Is 2018 the year when house prices crash?

Is 2018 the year when house prices crash?

When I meet people at networking and other business events the most popular question I get is “What is going to happen to house prices in next 12/18 months?”

Now it’s generally folly to predict house price movements or when the next recession will hit however one thing is certain - it is coming at some point.

 Recessions affect the housing market in two ways.

1. Borrowers start defaulting on their loans because they lose their job.

2. The banks’ appetite for lending on property dries up meaning it’s harder to get a mortgage or refinance an existing mortgage deal you may have. This causes supply and demand for loans and property are hit prices tend to fall.

When deciding for yourself whether a house price crash is round the corner look at the figures:

These figures are interesting as in real terms it means that houses are still cheaper than they were prior to the 2007 peak.

 What is also certain at the moment is that lending criteria is no where near as easy as it was in the run up to the crash of 2007. Back then you could get 125% mortgages, refinance same day deals and self certification mortgages with little due diligence.

 Those like me who have applied for a mortgage in 2017 will know it’s far tougher. Banks want to know everything including your inside leg measurement and even after jumping all the hoops and eligibility criteria plenty of loans never get past the underwriting stage.

 In short this tends to support the idea that a crash in house prices is unlikely.

 What is happening with buyers?

 Well the below graphic illustrates that there is a big fall in home movers and buy to let transactions.

Residential property transactions averaged just over 100,000 a month last year – but house purchase approvals hit a 15-month low in November.

What about the Wakefield & Leeds market?

According to the Halifax, house prices fell in both Wakefield & Leeds. I have to say however, our on the ground view doesn’t seem to support these statistics.

We have not seen any forecasts predicting a rise in transactions this year, but the average consensus seems to be that house prices will rise an average of 1-4%

Summary:

In short, everyone is guessing when it comes to house prices even for short term predictions such as what will happen this year. The consensus does appear to be that we are in a flat housing market and those people who make claims about the value of properties doubling every 10 years have been proved wrong.

The market is definitely fragile. There is one way you can guarantee to increase the value of your property. Add Value.

First port of call should be to speak to a knowledgeable local estate agent. They should know what improvements will add most value to your house and what will give you the best bang for buck.

I hope you enjoyed this article. If this is an area your interested in and need further help please get in touch with me personally at [email protected] or call Trinity Sales & lettings on 01924 609811 or send us a direct message via Facebook.