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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To think a House Price crash is coming

90 replies

HoneyIgrewthekids · 01/07/2019 17:53

I dont know when or where but im starting to notice more and more homes not selling and this is in a previously hot area of London. AIBU to expect a 20-40% crash in the near future.

OP posts:
witheringrowan · 01/07/2019 21:24

It's unlikely there'll be a crash while interest rates are so low and mortgages have been so thoroughly stress tested since the introduction of the MMR in 2013 - it means that it's less likely people will be defaulting on mortgages, so the banks won't repossess properties and there won't be so many distressed sales, which is what really forces a downward price spiral. The thing that could change that is if we return to a higher interest rate environment - e.g. no deal brexit, run on the pound leading to a sharp jump in rates, so lots more people who might not be able to pay their mortgage.

The other factor is that there has been a big tenure shift, with the growth of the private rented sector and the entrance of institutional investors rather than private landlords. Major funds like Blackrock are much better equipped to ride out a rocky market because they've got access to patient capital, whereas the private landlord with 1 or 2 buy to let properties might be more likely to be forced to sell to release capital in the event of a wider economic downturn.

But in the long term, you won't see the house price growth that people have got used to since the 1980s. Part of this is because of the development of residential as an asset class and the entrance of investors who worry more about rental yield than price growth. It's also because affordability is very stretched - house prices are on average 8 times incomes in England, and there is, on a macro level, much lower wage growth than pre-2008, so no real potential for prices to grow in a much more regulated mortgage market. It's particularly going to bite after 2023 when there is no Help to Buy on new build. Even if you see commentators forecasting 15% house price growth over the next 5 years, if you account for inflation, it's effectively zero growth.

The lack of wage growth is also why it's much harder for people to trade up the housing ladder, and also why transactions have fallen from around 1.7 million in 2007 to 1.1 million last year.

Alsohuman · 02/07/2019 07:19

Brexit, particularly the threat of a no deal Brexit, seems to be paralysing everything. The only house that’s sold quickly where we live was hugely underpriced, I think they only got one valuation because the agent that sold it is notorious for undervaluing.

Ladymargarethall · 02/07/2019 07:26

A house near us (slightly smaller) has just sold for £50,000 more than we paid for ours two years ago, so I think it depends where you live. New builds here are also selling well even though there are three estates to choose from.
I don't trust Zoopla to be honest. Our house is identical to the house of some friends but theirs is listed on Zoopla as 4 beds 2 baths 3 receps, whereas ours is listed as only 2 receps.

Chaichailatte · 02/07/2019 07:39

Everything here is sitting for years, much as it always has. But we're very rural, and you get a mix of very affordable ex council houses, which local families can afford to buy, and expensive character homes which wait for years until some townie idiot comes along to try their hand at that alpaca farm they've always dreamed of.

Rents have gone up massively however.

BogglesGoggles · 02/07/2019 07:43

I am of a correction rather than crash opinion. Mind you, in hot and up a coming areas of London a correction will be 20-40 per cent.

leckford · 02/07/2019 07:45

The population is allowed to increase buy some 300,000 per year because of immigration, they have to live somewhere. House prices are generally linked to jobs, however in place like London they are kept up by investors who are often foreign.

If you drive around the country houses are being built everywhere, destroying the countryside.

Knobrob · 02/07/2019 07:48

I hope not. I finally got on the ladder just over two years ago and if the value of my (admittedly stupidly expensive) flat dropped by tens of thousands while interest rates skyrocketed I don't know what I'd do. Probably go bankrupt at some point? Lose my home? Be paying thousands for a home I no longer live in while living in a bedsit elsewhere? I really hope not.

EssentialHummus · 02/07/2019 07:49

Very sensible post rowan.

Round my way (SE London) things that are priced at 2015/6 levels are selling within a reasonable time. What you don't have, thankfully, is open days and bidding wars for poor quality stock. Which we did have here pre-referendum. After the referendum it was like a switch had flicked.

fedup21 · 02/07/2019 07:50

My friend was talking about ‘the crash’ ten years ago-he was renting, waiting for it to happen before he bought a house. It didn’t happen.

He bought a very expensive house which would have been significantly cheaper had he not hung on.

I think people are not buying/selling now as they’re waiting to see what happens with Brexit-I don’t think we will see a crash.

MoodLighting · 02/07/2019 07:53

House prices doubled in a decade in my crappy part of London and are now at the top of affordability. One has been on the market for a year after a 50k price drop. I wish they'd fall further tbh. These are ex council in a rough neighbourhood w few schools at £650k!

MoodLighting · 02/07/2019 07:57

Great post witheringrowan

Ladymargarethall · 02/07/2019 07:59

Moodlighting this is precisely why houses are selling here. Four bed detached for £350,000.

dangerrabbit · 02/07/2019 08:38

Not necessarily and alarmist post given that brexit is looming.

AutumnCrow · 02/07/2019 08:42

The other thing that's notable where I live are the estate sales (sales of houses inherited from an older relative) - they're just not shifting. The margins just aren't there for landlords, and no one else can afford them or wants to buy them and do them up. It's all too expensive, all too uncertain.

So they've been sitting, for sale, for a long time. They used to be snapped up.

MsTSwift · 02/07/2019 08:43

Houses in our road don’t even make it to the open market before they are snapped up

3luckystars · 02/07/2019 08:50

(I'm not an expert on house prices)
I think the long term graph always goes up, but if you look at the line, it is not straight. So even big dips down will go back up again sometime.

So you might be right, but I'm definitely not wrong.

(My dad says that and it always makes me laugh)

Peachesandcream14 · 02/07/2019 08:54

I've noticed a real slowing of sales at the cheaper end of the market in my part of SE London, and a number of properties who have made big reductions and still not selling after a year. I'm hoping this lasts until I'm able to hopefully get a mortgage in a few years time. I don't care that I will only be able to afford a tiny flat behind a chicken shop, it would be a dream to not have to pay £1000+ a month in rent and have somewhere secure to live.

Zaphodsotherhead · 02/07/2019 08:54

There is a lack of affordable housing everywhere, not just SE.

Round here, any house that is remotely a 'first time buyer' property tends to get bought to be done up as a holiday let, so the smaller, lower priced properties get snapped up by developers/builders or the pool of people desperately trying to get on the housing ladder. I don't see that changing any time soon (very picturesque holiday area in high demand).

I'm trying to negotiate to buy a small house, but the buyer has a slightly inflated idea of how much it's worth because of the holiday home market. It would be nice to see everything becoming more realistic.

Zaphodsotherhead · 02/07/2019 08:54

Seller, dammit. I'm the buyer and I do NOT have an inflated idea of what it's worth!

PatoPotato · 02/07/2019 09:23

No deal Brexit = house price crash

Brexit going away = house prices soaring

Right now = stagnating and going down by small amounts because sellers are impatient but buyers are waiting for Brexit to blow over.

familycourtq · 02/07/2019 09:25

There is a lack of affordable housing everywhere, not just SE.
There is a lack of affordable housing anywhere where there are jobs. Where there are no jobs and no services there are cheaper houses.

EarlGreyOfTwinings · 02/07/2019 09:27

If there was a crash, people will just stay put, there will be even less properties available and the only ones who will benefit are investors who will snap the few cheaper properties available and let them.

Great time to be a developer and do extensions, great time to be an investor, no one else will see anything.

FcknHellAlan · 02/07/2019 09:27

Have seen this in yorkshire too, market does seem to have slowed. Maybe brexit?

FcknHellAlan · 02/07/2019 09:29

There is a lack of affordable housing anywhere where there are jobs. Where there are no jobs and no services there are cheaper houses

Perhaps urban areas yes, but the same doesn't hold true rurally.

Ellisandra · 02/07/2019 09:33

YABU to pull a range as wide as 20% - 40% out of your arse!

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