Housing price crash

[Eucalyptusbee]

It's happening!

AIBU to be excited

I’m afraid your credibility went out the window with your claims of high on employment that’s just ludicrous currently we have the lowest rates of unemployment in the UK we’ve ever had since the ONS began. If every single person who was unemployed suddenly went back into work tomorrow that still isn’t enough people to work in all the vacancies that we have.

The actual reality of this is it we will keep fighting the fires and wages are going to have to go up exponentially we’ve already had people in my sector TEch demand 70 grand pay rises when they’ve moved jobs.

is that sustainable yes it’s the new norm. The numbers on the screen utterly meaningless the money never existed in the first place.

We may have low unemployment at the moment but this is all about to change. When you have a big slowdown in the economy we will see many jobs disappear, expect to see many businesses go to the wall which will create a domino effect.

I've been running my tech business for 30 years and I can tell you this bubble is already bursting, if you follow the stock markets you can see this is already playing out. Tech stocks are the biggest losers in the stock markets at the moment because they have been super inflated for the last 2 years. You are obviously not tuned into the real economy, I would advise you to start doing your homework and then you may actually realise what is going on.

Personal debt is at its all time high here in the UK which is over 200 billion and that figure doesn't include mortgages.

Unfortunately I will be very surprised if we see anymore government stimilus like we have seen during the pandemic.
When you blow up a bubble like governments have, just take a look at history and you will see this will not end well.

If you read my initial post correctly I never said we have high unemployment. I said we are heading for Stagflation which will lead to high unemployment.

@TonyTeacake what you are saying makes perfect sense. People don't want to hear it though, so you can expect all their anger and distress to be directed as you, the messenger. Folk are in denial and unless they are pretty old (like me) they have not really experienced a bursting bubble.

Are you living under a rock?

There is a war on that might have a bit of an effect on food prices. This is turn will lead to massive issues around the world and this will have a knock on effect to just about everything we import. Cos 'supply chains' (a subject that a significant percentage of people seem to lack a basic grasp of even after Brexit and Covid much to my bewilderment)

All without fuel being a consideration.

Try googling 'Sri Lanka' crisis for your starting point. Then when you are done with that, you can move onto 'cooking oil prices' and 'wheat prices'.

The cost of living and inflationary pressures are going to get significantly worse before it gets better as a result.

I think we could be heading for a period of stagflation too. As people find more of their income going on essentials, there will be less discretionary spending, and growth will slow dramatically. And people will be more reluctant to enter into big financial commitments, like taking on a new mortgage.

There are already signs that property sales are slowing. Houses where I live used to sell so quickly that they rarely made it as far as Rightmove. There have been 4 houses in my immediate area on Rightmove recently, and they took about 3 weeks to go under offer.

We may not see the dramatic fall in prices we saw at the end of the 80s/early 90s, but growth will definitely slow and probably stop for a while.

We may not see the dramatic fall in prices we saw at the end of the 80s/early 90s.

Before the early 1990's we did not have a 15 year period when central banks pumped trillions of money into economies. This had the effect of the rich getting richer and a trickle down into all asset classes. Stock markets are up 300% since then and house prices up by 450% (much more in some locations). Quantitative easing ended yesterday. The 20 year bull run is at an end. The only thing that will prevent house prices falling by more than 10%-15% is full employment as Covid resets peoples' lives. If there is a recession and people start to lose jobs watch house prices fall further without a quick bounce back. There is no more money in the kitty anymore and that is not just the UK.

The 2008 crash was caused by irresponsible lending, which led people to lose their homes. It's highly unlikely that we'll see anything like that again because, a) there is a huge supply shortage in housing, and b) mortgages are stress tested and so far fewer people will lose their homes. As long as supply is strangled, you will never get a significant house price crash.

Also, if high inflation continues, wages will have to rise. For homeowners on fixed rate mortgages, inflation is good to some extent, because it erodes the value of the debt.

Are people burying their heads in the sand ? They have been using quantitative easing for years to stop the market crashing and now they can't use it anymore. I'm a home owner so doesn't benefit me for a crash but this feels very different to 2008 and much worse.

The over reliance on QE has done big damage

Are you being deliberately dim and rude?
Read this and chill Winston!
foodfoundation.org.uk/news/food-prices-tracking-february-update

'The FAO’s food price index, which tracks global food prices for key food commodities, averaged 135.7 points in January 2022, 1.5 points (1.1%) higher than in December 2021. The increase has mainly been driven by oils and dairy. Wheat prices which had been rising considerably have started to stabilize following large harvests in Australia and Argentina9. Global food price rises continue to be driven by labor shortages, extreme weather impacting on harvests, and high input and energy costs8 and FAO’s global projections suggest that food prices are likely to remain high in 2022.
Predictions are that food prices in the UK will continue to rise through 20226 with Tesco warning that “the worst is yet to come” and that average prices could increase by as much as 5% in supermarkets5. Similarly, Kantar predicts that annual food bills will rise by £180 on average'.

As I pointed out in my original post, fuel and housing skew the average.
It's these anomalies that the media are focusing on, to scare everyone into a nervous breakdown.
Everyone needs to chill out, prices have been suppressed for yrs, and they going up and will find a new level. I've taken this opportunity to increase my margins too.

There are certain goods and services which have been historically low and suppressed, these are also taking advantage of the current trading conditions.

I agree and I think some of us should take our rose-tinted spectacles off.

A lot of people are saying this is different to 2008, I agree this is much worse.
Only this time around we have had a global pandemic, 100s of billions of money printed for QE, rampant inflation, the highest records recorded for personal debts, war, and supply chain problems. Who knows where this will end.

We are in a crisis. The health panic is followed by an economic panic. People stop going out, stop shopping and dramatically reduce spending. This has an immediate impact on cash flow. Without cash, businesses go bust. Without cash, suppliers don't get paid and they, in turn, can't pay their creditors. The knock-on effect will be swift. Tax revenue will seize up. In addition, businesses without cash can't pay their employees who must be laid off. This exacerbates the slump.

I don't think house prices will be going up much further we have now hit the peak. I am seeing prices dropping and houses are staying on the market longer, although you could argue this may vary depending on where you live but it's already starting to play out.

Pension companies have never been so busy with people cashing in on their pensions early. These companies are inundated and they have never known anything like it. Now, this is not a good sign, this is a big red flag.

I do agree with you about wages need to increase to stay in line with inflation but I can tell you for the masses this won't be happening. Many businesses are really suffering due to consumers cutting back on spending. We are just at the tip of an iceberg and we are already seeing companies laying staff off, once this start to happen it will have a domino effect. I remember the recessions in the early 90s and 2008, unfortunately, this time around it's going to be a lot worse and you just can't ignore what is happening around us. It's starting to play out now and this crisis will only deepen.

You say people should chill out, try telling this to all those poor people using foodbanks. Can you imagine not having not enough money to feed your children.

I think one thing we do need to be careful about post pandemic is lucrative businesses employing remote staff abroad to save money on wages. I would legislate for that somehow if I were in charge. Also, encourage as many holidays and spending in our own economy. I know it isn’t great but we do need to do that as much as possible - high wage economies need that kind of thing.
Theoretically it is possible to get out of this with working a bit more and greater productivity/use of technology. We desperately need enough help for lower income families. Stress does not increase productivity.
And of course money can be printed to build social housing and keep house builders going on lots of the untapped land we still have. More remote working opportunities does actually mean that greater parts of the country could be more productive.

Pension companies have never been so busy with people cashing in on their pensions early. These companies are inundated and they have never known anything like it. Now, this is not a good sign, this is a big red flag.

I was reading about a huge exodus of over 50s workers who just left employment.

www.propertyreporter.co.uk/construction/ajority-of-britains-biggest-housebuilders-banked-more-land-during-the-pandemic.html

I don’t really understand how it works but more land needs to be released.

“Britain’s biggest housebuilders increased the volume of their land banking plots by 4% during the pandemic, with the total amount of plots now believed to be 441,702, according to new research by Birmingham and Newcastle-based property developer, StripeHomes.

The current level of land bank plots by these housebuilders alone far exceeds the government’s target to build 300,000 new homes a year, a target they consistently fail to reach.

Landbank plots are pieces of land that a developer owns but chooses not to build on, a practice that has been widely criticised with the nation in the grip of a housing crisis.

It’s largely believed that the motivation for land banking is to avoid diluting the housing market with stock which could cause the value of property to decrease. Instead, the approach of drip-feeding the market and limiting annual supply keeps prices at a premium.”

They do with land what OPEC does with oil. Of course now there is an excuse for supply shortages around materials/work force but with government help and will all of this can be unlocked.

I would disagree, this pent-up demand was created from the pandemic which has been the same for many countries. You have had too many buyers at one given time, people changing demographics, buying second homes, BTLs, etc.

This shift is starting to change, although you won't see it fully play out overnight. We all know rates are going up and I can tell you they will be a lot higher than what the BOE is forecasting because this inflation monster is going much higher than they anticipated. So people who are on variables or coming off their fixed rate term will get hit by this at some point. Unfortunately, mortgages taken out before and at the beginning of the pandemic were not stress-tested for the inflation we have today. Also, there are so many other variables to consider like divorce or if you lose your job in a recession. Some people will be able to ride this out but unfortunately many won't be able to. I personally would take insurance out to cover your mortgage payments and expenses in case this happens to you, but always make sure you take out a good policy to be certain that it fully covers you.

My son went to look at a 2 bed /2 bathroom apartment
a slightly bigger apartment with dual aspect balconies as it’s on the end of the block sold for 280 in Jan private sale no schemes / part buy rent

the one my son is looking at is pretty much exactly the same but without the dual balconies
it’s with a building company that offers part buy / rent and the price they told my son was 245k guaranteed no price hikes blah blah

so 35k difference in the two apartments apartment and only real difference is once has the dual balconies

But another one sold with a HA recently in the same block and it was exactly the same as the 280k and it was sold for 250k

I am sure some of the over 50s have left employment. But the main reason I was given by a gentleman who works for one of the big pension companies is that many are really struggling hence the reason for cashing in. I do believe there will be some people moving their pension pots out of stocks because they are very risky at the moment and into something safer.

Aren't UK holiday destinations fully booked up? Demand is high for travel home and abroad, and people still have money to spend.
Partners company have given her a 20% rise and flexible working to keep her from buggering off. Construction rates are at an all-time high. However raw materials are struggling to keep up with demand. There are more jobs than employees across all sectors.

They have to tackle this fuel rise, it's unrealistic and suppliers are using DDs to recapitalize and secure their futures after dozens went bust.

There are also people retiring early and cashing in because they think they have built up a lot of equity in their houses and plan to sell and cash in that way, or do equity release. So there is that too. They would rather live now then spend it on a care home later/give it to the tax man.
Plenty of 50 plus still have a good pension pot that will yield enough to live on (or so they thought pre inflation) and they don’t want to keep working until 65 plus and paying 40-45 per cent tax. There are plenty of those that I work with too. So it is very difficult to generalise.
www.independent.co.uk/news/health/nhs-hospital-consultant-quit-doctors-british-medical-association-retire-working-hours-a8721856.html

You have this problem in lots of sectors. If we need expert workers then government needs to make it worth their while. That also applies to those at the top of the working food chain. So stopping rich working people putting money into their pension pot and taxing them through the roof doesn’t necessarily always work.

To be honest, if people are predicting x y or z, it probably wont happen, crashes: housing, economic, financial or indeed a pandemic.. tend to come out of the blue, with few getting it right and no one is listening to them....

The biggest problem facing the world is climate change, its baked in, so to speak, we can do nothing about it now (too late) and it will effect us all, not least with mass migration.

Unfortunately, mortgages taken out before and at the beginning of the pandemic were not stress-tested for the inflation we have today.

@TonyTeacake how do you know? When I took my mortgage out they told me what the repayments would be if interest rates hit double digits. Eye watering, yes, but still possible to pay.

Lots of people talk about people 'overstretching' themselves on a mortgage, but you can't do that these days.

Completely.
we should be mitigating for it in anything that needs planning permission, so all extensions and all new builds,
solar or green roofs, more water storage, better landscaping (more hedges less fencing), heat pumps and insulation as standard.

but no. We carry on

This new fad for turning office blocks into flats, whilst I’m fully onboard with the repurposing land. They aren’t built for housing and need stricter regulations as well as better green proofing