..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.

Interest rates aren’t going up. They just aren’t.

@ChrissieKeller61 Thank you for that extremely insightful analysis.

My opinion is as valid as yours you’ve no more idea than I have. But in the basis that no government wants to deal with mass homelessness of hard working families I believe I’m right.

@ChrissieKeller61 Given that one of us was clearly able to back up the reasoning for our opinions with logic and evidence, no, our opinions aren’t equal.

There has been plenty of studies that show the amount of credit is the main driver for house prices

So then why is there a difference in house prices between the North East and the South East.

It is predominantly supply and demand. Less jobs in the North East = Cheaper house prices

More jobs in South East = Higher house prices

How much would interest rates have to go up for house prices to fall 20%

1%? 5%? 20%?

@Oliversmumsarmy You can read the Bank of England paper yourself here to understand this in more detail: www.bankofengland.co.uk/-/media/boe/files/working-paper/2019/uk-house-prices-and-three-decades-of-decline-in-the-risk-free-real-interest-rate.pdf?la=en&hash=7C12A901353CB615C3FC1A58557918D50775E470

A 1% rise in interest rate will result in a 20% fall

So if the interest rates go up to 5% which we were paying just a few years ago house prices would go down by about 70%

Purely hypothetical, past performance is not an indication of future success any more.

@Oliversmumsarmy I’ve been paying 5% for 14 years unfortunately but I’m managing perfectly well and will continue to do so.

ChrissieKeller61 why are you paying 5% when the base rate is .1

And for 14 years.

You must have wasted thousands

@Oliversmumsarmy exactly because there are more high paying jobs in London, that's why there is more access to credit. A combined household income of £100k equals whooping mortgage of £450k not even including the equity from an earlier home, inheritance and possibly a kindly parent remortgaging their home. It's not difficult to see how a couple on London professional income can suddenly afford a million pound house, except that this is all financed by generous loaning criteria. When 1 out of 8 mortgage holders in this country are on mortgage holidays , I don't see why the bank wants to extend more loans. And I don't see it being easy to get jobs so the people currently struggling to pay mortgage would magically be able to find new jobs in 3 months time.

Taking a mortgage holiday doesn’t automatically mean you can’t pay your mortgage or are in dire need.

No, people will be staying put I think. People with big houses usually have good jobs and savings so no reason to sell if they don't have to.

@Yelllow Interesting, what factual evidence or sources are you basing that on?

Stop being a vulture. It’s possible that large numbers of deaths might mean big deceased estates. Doesn’t mean they will be for sale - deceased estates usually have the benefit of not having to be tied in to another sale, sometimes they can wait it out. Or a relative might move in. Some people with big houses might find they’ve bitten off more than they can chew, but so will people in smaller properties too. People will sell as a last resort. Stop hoping that other people’s misery improves your life. It’s horrid.

Does anyone think there will be a move to convert office space to residential - some people saying that as employers realise wfh works reasonably well they could cut back on office space and rental costs. Of course many are tied into 25 yr leases, but there may be a gradual effect on Demand for commercial property.

The relevance being that if there’s an increase in property being converted, that may put downward pressure on Flat/house prices. Although if property prices are determined by the amount of credit (which i am sure is definitely a factor), it may not!

The pp talking about an overseas investor planning to buy and leave empty does prompt the thought that govt should be stepping in to stop/discourage this practice. In the past i have thought that it wouldnt do so because overseas governments would be displeased and it would therefore hinder wider trade agreements. But the geopolitical environment may change now. So perhaps it is something to look at.

There may be some move to convert to residential but it won’t be as high as the drop in commercial property value might suggest.

Most office blocks are long term holds by large funds and pensions. They keep them for their land value and for the rent. These funds can often cope with huge fluctuations and non-rent, because they concerned with the asset price rising. The buildings are somewhere to put cash.

Some commercial buildings owners may sell. But the cost of converting the premises to modern flats will put developers off all but the most premium sites. Usually it is cheaper just to start from scratch. This is also why commercial landlords are unlikely to convert themselves. Plus, residential tenants want to be looked after whereas commercial tenants take on the repair as part of the lease.

Very interesting persona. I suppose the City and canary wharf would be premium sites - if large numbers of those workers can successfully wfh, there may be some divestment there?

Though not that quickly as many leases will have some years to run.

If commercial space becomes available in the City (which it will) then expect that to stay as commercial space.

This is because companies that now really just want an address and some meeting rooms will take up the slack as larger tenants give up square metres and sub let.

By premium sites, I mean more offices above Regent Street or on High Street Ken etc. Premium residential sites.

@Oliversmumsarmy why would you take a mortgage holiday if you could have a choice not to?

I think it is a bit early to say if the new normal will be no open plan and people working at home (I have always hated them and luckily had my own office in London when a lawyer so could shut door, have own territory, think, silence, work, open window - no air con and have had that too here working from home since the 1990s).

What will the new normal be is not clear. Eg if 80% of us in London have had covid without knowing it and if that means we are immune then we might well all just go back to how it was before. If only 1% of people have had it and that having it does not even mean you are immune then perhaps not.

@Desiringonlychild due to the uncertainty. I’ve taken one and banked the money just in case. Once I know what’s happening with the self employed rescue package I’ll repay the money.

@BadApe you’d have to have a reasonably paying job to get a high mortgage in the first place. People rarely go from £100,000 to £50,000

@Xenia some people think that companies would move to permanent home working for most employees once covid is over/vaccine is found. I don't disagree with that but I wonder whether this would mean most people wouldn't want to live in London. I asked DH whether he would consider moving outside London (we could probably afford a house outside london rather than 2 bed flat with communal garden in zone 3). He said no, because London is a more buzzy place to live in and also he grew up in London and his mum is here (and would never leave). we also have synagogue here and additional option of jewish school in addition to the usual private/state options. So London is still an attractive place overall, but I wouldn't be happy if most people my age are gone.

Why would I take a mortgage holiday if I don’t need one?

Better the money in my hands than someone else’s.

Given it doesn’t have to be paid back in one go and attracts no penalties or interest then why wouldn’t you?

Also is WFH going well?

Whilst things might be getting done to a fashion I have a few London living friends who are doing it and it is driving them slowly mad.

They can’t wait to get back in the office and have people around them to chat to or bounce ideas off or just generally know there is bustle around them.

The idea their companies would make their jobs permanently wfh on a permanent basis
would have them looking for another job.

Not everyone wants to sit in silence at a desk in their own home for 7 hours per day.