will expect the up to date one’s, not to be disagreeing or anything just saying .
I know what you are saying Michael, but some of these experienced new sparky's, armed with their books and 6 months training will get you to do a whole host of changes, if you let them.
Fortunately my brother is an old school electrician and will help with high lighting correct procedures, helps also that he is highly qualified H&S. Not to current standards does not mean unsafe!
When these electrical inspections first came in there were a lot of electricians going around condemning electrical installations to boost their income, same as some MOT testers fail cars that should not have failed , thankfully I have very honest electrician that fully understands the requirements, rules, and regulations .
Well done Mario Mario. Your hard work has paid off. 2,452 signatures in the last 24 hours, a huge increase from 915 in the previous 24 hours. If this keeps up, we will make the 100k.
Andy. I understand what you are saying and difficult to renew if Tenanted so you are probably right unless having a Sale Survey, they’ll mark it up as to do, knock you I think.
Its not ever 17 or 17E anymore now 18 edition amendment 2. I don’t profess to be an electrician but done all this stuff before they had rules. I’am even resistant to ohms law. We still need a sense of humour.
But Michael 18th edition only applies to new work, not excising installations, we only need a fire prof consumer unit for new work or when replacing an older consumer unit, a lot of electricians don't understand this, or chose not to understand this as it's a money spinner for them to go around replacing consumer units that don't need replacing
Fair enough but you’ll need RCDs anyway if you haven’t PME and for your own comfort and peace of mind with modern trip switches, even the pop out type are now out dated, if you are charging the Consumer Unit now it has to be a metal units although we have plenty modern pvc units that was the Noam before they changed their minds.
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