To think the housing market is about to collapse

[sandrabedminster]

We seem to be getting almost daily story's about it on the edge, no surprise really given the ridiculous prices.

Now standard life have suspended their commercial property fund.

Is it about to go back to 2008 all again?

Putting the social housing homeless issue aside, thats what should be being built. The whole Housing benefit going to private landlords is quite the most ridiculous thing I've ever heard.

This is going to sound really really stupid
But, private renters are in the properties now? So theres plenty of properties out there, people just aren't able to obtain the amount on the loan to value income (yet they can afford the rent which is probably more than the mortgage would be) or get the huge deposits together. So, is the drive to build more unaffordable houses the way forward? There has to be a better way or turning those renting into ownership if they want to.

Eventually these renters will need housing benefit when they are no longer able to work, that bill is going to be huge. Theres no way you would be able to save enough in your pension to cover that as well.

Bengal your absolutely right, it costs between £3000-£5000 (boxes, van hire, estate agent fees, post redirection etc etc) every time you move, so on top of throwing that money away to the land lord you also have to find that each year for the 'privilege' of being flexible. But i don't want flexible, i want a home, i want my child to go to the same local school with his friends, not having to change as the landlord wants you out, i want to plant fruit trees in the garden to be there long enough to see them grow, I want to decorate my childrens bedroom and give them a proper childhood room. I want to know that someone else isn't going to decide to put my rent up by £500 a month as my land lord did last month.
Ok interest go up and thats out of your control as a mortgage payer, but at least you know at some point its yours and it also may go down.

It costs significantly more than £5000 to sell and move house. Stamp duty, solicitors fees, estate agents fees etc.

I am sure there is a bigger picture but in times of uncertainty people tend to stay put. I am not it will be a full on collapse but a definite slow down in the coming months. I think buy To let will slow down but not necessary
A bad thing.

Then there will be a second drop when article 50 is declared, then another drop when we leave the EU. So years of uncertainty, it will be a decline with some increases in the middle rather than a sharp drop. I think.

it costs between £3000-£5000 (boxes, van hire, estate agent fees, post redirection etc etc) every time you move

No way.

It does not cost £5k to move from one rented property to another.

If you end up having a rent overlap it is expensive, but there is no way the costs of moving inc estate agent fees and a removal company are anything like £5k. Post redirection is £60 for 12 months...

I am 25 and have just moved back home as had to swallow my pride and independence because rent is throwing money away.

Rent is not throwing money away. You are paying for somewhere to live and you don't take on any of the risk of ownership such as maintanance.

To those who think rent is highly mobile... you obviously haven't rented any time recently.

So yeah, you sign up to 1 year. typically with a 6 month break clause with 2 months notice so can move at 8 months. And after 1 year negotiate onto a rolling 2 month deal. No more estate agent fees to sign and you can move with 2 months notice. How is that NOT flexible? I rent. Most of my friends rent. We all seem to be capable of negotiating onto rolling contracts. LL are highly likely to say ‘no’ to you going onto a rolling contract, the agency pushes for it obviously as it is a money spinner for them!

People are so defeatist.

Eloquently put Tickle. My husband and I are on the housing ladder with a lot of equity (for now at least!). But I worry about our children, and I think it is very unfair on people in their 20/30s.

No BengalCat, I haven't moved house in many years. But my stamp duty was many many tens of thousands when I did move, on a completely different scale to renting.

When I was renting, I never spent anywhere near £3-5000 moving. I packed my own stuff, used recycled boxes, drove my own van and redirected all my own post.

The arse falling out of the housing market won't necessarily help anyone who currently can't buy a house to buy one. Banks become even more risk adverse on lending I'm afraid. Or it may just lead to foreign investors buying more of our property at cut price rates. If it is drastic it will lead to misery on a wide scale

The main issue is our housing model - I agree it is awful for renters and needs reforming - but there is no political will to do so. We need more social housing, rent controls and long term leases (5/10 years etc). Everyone deserves a stable home

whois that's what my last few have cost
Boxes
Bubble wrap
Post redirection
Estate agent fees (the last ones just demanded £1200 with no warning)
Referencing fees - you don't get those back if unsuccessful, you need to pay again for each property.
Van hire / man and van hire
Professional clean (all carpets, oven etc) on exit of current property - commonly written into contract

You also always have to have a constant future deposit, the X amount of months up front they want + the above costs sat in your account as your only ever 2 months away from a move on a rolling contract. Plus the fight (it's always a fight) to get your deposit back.

The flexibility is fine even great for some when it's your terms, not thrust on you from someone else.

I doubt foreign buyers will buy something that is falling in value. K&c has been falling for ages now.

If there was a 20% crash and then 2% every year for a couple of years hardly anyone(as a % of uk property,) would be in ne with their deposits and paying off the capital. Some will however, espically ones on low deposits or io but that's the risk.

I only bought a few years ago and even if prices fell 40% overnight I'd still be better off than people forced to rent with how much they have gone up and that mortgage payments are way less thsn rent.

There was an article in the Observer saying that overseas commercial investors are buying land.
I know of an expensive commercial site that was bought by a French company this morning.

Bloody hell, where do you live that costs £5000 to move rental property and LL puts rent up by £500 a month? £500???!!

I think it's a horrible situation, there's no easy answer for anyone. I've rented all my adult life (I'm 33) until I bought a tiny 2 bed flat this year for myself and my 2 children. It's small and I saved for 3 years constantly for the deposit but I've never felt luckier. If I go into negative equity I'll be fine as I'll be happy staying here, girls will share a room but it's ours, near their school and friends and have a lovely private garden too. I didn't overstretch myself, I'm naturally risk averse and even if interest rates hit 15% I'd manage as I have a very secure job.

I wouldn't swap this for the uncertainty of renting tbh. I think unless you've been in that situation as an adult with young DC, particularly if they're at school it's very hard to understand how horrible it is worrying that you're going to be moved on at any point or asked to pay more rent (usually £50-100 though!).

BUT, I can see how negative equity long term does no one any favours. Certainly the market levelling out and staying stagnant would be a better thing. I don't think that's feasible now though.

My estate agent fees recently were £17,000

Tickle - It's not always a fight to get a deposit back. I have been both renter and landlady, and have never had an issue getting my deposit back, and likewise I have never withheld any of it from any of my tenants. Neither have the vast majority of people I know (I know many renters living in London). Not disputing that there are challenges for renters, and that some landlords can be horrible, just trying to give a small amount of balance!

It's incredibly challenging to withhold any of the deposit now for LLs with the new deposit protection scheme! Fantastic development protecting renters deposits and removing the hold LLs had over tennants.

Not a fight anymore Tickle. Our landlord tried to fleece us for more than the deposit amount at the end of a long tenancy, deposit protection scheme adjudicator gave him very short shrift.

That didn't take long.

Telegraph article today

Britain's housing market is back to 'business as usual'.

I had a look at the four postcodes in my area on Rightmove. I didn't notice any price drops at the roughly million pound mark. I only noticed that one house has returned to the market post Brexit. Nothing seems to have come off he market as "sold" post Brexit either. I live in a nice suburb of London. It's a stalemate around here.

www.telegraph.co.uk/personal-banking/mortgages/business-as-usual-as-housing-and-mortgage-markets-crank-back-to/

This is good news for sellers (I've now got two viewings booked for this week compared to nothing at all last week),

The biggest difference since 2008 is that most first home buyers will have taken out a 80-90% LTV mortgage and will be paying off 10% of that mortgage every 2-3 years. So if you bought in 2013 with a 20% deposit you would probably have 30% equity in your house without any growth. It could easily be 40% with growth so even a 17% drop in the market would mean you had broken even and still maintained your deposit you would need almost a 35% drop to wipe out your deposit too.

What caused the dramatic crash in 2008 was the sudden number of repossessions and distressed sales due to people being in negative equity due to a big uptake in IO 100% mortgages and also loosing their job. People suddenly found themselves in a situation where they couldn't remortgage to a repayment mortgage and couldn't afford the interest on the IO mortgage.

There will not be a crash in the UK unless there is sudden mass unemployment.

Some of the comments on the thread are naïve in the extreme. A housing market collapse will not mean that property will become more affordable - the opposite in fact.

If there is a housing market collapse:

• Banks will effectively stop lending due to house price uncertainty and also job uncertainty.

• More people will be unable to buy.

• Many home owners will find themselves in negative equity. They will owe more than their house is worth.

• Anyone in negative equity will NOT be allowed to sell. They will be seriously stuck.

• Those owners who can still sell will have difficulty finding a buyer.

• Developers will simply sit tight and stop developing.

• This will cause major problems for property supply in the long term.

• A lack of property supply will cause serious difficulties for those renting.

• Homelessness will increase as a result.

The ONLY people who have possibly something to gain from a crash in the housing markets are cash buyers with large stashes of cash to buy property outright.

With regard to the Telegraph article and estate agents stating 'business as usual', well they would say that, wouldn't they?

No it's not going to crash. It may temporarily dip but it'll always recover and then some, simply because population is expanding and they all need somewhere to live.
There is a finite amount of land / housing stock that can be built. So long term the only way is up for prices.