..to think a lot of large houses will come on to the market?

[Whatarisk]

AIBU to assume that larger more expensive houses will start to appear on the property market?

My house is currently up for sale. We’d like to upsize. DH doesn’t think the property market will be affected much and if anything, people in larger houses will be put off listing their home. I think the opposite will be true.

Our jobs are relatively secure (in the sense that v few can be 100% confident of total job security right now) and I’m of the opinion that we sell ours, move in with my parents and hope something comes up. There are no properties that we are interested in currently but I’d rather sell before the market dips too much.

Interested in people’s views.

@Desiringonlychild I partially agree. It's not the exodus of people who currently live in London that could affect London disproportionally.

Around 13% of London new builds between 2014 and 2016 went to foreign investors. In fact in late 2016, this was nearly 18%! Also, over 54% of foreign buyers had taken a mortgage in their home countries to finance these houses.

It will be interesting to see how their confidence holds given the current global economic climate, Brexit etc. but I'm willing to bet they're definitely getting nervous given they bought at peak market prices.

@thequantofmontecarlo actually on that front, my dad is a property developer in Singapore and he was looking at London property pre covid. He thought it was all overpriced. Now he is looking at London property with renewed interest(though he wouldn't buy without significant discount and he is also cash buyer). from my dad's perspective, he is buying for the long haul so actually price crashes don't faze him. He is not even going to rent it out. I think he isn't alone, for most Kensington flats, the rent does not really cover the mortgage/maintenance and london price rises have been sluggish, foreigners buy it as a bank account in bricks and mortar, cos having cash sitting in a bank account is not great. As long as they can pay the mortgage or sit it out, they may not care. Unless of course, their business interests in their home countries are severely affected. My dad is not going to get any income from his commercial properties as the government has forbidden landlords to evict in the next year but as he bought it a long time ago and has paid off mortgage, he is in position to invest in new properties. I suspect there are probably quite a few investors like him.

@ploopsie maybe it would change pre covid. But unless 70-80% empoloyers transition to full home working or home working 2-3 times a week, there is no guarantee your next job would allow a lot of home working. In good times, there may be multiple job offers so to a certain extent, you can ensure that you work from home. I know a lot of people who moved out to commuter towns who were confident of that- their current jobs allowed home working and they were sure they could secure similar conditions for the next 10-20 years. I think its a risk that I would not be willing to take but then i stayed in London so maybe people think differently.

This is a lock down thing because banks won't want to offer big loans when values are unsure nor can be measured on bigger homes without inspection, as well as not being able to do more detailed surveys, which is highly recommended on bigger properties

Agree. Let's not forget it's not in the banks interest either for mortgages to be unattainable for the majority of people.

@Desiringonlychild it depends on the industry, I know lots of people who wfh 1-2 days a week pre covid. DH already does 3 days a month at home.
I guess it depends on how long we need to social distance for, this is an unprecedented event & I think some things will take a long time to go back to pre covid.

@Kaelle2 @GobbleGob It's not just about physical inspections. It's about risk. Banks are still lending £1M+, they're just not doing it at LTVs >60% because without a full evaluation, they can't be certain they'll get a portion of the money lent out in the event of a default.

Look at the bank's Q1 earnings results coming out this week. They're setting aside billions because they're expecting a significant amount of loans to default.

@Desiringonlychild I see your point but there are plenty of non professional investors who invest in property in the UK (over 50% of foreign investment in London new build property is for property valued at less than £500k). These folks bought homes via the roadshows, exhibitions etc. held by the respective developers in their countries and were promised "ever increasing returns". Since the Brexit vote, the 20% drop in the sterling actually encouraged people to invest even more as a lot of these investors never believed the UK would opt for a hard Brexit. What no one foresaw was the current crisis, coming exactly when a potential hard Brexit is materialising, and therefore, I doubt many non professional investors will be able to handle this increased risk + local economic conditions.

I could be wrong. But I, personally, wouldn't bet on the majority of these investors staying put.

@thequantofmontecarlo there would definitely be a dip but another thing to consider is that for many of these investors from Hong Kong and Singapore, London is a good deal. For example, in Singapore, 85% of all housing is built and controlled by the government. They only sell the public housing to Singapore citizen couples, Singapore citizen singles above the age of 35 and other approved family units. The new builds of public housing can only be sold to people with below 144k combined housing income or £70k. You can only own 1 public housing flat; you have to sell all other privately owned property. You can't rent out the flat in the first 5 years of ownership.Hence 85% of housing is off limits to investors and the only other option they have is the million dollar luxury condos. You get a lot more for your money in London. Any private condominium in Singapore costs at least 1 million unless it's tiny cos it's really meant for the top 15% .my dad saw a 3 bed terraced freehold house condo in London for £1 million.

For hong kong and Shanghai investors, the properties in their own cities are so expensive that I think that London would seem cheap in comparison. It's a digression from this thread but what I am saying is that London property is relatively lower priced compared to the likes of Hong Kong and Singapore. All those housing markets would drop but due to structural market conditions, London would still seem like a good deal.

• sorry meant to say you can get a freehold house in Camden for £1 million..

I doubt many non professional investors will be able to handle this increased risk + local economic conditions

I am presuming that the places are rented out and with interest rates at an all time low.
They might not invest more money but the investments they are paying for themselves. A fluctuation in house prices is not going to be of concern to most of them

One of those property programmes had a couple of young Chinese men buying cheap houses in Manchester a couple of months ago for friends/relatives back in China. When I say cheap it was northern cheap small mid-terrace. Similar story to Singapore in that property ownership in China is limited and when you buy it is a max 70 year lease on any property.

@EwwSprouts digression from the thread but Singapore has a 92% home ownership rate. But it is very difficult to be a landlord due to the fact that most property is controlled by the state and the state wants to keep it in the hands of average Singaporeans for their personal use. As for China, it is impossible to get a girl to marry you if you do not own an apartment. Hence despite it being expensive, men and their parents would beg borrow and steal to secure an apartment. This inflates the price of real estate in china but conversely China has the highest home ownership rate amongst millenials. So I am not surprised if foreign Chinese investors prefer to invest in London than their own limited market back home.

Actually I would not be surprised if the young men were buying in order to attract potential brides. Even in an economic crisis, people still have to get married?!

You're probably right about the motivation. What I thought was interesting was they had plumped for Manchester not London for their investments. Yes it's cheaper but they also made a lot of favourable comments about the city. Maybe there will be a slight re-balancing in the north/south property prices divide?

@EwwSprouts or foreign investment will fuck up the north too ... marvellous

Now he is looking at London property with renewed interest(though he wouldn't buy without significant discount and he is also cash buyer). from my dad's perspective, he is buying for the long haul so actually price crashes don't faze him. He is not even going to rent it out

This sh*t needs outlawing in this country, properties standing empty, communities decimated, honest hard working Brits unable to buy houses in their own capital

I haven't read all 9 pages. But I would put your property on the market and try to sell it. Then if you do sit tight for a year or so to see how things pan out.
BA have announced 12,000 redundancies. This is the tip of the iceberg imv, many will lose jobs. So houseprices will fall.

@GreyGardens88 or taxed to high heaven to put people off. I think it’s 25% extra to buy a property for cash in australia if you’re not a citizen

taxed to high heaven to put people off.

I much rather see this as past of a raft of measure as opposed to just hiking income tax to pay for covid.

@GreyGardens88 I kinda agree. I bought my london flat with DH, and my dad was also looking at that time. He got so many calls from all the estate agents...and they never returned my calls. Cos they know I am just a 28 year old with a £70k deposit. Which pales in comparison with the money of foreign investors.

I am not sure if those measures are enough to completely out off investors if the price is correct. I mean, as I explained below, my dad can't buy apartments in Singapore other than luxury condos and commercial property as the Singapore government reserves them for ordinary Singaporeans, not for wanton property speculation. The only way would be an outright ban like new Zealand. But the Tories wouldn't like that.

@GreyGardens88 I completely agree but it will never happen. The majority of houses over £2M go to foreign owners and are bought via offshore companies. London’s been a money laundering hotspot for the last 10 - 15 years for all sorts of characters and it’s this same money that props up our political system. Unless there’s a significant shift in the political climate, no politician in their right mind would do this as these people matter way more to them than the average voter.

And if, by any chance, they do impose harsh penalties on empty homes, foreign ownership etc., then house prices in the UK would easily fall by 30% due to the outflow of money and the first people to oppose that would be the locals!

I said upthread that people losing jobs will mean many houses on the market which means a drop in price. But now wondering if money will go into housing as share prices fall, funds lose value and people are looking for a safe place for investments. Also more overseas buyers looking for investment opportunities.
Who knows????

Prices were already sliding in London before this calamity befell. Sorry, I think we need to brace for a 20% fall over the next 12-18months, certainly in the London market. It’s simply not a question of choosing to sit tight and not sell. There will sadly be a lot of distressed sellers, including the overseas investors who will be consolidating and selling to protect their position.

Prices were already sliding in London before this calamity befell.

No they weren't, after the election they'd started to bounce back.

I agree with Freethefrogs prices in London and the SE (can’t comment on other areas) were creeping up and were in for a big leap.

There had been a wait and see what happens after January 30th. To see if the UK was suddenly going to fall flat on its face.

As it was business as usual there was an increase in people wanting to sell and more people wanting to buy.

After this I think there will be a lot of places put on the market and people who this hasn’t affected will be out in force and for the rest a wait and see period over exactly who have lost their jobs for good and can’t get another and those that realise they are ok.
Once that is established it will be taking off again

I think there will be a slight drop in selling prices (maybe around 10%) initially but then it will rise from there

There are a lot of pent up property sellers and buyers out there atm

@Freethefrogs, @Oliversmumsarmy: I don't think you really understand how the economy works. You are looking at this too simplistically and your "model" for predicting what's going to happen to house prices is based on the type of logic estate agents use. And just as any sensible investor wouldn't take a sales person's investment advice , you should stop relying on estate agent based logic for trying to understand where the market is headed.

What else do you expect an estate agent to say? "Oh, the market's going to be crap but you should still put your house on for sale?". "Yes, everything is terrible and house prices will tank by 20% but you should still put in an offer at asking".

There has been plenty of studies that show the amount of credit is the main driver for house prices. If interest rates were to go up (and given everything that's happening it most likely will), house prices will fall by 20%.