Housing price crash

[Eucalyptusbee]

It's happening!

AIBU to be excited

No, that was my point. It is pretty close to the average UK house price.

The average UK house price was £277,000 in February 2022, which is £27,000 higher than this time last year. Average house prices increased over the year in England to £296,000 (10.7%), in Wales to £205,000 (14.2%), in Scotland to £181,000 (11.7%) and in Northern Ireland to £159,000 (7.9%).

ONS data February 2022

Using London data really does skew your idea of house prices.

www.housepricecrash.co.uk/house-prices-uk/

Has a nice range of graphs that show the differences based on that ONS data.

Average London, just over £500K
South East about £375K

All other regions £50 - 220+K cheaper on average than the South East

The growth in prices is still ridiculous, but using London as any kind of benchmark really does skew your perception of it, even if you only use the averages rather than a single humongous rise!

I was thinking that the hyperbole isn't needed. Average data shows a more realistic picture - and that is 'bad' enough!

In the 70s interest rates were 12-15%, people didn't go out to eat, they spent almost nothing on entertainment. They literally went round to each others' houses for parties - that was fun, but nowadays a huge percentage of our economy is based on the service industry. If no one can afford more than their high interest mortgage, who is going to pay the wages of hospitality staff?

Except this time it's gas, food, fuel prices. With further interest rates on the horizon. I personally can't see 15% interest rates ahead but who knows.

I personally can't see 15% interest rates ahead but who knows.

Scary isn' t it? We said much the same in 1986... but base rate was already at about 10/11% by the time we actually got a mortgage and the bank/building society lending rate was obviously higher by 1 - 2 %ish

Th experts can't agree so what do we know. I think it would be carnage if we saw 15% interest rates along with the price rises. People are so much more in debt than they were 30 plus years ago. The BoE's hand will have to be severely forced to put them up to that but we are living through strange times.

Oh yes! We certainly are!

We have had about a 40% increase in people using the foodbank so far this month. We have pushed our capabilities to the absolute limit, asked for more volunteers and I've done another round of fund raising, 4 months earlier than planned. And we had a really dismal projection to start off with! Even Trussell have been surprised.

It is utterly rerrifying for some people, people whose lifestyles are in no way extravagent.

Just looking at rightmove regularly (saddo!) shows that my city has always been in a bubble. I expect there may be a small fall, but honestly, house prices are insane and so many people want to live here - or need to live here, as companies flock to the place, the demand is always there

It also means that if you do buy now your house will be worth less three months later. How do you like that prospect? Because you don't know when the low point of the crash is, do you?

Or you won’t get it through to completion as the mortgage company will shit themselves

Jesus that’s depressing.

the difference in wealth is vast at the moment. There seems to be a lot of people with a lot of money at the moment.

whoops pressed post by accident in the stupid site refresh!!

theres a lot of people with a lot of money, or those who are on the bones of their arse. The middle seems to have gone.

This is really sad to read , do you get much support from local supermarkets ?

Kind of agree, but if you've been unlucky enough to be priced out of the market, listening to gleeful landlords and property owners talking about their portfolios is pretty distasteful too.

@ChrisReasBathEggs derailing, but your username just made me laugh.

People are gleeful about how much money they have made on their house or how many buy to lets they own, which I find bloody distasteful. Young people have been utterly screwed re housing costs, rent and quality of life (the ones who don't have the bank of mummy and daddy to fall back on).

I never understand why it's ok to celebrate your house going up in value or selling for a huge profit but it's bad to want prices to be lower & housing more accessible.

The thread is full of reasons why falling house prices could be catastrophic, having a greater impact on people with less money!

And yes, to others who asked. We get a lot of support from local shops but they can't afford to supply us with the basic bag contents. So we still need more funding, which is part of my job to secure. We are lucky, we are well regarded locally, are part of a range of local community projects.

Lower house prices making it more accessible for more people would be brilliant. But as you can see from the multiple posts on explaining it, a house price crash wouldn’t lead to housing being more accessible. If we had a situation in which house prices could drop with absolutely no other economic impacts, then fab. But that doesn’t happen. A crash leads to banks tightening their criteria, asking for larger deposits, mortgages (if given) being more expensive, people staying put so fewer houses on the market… a crash also happens in an economic environment of high unemployment, high cost of living…

I don’t think anyone would say that they don’t want housing to be more affordable and accessible to FTB’s… but a crash won’t achieve that.

I didn't say it would make it easier but that's what people are inferring when they wish for a crash. That was my point.

A crash leads to banks tightening their criteria, asking for larger deposits, mortgages (if given) being more expensive, people staying put so fewer houses on the market… a crash also happens in an economic environment of high unemployment, high cost of living…

Having said much of the above has been true for years. After 08 the criteria was changed & became stricter. People have been struggling to buy for years as deposits need to be big, isn't the average London deposit for FTBs 100k or more? Obviously the smaller the % the deposit the higher the interest rate. People have been stuck on the ladder for years as moving is so expensive & as prices rise the next rung gets more expensive. We are the midst of the higher burden on households for decades & yet prices are at record levels!

Surely you’ve got cause and effect the wrong way around here?

Banks tightening their lending criteria (due to cost of living increases and affordability concerns), meaning people are able to borrow less, which then causes house prices to fall.

www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/april2022#owner-occupiers-housing-costs

The only driver of the current inflationary pressures is housing and fuel. Everything else is pretty flat. Finding new price points post covid, which I feel is entirely normal. We do need salaries to increase, charges for services have been too low for over a decade.
We also have record job vacancies, yet people are NOT applying.

Personally, I think the government support programs have worked in some aspects but certainly highlight why UBI is a non-starter.

Except that the only houses that become available are distress sales, those where people absolutely must move and those might lower in price. Might.,Everyone else sits tight leading to less general availability and the general scarcity of available properties keeps prices high.

*houses=property, inc flats

Or it won’t bother you because you are buying a home and as long as you pay the mortgage then negative equity only comes into play if you decide to sell.

10 years from now the likelihood is that what you paid for your house today will look like a bargain even if house prices have dipped massively at the beginning.

We have had several “house price crashes” in the last 30-40 years.

The average house price never really falls to below what the previous height was.

I have read most of the posts on here and I will tell you my reasons why we are heading not just for the biggest housing crash in history but the biggest economic crash we have ever seen.

Please excuse the long post.

The bubble that has been created in the last 2 years has been from Pent-up demand, low-interest rates, government support for the housing market, a dangerous and misleading rationale that property is a hedge against inflation, and a long and seemingly unending bull market, have made property seem like a sure bet.

This inflation monster is here to stay and won't be going away anytime soon.. The CPi is supposed to be 9% and I think most of us know it is at least 2 times higher. The BOE is now admitting it is not transitory and is playing catchup, I can tell you now interest rates will go through the roof so ignore what you read in the mainstream media. Also, you have to take into account all of the supply chain problems which are not going to be resolved anytime soon. This is why we have to start looking at the bigger picture and the wider economy. With rampant inflation, I really don’t see any way out of this one as we can’t just flick a switch and turn inflation off. There is a bad choice and a worse choice. The bad choice is to fight inflation and let interest rates go up so everything will collapse. The worse choice is to continue to create inflation to avoid that and postpone to consequences of hyperinflation. It looks like we are already heading into stagflation, high inflation, high unemployment and a deep recession. All of these sanctions are also pushing inflation much higher. Governments worldwide have been printing all this money and telling people to stay at home so we weren’t producing any goods or being productive. We have been dealing with much higher than expected inflation numbers long before Putin invaded Ukraine and inflation isn’t transitory running record budget deficits. Countries were flooded with money which people have been spending.

In this year alone we will see many firms making cuts to jobs and we already see this happening due to consumers cutting back on spending. Businesses are now suffering and they are seeing their turnovers drop drastically. The stock market is having its worse start a year since 1939. We are seeing so much volatility.

House prices have now hit their peak as for April growth was 0.3% which is a big drop if you compare to previous months of this year. Expect house prices to decline from now although this will vary depending on where you live. Within the next 2 years we will see a housing crash like nothing before. All of this pent up demand we have seen during the pandemic will evaporate. You can forget the supply and demand argument because the economy is going to take a real big downturn.

Unfortunately, all of this money that was printed during the pandemic which has created these artificial markets will be coming back to bite us all really hard. We are just at the beginning of a very long road.