House prices

[Newbie1999]

Realistically, how much do you think house prices will fall over the next couple of years?

@JemNadies I agree

What experts? 3% decrease would be a miracle surely. If that was the case why are the banks reducing LTV borrowing.

The banks have reduced LTV lending for now as they can't do physical house surveys and are relying on desk top valuations. It's a temporary reaction to an extraordinary circumstance not an economically driven decision

I don’t think they’ll fall. They would have done if Rishi Sunak hadn’t offered furlough to keep people afloat financially. Those people would have ended up unable to pay their mortgages and being forced to sell cheaply. Now they can keep paying their mortgages.

3% is a very positive spin.

@Roselily @JemNadies
I also saw an article in the guardian last week saying same thing. 3% drop this year but housing market will likely stall and pick up next year.

I think one of the things that has surprised older people who remember past recessions is that no matter what the intention it seems is not to let th ehousing market fail nd when you see the knock on effect of a buoyant or stable market you can see why - morale is strong, people are comfortable spending on eating out, etc. There is another thread on here where people are commenting on how much the lockdown is effecting their bank balance and it goes both ways - people realise they are happy to pay for things , others want to reduce their wastage.

If nothing, it has made me much more confident that the market won't crash - just gentler readjustments over time to protect those already in the market.

I feel positive about it, actually.

no matter what, the intention, it seems, is not to let the housing market fail...

Apologies for the complete absence of punctuation there.

Don't have an opinion/knowledge, just surprised it's only 3% and not double digits. I guess like all the other times the impact will be very regional.

Gosh - I think I'm in sync with capitalism. That's a bit of a shock to the system.

I think more worrying are the forecast pension amounts for those of us not retired but within 10 years or so of doing so I.e. no fixed amount set and only ten years to make up any shortfall (that wasn't there last month). For context, I received my pension forecast with Royal London in Feb and it was healthy - enough anyway given that it has taken two large hits following various recessions and bank crashes and I have had to pump as much as I can afford into it to get it back to previous levels or as close as possible. On a risk scale of investments I am a 6 out of 10 which is basically managed funds plus a few slightly more risky investments. Last year it did better than those who opted for more risky or safer options. My recent forecast of two weeks ago showed a 34% drop following the market crash with CV. Of course there is no real option other than to sit tight but even when the market recovers, it is unlikely to do so by anything like the same amount - other than slowly over time and starting now from a much smaller baseline in my case. The actual amount in terms of the pot accrued over the next ten years vs what it would have been will easily run into tens of thousands and probably more.

Prices may fall, but banks may require a bigger deposit.

Look at who is saying 3% though, Knight Frank have a vested interest in house prices not falling! They have major exposure to the market and would see a significant decrease in property investment if they put anything other than a positive spin on it.

Sorry but I agree 3% is a very postive outlook and isn't actually based on anything tangible. We are not in a position to even start measuring the economic fall out from this pandemic, nationally or globally. A vaccination is at least 18 months away which could mean we have more periods of lockdown ahead of us.

Despite being experts they are in no position to judge as its too early to call.

@Standrewsschool

@TigerKingisMental

Yes to both your statements - they are true - I just think that this governement and its backers will move quickly to get things back to buisiness as usual so that there is no opportunity to allow people to deviate from the economic model that has worked so well from them in the last 20 years. They are at risk of losing millions/billions and homeowners/small businesses are intrinsic to keeping them in their position as a foundation level of capital.

Ordinary employees/ modest homeowners are on the margins of that financial system, getting what they can so it is in their interests to move quickly and restore order as they are frightened of the destabilising effect this could have on their assets.

I think. I may be filling in the gaps here as I am an armchair observer of the world.

@mssmith

Your statement backs up my view that people will look to regain any losses they have made - particularly in relation to pensions/those close to pension age.

Those with money who have taken a knock are able to move assets to where they will now be optimised - wherever and whatever that is -that is how the market functions for them. The asset can change but the profit margin is what interests them and they can take the long view.

I imagine.

That’s like asking how long a piece of string is.

How much property prices drop and how long they take to recover is mainly dictated by location.
Main cities (London) will probably be less harder hit than a lot of other places and probably be quicker to bounce back too.

No one knows, even based on rudimentary numbers how bad a housing dip (crash) May be. Because we’ve never seen anything like this before. The economic ramifications are completely unknown.

Is supply changing?
Is demand changing?

In the short-term only the desperate will be trying to move, this might average out as market movements in one direction or the other. But every house and every move is unique and overall market trends don't tell you much about your next move or the value of your current house or your next house.

LTV values on mortgage offers are changing because the banks want to build in some resilience and reduce future default rates.

With pensions though, won’t they start buying stocks at a low and then grow it again. I thought that was the skill we pay for with managed funds - all these hedge fund managers who move it around to get the best growth.