House prices

[Newbie1999]

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

Many more balanced predictions on money and finance forums

Also worth reading - www.amazon.co.uk/Safe-Houses-Historical-Analysis-Property/dp/1907994017?tag=mumsnetforu03-21

And this article from end of December www.independent.co.uk/news/business/news/uk-house-prices-rise-interest-rates-mortgages-bank-of-england-a9258196.html

SE and London will likely be ok.
Poor areas of the North are going to have a shocker.

I agree with @Rebelwithallthecause that low interest rates have had an impact on increased prices, that's why they are still low. One issue now is they can't slash them like they did in the last recession.

Part of the article talks about the slash we’ve just seen this month having a potentially strong effect but that’s yet to be seen

It's not great for the economy to have people spending so much of their income on mortgages/rent.

@tontie 100%

Rebelwithallthecause

Is that article about the UK or the US with the reference to “foreclosures”

It’s Uk

I can only assume it was written by an American as the terminology isn’t what we have here.

We don’t have foreclosures we have repossessions

Whilst I agree there is a link between house prices and interest rates I don’t think you can dismiss the supply and demand scenario.

We might have in theory enough houses for everyone but if they are in places that don’t have the work or no one wants to live there then the prices are lower.
And vice versa if there is a city with loads of work where people want to be then the prices in those areas are higher

There aren't any economists predicting house price drops of LESS than 10%. Consensus is that any expectations of a "V shaped" recovery are, highly unrealistic and the economic data coming through in the next 4 - 8 weeks will clearly show this.

Also, if you look at Q1 earnings + future projections statements put out by the various banks today, you'll clearly see that they're expecting unprecedented number of defaults on mortgages and loans.

@newbie

defaults - do they mean a freeze on payments during corona? Or defaults as in people just walking away from their mortgage?

@Asimovsfutureishere2020 technically, "loan impairment" which means people unable to pay their mortgage/loan and therefore being able to recover only a % of the loan (if possible for example in the case of a secured loan by selling the underlying collateral)

How would banks know in the next 4-8 weeks who can or who can’t pay their mortgage if they have allowed people to take the 3 month mortgage “holiday”

I said “economic data coming through in the next 4 - 8 weeks will clearly show this”

The data being reported on this week was captured late March and that’s was barely 1-2 weeks into the lockdown. We will know the true impact of April’s lockdown only around the second week of May

But no one will know what is happening until at least 3 months from now.

Just because someone has taken the 3 month payment holiday doesn’t mean they can’t pay their mortgage and will need to have their house repossessed.

Dd is on UC and so will Ds if he reaches 18 and we are still in lockdown Both are self employed

It doesn’t mean they have “lost” their jobs and will continue on UC when the lockdown ends. Both have work that was stopped and will resume as soon as this is over.

Yes the economy looks completely f**d but it doesn’t mean it will continue.

Yes people will lose their jobs but a few months from now some will have gone self employed, some will find another job, some will have decided to emigrate, some will have retired and some will have died.

I don’t see how anyone would have thought the graph was ever going to be V shaped.

A U with a flattish bottom would be nearer the mark.

I don’t think fretting over the economics of the country in this 2nd quarter and even in the 3rd is worth worrying about.

There is nothing to be done about it that hasn’t already been put in place.

Only when this is all over and we get a few months down the road when we have returned to work and life will we see the real longer term effects.

Atm the economy looks like it has tanked but so by and large has every other economy around the world

I don’t think anyone can forecast how things will turn out based on the figures that are coming through.

“30 years ago you could go straight into buying your 3/4 bed ‘forever’ house if you had a half decent job”.

30 years ago (1990) interest rates were so high ( about 15% at the highest I remember) A small 1 bed flat where I lived ( South East 35 miles for London ) was £40k. It wasn't easy. ( my salary was £10k a year back then )

Then everything crashed and loads of people were in negative equity. The £40k flat was then worth only £30k and many people (like me) had taken out 100% mortgages.

I was "lucky" that I was able to walk from the problem away thanks to my by then ex boyfriend wanting to take over the flat and the mortgage and move his OW in.

Compare to six years later. In 1996
I was able to buy a 3 bed semi in the same area for £59k and interest rates were about 7-8% That did seem very easy at the time. I wished we'd been bolder and stretched ourselves a bit but the memory of 1990 was still very fresh in my mind.

If you bought prior to 2002 when prices started to rocket you are likely to be sitting on alot of equity. This will cause generational divide between even those in their 40/50s (that bought late 90s/early 2000s) and people looking to buy now.

It doesn’t mean they have “lost” their jobs and will continue on UC when the lockdown ends. Both have work that was stopped and will resume as soon as this is over.

Personally I think that very much depends on the work. I think it's extremely hopeful to assume that industries such as hospitality will resume as normal. I'm in the public sector & have a pretty secure job but I've reigned in our spending big time when we are actually much better off, no commuting costs & only paying the childminder a retainer.

@Oliversmumsarmy I respect your opinion, but, if I were to bet my money on your opinion vs what economists, investment managers etc. are saying, I'm going to have to go with their opinion.

I respect your opinion, but, if I were to bet my money on your opinion vs what economists, investment managers etc. are saying, I'm going to have to go with their opinion

One of my friends is an economist.
We have discussed this sort of stuff before and my opinion ended up in one of her reports.

tontie both dc were in the middle of jobs that got stopped. The jobs will start again as soon as this is over or lockdown is over.

They are both under contract.
Company is highly unlikely to go under.

They do hospitality but more big events like weddings and parties.

I don’t think people will stop getting married and the ones that are planned for later this year are still going to go ahead if we are out of lockdown

I don’t think people will stop getting married and the ones that are planned for later this year are still going to go ahead if we are out of lockdown

But what if we're out of lockdown, but gatherings of more than 50 people say are banned - that's a quite likely response (since with low levels of infection in the community the main thing you want to avoid is suddenly lots of people getting it and dispersing it all over so can't be traced) That would likely mean lots of weddings and parties will continue, they won't be completely "lost" like all the haircuts/beauty/training classes etc. but they will be much smaller and less in need of workers.

30 years ago you could go straight into buying your 3/4 bed ‘forever’ house if you had a half decent job

Well we bought our first house around then and those houses were way out of reach. In fact I can't think of any friends who went straight into that size of house, other than one friend who bought at a huge discount because his father sold him a house he'd done up. Interest rates were so high that many people went down the endowment mortgage route to make repayments affordable.

Hospitality encompasses all sorts of events & experiences not just weddings. I'm not sure why your dcs experience can be extrapolated to everyone else's. DSs big law firm has canx all pay rises & bonuses even though work hasn't yet slowed so I'm definitely being cautious.