..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.

@Yelllow "People with big houses usually have good jobs and savings so no reason to sell if they don't have to"

This is simply not true. Plenty of people live in big houses in areas they wouldn't be able to afford at today's values. We saw several houses in Finchley where the owners bought the houses in the early/mid 90's and even though they don't have a mortgage/paid off most of it, want to move away as the ever increasing cost of living, maintenance etc. was eating into their pensions.

Interesting discussion regarding the impact of WFH on house prices. I don't think we need the majority of companies to make their employees WFH 5 days a week to see a significant drop in demand in London.

Several colleagues of mine WFH 2 - 3 days a week and, because of this, have all bought houses outside London. That 1.5 hour one way commute looks pretty daunting if you need to do it daily but isn't at all bad if it's only twice a week when you need to do face to face meetings etc. And these people don't go and live in the middle of nowhere so where they're moving to allows them to have plenty of community etc.

The fact that some of the world's biggest companies have announced that they are going to start allowing employees to work more days from home + this crisis has proven that productivity won't be affected if people who have office jobs WFH + organisations realise they can actually make significant savings in energy spend, rent etc, could accelerate the trend of people wanting to live further away outside core cities like London.

yes, although I am not sure we have god studies yet on if people do have more productivity if working from home. Some have had childcare to do and are doing much less work and others are tempted by netflix as there is no boss checking up on them etc

thequantofmontecarlo

What happens when they lose the job.

They are 1.5 hours from London.
They are then subject to the local job market which doesn’t pay as well, even if they can get a job. If they want to get another job in London it might not be WFH and then they will either have to move or suck up the 1.5 hour twice daily commute.

So having been through similar, it took us to using someone else’s address to prove that his C.V wasn’t being looked at purely on where we lived.

You are stuck.

For everyone leaving London there is always someone waiting to move in.

@thequantofmontecarlo do you think that this might mean property prices would equalise. In my part of Finchley,a 3 bed house is a million which is a pretty big jump from my 400k 2 bed flat. Meanwhile, you can get a house in amersham for 600k. Would this mean that perhaps amersham and Finchley might have more equal prices (commuting costs are less an issue if you only do it 2 X a week)..

Plus it is very uncomfortable wfh. I think it is unfair to expect people to be as productive if you haven't got an adequate work space

@Oliversmumsarmy as many Mumsnet threads bear testimony, people tend not to think about the worst that might happen. They tend to envisage the best. Also the people who tend to move out have children, which in today's world usually means they are in mid to late 30s. these people may have been in the working world long enough to be able to work freelance if need be or have enough bargaining power to get another wfh job. Yes they may be shortchanged compared to someone in London (perhaps fewer jobs they can apply for) but people are wired to justify their decisions retrospectively. Its like how a lot Stay at home mums don't regret their decision to stay at home even if it permanently affected their earning power for life and the DH turned out to be a cheating bastard.

@scaryreading I live in a 2 bed London flat and I am refusing to use the second bedroom (as I want it to be for the future child and not get used to using the space). My desk (which can accomodate double computer monitors) is in in my bedroom and DH's desk is in the reception. So we have separate work spaces for conference calls. I understand its hard if you live in a bedsit or shared home, but most Mumsnetters are not in flatshares. You don't necessarily need more space but to reconfigure the space you do have. For example the reason why we have space for piano and home office set up in reception is because we have a sofa dining bench, so there is no separate sofa and eating area (that giant sofa set up that you see in most homes is a waste of space; realistically how much do you use it? Only to watch telly and to have the occasional guest, and you probably spend more time at the dining table as you eat there and possibly watch netflix while eating).

@Xenia: Here's a really good study on productivity boost on working from home: www.inc.com/scott-mautz/a-2-year-stanford-study-shows-astonishing-productivity-boost-of-working-from-home.html

The science has always backed this up. It's only corporate culture that's struggled to catch on.

@Oliversmumsarmy The reasons you have explained are why this hasn't worked at scale thus far. This crisis, by forcing almost all office workers to work from home for weeks on end with zero in person contact, has turned the old paradigm on it's head by proving to those employers that employees can be just as productive when WFH. Also, remember that this is actually the worst case WFH scenario from a productivity perspective (kids cannot go to school, no in person meetings etc.) and once the lockdown's lifted, people will also still be free to come in to the office 2-3 times a week.

@Desiringonlychild I don't think prices will equalise as people will still want to invest in London property etc. but, provided that enough companies embrace a more flexible WFH culture, there will be a significant drop in prices in London.

Would this mean that perhaps amersham and Finchley might have more equal prices

Whilst Amersham is a very nice area if I were to have the choice of 2 equally priced areas it would be Finchley every time for me.

Does Amersham actually have a synagogue?
I think it is Chesham that does and that is a couple of miles at least away.

Even a quick google on Right move and you are looking at getting on for a million for a detached house that is somewhat walkable to the synagogue

thequantofmontecarlo

I was trying to come at it from friends pov. Some don’t have young children, some are in lockdown on their own and work normally was their escape to meet and be around other adults,
The idea that they would be forced into WFH as the norm to them, even if they could go out every evening is something they don’t want to do.
Their work is about the working environment. Meeting their friends, chatting over a coffee. Not the silence.

@Oliversmumsarmy It would be finchley for me too! But most people are not Jewish and I live in the less Jewish part of Finchley that is still in the catchment of Akiva (Jewish finchley is more concentrated in Church End and North Finchley which don't have good school catchments as Jewish secondary schools tend to draw from a giant geographic area). So most buyers in my area wouldn't be Jewish. And the chesham synagogue doesn't even have a building, its more of a community that meets every fortnight and there are classes for children. You are probably talking about Kinloss at Finchley Central and yes it is very expensive to live near there. The prices wouldn't drop in Jewish London because its very difficult to create a Jewish community in the middle of nowhere (kosher shops, synagogues, mikveh all need some economies of scale). They managed quite well in Borehamwood but Borehamwood is still zone 6 London.

I think there is a possibility London house prices will absolutely collapse. Especially if there is a global recession. Companies will be looking to move to cheaper premises. That's only my opinion.

London house prices will not collapse. There is too little supply and demand will be ok.

But, they may drop a bit, be harder to shift. One bed third floor flats and above are likely to take more of a drop than family homes with gardens.

@PersonaNonGarter I guess its a question of whether the only thing keeping people in London were the jobs. There are a lot of other reasons people live in London.

I would only move out if London for the US

I don’t know any friends of mine (especially with children) who would move out.
London is home

@Oliversmumsarmy
www.theguardian.com/money/2020/may/01/financial-covid-19-citizens-advice-bill-payments
Survey finds 25% of people had missed bill payments and 20% rent, council tax or telecoms. FInd it quite hard to believe house prices wouldn't be affected when 20% of people find it hard to pay basic bills. Perhaps many are renters, but I find it difficult to believe there are no home owners in the equation. Also even if you are a home owner with a lot of equity, if you have no income, children to feed and bills to pay, 'sell the house' could be your only option. Furlough would end at some point and many of the furloughed people would be stuck on UC (which could barely keep people half alive in the best of times).

@Desiringonlychild
"Perhaps many are renters, but I find it difficult to believe there are no home owners in the equation"

Even if these were 100% renters, they are, in effect, paying off someone else's mortgage. This means that if they default, the landlord, will be squeezed and this will have a financial domino effect...

I am an Aussie so my perspective isn’t based on UK... I would think a podcast or UK economist google search could give much better answers.

Here is my armchair/zero expert opinion for what it’s worth.....
I have Liquid investments and am holding off on buying a house as I think prices will drop substantially.

Can’t comment on UK but some economists here thing house prices could drop by 30%

House prices here depend on demand and population growth. If borders don’t reopen until a vaccine is found then we will have no migration which will impact demand for housing.

I’m not sure about UK but here the banks are freezing mortgages for 6 months. All well and good but what happens in 6 months. The banks and the government can’t bank roll forever. I know plan is that economy will lift again but there will still be high unemployment.

A few people have said that wealthier people won’t be forced To sell their homes. I think a lot of commercial property owners and landlords could be in trouble if people can’t pay rent. Also business owners in hospitality sector retail etc.

Economists are predicting this could be bigger than 2008. The global economy will be impacted.

Can people continue to pay their mortgages without a job or business income ? When will the economy in UK return to normal and borders open ?

I guess that’s the big question is the borders. You’re talking massive losses to tourism, migration, international students, so many industries. If the UK government is waiting for a vaccine before they open borders then that’s potentially say 2 years of not having certain industries. Who knows though ?

There’s also massive levels of government debt/ will banks survive it etc.

I would think logically that the shit has hit the fan and that there will sadly be mortgage defaults, people that can’t pay rent and the market will suffer/dip.

@thequantofmontecarlo not all landlords rely on the rent to pay the mortgage. In the first place, that is a risky strategy, because any property (even a super luxe flat in Central London) is going to have gaps in occupancy. And the mortgage has to be paid nonetheless. Of course I accept that there are some very overleveraged landlords around. my flat was empty for 6 months before I bought it (landlord was a cash buyer who extended the lease).

I rent, with 3 others in London. Before lockdown, one tenant moved back to her country. Another tenant is staying with partner. First tenant has just notified landlord she is leaving. I am leaving as soon as lockdown finishes to go to parents. 4 th tenant is leaving soon as course has been disrupted. So, out of a house of 4 there is only, at the moment one guaranteed tenant.

We have been looking on spare room website for rooms. There are decent rooms on central and north London at the same price as zone 3/4/5 south London.

Those landlords who can afford to ride this out will lower rents and those who are in that pyramid scheme of having multiple properties but no real equity will have to change tactic before interest rate rises leave them with a high debt to pay against a reduction in tenants. The rental market, in my view has a much greater destabilising effect on the whole residential market (which was why many were critical of the btl/cheap credit market intervention. There seems to me a risk that is there and will only be offset by individual input (existing landlords plugging the gap with their own money). Many btl landlords don’t have that money and crucially, don’t realise that this is how markets work in difficult times - they won’t be bailed out.

@Desiringonlychild The majority of landlords, domestic and foreign, have a mortgage. And yes, of course properties will have gaps in occupancy and pricing your rent and managing your costs is part of being a landlord, but the reality is that there are plenty of people who are "accidental" landlords and will be now having to pay off two (or more) mortgages. Small changes to the buy to let model where landlords were no longer able to get tax relief off their mortgage interest have resulted in plenty of BTL landlords selling up - This situation is far worse.

@thequantofmontecarlo

Yes, exactly. There is a perception of who landlords are that is out of sync with the current reality that is a concern during extraordinary times. I’m not even sure it is entirely to do with money streams but also an attitude. Some newer landlords haven’t had to carry the weight during difficult times - only the froth at the top. Whether they will fold or stay in the game long term will depend on how well they cope with seeing their income streams collapse under the weight of their debt and whether they can see a way out that is manageable for them. They may well decide to cut their losses, exit the market without sustaining damage to their core assets (family home/pension) and then their properties (lower end one bed flats above shops, etc) will come on the market.

There is another factor here - a lot of people have been burned by the rental market and have had to change h thy heir view on where they would live, etc. Previously undesirable areas and properties (flats, etc) may seem attractive now. If those people can access mortgages they will underpin the housing market, as ftb have always done. If we prioritise btl over ftb during and after this, we are screwed. The middle will hollow out and depart rather than have the weight of the Uber rich collapse on them.

It is as much about how it is felt, for some people, as it is sums on paper.

Desiringonlychild

Of the 20% of people who have missed a payment I am wondering what industry they are in.

People like Dd who is on UC knows a lot of her fellow co workers who are probably in that 20%

They are all self employed and waiting for the governments 80% to ease things and when lockdown is eased they have jobs to go to.

Yes people will miss payments but really I think that is just stating the obvious.
Not everyone on UC will remain on UC. Not everyone who had taken a mortgage holiday is in dire need.
Not every landlord has a mortgage
Not every landlord is reliant on tenants paying their rent. A lot rent their properties to the local council who are responsible for paying the landlord regardless of if the tenant has paid or not

When the government got rid of being able to put mortgage interest payments against tax there wasn’t a huge surge of Btl properties flooding the market as people expected.
Instead landlords changed their properties to holiday cottages and continued to rent them out on a nightly/weekly basis instead of a yearly one. Then they were still able to put their mortgage interest against tax.

With a 0.1% interest rate I don’t see why we would be in for a really massive fall.

Yes it will be shit for a while but it will get better.

A couple of months after lockdown has eased will show what exactly is happening atm no one can say.

@Oliversmummy

I agree with much of your last statement however the btl market ( and the April tax changes would have appeared if it wasn’t for covid reshaping things) is significantly full of individual players whose circumstances are not as secure as previously thought. They are capable of skewering the dynamics overall.