Do you think Covid-19 will cause a crash in the housing market?

[Toddlertown]

We were viewing properties to buy (first time buyers) prior to this out break. Obviously this is now on hold. There are a few articles I have seen suggesting house prices are going to fall drastically due to a recession after all this is over. Do you think that’s true? Should we hold off?

Mother, I agree, in the UK, general taxation will probably increase after a political biscuit for the NHS front line. Offshore house ownership will probably be further nipped, affecting demand at the higher end in london further which will trickle down the London property market. IR35/self-employed/'personal service company [no such thing legally, I know]/disguised employment will be further nipped in line with the Chancellor's statement. All of this and job losses and the effects of COVID and aftermath on commercial property/high street retail/travel/restaurants will probably impact on incomes and aggregate demand enough to affect house prices even if the non-forced sellers withdraw from the market as usual in downturns. Could be wrong if PPs points about pent-up demand and government support for house purchases overcome those effects....

We are/we’re looking to move. Just before this lockdown we had viewed a house that we love and put ours on the market. We had a few views and a bit of interest but all with houses to sell themselves. Are we being naive to think that we can pick this back up when this clear a bit? Both my husband and I are in secure jobs with no threat of losing them.

I expect it will be not as much as the crash of the early 90s, as interest rates are low. More likely to be no-one putting houses on the market unless they really have little choice but to move.

i think it's very far from impossible but really all bets are off, it's not as if we can just cast our minds back to the last global mega-pandemic & assume that the same thing will happen again.

a real terms fall feels inevitable, but i suppose that the potential for inflation might be a wild card in terms of mitigating nominal terms falls.

People may currently want to go out spending but be unable to. Down the line though when there’s a lot of businesses which fold and a lot of people who lose their jobs then this will have an impact on the economy and house prices.

Though existing applications might not be affected -
www.bbc.co.uk/news/business-52106119

But anyone thinking ‘yes we have that 5 or 10% deposit we can now apply for a mortgage and go house hunting’ are now in for a shock that they can’t apply. Major disappointment.

@Theresnobslikeshowb

Why? Because the LTVs on offer will change?

Iwannabeadored20 Not will, already are for several lenders, now requiring 40% deposit or equity. Rules out the majority of first time buyers, unless they are getting help elsewhere or have the deposit at that level. It has been reported in the news today.

If lots and lots of people (and usually older people are homeowners) do die, which hopefully won’t be the case, I can’t see anything other than a reduction in house prices. Families won’t want to hold on to the houses, they’ll want the money, and if a load of properties flood the market, added to less people buying due to losing their jobs etc, then an abundance of supply and lack of demand = reduction in price

I think there'll be a reduction but it'll bounce back- this situation is finite.

@AvonBarksdale99 there was a theory I read some time ago that in 10-20 yrs lots of baby boomers will have passed away which would lead to a glut of family homes with lots of equity all on the market at the same time which would reduce prices.

@Theresnobslikeshowb Surely it depends on the applicants' jobs though - those who work in the NHS and/or Local Government are virtually redundancy-proof and so the current situation isn't affecting their job or earning power in the slightest. No reason for them not to be offered 90% or 95% mortgages.

Yes. Had an email earlier about first time mortgages being withdrawn. Offers only above 75% LTV

Some are still offering 90-95% mortgages

Yes - there will be a crash.

Yes there will be a crash because housing has been inflating in price way above what it’s actually worth for a long time now. (Australia way more than other places)
Plus here a lot of people have been defaulting in their mortgages before covid-19 and are mortgaged to their eyeballs.

The trouble is when everyone (gleefully!) starts talking about a crash on here is they seem to forget that for a lot of people, if house prices start going down they can no longer afford to sell, leading to a drop in supply, increase in demand and therefore price stability.

They may stagnate/ see a small drop but I think it's unlikely that there will be a massive crash which suddenly makes house ownership and mortgages affordable for everyone.

I think there will be a crash to the housing market.

Many first time buyers are saving a deposit in stocks and shares isa schemes. Stock market has tanked so many will have lost their savings and have to wait longer before they have enough deposit to buy.

Many have lost their jobs and are using their deposit savings for normal every day expenses.

Many have lost jobs so will have mortgage offers withdrawn.

Depending on death toll there may be more houses on the market so more choice for buyers (meaning sellers have to reduce to get a sale)

Self-fulfilling prophecy - people are talking about a potential house crash so more people will want to wait-and-see so the market will stagnate.

Then again, if the AIBU threads are any thing to go by there will be more people needing to sell at the end of this because divorce rates will go through the roof after 12 weeks of lockdown with a partner who used up the last can of chickpeas/eggs/loo roll etc.

@Canyousewcushions I agree with you in some respects but think it will be different from 08 in that there will be more job losses & the gov is unlikely to be able to prop it up this time. It's not gleeful, I'm a home owner but prices are ridiculous in some parts & it benefits very few people & affects productivity.

Short term slow down, very short term, because high demand will continue when this is all over.

Yes, I think they will drop. The property market is cyclical and volatile. I read some time ago it was statistically due to crash around 2025. All cv is doing is bringing the date forward a little. If this does happen, mid 2020’s could be the bottomed out figure and then the stats would be pretty much spot on...

Growth in the SE was already restricted because of affordability.

People will die, but unless both of a couple die and none of their children want to take on the house - and the deceased's child's landlord panics and sells for anything they can get, there won't suddenly be a mass movt of properties onto the market.

Factor in lockdown divorces (sell one house to buy two) and a total collapse of the property market is possible but unlikely.

Dip briefly as people panic sell but then rocket up as inflation takes hold after the biggest case of inventing money we’ve ever seen. You don’t just print trillions and maintain currency value.