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

But the context is that interest rates can rise- and overnight. My parents mortgage rate doubled & went up to 15% - my mother still says she doesn’t know how they kept the house- and that was in an era of cheap houses! People are mortgaged much higher these days. I’m just saying people on here are SO certain of house prices not dropping, interest rates not rising, government not ‘letting it happen’ and is very naive

Because the government last time didn’t have their own investment in the housing market when that happened
They now do

The housing market accounts for about 15% of GDP. Outrageously high but still less significant than the remaining 85%. Low interest rates are necessary to encourage businesses to borrow to expand, and consumers to borrow to stimulate sections of the economy like retail, building/maintenance, high-price goods (cars, etc.) and so on. Also, of course, the government itself needs to borrow huge amounts and can't afford to push interest rates upwards. Rising interest rates would push the economy into a severe and long-lasting recession. Trying to control the housing market - which never works anyway - can't take priority over stimulating the economy.

Of course, we do have a no-deal EU exit still to hit us at the end of the year, by which time the economy will barely have begun to recover from Covid-19. God alone knows what happens then.

I was pretty busy with my toys in 1992, but I do know how Black Wednesday happened in retrospect and I still think the government are going to want to try and keep interest rates low, purely because they have demonstrated conclusively over the last decade that they'll do anything to try and stop prices falling. They have told us who they are, and I believe them.

Now I'm not saying that's a good thing, and though I'm a homeowner myself I'd rather there be a fall in prices. Have also got nearly four years left on current fix so it's not an immediate concern for me. But our economy now looks colossally different from 30 years ago, especially after the QE of the 2010s.

and that was in an era of cheap houses! People are mortgaged much higher these days.

House price doubled in many areas Within two years and then Crashed, whilst interest rates were pushing up to 15% along with 100% mortgages

House prices may seem cheap at £50k for a two up two down but 24 months prior they were £22k And wages certainly hadn’t doubled

StylishMummy interested to know whether people are accepting the cheeky bids but then expecting the same off the house they want to buy and what happens if someone says no.