To think most property owners don’t understand how hard it now is to buy a house

[Boredfromboredshire]

DP and me earn 40k between us and our rent is 1200 a month for a 3 bed house. We don’t have rich relatives, we are in our early 40’s and circumstances (ill health) meant that we didn’t buy a house before. We can’t save a deposit & houses are expensive by us. We have stable jobs & our kids are happy so moving in the current uncertain time’s isn’t an option. Life has happened to us & some of it has been out it control.

Cue well meaning friend (who bought their house for peanuts) asking me why we couldn’t afford a house when we could get a house in a cheaper area for ‘only’ 400k. I’m so fed up of it. We really want a home of our own & we would move but in the current recession, it’s not a good idea to give up a job. And we can’t afford to save. My friend (whose deposit was 12k can’t understand it and looks on pityingly while telling me the house they bought for 120k is now worth 700k.

For many of us, the housing market is closed for ever. I’m so tired of the pity and the complete cluelessness- I quite often feel utter despair about it. It makes me feel such a failure for no real fault of our own. Some people were lucky because they happened to buy at a particular month in time & then some of us couldn’t & it’s over.

I don’t think people who own really understand what it’s like. Low interest rates, cheap mortgages, everything weighted in favour of owners while renters are treated like the Victorian poor.

Aibu to be sick of it. We are a normal family in normal jobs.

It may also be an unusual effect too I suspect - there may be a few more families want to move out of inner London to get a garden and get away from pollution (perhaps at last my living in the suburbs might be vindicated although you then have a very crammed tube journey to work so pros and cons....). I would not be surprised if London went back to how it was in the 1990s - much lower population, not even up to 1930s levels particularly with Brexit effects already felt since we left on 31 Jan 2020 so we might get more people moving further out or even away from big cities although people need jobs so who knows. I am usually wrong anyway about property.

@desiringonlychild Yes it was due to the interest rates rising out of control for them.
I guess we shall see what happens in the next few months/years to come.

The guardian article rightly points out that the base rate is not in line with all the other markers for a recession

But it also suggests that those that have been forced onto UC will remain on UC and those furloughed workers will just add to the unemployment figures whilst I believe there will be a big increase in unemployment. Those that are on UC are not necessarily going to remain without jobs.
We as a family are atm all claiming UC but as soon as things start again then we will be off the benefit.
A lot of the SE people we know are in the same position as us and this is just a blip.

The Investment weekly article says that the IMF think UK house prices are 30% over valued.
This isn’t anything new. They have for years said the property market is overvalued.

It also refers to the housing market “soaring so high” before the down turn in 2007.
That is 13 years ago. I wasn’t fully understanding the significance of what happened before the 2008 recession.

Woolnough does get things correct from time to time (although he certainly didn’t see this one coming) but he tends to over dramatise the situation.

I think we were supposed to see year on year falls of 20% in the housing market back in 2008.
We had a 16% fall in 2008 then things started levelling off and slowly recovering.

So yes things might go down but not as far as he predicts and like the BOE says it is most likely going to be a quick recovery.

So I think a wait and see policy to see how things pan out with regard to your jobs is advisable. If everything looks like it is going to be business as usual then I wouldn’t hang around for property to suddenly fall any more because the most likely scenario is the government doesn’t want people losing their homes (otherwise they would have to pay to house them and they can’t afford another expense) so will do things to prop up the housing market if they think it is going to slip hugely.
It pays to keep people in their homes.
Even if allowing people to go onto an interest only mortgage for a couple of years till they sort themselves out it is cheaper for them than having a mass housing benefits bill

I hope it falls by 50% my son still lives at home with us at nearly 30. He’s a teacher so will hopefully keep his job. We have £10,000 saved for his deposit, just waiting for the right time for him to buy

What has he saved?

I hope it falls by 50% my son still lives at home with us at nearly 30. He’s a teacher so will hopefully keep his job. We have £10,000 saved for his deposit, just waiting for the right time for him to buy.

What has he saved?

This!??

Be careful what you wish for.

I concur, and feel that those who hope prices never fall haven’t really thought things through for the long term health of the nation and future generations. Before anyone asks me to elaborate, please refer to my RTFT comment and previous replies, what seems like a long time ago now.

Just hold tight and wait for house prices to get back to normal in a few years.

Ah, normal. Very hard to define in these times. I’ll take a shot: sensible salary multiples for most of the working population; at least a 10% deposit, to show you know how to save and handle money; interest rates not at 300 year lows; and a lack of desperate government props to the market. You may say I’m a dreamer.

It is extremely unlikely you will see falls of x%

Most house price predictions I've seen only predict a temporary dip and then they are expected to rise again.

etc., etc.

Ignore anyone predicting anything, from ‘experts’ on down (including the BoE, which doesn’t have a sterling track record at predictions). Satisfy yourself with being pleasantly surprised if things happen to go your way.

I think house prices are insane and I think insane amount of debt have just been normalised so that anyone who doesn't want to take on a huge debt is seen as strange.

Welcome to the club! We’re small, but growing.

I think house prices are insane and I think insane amount of debt have just been normalised so that anyone who doesn't want to take on a huge debt is seen as strange.

I think the tiny house movement is a symptom of this thinking! We did it...we opted to live in a small (under 400sqft) house instead of a huge one with a mortgage. It's a great movement that is quite sustainable and can work out to be such a positive experience.

I don’t think anyone is predicting house prices to rise
What I would say is the current unemployment/furlough of workers is giving a false reading to what the rates will be after we have started up again properly.
There will be a rise in unemployment but how much for how long will be the key to what happens in the future

The other markers of a full blown recession

Interest rates rising (if anything they look like falling further)

And a overheated economy which if anything with Brexit and austerity was the least overheated economy for some time

I think you can’t point to previous recessions and say this or that is going to repeat itself because I don’t think we have ever had a situation like this before where suddenly the whole world stopped for 12 weeks.

The best we can hope for is the sharp V shape downward then recovery and hope we all get through this without too much hardship and heartache.

Wishing that there will be a 50% downfall in house prices will not do anyone other than those with cash who aren’t reliant on mortgage companies any good and to wish it is just short sighted.

Bored I would wait to see what your jobs are like after this and then if everything is ok I would get on with buying a home.

It isn’t that you can’t afford to buy a place it is that you can’t afford to buy a place in a certain area.
When a few miles out you could have certainly bought something by now.

Savills made a prediction for the next 5 years with 2020 dip in prices but back up again next year and overall I think they predicted over 10% rise in the next 5 years?

Ofc they're just one group trying to look into a crystal ball and there are likely plenty of contradicting predictions.

My crystal ball tells me that house prices will drop by 25% nationwide except for London which will fall by 40%.
The market will be swamped by repos, more in London and huge redundancies and recession will keep prices low. My crystal ball says it will take 10 years to recover.

Savills made a prediction for the next 5 years with 2020 dip in prices but back up again next year and overall I think they predicted over 10% rise in the next 5 years

That’s what you call a vested interest

@Devlesko i actually think it would be the reverse- 25% in London, 40% in the north. So much of PCL property was purchased using cash, the nature of the prices in London usually mean that the buyers had good jobs/parental help. It is only in the north and poorer parts that lower income workers (who are more vulnerable to covid 19 job losses) could even dream of home ownership.

This was mirrored in 2008 where the worst hit regions weren''t in London but in the north and northern ireland. Northern ireland house prices suffered a decline of over 50% in the last recession

Northern ireland house prices suffered a decline of over 50% in the last recession

And even now our house prices are nowhere near what they were at their peak. My very average house is worth almost £100k less than my neighbour's almost identical house sold for in 2007 ish.

My crystal ball says a 20 percent drop in prices is on the cards.

Then again it's the same crystal ball that screwed me over back in 2002 and convinced me that there was no possible way prices could continue increasing past 2004. Couldn't have been more wrong!

I am probably the worst predictor so do the opposite of whatever I say on property and people will do best......

We always just went for the very very highest mortgage possible for our two full time incomes and used every last penny of savings (because I am a risk taker I suppose and because i have always thought I could just earn more and more money)

*1) Do you have a deposit available now if they do fall?

2. How would you feel if house prices fall (the same amount as you are wishing for now) after you brought your house?*

Yep, and I'd be annoyed but cope with it because taking out a huge debt on an over-inflated asset is a risk. That's just what happens in life, the value of your investments may go up or down.

How on earth is it dickish to wish for a house price crash that will benefit the young generation, but not dickish to wish for house prices to go up and up endlessly so you do better but your children are priced out? High house prices don't help anyone, they need to come down.

We lost out on our flat we bought in the early 90’s then had to rent, then bought the house we rented at a slight discount (not council) We made £100k on that house when we moved so it wasn’t all bad news when property prices drop.

We could only afford to buy one because the prices are cheap in our area compared to a lot of areas of the country. We lived near Oxford for a few years in military housing and the house prices were so high. We would never have afforded it. We were also in the very lucky position that we payed cheap rent so could afford to save a deposit. If we weren’t in that position when we were we would not have been able to afford to buy.

@BeijingBikini

Not sure where you read in my question about it being dickish, it was a simple question.

I am in the younger generation and I have managed to buy. I havent said that I want house prices to go up at all, I just don't want to have a drop that could put my family at risk.

To reference to my first question, it's no good people hoping for a price crash if they have no deposit ready is it?!

@Rlw2020 a drop doesn't really affect you unless you want to sell or remortgage - people can just carry on paying down the mortgage until they are out of negative equity. Of course there's no point hoping for price falls with no deposit, but I'm in a position to buy having saved hard for 4 years, and live in a very expensive town - so naturally would like if prices went down.

I feel for people who bought a couple of years ago, but not for someone who bought their house for 40k back in 1980, and now might get 650 instead of 750 for it. Some of the flats we viewed were bought 8 years ago and have almost doubled in price since - that seems insane. In this case my savings are paying for someone's mega-profits.

@BeijingBikini

I agree, I first brought my house 5 years ago at the age of 23. I recently moved, in fact the first week of lockdown.

You have your deposit so I understand however there are many people hoping for a drop who haven't got anything saved so that doesn't make sense their thinking.

I know how hard it is to save and 10% was 23k for us originally but we did it.

Best of luck with your search

It is extremely unlikely you will see falls of 50%.

Our house halved in value after the crash in 2008. We still have negative equity.

It all depends on the area. We were living in a cheap area and house prices were massively hit. They still hadn't recovered fully last I checked.

I had a flat that dropped in value by 20% between 2008 and 2010. I bought it in 1999 though, so it was still worth more than I’d paid for it. I sold it last year for 3 times what I’d originally paid for it.

@TazSyd its good that you had staying power! But i think for some people, the loss of income may force them to sell at an awful time.

I am trying to build up a safety cushion of 1 year of mortgage payments and bills.