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

I’m sure there will be some effect. My mum was buying a studio flat before this all kicked off and she’s just negotiated it down to £102k from £120k agreed. The identical one in the building went for £135k last year. It won’t be one size fits all but will depend on property type, area and a myriad of other things. Some people will still need to sell, others won’t and will sit tight.

We bough ours for 180k and have 40kish left on the mortage

Bit deceptive to refer to a 600k house then. Of course you can service a 40k mortgage on two minimum wage jobs, though that in no way validates your point that house prices won't drop.

all it will create is a mexican standoff that will freeze the market until buyers get a sense of reality.

Tsk, yes get those silly buyers told. People should just pay what's asked.

That's a big concern Sonja

A lot of people are realising that being in a position where you spend hundreds of pounds a month on things that are not strictly necessary like lunch, coffee, meals out, cinema, gym membership, beauty treatments while having no savings isn't a great position to be in, and when they're all suddenly taken away and they're forced to do without or find alternatives, most of which are far cheaper, it suddenly hits them how much it was all costing and how they can happily do without a lot of them.

So while people might be rushing back to the hairdressers and meals out, anyone with an insecure income might be more cautious, along with the people who've decided that they prefer exercising outdoors, making their own lunch or doing their own nails, might lead to a significant downturn in these sectors, which is obviously not great for anyone who's job depends on this sort of spend.

Meant to say she was going to pull out because she got scared of the market dipping so they renegotiated as the owner was desperate for the cash. I’m sure this situation will be replicated over and over up and down the country. Fear of market dips can drive them!

@dibble15 nope still on the market. The price has dropped from $12mill to $10.75mill. wasn't worth getting the sink nor the plumbing fixed.

It’s possible they could drop that much. According to Zoopla our house has risen 32% since we bought in 2014. Look at sold prices for 2010-2013. House prices are insanely high at the moment all propped up with low interest rates and Help to Buy. Dreamt up a little conspiracy that they ramped prices up in preparation for Brexit... anyway.

Sadly high house prices just reduce everyone’s standard of living. Worry about friends and family that have recently bought and also about my siblings trying to get on the ladder. Prices are unsustainable and surely any drops will be exasperated when/if they pull H2B.

Hubby and me were planning some substantial home improvements but decided against it now, we’ll be fixing for 5 years at the super low rates and dropping the term to try and counter any shocks.

Unfortunately they say the three D’s keep houses selling, Death, Divorce and Debt, some people won’t have a choice, hoping this recession is short lived and everyone bounces back quickly but history tells a different story. 2008 financial crisis I’ve read our GDP dropped 6% and house prices fell 20%, granted we didn’t have H2B assisting sales but this seems so much bigger than the 2008 crisis.

Just thinking back to when we had ours valued earlier this year though, the Estate Agent did say there were plenty of buyers but no sellers so it might go the other way if there are a glut of sellers, who knows.

@SonjaMorgan 🤣🤣 you'll never get rid!

@barbaraofSeville I'm worried about the impact of that because I'm doing exactly that.

People who really want to sell, or have no choice, will sell because they have to.

In the late 80s, my house was valued at £87.5k Because I was relocating, I sold it in 1992 for £49k. Prices had fallen by over 40%. It didn't matter to me, I had bought 5 years earlier, I hadn't remortaged, and the sale price still left me with quite a bit of equity.

And the house I bought had similarly fallen in value, so what I bought was less than half the price I'd have paid for it in the late 80s.

House price falls only really matter to those who want to release equity to spend on something else, or those who have large mortgages. When prices crashed at the end of the 80s, it was the people who'd only recently bought, or repeatedly remortgaged to raise money for cars and holidays, who lost out.

Many found themselves in negative equity. One of my friends reckons she probably still owes money on the house she bought in 1987, it was repossessed and sold for far less than the mortgage they owed on it.

@SonjaMorgan 😂

Ultimately it sucks for older people who want to downsize and live off the equity they'd built up.

The equity they built up? Do you mean the equity that magically got created due to over a decade and a half of loose monetary policy and Government props?

If you really need to sell then you might drop to get a quick sale. Not sure if it would be by that much.

I'm only really concerned about managing to keep my house with the rise in food prices, tax etc.

We weren't planning on upsizing for another 5 years anyway so it makes little difference to us. Although an extra bedroom would be nice for another home office since we are both wfh.

No you shut up. Is that the level of debate you want, OP? Fortunately most replies have risen above that.

It is bemusing that sentiment – i.e., “shut up” about the possibility of prices falling – suddenly takes the fore at times like this. I thought it was all about supply and demand? (Of credit, yes.)

First post nailed it: “Some people won’t have a choice.” Prices are set by houses that actually sell. Nobody has to buy.

No you shut up. Is that the level of debate you want, OP?

No, OP doesn’t want any debate. She thinks talking about it will make it happen and not talking about it will stop it happening.

My DH sold his house in West London last year. Really nice part of West London. The vast majority of the people in his road were well over 65. They had brought 40 plus years ago and decided to stay as the area is desirable.

They are now living in large 4-5 bed houses either singly or as a couple. They will have no mortgage and will stay in these houses until they are carried out.

My DH house got a huge amounts of offers even though it was in a real state.

So, some people think they can get a bargain when they trade up. Just remember that your own place will also have gone down too!

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.

Or until sellers get a sense of reality. Asset prices do drop. It's quite likely that they will drop during the biggest recession in modern history.

(And asking people who make this perfectly rational point to shut up is very unreasonable, and frankly ridiculous!)

Ultimately it sucks for older people who want to downsize and live off the equity they'd built up.

The equity they built up? Do you mean the equity that magically got created due to over a decade and a half of loose monetary policy and Government props?

And the equity that got destroyed by closing down the economy in order to protect almost exclusively those over the age of 65? There is at least some justice

Yes. The equity they built up. I'm not saying it's right, just that because this is how it's worked in recent years, some people will have banked on downsizing for retirement. Not saving into pensions because they planned to sell up. Maybe you can live on state pension, but I certainly couldn't.

I was using that scenario to show how it will affect some people (downsizers), but not necessarily those who want to go up the ladder if the price drop is the same for the house the sell and the house the buy

some people will have banked on downsizing for retirement.

Well the risks of that strategy were obvious. They were never guaranteed that their house would maintain value.

People wetting their pants at the thought of 30% off house prices, are you ok with 30% salary drops at the same time ? Do the numbers still work ?
Btw salaries haven't dropped by 30% if you were worth £50k 8 weeks ago you're still worth £50,000. If you were blagging then different story.

Depends on the industry doesn't it, just ask a pilot.

People wetting their pants at the thought of 30% off house prices, are you ok with 30% salary drops at the same time ?

Yes because house prices and salaries always rise in direct correlation with each other.

Oh wait ...

People wetting their pants at the thought of 30% off house prices, are you ok with 30% salary drops at the same time ?

This post seems to attach some sort of moral connection between the two! It doesn't really matter whether anyone is happy with any of it. With the widespread support of those who will suffer the government has embarked upon this course of action. If it happens it happens. The reason why asset prices will be due to the unprecedented economic and political devastation we are teetering on the edge of! Hold onto your hats.