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

Rebel, you said yourself further up the thread that mortgages may only be offering a 70% LTV. If this happened it would mean that house prices have fallen 30%. Guess you see these falls happening too.

Should add - will be different for different areas of the country of course

I think that house prices will drop. No idea by how much.

My reasons for thinking this is that people will lose their jobs, others might have less money to spend due to reduced wages for a while/using up savings. Others might be reluctant to move whilst waiting to see if the market drops. If I were looking to move house I would personally wait until next year to see what happens with the economy.

I can only speak for myself. My question to you is why should someone shut up if they voice an opinion that they think house prices will drop? Their opinion is as equally valid as your opinion (neither of you are talking facts since none of us actually know either way).

@Weallhavevalidopinions it’s because it doesn’t fit with peoples narrative at all. Very few on here have lived through a true crash and no one acknowledges that the housing market has been a giant Ponzi scheme for at least the last decade at the expense of a massive UK wide housing crisis. It’s not a real free market at all because if it was, housing would have fallen a lot more in 2008 than it did. This time options are limited because the entire economy is in very deep trouble and rates are already low. There’s a lot of wishful thinking on this thread.

I think there's a lot of wishful thinking on both sides. I think anyone who thinks prices won't fall is kidding themselves (we're in the process of selling ours and just waiting for it to either fall through or we take a big hit on the price - I can't see how it will go ahead at the current price unless our buyers are a bit daft, tbh) but so are the people who imagine a big price crash would mean lots of FTBs getting their dream homes. People keep talking about the Irish crash - don't think that worked out as quite the gift to the young that the wishful/deluded here are hoping for, did it?!

Black dress. I agree, if it was a free market, a house would be affordable on 3.5 x the average wage. It has to be propped by by various schemes to keep FTB buying. The 2008 was not a recession at all. On economic models, it only went 2 points, a full recession is 4. The can was kicked down the road. I believe we are now going to get a ‘double recession’ will equals a depression.

My question to you is why should someone shut up if they voice an opinion that they think house prices will drop?

most posters have no problem with an actual discussion, if the posts in the line of "the market will crash, screw you all, you deserve it you evil home owner/landlords and it can't happen soon enough" that are questionable.

Wishing for a property crash because we will be in the middle of a nasty recession is not something I can agree with. It's not as easy as pretending that first time buyers will then be able to buy a house on their credit card.

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

What does paying the interest only on your mortgage for a couple years and extending the length of the mortgage have anything to do with tax payers money?

What exactly do you think the tax payers will be paying for?

I am on an interest only mortgage. I can’t see where I am being bailed out with taxpayers money?

@LisaSimpsonsbff you're absolutely right, the irish crash didn't help the younger first time buyers in 2008-2013 when prices were lower than they had been for years, because all of the lending rules went the other way completely. They had been lax and they went so far the other way, they overshot completely. Even if one person in the couple was self-employed, or an artist/musician or didn't have a contract, there were a lot of people saying they could afford to buy a house but weren't allowed to. LOT of frustration from first time buyers.

I was 37 when the bottom fell out of the housing market here so by that age, I knew so many people who had fairly recently taken on huge mortgages for very ordinary 3 bed houses, and then 2-3 years later, the house was worth, if they were lucky 2/3rds of what it had been worth when they bought it.

The only silver lining for my generation is that now, finally, things have levelled out and the worth of their house compared to what's left on ttheir mortgage is begining to seem less of a prison.

One of the ''takeaways'' from the Irish boom bust was Don't buy a house you're not happy to live in. People used to repeat that ad infinitum as THE lesson from all of this. (ie, 70 sq ft apartment in Athlone that leaves you behind the wheel of a car for 18 hours a week every week for ever....) But even that was before remote working, working from home, zoom conferences and meetings. Technology has progressed since 2007

And lending rules are still tight. The young woman who cuts my hair, she looked about 24 to me but she told me that she and her husband had to bite the bullet and buy now as they were both going to be 30 in the next year and that was going to make things harder again. She looks like the most fresh-faced innocent I've cross paths with in a decade and to hear her say that she'd soon be too old to buy a house..............

OMG why is it so hard.

@Olivers well if it happens for home owners, then the same should happen to renters. They can just pay interest on their landlords mortgage too then. Let’s see how that goes down. Who will compensate the banks for all these interest only mortgages? Oh yes, same as last time, taxpayers

Because house prices are unrealistically high. They are in a bubble, which has just been burst by the Covid pin.

OP I bet you're from the same sheltered social circle in Surrey as that other poster who commented that she didn't know anyone that has been furloughed or under threat of redundancy and they're busier than ever, and she couldn't see what the crisis was!

They do talk the market up on here. It’s a dangerous thing actually, like encouraging people to buy now, when we are on the edge of a house price crash. People should do their own research and not listen to the “experts’ on here.

littleblackdress04
well if it happens for home owners, then the same should happen to renters. They can just pay interest on their landlords mortgage too then. Let’s see how that goes down Who will compensate the banks for all these interest only mortgages?

you do understand that the debt doesn't change don't you? the full mortgage is still due, just spread out more.

How would it even work for tenants? Where would landlord get the money back from the rent due when the tenants want to leave?

If I pay interest only, at worst the house can get repossessed/sold and the banks get their money back. How would that work for tenants?

littleblackdress04

Why would the banks be compensated for interest only mortgages?

Noone would voluntarily sell their home at a loss, or even put it on the market if in negative equity

However, there will be some people who bought expensive properties on max mortgages for their high salaries
who have become unemployed.

The bank doesn't care if someone has to go from a 4-bed detached to a 1-bed rented flat - they just want their loan payments.
Lenders will let people pay interest for a while after current payment holidays,
but will eventually repossess if it looks like that high-paying job won't be achievable again for years

So, depends whether it's just a deep V-shaped recession with a quick bounce back,
or a prolonged recession / deperession of several years

But surely renters are entitled to the same help as homeowners? The landlord could just spread their mortgage out over a few more years to help renters. That just sums up everything that is wrong with our country today. Renters don’t get any help or assistance and apparently that is ok.

Exactly @Jenny1211 and that’s exactly what people on here don’t get.

In previous recessions, rents have fallen in some areas
The local market depends on the median income for renters
and now how many become unemployed - the govt is likely to reduce housing benefit, not increase it

Noone would voluntarily sell their home at a loss

depends how much loss - it might make financial sense when you are upsizing, and you are in a good position for a mortgage at the lowest interest rate possible and you need more space.

It also depends if people consider "loss" and talk about negative equity, or loss as in "drop down in price but with still a lot of equity in the house".

Renters don’t get any help or assistance

Yes they do.

It is called Housing Benefit

The big re-set at the end of the year, which eventually leads to house 3.5x average and interest rates at 5% will equal out society. No deal Brexit, which is looking likely will ensure this happens.

Surely interest rates can only go one way?

But surely renters are entitled to the same help as homeowners?

do homeowners qualify for housing benefit when they lose their job in the uk?

The landlord could just spread their mortgage out over a few more years to help renters. could they? Is it so easy to extend a mortgage whilst keeping the same rate?
HOW do you ensure renters pay the full debt if they decide to leave, or just stop paying entirely?

The bank can repossess the property if the mortgage is due - what can a landlord do to get their money back?