House price crash

[Neron]

Seeing a lot of comments about this, some delight in that property could be bought cheaper in a few months.
Surely those houses will only be available because the owners have lost their jobs/repossessions etc? Why would we delight in that? I could be wrong, but those who don't have to move probably won't as no one would sell for a loss unless forced

The majority of home owners are not hording houses.

Some people are so short sighted...where do you think the government has invested mush of your pension pot?

That'll be in blue chip stocks like banks.

A house price crash will be disasterous for the stock market, and will take everyone's pensions down with it (including yours)

But hey, you might snap up a bargain one a 3 bed semi in Hounslow

LaurieMarlow.

I'm affraid your conflating two separate issues, Ireland had major problems with it's banking system, which both led to a pricing correction across all assets and then a liquidity problems post 2008 ,which compounded the problems for high street bank's lending.

Best,
MJD

If people are still expecting house prices to be immune and for their 1 bed flat in Peckham to still have some mug pay £1 million they are deluded. There simply won't be the appetite let alone the will to risk paying over the odds for something already way overpriced, people will have a lot less money and people will realise they need money in case of an emergency and can put it all into lining someone elses pockets just to have a roof over their heads.

The best thing that come out of this is that the Goverment may invest a huge amount in social house building (not wastefully propping up the banks like they did in 2008 or rich landlords via the huge and wasteful housing benefit bill) and invests in everyone, not a small group who are already pretty well off.

Has all this not taught you that everyone is out for themselves ? Of course people will happily snap up a house cheap even if the occupants are now homeless

Housing market crashes don’t benefit the poor because usually banks will raise salary requirements or make mortgages available for people with higher deposits. So a crash would only benefit the wealthy, cash buyers, or buy to let buyers. For example I am selling my house in a town that is commutable to all three major English cities - I have had 20 viewings per week as the buyers are working from home and in jobs / industries that won’t be affected by this pandemic.

Mercurial123 Thu 19-Mar-20 12:48:56
British people are crazy when it come to property ownership though. They pressed with buying houses, it’s a form of madness.
......
I don't get that, surely most people aspire to owning a property eventually, it's natural.

A crisis like this shows how over-leveraged we've become. If many people are relying on two full time wages plus grandparent care to pay a massive mortgage - something's wrong in the system. A house price correction is what we need, but demand still outstrips supply, so who knows if it will happen.

Ireland had major problems with it's banking system, which both led to a pricing correction across all assets and then a liquidity problems post 2008 ,which compounded the problems for high street bank's lending.

Yes that was an issue.

However if you think that house prices can crash but at the same time ...

A) owners who have any choice in the matter continue selling

And

B) banks continue to extend credit on the same terms as they’ve always done

Then you’re a naive fool.

The set of circumstances that would lead to a crash will also lead to banks withdrawing lines of credit quicker than you can even imagine.

Unfortunately it’s the Me, Me, Me generation, following the monetarist approach.

When we were in trouble many years ago, people were saying lenders would be sympathetic. At our embarrassing meeting with our lender they told us to eff off.

Good luck everyone!

Back in the early 1990's interest rates went up to 14% more than doubling most people's mortgage payments, it was hell. Lots of people trapped in negative equity and having to walk away from their homes. We managed to keep out house by the skin of our teeth, lived without a boiler when it broke for over 6 months etc. Many of our neighbours had to walk away from their homes and they were auctioned off. Heartbreaking. Rents actually went up in the city as there was more demand.

Our road gentrified because middle class couples with well off parents bought the places "for a song."

Really hope the market doesn't crash. Level out a bit for sure but don't wish for a crash causes so much misery

Unfortunately it’s the Me, Me, Me generation, following the monetarist approach.

Which gen are you talking about?

LaurieMarlow:

Your analysis only holds if banks refuse to lend, they will of course start lending again, and house prices will again start to rise, but (and this is key) at a more favourable price to average earnings ratio than pre crash.

Furthermore, the current market is unsustainable, the correction has been more or less inevitable for a long while now, a matter of 'when" not "if".

Best,
MJD

A house price crash doesn't mean it will be easier to buy a house.

In fact after the last crash exactly the opposite happened because people lost jobs and credit was harder to get.

It's more likely to stop building of houses as it's less economically viable and profitable.

If older people die then it's larger houses which will vacate but people are unlikely to find it easier to move up the chain. Especially if they are in negative equity caused by a crash themselves.

There aren't going to be lots more small houses available. Especially if there is less building going on.

The buy to let market is more likely to be protected by mortgage holidays than favour renters getting onto the property ladder. Renters who default in the short term due to coronavirus relate employment issues are going to have worse credit ratings thus less likely to be approved for a mortgage.

The market will just freeze with little buying and selling going on.

Our relative an estate agent says if you are thinking of moving think long and hard. She may be out of work soon as well.

Friend in Manchester said the chinese bought a whole block of flats sight unseen a couple of years ago. I suspect the oversea buyers market to dry up for a long time now.

Well interest rates have been at record lows, that with various government schemes to get people to borrow more money to put into property and the bank of mum and dad throwing money into the market, it is massively over inflated and is going to come down hard, people who have maxed out their mortgage on 2 salaries and buy to help are going to have a massive shock and those with low LTVs, near me 2 bed starter homes have gone up 50-60% in the past 5-6 years, that is simply not sustainable long term and those who have got into the fear of missing out and brought and going to have a tough lesson to learn if one of them losses jobs or has to take extended unpaid leave.

Your analysis only holds if banks refuse to lend, they will of course start lending again

Based on what? They won’t lend until they feel safe in a return on their investment. They’re businesses, not charities. In uncertain times, who knows when that would be?

Furthermore, the current market is unsustainable, the correction has been more or less inevitable for a long while now, a matter of 'when" not "if"

This is much more fundamentally about supply and demand, as the Irish market has been proving. Lots of things are unaffordable to the average customer, why would buying a house be any different?

In uncertain economic times, house building is hardly something that’s likely to be attractive to enterprise. Unless there’s significant support from the government. Which this Tory government would be unlikely to do, but perhaps a centralist government would prioritise?

House prices are going to fall [who can say how much by], something I'd otherwise have been not displesaed to see, but unfortunately it's going to be happen for unambigously bad reasons [widespread job losses, falling incomes, possibly higher taxes etc] rather than some sort of karmic reversal of the bad things that've been happening so far in the 21st century [a transfer of wealth from young to old via various government policies which have the impact of increasing the demand for housing whilst choking supply].

It's not about how expensive houses are.

It's about how affordable they are and how easy it is for people to buy them.

There's a real lack of understanding of this concept.

Even if prices fall it doesn't mean they are easier to buy and more people can get on the property ladder.

Ive no idea what to do.

We are in rented and they are selling in August, we have a deposit and MiP and now it's all up in the air.

Rentals are very hard to come by round here too.

There's not going to be a huge amount of people who are going to be in a better position after this. Yes houses prices might go down but so might wages, higher unemployment, higher LTV mortgages, higher mortgage rates.

You can tell there’s a lot of house owners on this thread.

Obviously everything about this virus and people dying/losing their jobs is bad, that goes without saying. But if there is a big housing price drop then SOME people will benefit.

The three Ds (death, divorce, debt) mean that there will always be some houses coming onto the market. If you’re first time buyers lucky enough to have secure jobs and a large deposit then a housing market crash will mean you’ll get more for your money than you otherwise would. That’s not those people being horrible or selfish, they’re just buying a house when they normally would have.

Interest rates have just been cut and are at almost record lows. It’s very changeable of course but at the moment it’s not looking like it’s going to be hard or expensive to get a mortgage.

We used to jest about my graduate son's job choice of grocery delivery driver but it certainly looks as if he will not be out of a job any time soon.

As to what will happen with houses the market has always gone up and down and for many there is never a perfect time to buy and if you are lucky enough to be able to which for my parents meant 2 full time professional salaries working for 8 years before having children , then 1980s same with us - buy before you breed and my child with children - 2 professional full time salaries and buy before you have children. In fact my father's father had similarly to put off marriage until well into his 30s and had my father at 49 because it was so expensive to buy even then 1929 crash etc. May be life has always been a veil of tears with ups and downs.

At present in the NE of England where I am from there are a lot of homes that aren't selling which do not cost very much - my mother's mother's rented house eg costs £50k to buy outright. Down here in the SE my son bought a new detached Bellway house which is lovely for about £303k last year plus extra for carpets etc. Affording £50k on two full time salaries is not too hard. Affording £303k on 2 full time salaries is not so easy for those not in high paid professional jobs. The properties are there but the stagnated wages for 10 years have not made things easy.

It's more likely to stop building of houses

Who'd notice ?

The whole "housing crisis" has been engineered by allowing large homebuilders to snap up vast tracts of developable land and then hold them to ensure the houses they dribble onto the market keep their value.

That's not a tin foil hat view. It's what successive agents told us when we last looked at new builds (that DW couldn't get into because they were completely inaccessible. But that's another story).

After WW1 millions of houses were built in a decade. Same for WW2. That's how you solve a housing crisis. Not by changing the font on mortgage offers.