Would you welcome a fall in house prices?

After many years of consistent house price inflation, the value of the average property in the UK has started to decline.

In fact, the Royal Institution of Chartered Surveyors has noted that house prices are now on a “downward trajectory at the national level”, and especially so in the West Midlands and south-east England.

Savills, meanwhile, has questioned whether recent data showing house price falls is telling an accurate story, as they don’t take into account soaring inflation over the last few years.

The organisation believes that if you adjust for inflation, average house prices are no higher than they were in late 2015, so if you bought your property around then, it’s likely you’ll have seen a real-terms loss in the value of your home.

Of course, this is bad news if you see your property largely as an investment and have an eye on collecting healthy returns when you sell up.

But interestingly, this drop in house prices isn’t causing any great anxiety among property owners who just want a place to call their own.

According to research by eXp UK, 83 per cent of homeowners are comfortable with cooling house prices, and only 27 per cent are concerned that a market slowdown could turn into a house price crash.

To answer the question of why they’re so relaxed about the situation, we have to look at why they bought a property in the first place.

The eXp UK survey found that 89 per cent of current homeowners believe it’s important to get their foot on the property ladder.

But when asked why, only 12 per cent said they bought a house largely as an investment so they could make a profit when they sell in the future.

By contrast, more than half – 51 per cent – said their main drive was simply to own a home of their own, without being hamstrung by rental market restrictions and having to deal with landlords.

So it seems that how you respond to news that house prices are coming down really is a matter of perspective.

For all the talk about how a housing market crash could represent a major financial hit to Britain’s homeowners, it appears as if the vast majority don’t perceive their house as a financial asset that’s there to generate returns.

If you ask most people, buying a house is about having a place to call their own, laying down roots, being part of a community and giving a sense of security and belonging to themselves and their families.

And if you have bought a property as an investment and are worried about its potential to generate a profit, it’s worth remembering that the value of any type of investment goes down as well as up in the short term.

Markets always bounce back in the longer term, so it’s important not to react rashly if there’s any decline or volatility.

It’s interesting to observe that even though most of the people polled by eXp UK weren’t overly concerned about the profitability of their home, the vast majority were still confident that they’d receive more money than they paid for it, whenever they decided to sell up.

So even if you’re confronted with alarmist headlines and scare stories about plummeting house prices day after day, there’s no need to panic and act impulsively.

If you have any questions about managing your long-term finances, please get in touch with our specialist advisers and we’ll be happy to speak with you.

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The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. Welby is a trading name of Welby Associates Wealth Management Ltd Company Registered Number NI630504 who is authorised and regulated by the Financial Conduct Authority, FCA register number 697372. The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk

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