Housing price crash

[Eucalyptusbee]

It's happening!

AIBU to be excited

I'm one of these people. Cheers.

Mortgage rates going up won't help that though. Rents will go up to service increased mortgage costs.

You forgot the part where her husband studied economics esp regarding property.

OP - in the nicest possible way your husband is not as intelligent as he tries to make you believe. He knows nothing about economics or rather how the theory of economics fits real life economics scenarios.

And renters will also suffer from the difficult economic climate that has lead to the house price crash.

Yeah, it doesn’t seem to be slowing down here, either.

We bought a few years ago and since a few houses on our street have went on the market, sold within a month each time and sold for £40k more than what they paid (it was a new development so we know what people paid back then).

And this is in a small town, not in England. It’s a “commuter” town into the city but prices here have never been comparable to England, so the fact it’s went up so much over a few years is quite bonkers.

If we had waited any longer to buy, we wouldn’t be able to afford a house anywhere similar to this. We would have had to buy somewhere to completely renovate, or downsize a bedroom at least.

A crash is not the answer. Though. Crashes don't help first time buyer - house prices come down but mortgage rates go up, the affordability calculations become harsher loan to value rates decrease. So any perceived benefit from a reduction in house prices is removed by the increase in difficulty and cost of getting and servicing a mortgage.

Plus crashes don't happen in vacuums and cost of living usually increases too, meaning that people cannot save as much, rents go up, so people cannot save as much. So it is equally as hard to get the now larger LTV deposit together as it ever was.

House prices against COL and wages is what needs to change to make houses more affordable.

Yes that’s very likely, there is an inverse relationship between the two.

As the cost of living rises, so lenders become more nervous about borrowers ability to make their mortgage payments. Therefore they tighten their lender criteria, meaning borrowers are able to borrow less and the price of houses consequently starts to fall.

Also as prices in shops rise, the government becomes nervous about inflation, and starts to increase interest rates to combat this. (We’re seeing this happen at the moment.) This also restricts house buyers ability to borrow higher sums, and so impacts house prices.

Well they all demonstrate the OP's grasp of the property market. So why anyone would take this thread seriously is a mystery but look at how many pages it's got already. Bonus points to Koblins for navigating the search option as well 😁

It really makes my toes curl when someone comes on here claiming something must be true because their husband said so and he’s, like, really clever.

There may be a slow down in growth/flattening eventually when many people cannot get a mortgage anymore or not at a good rate. With cost of living increases, affordability of mortgages will naturally decrease if wages don’t increase proportionally.
However, at the moment, anyone who can is still trying to get a home and due to the imbalance in supply and demand, prices are still going up.
Desirable houses on desirable streets in desirable areas just don’t come on much in a “slowdown” and people know this. They tend to take a long view on house prices because they are primarily homes rather than just investments.
We are in Greater London and price growth and the market have been crazy in the last 2 years. It isn’t surprising because post Brexit there was a lot of pent up demand - many people had been waiting for ages to move or buy. Then Covid hit, with the focus on staying home/working from home/no holidays abroad etc so people started upsizing or buying again or buying for the first time.
I don’t think that has changed yet - most are still thinking, let’s get as big a mortgage whilst I still can. I think post Covid people are actually more focussed on making sacrifices to get a nice home because the psychology is there that a nice home is the main thing that cannot be taken away, or not easily.

i think that was more likely to happen when people had 100% mortgages. At the moment it would only affect interest only mortgages or people who had very little current equity so a new mortgage. Most deposits are at least 10% now so we would need a house price reduction of at LEAST 10% for that to affect those people and it wouldn’t affect all of them. So pool gets smaller and smaller.

if house prices drop by 15-20% then yeah it could happen again but how likely is it really for it be that bad?

Not in Richmond its not
Go to house-crash forum see the nutters there haha

If everyone who currently owns gets plunged into negative equity or looses what they have paid in they won’t move will they?
IME many people don't understand there's a price you can't sell under unless really forced to.

Took 10 + pre kids to save deposit - house prices went down after we bought but that didn't bother us as we could afford the bills.

When eldest got close to secondary school age and DH was working away all week paying rent and train fares back to us - we decided would be worth moving despite house price being less than we bought it for.

We worked out to buy in new area needed same amount of deposit as bought first house with and we could borrow slightly more- we had saving to cover the moving costs.

So we were essentially writing of the 20K of work structural/improvement work the structural survey hadn’t picked up needed doing and 7 years of a repayment mortgage and ending up in place we’d started in with same amount for deposit on next house.

I got accused on her and in RL of price gouging and being THE PROBLEM and as long as we weren’t in negative equality of course we could move.

No amount of pointing out we needed a house in new area or would be better off staying put and paying our current bills got through.

Selling below that price we'd have essentially been stepping off housing ladder probably for good given our ages and us and the kids would be back to the insecurity of renting long term and rents weren't cheaper than our mortage repayments.

The first house few years after we move regained the "price" so could have waited it out though moving when we did was best time for eldest schooling.

Long term slumps or slow downs of housing market would be in everyone interests - I'd like my kids to have chance to buy at some point -and the monthly rents at minute seem insane but crashes I think may people just can't grasp what it means.

Exciting because buying a home might become affordable again

Lol - it really doesn't work like that. For one, people will just stop putting their homes up for sale and stay put. That's already happening. No one who doesn't absolutely have to will be selling their property on the cheap. So the slim pickings that are left will be priced highly - supply and demand.

Where did your dh study economics OP?

I have a masters in economics from Oxford uni.
If your hubby who is a lawyer things there will be a houseprice crash he is deluded
Needs to stick to being a conveyancing clerk

Even if the property market does crash far less houses will go on sale. People tend to stay put and only sell if that have to. Mortgage rates are rising and so is household expenditure so it will be harder to get a mortgage. As recession looms there will be concerns over job security added to the mix.

With the interest rates going up and there section 21 (no fault) evictions are coming to an end. Rents will definitely not be coming down which will make it harder for first time buyers.

So if your in a very strong financial position (if you have not been able to get on the housing market yet then I doubt this) then maybe you could get a house cheaper than today's prices when layoffs happen, savings are spent and families lose their homes. Yay, how exciting.

What is immoral about owning my own home?

Somethings going on. I am trying to buy. Have been for months. Couldn't even get a viewing until a few weeks ago. Got 5 viewings over the weekend. Offered on one. 3% over asking. Accepted today. The 2 higher bidders had to retract as they couldn't get the mortgage. Banks are tightening lending.

Tell then to study hard so they get a well paid job then
They are no owed a house - we all have to earn it

And that’s great as long as they’re not tightening their lending to you I guess.

All these pillocks rubbing their hands together in glee at the idea that a house they would want to live in might drop in price need to realise it’s not going to be a house that you will be able to purchase unless you have the full cash amount sat in the bank right now and if you do I’ll be very surprised because inflation is eating it away by the day.

A quote from my lecturer in economics from Oxford on our first day ….. when the economy is good, the rich benefit, when the economy is bad, the rich benefit even more. do you know who never benefits the poor and the middle class.

OP YABU to be so excited about something that could have a major impact on many other families

Millions get excited about their house going up X amount even though that impacts other families....

Whatever happens nope this will sadly not be the case. The housing system here sucks, and for many home ownership will never happen.

Where are you living? London its bonkers, where I am houses are still being sold the same day as being advertised, waiting lists on roads, house price not even at standstill still rising. I imagine it will slow with the increased living cost but its certainly not going to massively drop the government won't let it, it would have too much of an impact on the rich.

If that's to me it's exactly what we do tell the kids - that they'll need a well paying job and to save hard like we did and then on top we made some strategic moves aligning work and house prices so had to be willing to move around UK. Plus we were in early 30s before we were in position to buy.

Unfortunately they'll come out of University in more debt than we ever did though no fault of theirs at same time house prices have exceeded wages increases making them even more unafforabale and reducing the area that it is afforable to buy in.

Even our eldest has over a decade before being in the place to buy though - so they have time on their side.

Long term though weighing young people down in debt and making it harder to live as well as having taxes projected to go up as burden of older population of dependend kicks in evern more - probably isn't in the countries long term interests - though no government seems to get to grips with the problem.

If everyone who currently owns gets plunged into negative equity or looses what they have paid in they won’t move will they?

Loads won't be plunged into negative equity though & upsizing is easier in a falling market.