People talking about houses dropping 30%

[ayvian]

AIBU to think they should shut up.

Banks are still lending, furlough has saved millions of jobs and no one is going to sell their biggest asset at a 30% loss. It just won't happen all it will create is a mexican standoff that will freeze the market until buyers get a sense of reality. We want to move, but not that desperate to accept a loss of what something was worth a few weeks ago. We'll hold on. It's wishful thinking that anyone can get a bargain right now

And don’t forget we have the “elephant in the room”, Brexit. We now have 6 weeks to agree to a deal or an extension, or we will leave with no deal. This was always going to have an effect on house prices, even before Covid.

Agree that renting is problematic in the UK due to lack of security and lack of price regulation both of which drive people to see home ownership as the only way to have long term good quality of life. All that rent does is buy the right to stay in your home for two months which is fuck all. And renting is expensive long term both during working life and into retirement - this latter has the knock on effect of discouraging saving - why would you, when the first £700 a month of any payout from what you've put by goes on rent, which would otherwise be paid by housing benefit if you were only claiming state pension?

So no, it's not a right to own a home and I agree that it's always been a financial stretch for most people on average earnings to do so. But due to the shift in rental provision from public to unregulated private sector, there are financial and practical penalties at all life stages if you do not. However growing wage disparity and crucially a drop in wages at the level just above minimum wage over the last 20 years (papered over with tax credits for those with children) means that fewer people on modest incomes can do so but those above that level can pay more as their wages have risen by a greater degree, and this money is now bolstered by money funnelling into the market through inheritances that are of greater value after 25 years of a broadly rising market.

We went and viewed a property this morning that had 20 viewings over 2 days. And has had more than 4 offers. So it's going to sealed bids. People don't seem that worried around here!

I think lots of posts here showing how quickly GOOD properties are selling shows there won't be any big crash.

The vested interests of some people are showing, thinking they can get a nice property at a bargain price. Wishful thinking!

Where are you, Eeyore?

Kent

thisismytime central south coast.

We have just gone on the market and not on right move or anything yet and have had 2 viewings on our property. No offers yet but it's not even online yet. So I am hopeful.

How are you allowed to view houses?

Someone I know has just had a valuation on a house they were buying, and it has been downgraded 16%. Banks are no longer lending more than 85% LTV. This also happened In 2008. Sounds about right actually, Bank of England predicted prices had dropped 16%.

What all this anecdotal evidence shows is how much the housing market varies across the UK and indeed sometimes at a very localised level. In some places prices will hold steady (certainly my experience of selling in the last couple of weeks). In other places prices may be significantly reduced. Some parts of the housing stock will fare better than others. We will only be able to reach conclusions in the months and years ahead as data becomes available. It certainly won’t be a major correction for all.

@Thisismytimetoshine

The vendor goes out. Estate agent socially distances masks and gloves are worn, all doors and windows are left open and only 1 set of viewers per half an hour for a bulk viewing. Or just one at a time as they book.

@DrinkVeneer I disagree. It's 'people saying' that starts the drop. The stock markets are all about perception and so is the housing market. As soon as people start saying prices will drop they will drop.

@mynamesmrdiggety you're right, but it's so glaringly obvious that you can't expect people not to discuss it and make a sensible assumption as to what will happen.

My MIL has just reduced the price of their home by 17%. Original price was reliably sensible before covid as it's so similar to others that would at that price on tenor street recently.

I don't think they will drop by that much no.

I downsized at the end of 2018 thank God, so my equity is all safe. I have young adult DC who would benefit from house prices falling, both for sales and rentals. So you could argue I have a vested interest in the 30% drop being true but I think it's crap.

I think there will be a small decrease in values which will pick back up over about 2 years.

Those saying it will be such a huge drop - either they know something we don't or it's just wishful thinking.

Fantastic news for buyers

@HelenaPeach not really. Unless they have cash to buy. People won't be selling unless they have to so much less on the market. And mortgage companies will be massively tightening everything up.

These threads always bring out the "Yay, I'll be able to afford a house now!!" posters who have no idea how it actually works. Sad.

I thought surveys and viewings were still stopped?

No surveys and viewings we’re back on since Wednesday just gone

The people who will really suffer are those who recently bought and those who recently upgraded as likely they paid at the top of the market. Plus anyone who has lost significant income.

For everyone else it's Monopoly money that yes equity has gone down but you could 'upgrade' for far less. New buyers will need more deposit than ever so the price going down in itself isn't the only factor to affordability.

I bought my first house a few years before the 2098 crash. It wasn't in negative equity but took a while to recover. People I know who were in negative equity were fine as long as they still had jobs to pay the mortgage. It eventually evened out and they'd have to pay rent anyway so it's not like a mortgage is the thing that's problematic.

The news in the times this morning is that record numbers of buyers registered with estate agents when the reopened this week

There’s a lot of pent up demand from not being able to do anything for 2

And demand pushes those prices right back up there...

I hope so as I'm priced out of my local area, despite us both earning ok salaries. We can't get a deposit together, but could manage the mortgage easily if we even stood a chance of getting one, as we already pay it in rent. I will probably need an 80% depositat this rate though, so it won't actually help me much even if prices did drop.

Something has to give though. Houses prices are ridiculously inflated and it is damaging small tourist communities and turning them into ghost towns in the winter. Something needs to change.

That’s exactly the problem

Mortgages can be cheaper than rent if you have the capital available for a decent deposit for someone to lend to in the first place

A 10% deposit on an average house is £20k

But now hey are looking for minimum of 85% LTV to lend on that deposit needs to increase to 15%

If the furlough scheme doesn’t save as many jobs as they hope then it’s likely lenders will require 70% LTV to lend so requiring 30% deposits which will be £60k on an average house

That alone will stall the market as first time buyers won’t have those sorts of figures in savings and only the few from wealthy background will have parents willing to give that amount over without conditions