To think people scaremongering about house prices need to reign it in

[marysuzairn]

Irl and on here I've seen people telling others not to buy a house and they're about to crash. But realistically that's not going to happen

The cover of the express today is showing how they're surging and hitting new highs

For people that can afford it they really need to buy now as hanging on for a crash has never worked

I think the high expressed emotion on both sides could do with being reigned in. The fury people express on here when others raise the possibility of a fall in house prices when the recession hits... it's mind boggling, they seem incensed.

People who have been watching the housing market for a long time- decades rather than years- and have lived through plenty of economic turmoil... they seem quite downbeat about the prospect of the current mini boom being anything other than a pre crash bubble. But they could well be wrong, who knows?

Or do I mean reined in? I always get those mixed up

That was it Grumpy! I knew there was a taxation reason the market was artificially high and then slumped, the abolition of double tax relief. Sounds a bit familiar....

The street I used to live in before our last move is traditional 2 bed+ small boxroom red brick terraces. 5 years ago the house next door to us sold for just over £115k, last week it sold for £190k. No major work was done to it in that period; the biggest job undertaken was internal painting. There is no way wages have kept pace with that sort of price rise. If my maths is right that's a 65% increase? What else has grown by 65% in 5 years? And the coming 5 years look like they will be really, really bad ones... how can the housing market not be affected?

Because of the stamp duty holiday buyers have a bit more in their budget so might think this is a good opportunity to go for a slightly more expensive and better house.
Wages aren't the only way people get money - inheritance, gifts, winning money, income from investments and property.
Plus there are lots of retired people on fab pensions with lots of savings willing to help out their dc and dgc with deposits.
My friends parents have given their annual cruise money £15k to her ds to add to his savings so he can buy his first home.

There won't be a crash. Maybe a small contraction but that will be a temporary blip - over a period of a couple of years, prices will rise overall.

The only way for there to be a big drop would be for there to be a massive increase of supply over demand. Millions of new homes would have to be built, or a population reduction of tens of millions. The former isn't feasible in the quantity that would be required. Why build 100 houses at reduced selling price to make the same profit as building 10? The latter would require a mass deportation or the euthanising of many people and would take a brave politician to be even suggested.

In 1988 I bought a flat in a West London suburb for £65k...In 1995 I sold the same flat for £38k

That’s a shame, I wonder what it’s worth today. I guess you were forced to sell and just couldn’t ride it out? You can’t even get a. parking space in London for 38k now! (Slight exaggeration)

I think that’s. Risk everyone has, if you are forced to sell and there is a drop then you could loose big, but if you can ride it out then your quids in.

There is nothing you can buy in London for 65k now, so I think this demonstrates just how much prices go up. If you’d held on to that flat the equity would be enormous by now.

@Bluntness100

Probably worth about £220k today. - but I have made a larger paper profit on the house I'm in now so who cares.

I was not overmortgaged at the time so just accepted the loss when I sold, to buy somewhere bigger. It just meant I stayed in the flat longer than I would have liked. I knew people at the time who had their houses repossessed - it took about 11 years for houses to reach their previous peak.
The big difference between then and now was interest rates. - I well remember the day my mortgage interest rate was increased by 5% (to 17.5%

I firmly believe that houses are far too expensive at present in relation to earnings - and it may not take much to break the market. A post covid and brexit recession plus a rush to buy during the stamp duty holiday followed by a slump is I believe a significant risk.

Wages aren't the only way people get money - inheritance, gifts, winning money, income from investments and property.
Yes, but I would hazard that wages are the way most people get their money. Most of us don't have investments or parents who can gift or even will us large sums.

My friends parents have given their annual cruise money £15k to her ds to add to his savings so he can buy his first home.
You have to know that this is not the norm. Most people don't have £15k in available cash, let alone £15k to spend each year on cruises!

Does it make a difference that the 2008 recession was literally about bad mortgage lending, while the current situation isn't?

Mmh global pandemic, redundancies all across the board, whole industries in pause... but if estate agents and people who have an interest in keeping the market up are saying that there won’t be a crash, they must be right. Or maybe not...