I was searching in that price bracket, in SoCoDu and I have closed on a house, during covid…
My expectation is that prices will drop, but will take a good long while to do so. I wouldn’t have bought if I saw it as an investment or if I thought I was going to be moving in a few years. Although I may have to emigrate if I lose my job, something I am maybe a little to open about. I am fortunate in that I negotiated a discount, not as much as I was hoping, but it will pay the mortgage for a year or two plus some works that need to be done on the house.
I would agreed that there is not a lot of “good” houses in that bracket, but equally the equity I have put into the house, is what I could have bought something bigger down the country so the location for family is a factor for me. what good is to people will differ considerably.
What I noticed was that price expectations go up very quickly in vendors minds, but they are slow to come down. In a purchasers expectations it is the opposite. Long story short, the person who is willing to walk away has the power.
My experience with the banks was that while I had AIP with a few of them, some banks became very reluctant to give final / drawdown approval, preferring to ask an eternity of questions rather than actually say no. Banks are preoccupied with managing their current lending books as many people have stopped paying with covid moratoriums. Some will go back to their payment schedules after the 3 months or whatever it is, and others won’t. As we know it takes years to solve the arrears problems, and these moratoriums hang around banks like a bad smell - if its stinks enough there is every reason not to approve similar loans, but if the problem reduces, bankers stop worrying about it and wonder what they can do with all their liquidity that the ECB is giving out for free.
So the last number of people who can & want / need to buy will. And some will buy because they don’t know when they might be in a position to again. But once that number of buyers is exhausted, then prices will start to drop so long as there is property coming available. however we know from last time that investors (or bankers) will try to hold off crystallising a loss. And lots of people won’t sell because their neighbour got mill for their house and they should get the same.
And remember that the ECB and the fed are printing lots of money meaning investors have to put it somewhere. Most investment grade bonds are below 1%… That means investors (and banks) may not be inclined to withdraw money from a particular investment until it is very clearly making obvious losses. If there can be an argument to hold an asset long term, investors may take that option too. Therefore it could take some time before banks start to repossess properties en mass, as was previously the case. Thereby slowing down the inevitable decline in house prices. Nothing changes quickly.