Housing price crash

[Eucalyptusbee]

It's happening!

AIBU to be excited

I doubt it will make much different tbh. I live in a house that's always marketed as an "ideal starter home" (2bed semi). I'm planning to move within the next year or 2 but if the market crashes and either I risk putting myself into negative equity or there just aren't any houses on the market for me to move into (because their owners also don't want to go into negative equity!) then I'll just stay put. Yes there will be some families who have to upgrade e.g if they have kids and need a bigger house but most won't risk it.

You're also hoping that people who have struggled to buy in the last few years will either become homeless if they can't afford the interest rate, or, at best, plunge into negative equity and basically pay accrue debt that they'll be paying off for the rest of their lives....not nice.

I'm all for the market stabilising a bit to give everyone a better chance, as the refent increaes have been ridiculous, but a crash rarely benefits anyone, apart from maybe property developers or multi property landlords.

If you are in negative equity you are still better off than anyone who is renting.

Good.. I can finally buy my bastard ex out of the house he put nothing into. As well as free me up to do it up. As it stands it doubled in value.

How does this make sense? If in 6m time we will long for today's house prices this suggests they will be much higher and even more unaffordable in 6m time, not cheaper (as a result of a crash?)

I’m not convinced tbh, massive supply shortage where I am (hour outside London) people literally wait years for a suitable house to come on the market.

Borrowing is incredibly cheap but BoE seem in no hurry to raise interest rates, while inflation is being driven by oil prices what benefit will interest rates going up actually bring?

I don’t think historically a housing crash has made a big difference to FTB really, banks tend to respond by making borrowing more difficult. We had our flat on the market when the last crash hit and all the ftb interested lost their mortgage offers, speculators with significant assets were the only ones able to offer on it until the market started to recover.

Will only effect the first time buyers who have over leveraged who have borrowed to much and put down every last penny they have in order to get onto the ladder, which is one reason house prices were so high in first place, others will have opted for a smaller house and in a not so nice location so they didn't over stretch themselves to much should the worse happen in the economy happen and some would of not brought at all knowing that in the last 2 years house prices have gone up almost £50k alone and simply isn't feasible long term and something will give way

Not necessarily.

Your mortgage payment could be more than what the rent would be, if you need to move it will be impossible, or at least very difficult or expensive - if you sell the house, you end up with the negative equity as a debt.

Agree that if prices fall, no one sells unless forced, and builders don’t build.

furthermore, a lot of people remember previous “crashes” and will be ready to snap up available bargain properties with cash, knowing that prices will inevitably rise.

A great many people own their properties outright now too, so not affected by interest rate rises.

And one last point - there is a shortage of “naice” family houses with gardens and people are fighting to the death for these. There may be a glut of new-builds and estate houses, but desirable remains desirable and holds its value.

I work in economics too, we do not believe this at all...

www.express.co.uk/finance/personalfinance/1608569/house-prices-homes-property-market-crash-first-time-buyers-mortgage-rates-lenders

But how much would they crash? Even if they crash by 50% (very unlikely) my house would still be more expensive than i paid for it 10 years ago (at the time of the last property crash). House prives are now so ridiculous that a 10% drop on an unaffordable house, will still leave it unaffordable to most ftb.

I think a slightly more likely scenario is that house price rises may slow, or stall, or drop a teeny bit. But high inflation will kind of erode the value of the house. Maybe. Which is great for people working in the private sector getting above inflation payrises, but public sector workers wont benefit in the same way.

ow, op. With your lawyer husband and your mortgage free house. All excited about a crash that likely won’t happen. 😂

Where I live, property has been increasing each year
No sign of any decrease

Something fishy about the OP for sure.
House prices are crazy around here.
If there's a crash the people who are renting and haven't saved a deposit will still be renting allowing landlords to use our savings and buy another rental property to rent out to them.

So, everyone who was a FTB in the south east in the past 5-10 years then?

The last time I remember this happening it affected my DSIS, she had purchased a 1 bed maisonette for 68k in the 80s and then the houses crashed just when she needed to move as wanted to start a family, she sold for £40k and lost a lot of money, my parents stepped in and helped her buy a family home, she was lucky they were able to do that, not many will be able to so this isnt a good thing really. It would be better for house prices to remain the same rather than drop or increase.

Don’t be a dick, seriously

Not happening in the SE but I do accept that there are many people who are going to be hit hard by a rise in interest rates.

Same in our area. Lots of houses off rightmove within 24 hours and many buyers only accepting offers from cash buyers.

If only. Not here in rural Wales. People from the South East or midlands selling their houses and moving here. Thanks pandemic.

House price crashes only benefit the rich, which is why I don't understand the rhetoric by some in this instance.

Houses that become cheap to sell are usually foreclosures and therefore, the bank only wishes to recuperate their money not sell the price for the true MV. As a result, those with higher incomes / landlords snap those properties up. Those that are FTB trying to get on the ladder will still struggle due to the mortgage rates and difficulty obtaining mortgages.

So either you have a large deposit so will go for 20% LTV and finally be OK to buy as a FTB. Or you're wealthy and will make yourself richer buying up the homes poor families lose.

if this is your perspective either your husband hasn’t communicated very well or he became a lawyer because economics wasn’t his strength.

If there is/was a house price crash that would be happening because either people were losing their jobs through economic downturn (this would be affecting those waiting to get on the housing ladder as well and probably disproportionately who would not be able to get on the housing ladder then anyway) the double whammy of this would by BTL investors selling up meaning less rental properties meaning shortages.

interest rates shooting up, basically has he same effect as above.

Both the above would mean much less money sloshing round the economy, likely to affect hospitality and retail most, again leading to job losses then not being able to afford a house.

many would be in negative equity which would dent their feeling of economic well-being and again this would severely affect the economy.

a house price crash (if it happened) is really not good news for anyone except rich cash buyers and then after a few years or dip the problem is likely to come back even worse.

all the above is just the tip of the iceberg

www.thetimes.co.uk/money-mentor/article/will-house-prices-drop/

growth could slow. That’s not a crash though. It’s still predicted to grow and this is based on the Bank of England predictions.

sorry op

The 2008 “crash” was a 10% reduction on prices that had already risen 300%. It didn’t help FTB get on the ladder because prices were still too high. Only those who were already on the ladder and had made huge profits were able to benefit from that “crash”.

The difference is, in 2008 only a small number of people had paid inflated prices and would be destroyed by a crash. That would be manageable for the country as a whole. A crash now would be devastating because everyone under 45 has paid an inflated price, so millions of people would be dropped in the shit. That would not be manageable for the country as a whole.

And as I said, a “crash” like 2008 isn’t helpful. It would take a HUGE crash - like a 60-70% reduction - to bring prices back into the realm of affordability. And that sort of crash would devastate the economy, banks, pensions and individuals. It’ll never happen, it’s too late now.