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

The London/SE market has been strongly driven by foreign buyers at the top and upper middle. Will we still be seen as a safe haven for (sometimes dirty) foreign money?
When the whole world is going into recession will rich people still think acquiring UK property is a priority?
AirBNB has already come to a grinding halt - a huge driver of rents and purchases in popular tourist spots all over the world and in UK.
www.theguardian.com/technology/2020/may/09/airbnb-slump-europe-cities-residents-barcelona-dublin
All those AirBNB landlords will be hurting right now, looking to get new tenants or looking to offload the properties.
Ditto for landlords whose EU tenants are disappearing back to mainland Europe by the end of the year. The sterling to euro exchange rate used to justify coming here to earn pounds but after Brexit competes it won't be as easy or lucrative with tax credits.
That means more landlords selling up.
So already we can see top end and bottom end properties likely getting hit.
When you're a homeowner with an easy mortgage to pay it's difficult to see yourself as part of a network that can be impacted by any number of economic factors. Certainly, if you have a figure in mind and you can wait as long as it takes to reach that sum (5, 10 years) then you will eventually sell for that amount.
But property in the UK is not just homeowners. It's a big business with squeezed builders answering to shareholders, a huge amount of landlords and immense foreign investment - all of which are far more fickle and less likely to 'wait it out'.

No chance. House prices aren't going anywhere because of this. People always ask this on MN.

House prices will fall. No amount of wishing they won't will prevent this.

People have been wishing and saying this ever since the last crash.

It’s always being predicted and the government keep stepping in to prevent it

After all, all those members of Parliament themselves have property that’s probably their main pension plan.

It’s worth reading the house prices crash forums as it’s been discussed over and over and there’s a dedicated forum just to house prices falling

Many unfortunate people have ended up not buying because of their bad predictions, just holding out and holding out for the drop that never came

All those years they could be half way to their mortgage being paid off by now

Comparing his i situation to anything that has happened in her past is only going tk get you so far. We have never ever seen anything like this before. This is a new situation.....

It’s always a ‘new situation’ every time the doom merchants start stoking the property crash fire.

Many unfortunate people have ended up not buying because of their bad predictions, just holding out and holding out for the drop that never came

In the early years (2003) they encouraged home owners to sell up and wait for a crash so that they could buy back in much more cheaply - a strategy known as sell-to-rent or STR, which was ruinous.

House prices will fall. No amount of wishing they won't will prevent this.

@Viviennemary

It reminds of the people who thought brexit would be a success, if only we believed in it hard enough

House prices will fall. No amount of wishing they won't will prevent this.

^^this

What we don’t know is by how much. I think one issue is that people envisage that it will be enormous but that would just lead us back into financial crisis. But if there is a recession so less money in the economy they will fall. If more jobs in the future do not require people to be needlessly London-based it may well lead to weakness in the south east.

House prices will fall. No amount of wishing they won't will prevent this

Wishing they will fall won't make it happen either. If you want to own a home save up a deposit, be realistic and buy anyway. Don't wait for an imaginary fall or perfect timing. Tell your kids the same don't feed them to fear affordable borrowing or bs about fantasy falls in the property market. It's a good thing to go for a mortgage, ours are all on the property ladder, one has a rental too.

@Viviennemary

Of course they will fall.

I think the point most people are trying to make is that unless the demand for housing in the U.K. drops significantly (unlikely), or a mass amount are forced to sell their homes at a loss (also unlikely) then there will still be a high demand for a shortage of homes.

Combine that with new developers pulling back due to the precarious economy and the drop in housing prices is very unlikely to be sustained long term. I’d predict 2-3 years at most before they start creeping up again. 5+ and I bet they’re the same again.

Of course I’d sell my house, even if it’s dropped in value by 30% if I’m purchasing another property and it’s more expensive than mine I’ll be getting a bargain....

Sell my house for £210k and it was worth £300k
Purchase house for £280 and it was worth £400k

Some people will not owe on mortgage or have smaller mortgages and be able to borrow more

I’ll just point out, I don’t think prices would drop by 30%. Reason being that there isn’t enough housing available.
I would predict a drop on average across the country if no more than 10% obviously some areas may have a further decrease

Price will then stabilise and become stagnant for many years

First time buyers now may be in negative equity for a few years

I’ve seen two crashes, 2008 & 1990

heres a video about the current housing situation by a moneyweek journalist

m.youtube.com/watch?v=HlUyCuYGj-A&feature=youtu.be

I agree with previous posters - even the worst of drops will be short lived in most areas where employment recovers to a normal level again next year which is what the BOE are predicting

Then it’ll be business as usual for a few years with some stagnation until they creep up again as confidence returns

It’s worth reading the house prices crash forums as it’s been discussed over and over and there’s a dedicated forum just to house prices falling

Many unfortunate people have ended up not buying because of their bad predictions, just holding out and holding out for the drop that never came

This is very true. I remember terrifying myself just before we exchanged on our first house in 2015 because I stayed up all night reading people saying that the market would see a huge crash that year and if we hung on a year we'd be able to buy the same house for half the price. Obviously that didn't happen, and we would have just spent an extra £12k on rent in the meantime. You've been able to find people saying that every year since and they've been wrong. This is a different situation and I think some drop is inevitable but I'm not much inclined to trust the predictions of people who have been predicting calamitous drops for years and been wrong every time.

Also was around for the last crash, and we made it through that. House prices now are way higher than what the drops were back then.
I was a first time buyer and had thousands wiped off the value.

I sat right and it was a few years before we could sell at more than we bought for but that’s not a huge amount of time in grand scheme of things to sit and wait if you end up in negative equity

We were also only in negative equity because we had a 95% mortgage at the time, luckily they haven’t been dishing out 95 or 100% mortgages like they used to

Something that hasn't happened before is that people are going to be prepared to live so much further out of london.

I watched the video and the fact that there isn't much new housing stock in London won't be as big a factor like in 2008, where the lack of new stock kept house prices from falling. So many people will now think, yeh if I only have to go in to the office once or twice a week, then sure, I can hack the commuting, why not live in a decent size house in Randomplacesofaroutoflondon.

There will be less demand. The world has changed. Working from home is not going away now.

People have been wishing and saying this ever since the last crash. It’s always being predicted and the government keep stepping in to prevent it. After all, all those members of Parliament themselves have property that’s probably their main pension plan.

While that's all 100% true rebelwithoutacause, the actions of the last decade mean they have a great deal less to play with to try and maintain prices now. In 2008 interest rates were absolutely slashed, for example, which clearly isn't an option now. They threw money at schemes like help to buy, but spare money is going to be in very short supply.

So I don't doubt the Tories will do everything they can to keep prices high, because that's what their base want and the priced out already don't vote for them, but they're going to have a much more difficult job this time round.

I could service my interest only mortgage just with a bit of matched betting.

If my buyer pulls out then I won’t sell for under a certain amount. During lockdown I have converted an outbuilding and will probably rent that out for income as well.

Be a bit tight but could be done without us having to go to work.

A very easy way to prop the property market up would be allowing people a couple of years of interest only payments on their mortgage then extending the mortgage by a couple of years. That way no one loses out and it gives time for people to get on their feet again.

So many people will now think, yeh if I only have to go in to the office once or twice a week, then sure, I can hack the commuting, why not live in a decent size house in Randomplacesofaroutoflondon.

People keep talking like everyone working from home most of the week is a done deal. I expect we will see more WFH, but I also think it'll take a while to see how much more, and that it's unlikely that all offices will all go over to working from home most of the time. The only way to save money from your staff working from home is to go entirely remote - which has real challenges and most won't want to do that - or to hotdesk: but is hotdesking going to be encouraged at the moment? Anyone buying a house now in the assumption that they'll work from home most of the time in any future job is taking a big gamble.

I wouldn't necessarily describe it as 'easy' for banks to simply extend mortgages, given that there are requirements for them to hold a certain amount of capital in order to lend. Though I do think that's one tactic they will probably want to try if things get bad, since it's not ideal for them to be repossessing large numbers of homes in a short period for a lot of reasons.

@Oliversmumsarmy but why should people with mortgages get bailed out with tax payers money while renters get endlessly shafted?

I think it will flatten and stagnate rather than tank. I don't want to see anyone in negative equity. We'll see what happens.