To shout that house prices falling won't help ANYONE

[Marg33t]

Lots are starting to get happy that prices could fall a bit next year.

But really that won't help anyone as sellers will refuse to sell if they fall and buyers will need a bigger deposit. It won't help! They have to keep increasing at at least inflation for a healthy economy.

Falls may help 0.00001% of those that have a huge amount of cash, but that's it. Everyone else will not benefit!

We need to stop seeing house as an investment and purely as accommodation. That's why some countries that are wealthier than the UK have lower house prices. We also need rent control a 3 bed around here are going for around £1500 a month.

@goose1964

We need to stop seeing house as an investment and purely as accommodation. That's why some countries that are wealthier than the UK have lower house prices. We also need rent control a 3 bed around here are going for around £1500 a month.

Could not agree more

It’s great news for rogue landlords with lots of cash eg the Wilsons. No doubt we’ll see more little empires emerging like theirs.

www.google.co.uk/amp/s/amp.theguardian.com/business/2018/dec/12/landlord-fined-25000-over-lack-of-hot-water-for-disabled-tenant

Bad news for everyone else.

It's actually rising where I am. Quite considerably I would say.

Lol at "most are bought by cash"...
Across Britain, 28% of homes were bought with cash rather than a mortgage in the first half of 2019, Hamptons International has estimated.

House prices are certainly not falling right now if Rightmove is anything to go by.

If they do fall next year and it means more young people being able to buy for the first time, I'll be pleased for them.

I think it's rash to make any firm predictions. If we see job losses and disruption on the scale some expect over the coming 6-9 months then I don't see how house prices won't fall. People might not choose to sell but if they can't pay their mortgage and the houses are repossessed, they'll be sold by the banks.

House prices continuing to rise won't help many people either!

@BocolateChiscuits

It can help if you want to sell to buy a larger place - so long as the drop isn't sharp enough to touch your equity.

Say you want to sell a £200k place to buy a £400k place - you need £200k more. If prices then drop by 20% you'll be in the position of wanting to sell a £160k place to buy a £320k place - you need £160k more. You've saved £40k.

House price drops hurt downsizers, people who only bought their place recently without much equity and need to sell now and investors the most.

You are not really saving 40k.

Because the upper houses refuse to sell. There is that house on a top which wants to downsize, you are right these would be hurt. So either the 400k refuses to sell or the one they plan on moving to. In the end there is someone who is downsizing.

So it all stalls. And the market stalls because there is a block in moving up, but it's not worth to move in a same level and it's absolutely not worth to downsize.

Plus with 20% fall come job losses and economic turmoil. It doesn't happen by itself.

@RepeatSwan

Why will people need bigger deposits?

Not all people would, FTB and upgraders would need smaller deposits wouldn't they?

FTB will likely need bigger deposits because in recessions with house prices dropping and unemployment a major issues, banks tighten their lending criteria. Try and find 95% and 90% mortgages even now- they've all but disappeared, and if things get as bad as some predict, you're looking at a real struggle to get a mortgage with a LTV of 80%+, and even 80% might be pushing it. House prices would need to drop a huge amount to make needing a 20-25% deposit affordable to most FTB.

It’s already helping me - first time buyer in London! Some of the houses I’m interested in have come down a bit in price and there’s bloody plenty of them! Nothing is getting more expensive so we are in a great position right now

I’m getting a 90% mortgage - there are less of them - but I’ve had mine approved sooo they do still exist and mortgage broker has aid they expect more and more providers To come back with them in the coming months!

I do think people fail to appreciate that falling prices are accompanied by job losses, mortgages drying up and nothing coming on the market. If it were the case that prices just fell and suddenly lots of priced out people can afford somewhere, then falling prices wouldn't be a problem, but unfortunately they are!

I mean, the whole system is a mess and even if prices fell loads, a lot of people still couldn't afford anywhere, but certainly not many people will do well by a price collapse.

@Heyahun check the provider will still honor it.

Im that classic first time buyer thats been pushed out currently. I had a decent 10% mortgage in principle, that bank has now with drawn it.

The options i have now are:

• increase my monthly mortgage payments by several hundred pounds/ 25% simply in interest. Eg rather than paying 800 a month for 35 years the new deal is over a thousand a month for 35 years.

• some how find an extra 5% deposit which is about an extra 13 grand.

-wait it out

Low house prices without mortgage offers wont help ftb

Yeah we are aware it could be dropped @Gatr - but not too worried about it as we aren’t desperate to move - love our rental so we while we are looking to move / find a place soon we understand mayfall through

We got this approved just yesterday though - aiming to offer on a house we like on Monday

Mortgage broker said there is such high demand for the 90% they can be withdrawn suddenly !

But I’m hopeful we will get this one through

*The options i have now are:

• increase my monthly mortgage payments by several hundred pounds/ 25% simply in interest. Eg rather than paying 800 a month for 35 years the new deal is over a thousand a month for 35 years.*

What interest did they offer you?

Remember that you won't pay the same for the whole time. The smaller the deposit, the higher interest, but it comes down so the payments come down. So it could be a 2 year situation. Sometimes it is worth it, sometimes it isn't. In my case it was wort it to pay more, however, important to say that my mortgage was considerably less👀

@SchrodingersImmigrant

I don't remember the rate unfortunately, as am going through a mortgage advisor. I just knew the change in estimated payments from mid june to September.

We are currently considering Halifax as has a fairly decent rate, but only on shorter mortgages. If we went with their maximum 25 year mortgage they are offering out payment would be high but at least its direct off the mortgage.

Since talking about it lots of people around me have casually mentioned about pulling together that extra 5% but i dont think people realise how much that is. House hunting for me has bought into sharp focus how out of touch lots of people are with house prices, even those that bought 5 years ago and feel "current" have been amazed at how much houses locally are going for. People keep insisting i look at the house next door to them etc until i show them quite how much it is.

Joys of the south east i suppose

Joys of the south east i suppose

Sadly yeah. Good luck! It will calm down soon

It will help us as we were looking for a buy to let before all this - but my guess is people will just stay put for now.

Last month of price rises imo. This mini bubble is over and the housing market has had its final prop with the stamp duty cut. This winter will be tough one and prices will see falls starting this year.

Well, all I can say is that in my tiny town in East Sussex practically every house on the market has sold in the last month. Including ones that had been sitting around for months.
Strongly suspect that the price of flats in London must be taking a dip.

Well, I sure wish they’d stop rising! We had a purchase fall through just after lockdown from sellers who decided to pull out for health reasons and being afraid to move due to COVID. Since then, every house we’ve considered has gone to sealed bids within a week or so of coming on the market. One had an offer accepted after 4 days and they just cancelled our viewing. Another we did make an offer on sold for at least £50k over guide price and it turns out probably wasn’t even mortgageable due to a planning issue. It’s insane.

We live in a rural area far from London but very desirable for second homes and people who want a ‘lifestyle change.’ I just hope everyone moves back to London soon so we can finally manage to buy. 😞

A house price crash would be bad. I don’t know what the solution is though to ever-increasing stupid house prices. We live in London and just got our flat valued, it’s gone up massively in the last 15 years. And obviously so have the ones we want to buy. The main result is to screw over the generations below and renters. Up and up and up out of all proportion to wages. Stupid.

I don't want a crash as I'm on the mortgage hamster wheel too. But I do think that we need to separate homes to live in from investment commodities.
I would like to see property prices stagnate so they didn't increase in respect of earnings. This could be achieved through various government policies. A tax on any gain made between sales would help - 50% with a rebate for a home sold after being held for 30years or more.
Secondly remove private people from the rental market, all rental to be licenced with the bulk held by local authority /PPP. This could be phased in to five people time to unload property. Also private organisations/ individuals renting property out should start being taxed on the rental income directly, this to be phased in to squeeze them out. At the end of the day housing is a need not a commodity. A better society means not letting people be abused by raw market conditions.

Lots of questions mixed together that obfuscates:

1. what will happen (likely a significant drop in the medium term driven by forced sellers);
2. whether the results will help first time buyers (yes in the medium term - eventually the market will stabilise then 'normal' deposits will return); and
3. whether people delude themselves that by saying prices won't fall will stop prices falling and those who talk down the market are vil/doom-mongers/wrong/selfish/'look at my local market'/'look prices are increasing'[before furlough/stabilisation measures/redundancies have really bitten]... yes on every relevant thread.

If someone bought a house a few years ago with a 10% deposit then they would not sell for 20% less because they wouldn’t be able to pay off the mortgage with it. They would put it up for rent if they really had to move.

1/ you forgot about forced sales, loosely called death, debt and divorce.

2/ being a landlord is getting tougher. You need at least 25% equity to get a btl mortgage, an EPC and tax has changed for landlords recently. Many people would be worse off becoming a “forced landlord” than selling at a loss.

People always have to move for some reason - death, dept, divorce and simply because they want to. If people lose on their sale they may well make up that loss on their purchase.

The ‘because they want to’ group decreases significantly, particularly those looking to upsize. Against a backdrop of economic uncertainty and instability, people are less likely to take risks like increased debt, or if they’re getting less equity out of their current place than they’d hoped. And while the next house up may also be cheaper, it’s not always a proportionate drop - and so a housing market which absolutely relies on purchase chains grinds to a halt.

So you have fewer properties on the market, fewer FTBs (because if banks are worried about a 10%+ reduction in value they’re less likely to offer a 90% mortgage that would practically guarantee negative equity and increase risk to the bank). And due to a lack of supply prices would stabilise before too long - because those who have to move will be competing for a smaller pool of properties.

The key is the balance between the ‘want tos’ and ‘have tos’ at various points in the market. If in any category the ‘want tos’ significantly outnumber the others, you’re unlikely to see a big crash.

I was a FTB in late 2008, and we probably did marginally better than we would have done otherwise but the market stabilised soon after we bought, and was mental again when we sold 4 years later. And we were textbook buyers - secure well-paying public sector jobs, big(ish) deposit.