To think a recession is looming?

[GrannyBloomers]

I was quoted £2 a litre for heating oil. £1000 for 500 litres, a matter of weeks ago it was roughly a quarter of the price.

Energy bills set to be £3k per annum - potentially more when a new price cap comes in in October.

Diesel near me is 171p and rising.

I'm in a 3 bed semi, nothing special. I need at least 1500 litres of oil a year (it runs the hot water too). That's say £3k. No gas but electric. I'm doing ok with cutting use = £1.5k per annum.

That's 4.5k at todays prices for household power. What will it be in October - 6k, 9k more?

This is before other costs increase - food will go up when the cost of storing it (refridgeration etc uses energy) and transport also increase.

If all the average person's income is spent on rent/mortgage/ bills and energy, then there's no money to spend on anything else. No eating out, no leisure, no holidays.

Surely a huge recession will follow.

And what if a much higher proportion of people need benefits?

I think I read somewhere it's like a 7 year cycle? And we're at the beginning, so it's uphill for a time.
I've just packed in being self employed and taken a job with the council for security. I'd say as a family were generally fairly ok financially, but we're definitely preparing to weather the storm. We're rural and already try to run our house and cars economically. Not sure where we can cut back.

House prices won't crash, I think they may stay the same for a time, before continuing to rise.

We waited so long to be in a finical position to have a second baby and then covid happened. And now this. I'm 38 weeks so too late to go back now but I am so anxious how we will afford this poor baby and the impact it will have on what we can afford to do for DD.

I've been wondering whether people will stop using their cars so much and move to other modes of transport - cycling, walking, buses etc.
I don’t think buses are significantly cheaper than cars? Most of my driving is within a 5 mile radius of my home. It would cost me £80 a month for a bus pass. My car averages out at about £80 per month for fuel, tax and insurance. So there’s not a huge difference. I already own the car, the only additional cost is repairs, and I’m willing to pay that for the convenience. That’s assuming my kids are young enough to get on the bus with me for free - as soon as I have to pay for them it becomes more economical to have a car.

But house prices aren't going to crash, unfortunately, because of the international investor market

You don't think European instability & the possibility of war might impact that market?
Have you considered that removing Russian money from the top of the UK housing market might also have an impact?

There's something so grossly wrong with people who are working full time and being unable to afford to feed their families relying on food banks to get by due to price hikes. I think that's what will happen to many families who only have minium wage.

House prices won't crash, I think they may stay the same for a time, before continuing to rise
House prices only crash when people are forced to sell at a low price because they can’t afford their mortgage. And they will have cut literally every other expense to keep up with their mortgage. So if people can’t afford their mortgage they can’t afford anything, and the whole economy is in the toilet.

I think recession is a certainty, and a house price dip (or even crash) is a virtual certainty. International investors only make up around 10% of the market, which won't be enough to stave off a crash I don't think.

It's more of an overheated market at the moment - the opposite of a recession.

The war in Ukraine has properly fucked it all up though. Obviously there are greater considerations than the economy, but the price rises will eventually calm down demand. I'm hoping it will just level things off a bit rather than cause a downturn.

Definitely. Sadly.

Oil price spikes always precede recession. People suck up inflation for a short while, but then they literally have nothing left to spend, so stop buying. Demand tanks. Stagflation. It’s going to be very very shit.

House prices will definitely fall soon. They’re at record highs because of pent up demand following covid, but the top of the market was supported by huge amounts of Russian and Chinese capital. Both of which are tanking. Then at the bottom of the market, people’s ability to save, mortgage offers etc all being squeezed. Prices have also been inflated due to low supply. But I live in a second-home-owners dream area and there are suddenly a lot on the market. People who might have thought about selling in the next 10 years and doing it now, while they can get a good price.

I think there’s going to be a massive recession. People will stop eating out, stop drinking down the pub, cut back on take aways, cancel gym memberships, stop getting their legs waxed. Anything they can do to save money which they need to divert to rising food, petrol and energy prices. Those types of businesses will go bust. More unemployment. Inflation is obviously increasing so at some point interest rates will go up. Bad news for those with mortgages and may well lead to a property crash. It’s going to be a bad few years.

Property prices are also going to be affected by the fact that landlords soon won’t be able to rent out cheaper older terrace houses without spending quite a bit to improve their energy rating. On right move now such adverts say “this house may not be able to be rented out, etc, etc”. Will put people off.

@SkankingMopoke I don't know what trade you are but there is stacks of building going on in Suffolk Cambridge area & construction workers are at a premium & its difficult to get people into your home for extensions -

I think we're looking at a depression rather than recession. Tighten your belts, it's only going to get worse.

@QuebecBagnet

Property prices are also going to be affected by the fact that landlords soon won’t be able to rent out cheaper older terrace houses without spending quite a bit to improve their energy rating. On right move now such adverts say “this house may not be able to be rented out, etc, etc”. Will put people off.

That’s an interesting point. We’re currently looking to buy and even before it kicked off in Ukraine, I’ve been discounting those with poor EPCs, storage heaters, oil etc. Insulation and dependency on gas/oil is going to be an even bigger factor now.

I think we need to face up it: we are going to endure the worse times have ever experienced in any of our lifetimes. Life will be immeasurably and inconceivably different from now on in. The year 2019 was our last and best year. There is no return to a preferred normal. Realism.

@Enb76

I think we're looking at a depression rather than recession. Tighten your belts, it's only going to get worse.

What’s the difference between a depression and recession?

I've been wondering whether people will stop using their cars so much and move to other modes of transport - cycling, walking, buses etc.

Maybe those who can will, but lots of people use their cars from necessity rather than choice. And, of course, those not being hit by the rising prices won't give a toss and continue to use their cars.

From what I'm hearing a lot of private landlords (those owning 1 or 2 properties) are already selling up due to the changes in tax. With profits squeezed it's not worth the hassle anymore and that's even before the proposed rental reforms.

People might see this as a good thing but it does potentially mean renters have less options and a market crash isn't going to mean renters can suddenly buy houses with all the other factors (like cost of living) at play.

I feel the same, I just can’t see how I’m going to have much money for the nice things in life. My DP and I both want a child I’m 34 turning 35 this year and again circumstances are just putting us off again. Was COVID before as uncertain about my job. I got through that. But how can we even consider having a baby. I feel like we will loose our chance but economically the timing has been awful

@Allelbowsandtoes

Very scary times at the minute. I've been wondering whether people will stop using their cars so much and move to other modes of transport - cycling, walking, buses etc. I cycle to work and traffic is horrendous where I live in Bristol. I appreciate that some people aren't able to walk or cycle, either due to mobility/kids/long commutes etc. But I suspect that as fuel prices continue to rise, a lot of people might start exploring alternative transport which could only be a good thing?

@Allelbowsandtoes - I use the car far less than I used to. Walk, bus etc more. Seriously considering cycling.

It's not a risk, we're already in it!

I'm another one who thinks recession is coming. I'm not sure how best to prepare to be honest, although I'm sure the posters over on "Preppers" will have some good advice.

I'm also very concerned at the British deciding to follow the Americans to stop importing Russian oil and gas. I think this is going to have a disastrous effect on prices, I fear we will never see energy prices come down.

I've long been dismayed by all the overconsumption and waste I've seen increasing year by year. Huge shiny SUVs, bags and bags of new clothes, flying to the other side of Europe just for a weekend, holiday rentals in this country costing silly money (I live in Cornwall, so am witnessing first hand the impacts of the second home/ AirBnB boom, and it's awful). So, to see people forced to live within their means- and those of the planet- wouldn't be unwelcome to me.

However, we know that this impact isn't going to be distributed equally, and that those already struggling will be hardest hit. The government could introduce measures to help soften the blow, and at the same time reduce our carbon emissions- more, cheaper public transport, insulating homes, installing electric heat pumps (it's 2022 FFS! Nobody should be having to rely on heating oil!), windfall taxes on energy companies to pay for a reduction in bills, etc etc....but will they? Sadly, I very much doubt it.

[quote mumwon]@SkankingMopoke I don't know what trade you are but there is stacks of building going on in Suffolk Cambridge area & construction workers are at a premium & its difficult to get people into your home for extensions -[/quote]
A lot of that is a temporary "peak" due to two reasons. Firstly all the construction work delayed by materials shortages (covid and Suez). Secondly, due to furlough, covid grants, WFH, not having holidays, some people found themselves with money and want to spend it. Those two reasons are temporary and things will return to normal, and probably lower than normal activity. We wanted a few small jobs doing on our house, but tradesmen were giving ridiculous timescales and quotes as they were already busy - we've had a few phone calls from them recently asking if we're still interested, so that tends to show that their diaries are starting to look emptier and they're trying to fill them again.