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Autumn Property Review

Autumn Property Review

Autumn Property Review

We here at Home House Buyers will openly say that this is the most nervous we have been about the property market since Brexit and Late 2006. Why, (we hear you ask)? Well, with house prices falling, sales dropping, interest rates rising and a Brexit deal still not set in stone then we are worried that we are on the brink of another market crash. Who knows what will happen but we have scoured the internet and papers to get some knowledgeable reviews on the market so that you can formulate your own opinion on the market.


According to the economist house price growth is set to drop by half to 1.6% with London and some parts of the South East being hit the hardest.

In KPMGs last quarterly report they said that it expected the rate of growth to drop from 4.5 per cent last year to 1.6 per cent in 2020. The accountant blamed numerous factors including high prices, uncertainty and rising interest rates, with the slowdown likely to be felt most in London, the South East and England. In London, prices are forecast to drop 0.7 per cent next year. Official figures last month showed UK house prices had only risen by 3 per cent in the 12 months to June, this is the slowest increase we have seen in five years. However, KPMG also said it expected the economy to grow by 1.4 per cent next year if there was a ‘friction-light’ Brexit. Not good news for those looking for some kind of quick house sale.

Chances of the market crashing

Experts are saying there is a one-in-three chance of a ‘significant correction’ in London’s housing market by the end of next year according to a poll of experts. Property prices in London are on course to fall this year and then also fall next year. These prices are expected to then plummet if Britain ends up with a no-deal Brexit. With foreign investors shunning the capital, house prices in London will fall by 1.6 per cent this year and 0.1 per cent next year, a 30-strong group of property experts told Reuters. When asked about the likelihood of London seeing a crash 29% of the focus group could see this happening. Now we understand this is not an exact science but patterns and trends seem to be shifting the market towards a downward spiral.

Tony Williams, of property consultancy firm Building Value, said: ‘Central London is tanking because the traditional international buyers are staying away – and the quantum of buyers is falling.

‘A disorderly Brexit will exacerbate this trend.’

If you are one of those vendors that are on the market looking to sell house fast then maybe an aggressive pricing strategy would be best suited to stimulate a quick house sale before a potential crash.


So what is happening with house prices? Well, they fell by the largest amount in six years on a month by month basis according to new figures from the Nationwide Building Society have revealed. House values dropped 0.5 per cent month on month in August – the biggest decline we have seen since July 2012, according to the Nationwide’s House Price Index. This also follows a 0.7 per cent increase month on month for July, so the market is very unpredictable. This will then come as no surprise that we have seen house prices slump £7k in a month and the experts are saying sellers now need to make more ‘substantial’ discounts to entice buyers. If you are looking for a quick house sale then you will need to compete not only with your neighbours but also any developments that you may see in the area. This can sometimes cause an aggressive price war for those looking to sell their house quickly and first!

The Problems with new builds

This is not the first time that we have seen newbuild create havoc in the market, with their overinflated prices and the great incentives as some of you will remember when the property boom hit. In 2006 sellers, banks and developers were offering 100% mortgages, great incentives, no money down deals and in some cases over inflated prices and the rest is history.

So what happening now? With the government help to buy scheme, it is making it easier and more affordable to purchase your own home. This seemed to come amid pressure and concerns that the younger generations would be able to save post market crash deposits of 30% (Average UK House Price £225000 meaning a deposit of £67500). The HTB (Help to Buy) offers those looking to buy a new build involved in the scheme then they can put down 5% deposit and the government will offer the additional 20% as an interest-free loan for 5 years.

This massive incentive seems to be having a negative effect on some non-newbuild house prices across England. The huge deposit incentive seems to be steering buyers clear of these ‘2nd hand homes’ as the 5% deposit is much more attainable, not good news for those looking to sell house fast. With increased demand does this mean that we are likely to see over inflated prices from developers? In some areas, it seems that this is the case. Looking at this article it shows that a couple trying to buy a 730 sq ft apartment in Catford is on the market for £425000 (needing a £21250 deposit) and round the corner, you can buy a full three bedroom 1400 sq ft house with a garage for £410000, however, this would require a staggering £123000 deposit. Im sure you can see the dilemma. It seems to us that people are risking overpaying for a property to be in their own home rather than trying to save, what for most would seem to be an unlikely deposit. Some developers (such as this one) are offering huge cash back incentives which would lead us to believe that maybe the price was overinflated in the first place?

Andrew Montlake, director of the national mortgage adviser firm Coreco had the following to say: –

‘Developers know that first-time buyers are prepared to pay high prices for a new home out of desperation to get on the housing ladder,’ he says.

‘But many young couples will just be thinking about getting their foot in the door without realising the consequences of overpaying — and I’m worried what’s going to happen to them further down the line.’

Some in the property industry think that newbuild developments are being as priced as high as 15% over value on certain developments which is a ticking time bomb. Why is it a potential time bomb? Well, inside of London people are being given a 40% deposit interest-free for five years and then when they come to refinancing to pay off the 40% if their prices ‘were’ overinflated then it could cause catastrophic problems market. So to give an on a house that you bought, for example, say you buy a house for £450,000 that is 15 per cent overpriced. If prices don’t rise, when you come to sell, the next buyer could receive a new valuation of circa £382,500. If you had borrowed 95 per cent of the property price to buy your home, it would stand you at £427,500 (taking off your deposit) to pay back the bank and the Government, less any mortgage you’d paid off so far. This would mean that you would have a disparity of £45000 that you would have to pay before you could see the property.

Do you have any thoughts on the topic? Or would you like us to write about anything in particular? Then just drop us an email and we will write about it [email protected]


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