To worry about the predicted 30% fall in London house prices

(110 Posts)
feellikeahugefailure Mon 18-Jul-16 12:33:12

This would have huge knock on affects if they let this happen to everyone in the country.

It wouldn't help people that cant afford a home, it would probably make them worse off as banks won't lend. The poor will be hit the hardest by any downturn.

Mr Carney does need to do something imo, was surprised that the rate wasn't dropped. But it will have to be in August.

honeysucklejasmine Mon 18-Jul-16 12:35:01

Plunging people in to negative equity is not the way to make home ownership more accessible, as I am sure you understand. A price freeze would probably be the only "acceptable" change to the market tbh.

SaucyJack Mon 18-Jul-16 12:38:36

I dunno. Something's give at some point, Shirley?

Babyroobs Mon 18-Jul-16 12:38:43

Who has predicted a 30% fall ?

cosmicglittergirl Mon 18-Jul-16 12:43:33

I doubt it will happen TBH. And the market would recover in time if it did.

Rhaegal Mon 18-Jul-16 12:43:48

I thought the London house market was off in it's own little bubble - partly as it had so much foreign/over seas money flooding into it.

So I'm not sure it follows that the entire country would follow suit even it a 30% drop did happen.

Donatellalymanmoss Mon 18-Jul-16 12:44:03

House prices dropped by 50% in Northern Ireland. It was bit shit to be in negativity equity but if you keep paying your mortgage there is a light at the end of the tunnel.

The market has now stabilsed and many people can not afford to buy houses again. The prices in London are unsustainable and a correction is inevitable as you need first time buyers in a market.

acasualobserver Mon 18-Jul-16 12:53:32

What is your source for this forecast, OP?

CuboidalSlipshoddy Mon 18-Jul-16 13:06:43

The source is presumably this:

www.theguardian.com/money/2016/jul/18/brexit-could-cut-london-house-prices-by-more-than-30-says-bank

Which says rather different things. The main prediction is about commercial properties, and it goes on to predict drops in the sale price of high-value houses in expensive areas. It's hard to imagine how little of a shit I, and the vast majority of the population give, about negative equity problems of people who have bought houses worth over a million quid on high LTV mortgages.

acasualobserver Mon 18-Jul-16 13:16:30

It's significant that this is the prediction of a French bank. An axe to grind perhaps?

c3pu Mon 18-Jul-16 13:21:16

Prices may go down as well as up... Risk of being a homeowner I'm afraid.

Still miles better than flushing your money down the toilet each month on rent though.

mollie123 Mon 18-Jul-16 13:21:40

London prices need to drop by at least that much.
The rest of the sensible bits of the country that are not second home territory for rich Londoners and retirees have not budged much on property values since the 2008/9 financial crisis.
The bubble and gloating how much London property is 'worth' needs to be burst so that the much despised 'ordinary people' can afford to live in the soiuth-east and particularly London

ErrolTheDragon Mon 18-Jul-16 13:21:56

We've had boom and bust a few times in my lifetime ... House prices are way too high relative to earnings and young people's ability to save for a deposit. There needs to be a correction, if only then buyers (and mortgage lenders) would learn and not just start on another cycle of house price inflation, but that's too much to hope for. At least this time interest rates are already low - the negative equity situation in the 80s bust when there were high interest rates was grim.

Tbh I think there needs to be very low interest rates and good supply of lending for businesses but not so much for the overheated housing market.

EssentialHummus Mon 18-Jul-16 13:25:27

For this to be the start of a positive change for ftbs and families, I think the government needs to ban or restrict foreign ownership. Otherwise prices come down, more foreign investors flood in, and prices go straight back up. And a speak as a home-owning foreigner!

EssentialHummus Mon 18-Jul-16 13:25:54

*I

CuboidalSlipshoddy Mon 18-Jul-16 13:27:22

It's not hard to construct an argument that smug Londoners boasting about how much money they're making out of their houses were one of the driving forces for the Brexit vote.

To re-use an old joke: How do you know how much a Londoner's house is worth? Don't worry, they'll tell you soon enough.

CecilyP Mon 18-Jul-16 13:30:47

Agree with others that London property prices are hugely inflated. Rents that could be charged in relation to purchase cost are relatively low. It had to end sometime. Where I live, prices are only very slightly higher than in 2008, so wouldn't expect much of a fall.

harshbuttrue1980 Mon 18-Jul-16 13:40:57

A fall will only be a correction, closer to what the price should actually be. Ridiculous that a 1 bed flat where I live (SLOUGH ffs!!!) goes for around £200,000. Too many greedy people have been buying houses and flats for "investment", pricing normal people out of the market. I would be happy to see these "investors" losing out if it meant that normal people can buy. Its stupid to buy an investment of any kind without realising that there is a risk that the price could fall anyway. I do feel sorry for homeowners who bought at the top of the market intending to live in the home, but still think it is a necessary correction and will benefit more people than it harms.

slimebuster Mon 18-Jul-16 13:46:36

We bought our London flat in 2012 and it's gone up by around 30%, so a 30% drop wouldn't have much impact for us. There could well be others who have bought more recently who would end up in negative equity though. We have no plans to move for 30+ years so even if prices dropped further it wouldn't really affect us. We've overpaid massively and had a big initial deposit, so negative equity isn't a worry.

BarbaraofSeville Mon 18-Jul-16 13:49:46

Interest rates are at historical low, almost zero so can't fall much further. I can't see how dropping interest rates would affect the London property market. Lending could be interest free and still almost no-one could afford to buy.

I also can't see how a big crash in London would affect the rest of the country, apart from slightly more people who can't afford London and who currently buy on the outskirts/Home Counties etc may buy a bit closer in.

While London has been having its massive boom over the last 5 years or whatever, the rest of the country has been bumping along with falling/flat and now slightly rising prices. It's only the last year or two where I am where prices have got back up to pre-crash levels, almost 10 years on.

specialsubject Mon 18-Jul-16 14:40:02

That's London. Rest of the country is different.

evilcherub Mon 18-Jul-16 14:44:26

It would be great. Young people would be able to afford homes again rather than paying for their landlords 2nd/3rd/4th etc and homes will be cheaper for those wanting to "move up" the ladder. Why is negative equity for a few worse than a life of perpetual renting for the many? Renters also lose thousands of pounds paying out money in rent but hey, ho, nobody seems to give a shit about them, just people who might be in negative equity (but still have their OWN home at the end of the day!).

BagPusscatnip Mon 18-Jul-16 14:44:59

Not sure where you are getting your information OP? This is the first I have heard of a 30 percent drop. Source?

sall74 Mon 18-Jul-16 15:02:05

www.bloomberg.com/news/articles/2016-07-18/buy-a-london-home-win-a-parking-space-as-developers-seek-buyers

AyeAmarok Mon 18-Jul-16 15:07:50

I think there might be a correction in prices in London, but I don't think it'll have a huge impact elsewhere.

London has got beyond ridiculous.

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