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?

Nobody should hope for a house price crash. Its hell for those with negative equity and indicative of real problems in the economy.

@EverydayIsPJday

I'm going to ask a dim question (sorry) but I don't understand how recessions work in relation to housing. does it affect current home owners or people hoping to buy/sell? We have a mortgage on our place, so does this mean our interest (payments) will go up? Slightly freaking out as we are obv feeling the energy increase already and are expecting another baby this year (timing is wonderful). I'd like to know what this all really means (as I save like a squirrel for any hope of a maternity leave)

Thank you ☺️

Depends if you’re on a fixed rate mortgage or a variable rate one. If on a variable rate and interest rates go up then your payments go up.

@Ionsion

I’m hoping for a house price crash and for it to be harder for landlords to let properties . I worry about young people who are just starting out. They don’t stand a chance unless they have wealthy parents. A price crash would be beneficial to them.

If you make it harder for landlords to rent out properties, rental prices go up.

Ok thank you @QuebecBagnet we are fixed until June..I guess we might want to look for a deal soon.

@lonsion what about people like us (if you can call 30 young) who have scrimped and saved for over 10 years to buy a home if your wish of a crash happened. We would loose every penny we have spent on this house, not all of us were given handouts and I’m sure thousands of others would be in the same boat.

Also if there’s a massive crash and we are all plunged into negative equity nobody will move and so there’s will be no homes to buy anyway.

I worry about young people who are just starting out. They don’t stand a chance unless they have wealthy parents. A price crash would be beneficial to them.

A price crash would be beneficial to those with wealthy parents, but not to ordinary people who are just starting out. If all the money is going on food, bills and rent, it won't make much difference if houses are going for 200k or 300k.

[quote Gonnagetgoing]@Grapeflavour - agreed re house prices. I've been looking near where I live for a house for DB and his family to buy. Saw a nice one but it was horrendously overpriced and of course, hasn't sold since October last year. Contrast this to another friend who has a lovely house in a nice area but competitively priced, on the market last autumn didn't sell but she sold two weeks ago, for the asking price.[/quote]
Yeah I've also noticed a couple of grossly overpriced houses in my area being stuck on the market for a while. Think (and hope, for buyers' sakes) that things are starting to stagnate.

What is this ‘Great reset’ that a pp mentioned ?

Seems like a tinfoil hat theory to me but I follow a well respected journalist on twitter who is convinced that the reaction to Covid and the attack on Ukraine are a part of the WEF conspiracy, she has today said that Zelensky has manipulated the situation and we are all sheep for supporting him.
How does trashing the World economy help anyone?

Employment is at an all time high, wages are rising fast.

And which planet do you inhabit? Zero hour contracts and self-employment keep people out of unemployment stats but they don't give people the kind of security that enables them to spend money. And real wages are not rising www.economicsobservatory.com/what-is-happening-with-UK-wages

Although out of interest, how much did you get paid to write that bollocks?

Lower income households will bear the brunt of it. They spend more of their household income on basic necessities. House prices shouldn’t see a dip for a while due to supply vs demand and low interest rates. Until rates increase dramatically and supply increases, there won’t be a crash.
Middle class drive the property market- they are the ones buying and selling and their household income has a lower % spent on basic necessities like fuel, energy, food which is what is increasing in price

Going against the grain here but… no, we’re not heading for recession. If anything, we’re heading for a massive boom with inflation going up significantly
You really think there’ll be a boom? I was devastated because the coming recession will prevent me quitting my crappy job and starting a business (material costs rising plus nobody will be able to afford my products). I would be thrilled if there was a boom instead.

@EverydayIsPJday

Ok thank you *@QuebecBagnet* we are fixed until June..I guess we might want to look for a deal soon.

We've just signed up for a new 2 year fixed deal (due to end in August) and our monthly payments have increased. I would look at signing up soon as I only see interest rates going up.

A house price crash doesn’t mean younger people and lower income people can get on the property ladder. Banks tighten up their lending and you need bigger deposits, lower income are less likely to have the high LTV that will be required. Plus supply of homes will diminish as less people will want to move in times of uncertainty unless due to death, debt or divorce. House price crashes don’t benefit anybody

Lots of people are sitting on massive amounts of money. I know several people in their 50s and 60s who've inherited £200k-£500k from parents/ elderly relatives whose homes have grown massively in value. In one case both husband and wife have each inherited.

I'm working on an increasing number of private construction projects for people with £3-5 million budget — and those projects are in Wales, not in the affluent southeast. The calls are coming thick and fast. Lots of people with investments made serious money in 2020, when share prices went through the roof.

A lot of people have lived like there is no tomorrow as well, encouraged to borrow more than they can afford with low interest payments. Very worrying

A house price crash would not benefit young people who are struggling to get on the housing ladder. Honestly, I can’t believe how many people think this. If the housing market truly crashes we are all going to suffer.

@EverydayIsPJday - you can normally fix around 3 months before your current deal expires. Lots of lenders pulling cheap interest rates now and Bank of England meeting again on 17 March - if they increase interest rates again (not sure if they will given current situ with oil etc) then they may pull even more deals. If I were you I’d get investigating now.

We fixed at 1.29% for 5 years when we applied for our mortgage in Jan. Closest to it now where we are (Channel Islands) is 1.79 and I suspect that will go up soon.

@JesusInTheCabbageVan

I worry about young people who are just starting out. They don’t stand a chance unless they have wealthy parents. A price crash would be beneficial to them.

A price crash would be beneficial to those with wealthy parents, but not to ordinary people who are just starting out. If all the money is going on food, bills and rent, it won't make much difference if houses are going for 200k or 300k.

Well, food and power aren't going to go up so much are they. They may, worst case, double, but spending on those is highly likely to be less than what they'd have to spend on a mortgage, and they need to save less for the deposit. It all depends on how much prices go up for essentials and how much property prices fall. Falling house prices would also lead to falling rents in the long term, so whilst one expense goes up, another comes down.

I can’t see how a recession can be avoided tbh. Rising utilities, food costs, fuel, interest rates, inflation, rise in NI from April. The poorest in society will be hit again, what choice do you make, eat, heat or put fuel in the car.

A housing market crash is a real possibility, it has happened many times in the past. Cheap money is a thing of the past. As mortgage rates rise, the squeeze will get worse. I can remember mortgage rates 12-15% and the repossessions and negative equity that it cause. Awful times, I really hope it doesn’t happen, but I think it’s entirely possible, sadly.

@SpiderinaWingMirror

Nobody should hope for a house price crash. Its hell for those with negative equity and indicative of real problems in the economy.

This really. It’s tempting to think that a crash would be personally beneficial but housing price crashes don’t happen in isolation, it’s unlikely such a large event wouldn’t affect most residents in some way or another.

The housing market desperately needs correcting imho, but not due to a crash.

As an aside there’s precious little criticism of the stamp duty measures due to covid. It wasn’t needed and took thousands out of the treasury all to keep a ‘free market’ artificially inflated. I know a few people who took advantage of it who are distinctly concerned now.

@Pluvia you are right. A lot of people have amassed huge amounts of capital through recent inheritance and built so much equity in their homes in the past couple of years. There may be a dip for lower income households but not for others

@Clarabe1

A lot of people have lived like there is no tomorrow as well, encouraged to borrow more than they can afford with low interest payments. Very worrying

Same with car leasing. With inflation and perhaps adverse exchange rates, plus higher interest, people currently able to afford, say £300 per month for their leased car may find themselves having to pay, say £450 per month for an equivalent car at the end of the lease when they hand the car back.

The crash was staved off by shutting society down for a bit, killing small businesses and creating a lot more debt, but it will fail, soon, and when it does it will be disastrous. I spent the last two years preparing for what is obviously a coverup for a global financial crash and introduction of social credit to replace fiat currency.

We are not in a recession currently as you need to have two quarters of economic decline for it to be labelled as a recession. Covid caused a short sharp recession and we are still growing from that so it could be a while before we hit two quarters. However, it may not officially be one but it feels like one due to the inflationary pressures. Middle classes and upwards are usually ok as they tend to save and can just cut back on that it needs be. It hurts the low income families the hardest.

A house price crash doesn’t mean younger people and lower income people can get on the property ladder

So what you’re talking about is the current owner being broke and forced to sell his house cheap and go bankrupt, which means a younger person can buy that house. What makes you think the younger person is more deserving of the house than the older person who currently owns it?

Secondly, if the older person (let’s say the office manager) is in such a dire situation that he has to sell his house cheap and go bankrupt, then the younger person (let’s say the office junior) is certainly not going to be in a position to buy it from him.