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

We have to wait as need to see how permanent wfh will be as it will open up a much bigger market to us.

30% sounds like a lot, but my house has risen by more than that in the last 8 years (since the last crash).

Altogether depends on the ability of current homeowners to keep house prices at ridiculous levels. And a lot of that depends on the economy, their jobs, their parents. If prices become more realistic and affordable for more people that is a welcome thing for society but potentially devastating for parts of it in terms of repossessions , negative equity, escalating private rents etc.

I wouldn’t like to say either way.
I certainly wouldn’t want to have gone into this already stretched beyond being comfortable as it will only get worse.

It's wishful thinking that anyone can get a bargain right now

You can't speak for every buyer or seller though. I know someone who had an offer of 412k accepted on a 465k property in March.

@dibble15
@TrophyCat

Both also very relevant observations

furlough has saved millions of jobs

Has it?

Interest rates are super low, even my house worth 600k we could get min wage jobs and still service the morgage. People won't just be handing back their homes

Your mortgage lending is a LOT lower than your house value if that’s the case. Which gives you a decent safety net.

This isn’t the case with many though is it? Those with £600k homes and £500k outstanding mortgage who lose their jobs aren’t going to be able to pick up any old minimum wage job to cover the mortgage - many will be up shit creek and yes, will be forced to sell at a loss.

PLENTY of people every day are forced to sell their biggest asset, often at a loss, due to repos. There’s no choice in it.

Exactly Dibble - we'll only see whether jobs were saved by furlough later this year. It's a long term thing, not just a matter of surviving the last month or so.

Yeah, people with a secure income (pensions) and masses of equity are the real losers in the current economic climate.... won't somebody think of them? Oh! Never mind!

Talk of huge drops seems premature to me. The recession forecasts show a big drop but then a relatively fast recovery. We're yet to see what unemployment figures will be - and until we know when retail, hospitality etc can reopen it's hard to predict. Then there are a considerable proportion of people actually better off because of lockdown - reduced childcare costs, no commuting costs, no entertainment/eating out/holidays. So given that the impacts are going to be felt so very differently by different groups of people, surely we can't expect a huge and uniform impact on the housing market.

@stophuggingme my property has probably doubled in value, why wouldn't I accept a 20% reduction if I was getting 20% of the next property? Less stamp duty too.

The chances of the housing market depreciating by 30% are almost nil and I imagine just a rumour being circulated by hopeful first time buyers!

Yes there will be the unlucky few who have to sell and certain people who have to move area...etc but I can’t imagine that being any more than 15-20% of sellers on the market. So even if buyers over the next few years decide they want to pay 30% less, only 15-20% of the market will sell at those prices whilst the rest wait it out.
Developers won’t be building new homes in the same way and this will be hit significant by CV so a few years down the line supply/demand will just push prices back up.

I actually think the subsequent update to furlough and the obligations it places on employers is the death knell for thousands of jobs especially in hard hit hospitality and retail industries

People are naive to think the Tory government introduced furlough for any other reason than to use it as a lever to force people back to work even if unsafe to do so

Why should they shut up more than you?
Anyone saying they KNOW what will happen is a dick head. Nobody knows, you included.

Putting forward ones own opinions is fine. But anyone saying they “know” is the person that needs to shut it.

@dibble15 I’m a bit confused why you seem to think I don’t agree. I said your observations were relevant. Of course if you can absorb that and want to that’s all well and good. If people bought at the right time and everything else falls in their favour than a 20% loss isn’t really a loss if your house doubled in value. You’d still be retaining 30% of the rise in value above and beyond what you purchased it for.
But many people won’t be able to, and therein lies the problem.

To be perfectly honest and at a risk of pissing people off, I welcome a drop. I've waiting years to finally be in a position to buy and a drop in prices (although probably not as much as 30% as in SE, and depending on lenders) will be of benefit to me. I'm viewing 2 probate sales on Saturday (both listed pre covid) and hopefully will be able to get an offer in under budget 🤞

There will definitely be a house price crash if we go into a recession. I've bought last year and I'm happy I did. The problem in this country is that too many people see their house as an investment rather than a home to live. I don't see my house as an investment perse, but as my home that belongs to me, which is cozy, which I can alter and decorate. I'm happy I don't have to deal with landlords anymore, who can sell the house and have me kicked out. Although I would be very happy and I also think that my house will rise in value over the next 10 years or so, I don't anticipate it to be a huge rise, maybe slightly bigger than inflation if we're lucky. It's also selfish to expect huge rises and be happy about it, how do you think young people will ever be able to afford a house in 20 years time?

no one is going to sell their biggest asset at a 30% loss.

IF the market drops by 30% people selling won’t be selling at a 30% loss. That’s not how it works. That’s just how much the market has dropped. One person could have bought their house last year for even more than it was worth right before the pandemic so they could be selling for a 40% loss on what they actually paid. And their neighbour could have bought it 10 years ago for half the price it’s worth now so they’re still making money even if they sell for 30% less than the market rate was 3 months ago.

Your house isn't worth what you paid for it or what you think it should be worth. It's only worth what a buyer is willing to pay for it. If buyers are only willing to pay you 70% of that, then that's what the market says your house is worth.

You can't just declare your home is worth £600k when the market won't pay more than £420k.

We're expecting a big fall in property prices but maybe not as much as 30%. However, we've bought our homes to live in, not to make a return on, and aren't looking to move any time soon.

stophuggingme I agree. I don't think people realise how much furlough costs employers - they still have to pay staff to administer the scheme, and employees on furlough accrue holiday pay and other entitlements. Having employees furloughed costs employers money, at a time when they may have literally no income coming in.

Businesses in the worst affected industries (e.g. hospitality) can't afford to do that for any length of time. Even when they are allowed to reopen, it may not be worth their while opening up if a pub is only allowed to serve a handful of customers at a time. There are fixed costs that don't decrease because activity is reduced.

The idea that the jobs have all been saved and these industries will return in a few months is naive - the picture is a lot more complicated than that.

Thisismytimetoshine
Complete tripe.

Hey, Boris.

Think I touched a nerve there.

Of course you haven't "touched a nerve" . It's of no real issue to me that you're talking bollocks 🤷🏻‍♀️

No not a 600k mortage, we've paid off a lot. Like have most people that bought a few years ago.

We bough ours for 180k and have 40kish left on the mortage. The very idea that someone could buy it at a 30% loss is silly - we won't sell for that. Unless people want to sell at that price then it won't happen.

My job is currently safe but will it be next yr when the actual virus is a memory (🤞) but life is more expensive (VAT rises, higher food costs, income tax rises, etc) so people have less disposable income & crucially there are plenty of people who are conscious of how much they are now saving (myself included) & want to keep that money in their pockets going forward & "waste less".

Also your house isn't worth what zoopla or rightmove says it is, it's only worth what somebody is willing to pay for it