Falls in house prices predicted for the end of this year

[Mark Rocks]

Rightmove have released new data showing that house prices once again rose in June.

But this time the growth was only 0.3% - the smallest increase since January.

The team at Rightmove have said that the affordability crisis is likely to put the brakes on the incline growth of house prices we've witnessed in the last year, saying;

"After a very strong first half of the year, it is likely that the housing affordability crunch will have a greater impact on market behaviour in the months ahead, with further interest rate rises anticipated during that period.

“This, alongside more choice coming on to the market for buyers and the usual seasonal variations we would expect, means there are likely to be some month-on-month price falls during the second half of the year.”

https://www.theguardian.com/business/2022/jun/20/house-prices-in-great-britain-hit-record-high-but-falls-predicted-in-2022

Are you surprised to hear that the market may be cooling off this soon?

[Anand1209]

prices may cool off gradually, however, don't think prices will crash according to 18yr property cycle

[Mark Rocks]

Yeah according to the 18-year property cycle we've got at least 3 or 4 more years before the crash arrives.

Would this cooling off in house prices lead you to change your own investment strategy, do you think?

[CH_]

I guess we have to consider whether the 18 year property cycle is war and global pandemic proof? Very much hoping the cost of living crisis and inflation will cool next year but if not it seems highly unlikely prices will continue to rise and more likely we'll see a slight correction. Affordability is key, rates up and affordability down is surely only going to lead to one thing. Or maybe growth stalls for a year or so then continues on as per the cycle. 

[russellshire]

@CH_ Prices will undoubtably cool off, but for them to drop we'd need some forced sellers in the market. Interest rate rises could theoretically make some homes or investments inviable, but most people are fixed for the next few years.

[Peter Plucker]

The BoE just removed the Affordability Test for mortgages so this will take the brakes off house price increases!

[kasim]

I've viewed the Property Cycle on the Property Hub and it implies that it's independent of wars etc. They also said that the cycle isn't exact i.e. it can start/end at different times than predicted. If you assume that the cycle started in the 2008 financial crisis, then the next crash will be in 2026; but this is not guaranteed. Assuming that this will happen as predicted, then we're in the 'winners curse' because the predicted crash is only 4 years away.

Personally, I'm entering the Serviced Accommodation (SA) market by converting my BTLs into SA units one at a time to take advantage of the CGT allowance; and it gives me more time to learn the SA process as I'm new to it - I'm already taking a course on it. I'm starting in September 2022 when the AST finishes, and I'll run it for 12 months before converting the next one. As I have 3 convertible BTLs, it'll take me close to the predicted crash.

I was caught out by the 2008 crash because I bought my apartment in 2007; and it never recovered. But by 2009, I took advantage of the crash by buying 5 BTLs in as many years. Then I quit my day job and didn't expand my portfolio because I was ineligible for mortgages. But now, I can raise £100K every 5 years to expand my portfolio. I will keep my powder dry until the next crash; but the advice is to buy property and wait; not wait to buy property. However, when I do the conversions, I'll need to remortgage my properties to pay for them; then I'll be forced to wait - equity growth is a slow processs.