Home Prices Are Falling Does It Matter? The New York Times

Table Of Content

• UPDATE 2 August 2021 – Londoners flock to buy homes outside capital
• November: Nationwide sees average property value top £250,000 for first time
• May: Nationwide Logs Annual Price Fall But Hints At Recovery
• Is 2023 a good time to buy a house?
• Market predictions
• Bank Of England Raises Interest Rates To 0.25%
• November: Relief for borrowers as Bank rate stays at 0.1% – for now

Properties in Nottingham saw the steepest annual increase of 10.5%, while prices in London grew by just 4.4%. Nationwide’s average property value for November stands at £263,788, down from the previous £268,282. According to ONS, the average UK property cost £296,000 in October 2022, representing an increase of £33,000 compared with a year previously. It should also be noted that other indices measuring price movements since October, from the likes of Halifax, Nationwide and Rightmove, have shown growth at much lower levels (see stories below). It says the flight to rural and coastal locations – a consequence of the sharp rise in the number of people working from home during the Covid-19 pandemic – has begun to run out of steam. Further evidence of the slowdown in the housing market can be seen in today’s Nationwide House Price Index.

UPDATE 2 August 2021 – Londoners flock to buy homes outside capital

Rightmove said that rocketing rents was a key motivator – for those able to clear the mortgage and deposit hurdles – to get onto the property ladder. The bank reported a Q1 profit of £547 million, up 11% on the £495 million it made in the corresponding period in 2022. “It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find. Investors we are dealing with are purchasing at 20 to 30% below peak 2022 market values, and only those who need to sell in this market are selling. Only cash purchasers are not directly affected in terms of their ability to pay. Agents say this is being fuelled by record high rents, up 33% since 2019, and the lack of available rental property.

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November: Nationwide sees average property value top £250,000 for first time

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The price of property coming to market edged down this month, according to June data from Rightmove, writes Laura Howard. Zoopla says there are some signs that supply is starting to grow at an above-average rate, with 18% more homes listed for sale in the last four weeks compared to the five-year average. “These are worrying times for first-time buyers whose carefully saved deposit may no longer be enough to secure the home they want. Some borrowers may consider radical solutions such as longer mortgage terms, 100% mortgages and downgrading the size and location of the property they purchase to ensure they can afford repayments. “Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans.

May: Nationwide Logs Annual Price Fall But Hints At Recovery

According to the Office for National Statistics (ONS), a 10% deposit on a typical first-time buyer home represents 60% of the buyer’s gross annual income, so this difficulty is unsurprising. In recent years, there was a credible case for a ‘wait and see’ approach that saw many households drift onto expensive SVRs in the hope that interest rates would fall even further. However, those days are well and truly behind us and the only way is up for interest rates. “Anyone paying their lender’s standard variable rate (SVR), or on any mortgage deal that’s linked to the Bank rate, will have to absorb an almost immediate impact in the cost of their monthly payments. “It’s the same story in the US, which – just yesterday – saw the Federal Reserve increase rates from 0.5% to 1% in the wake of the highest inflation the country has seen in 40 years.

"In October, 24% of homes received over the asking price. Conversely, homes sitting on the market for more than 120 days saw prices reduced by an average of 15.8%." Wall Street bank Goldman Sachs expects home prices to fall for the rest of the year due to high mortgage rates and low inventory. “House prices nationwide are down 2-3% from their last summer peak, according to the Moody’s Analytics repeat sales house price index,” Mark Zandi, the company’s chief economist, told MarketWatch. Though down from its 2023 high of 7.79%, the average 30-year fixed mortgage rate in 2024 remains well over 6% amid rising home values. However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly.

Is 2023 a good time to buy a house?

With stretched budgets and a preference for living in city centres, the demand for typically cheaper studio flats has grown by 71% compared to last year, says Rightmove. As more buyers return to offices post pandemic, they’re increasingly opting for urban centres. It predicts prices will fall by 0.2% in the first quarter of 2023, then by 5.8% in the second quarter, 8.2% in the third quarter and 7.9 in the fourth quarter. House prices could fall by 8% next year before stagnating until 2027, according to experts at Lloyds Banking Group, writes Mark Hooson.

"Because you don't know whether interest rates are going to go up or down in the long term, and you're simply making a housing decision, as opposed to an investment decision," he says. That's not to say it's a bad thing that older adults are able to remain independent for longer, often thanks to advances in technology and telehealth, but it cuts off a key source of inventory that isn't added elsewhere. When younger adults sell their homes, for example, they're typically also looking to buy another, increasing turnover, not supply. According to these forecasts, home prices could rise anywhere between 1.4% and 4.1% in 2024.

McGill says that anyone who wants home values to rise rather than fall should support immigration. "The reason why is because existing homeowners have pulled back. New listings are down." While experts have maintained that home prices are unlikely to plummet in a similar fashion to the housing boom of the mid-aughts, evidence is mounting that the current housing downturn is growing more severe by the day. She told MarketWatch that she expects home prices to remain strong through the rest of the year.

In fact, depending on how much you need to borrow, you may be better off choosing a no-fee deal with a slightly higher rate. Not everyone will be eligible for a sub 1% mortgage deal, since offers are subject to status. Lenders will want to see that you’re a responsible borrower with a good track record of managing credit in the past. Because of the lack of consistency in mortgage approval times among lenders, Trussle will only work with the UK’s fastest lenders to deliver on its five-day service commitment.

In Wales, year-on-year growth stands at 13.4% – a 1.9% drop compared with the first quarter of 2022. Rightmove also found that 34% of landlords are planning to expand their property portfolio over the next 12 months. By the end of the year, Rightmove predicts average asking rent growth to reach 8%, revised upwards from the 5% it predicted at the start of the year. Annually, the cost of rent was 11.8% higher in June 2022 than 12 months ago, according to data from Rightmove, which analysed 332,460 rent charges. For this reason, Rightmove’s annual growth forecast at 7%, is lower than 9.3% it’s currently running at.

NAR’s Pending Homes Sales Index rose 1.6% in February from the month prior even as mortgage rates approached 7% by the end of the month. Existing inventory rose 5.9%—logging 1.07 million unsold homes at the end of February. However, there are still only 2.9 months of inventory at the current sales pace.