House prices

[Newbie1999]

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

they didn't do that in 08

30 years ago you would probably of bought a house younger (early 20s) than todays average. Stayed in a 2 bed terraced for a few years and then moved up to 3/4 bedroom when people had saved more/got promotions.

The problem now is people get on the ladder later and don't have the finances to move up as quickly/if ever as their parents did.

There is also far more comestic value in homes now people want the latest white goods/furnishings when 30 years ago things were far more sparse.

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.

This is, officially, the funniest thing I've read on Mumsnet. Ever.

My DP is a carpenter, but I told him what I thought of house prices and he ended up winning the Nobel Prize for Economics.

I thought it was hilarious too given she went to university and did a masters in the subject yet she said she used the opinion of someone with no O levels or qualifications to tell her (quite rightly as it turned out) what would happen in the housing market.

But there again I probably have more experience than most economists when it comes to the housing market

Don’t know where the “said” came from

why's that?

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.

I must admit this did make me laugh too. was thinking she wasted a lot of money on expensive education if she's had to go a MN poster for unqualified professional advice.

3%? Not likely. 10% would be a miracle. Especially for those at the lower end of the price market. A ton of retail and cafe jobs will be gone so those on traditionally lower incomes will be more likely to be broke and not in a position to buy. So prices will have to reflect that. Probably for at least 3-5 years.

I'm in Ireland so obviously there are differences but I'm surprised also as they're talking about a depression ahead rather than a recession.. I agree that I wouldn't be looking at an estate agent's forecast. I know someone who's taken their house off the market. We'll see I suppose!

I do think a 13% downturn is looking pretty realistic, and indeed optimistic, given that furlough payments and other safety nets will have to end - probably in June.

That sounds more realistic, yes.

I think it go up...we want a bigger garden now and everyone i spoken to wants to move to a house with bigger garden. Just hoping dh holds job. If not we stay in house and move next year.

I wonder though if it's easier to upgrade if house prices go down if you are not in negative equity/built up a lot of equity in your current home. For example, I own a 2 bed flat in zone 3 London which costs £400k. A 3 bed terrace is 1 million so that's a huge jump - I used to refer to the property ladder as the property greasy pole. Cos having a flat doesn't make it easier to buy a house, the amount you save in rent doesnt allow you to build up the large deposit you need and the amount you can borrow is dependent on how much you earn. Even overpaying your mortgage on the flat doesn't work unless you also have a huge income. But if prices drop, would that perhaps close the gap between the flat and house if the house suffers a bigger price drop? I feel somewhat doubtful about this.

I don't think so desiring unfortunately, unless for some reason flats more in demand... perhaps if ftbs go for flats instead of houses if they've less money (a stretch there!!)

@Heygirlheyboy first time buyers wouldn't be able to afford the east Finchley house anyway cos it's unlikely to become less than 500k (its currently 1 million). And you only get the stamp duty reduction for first time buyers if the property is 500k and below. For anyone buying the house, it's not likely to be a first property.

I do think a 13% downturn is looking pretty realistic, and indeed optimistic, given that furlough payments and other safety nets will have to end - probably in June

Aren’t mortgage companies just adding it to the cost of the mortgage and taking it over the remaining period of the mortgage interest free. So you won’t have to find 3 months money in one go.

@Heygirlheyboy unless the people who buy £1 million are similar to the parents who educate privately.a large part of their money is derived from bonuses/from a small business. Small businesses are going to take a battering and I imagine any small business owner's priority is saving a business not buying or holding onto a nice house. That happened to my dad in the Asian financial crisis and Sars pandemic, he scooped up properties that went 60% down, both sellers wanted to save their businesses. But I imagine this favours cash buyers more than me!

Then what?

@Oliversmumsarmy yes but at some point, the mortgage holiday has to end. Banks are not going to let it go on indefinitely. People need to find jobs. That is difficult in a recession.

no doubt the media will trot out opinions from people with a huge vested interest such as Ray boulger mortgage broker and Crafty allsop all trying to keep market up and keep their empires going

A ton of retail and cafe jobs will be gone so those on traditionally lower incomes will be more likely to be broke and not in a position to buy.

Forgive my ignorance, but can someone explain to me why this would be ?

Say you run a cafe on an industrial estate, or near some offices, or the caff at the back of the market near me.
Obviously, you have no income for - lets even say 6 months. During that time, you have no food to buy in, staff are furloughed and Gvmt covering 80% of their wage. Cleaning / gas elec all not being used.
I understand you will have rent to pay and potentially business rates
but
say we all go back to normal in September - there is nothing to be gained by the landlord having forced you to pay full whack for them when you are closed, making you go bust and then not having any businesses left in the market. It makes sense for them to give a payment holiday, or negotiate a % to be paid or whatever, so you are able to open up when this is over.
When everyone is back at work, they will still need / want the cafes just as they did before.
Sorry if I'm being a bit dim, but why will they all go bust ?

I don’t expect them to go down that much tbh, or for that long, the government have done a lot to try to protect the economy. Unfortunately, I think the most vulnerable people in society will pay the biggest price and they typically rent rather than buy.

House prices will go down but by a manageable amount that is unlikely to screw over the retail banking sector (ie no more than 10%). There is no getting around that we have not enough houses for all the many people who want them - this will keep prices high.

It will be agony being part of the buy/sell process though. No one thinks they’ll be making a quick buck so they won’t be too worried about taking their time over decisions.

Also, I disagree that London will be insulated time. As many companies move to WFH and there is an increased unease about using daily commute transport (infectious and bad for the environment), London salaries may not look as good value against regional ones etc. The capital may experience some wage deflation.

@desiringonkychild you're right about the property ladder not really existing any more, there was a good article in the FT about it. There's a huge issue with people on the ladder but not able to move up it even if they have equity. Technically a drop in prices may help moving up the ladder as the % equivalent will be bigger for houses but there is an issue with an oversupply of flats in certain areas. Do developers even build "proper" 5 beds anymore?