To just be so upset about house prices

[spuddy56]

We started looking in December after scrimping and saving for years and its got more and more out of reach with every passing week since then. We've had two sales fall through due to downvaluations, so not only did we need the huge deposit we had saved up for years, we needed 10k on top of that which is impossible for us. We are paying rent and have no family help. We viewed a tiny house that we love and has been on the market since beginning of April with no offers but the seller won't budge on the price. Based on one year of sold prices in the area its about 40k too much, even taking into account the 10% rises over the last 12 months. Theres just no way a mortgage company would lend that much. Been to view another one and it's tiny, has had no offers and is worth a lot less but agents don't think they will go lower. We've had to adjust our expectations down and down despite being what we thought were healthy earners. How are first time buyers managing to buy right now without help?! I'm so so upset at not having somewhere to settle and call a permanent home.

But you don’t know that we are at the peak.

You are not being unreasonable.

we were living with parents prior to covid, but needed our own space, so started renting in 2020. We quickly realised how much house prices were going up, so decided to start looking at help to buy, with the ‘little’ amount of money we had saved. It is not everyone’s first choice (it wasn’t ours either.) however, it has allowed us to get on the property ladder. We managed to get a three bed, detached, down south for around £340,000. Houses like this have already gone up to just under £400,000. It’s one big huge mess :( the fact that wages are not going up, in line with housing prices, is even worse.

That only works if they expect the assets to make a gain in the near future. They will not want to hold loss making 'assets'. Rapid gains are not expected in the near future at all. I don't think this recession will be like others and the UK economy is in a very poor state. I'm sure you have seen the headlines this morning and I already linked to several other articles.

You have been making comments on this thread (and others) denying recessionary risks and generally talking things up and accusing others of running around like headless chickens because they are warning of risks, risks that are frankly very obvious at this stage.

All of us can only comment on what we see and personal lived experiences and mine are quite simply in 2008 wasn’t that bad for me nor most of my friends and neighbours some of literally did not know what you were talking about if you said the word credit crunch to them they had no comprehension. Life went on. That will be the case this time round as well.

My worry is that we have much less to throw at managing it than we did in 08.

I don’t know it, no. I am, however, capable of interpreting evidence. A bit like the estate agents’ trade body. And the Bank of England. And economists. And lenders. All of those groups are expecting the market to wobble this year. That’s because they can see that too many borrowers are overextended and that interest rate rises are inevitable.

Anyone who thinks that borrowers who have taken out 30+ year mortgages for huge multiples of their salaries will be OK “because we were alright (sic) in 2008” hasn’t understood that interest rates were cut to artificially low levels post credit crunch to keep liquidity in the economy. That won’t happen this time around. The quantitative easing programme, which created all the money now being thrown at housing, is being scaled back and rates will go up.

Somebody upthread denied that landlords were exiting the market, because that’s not what she’d seen where she lived. Sadly for anyone still claiming that their own anecdotes represent universal truths, that’s not the case.

www.independent.co.uk/independentpremium/uk-news/private-rent-homes-landlords-house-sales-b2095919.html

metro.co.uk/2022/06/07/renters-face-soaring-prices-after-landlords-sell-off-homes-16781918/

The thing with 08 is that the economy didn't ever really recover fully, look at wage growth & productivity. QE was brought in then & propped up the housing market but it's why we are now much more exposed, as they have exhausted that trick.

Yeah, we've had over a decade of emergency level interest rates.

Absolutely. I had to go down to 80% hours at work in 2008 in luxury fashion retail. I finally got made redundant in 2020 (pre-covid) because the pound was so weak against the euro (in which we were charged for the goods), consumer spending had never really recovered, and the banks would no longer cover our seasonal quiet periods. We went from 12m to 2.5m coming in, over 10 years.

This really, really made me laugh. For all the wrong reasons.

You do know that the cashpoints were within two hours of running dry in February 2008, right? And that the government had to acquire stakes in a bunch of British banks at a cost of £50 Billion to prevent them collapsing?

No, you and your friends and neighbours, with ‘no comprehension’ carried on watching Celebrity Big Brother and speculating about who was going to be on Dancing on Ice or whatever, in blissful ignorance.

So you will forgive me, I am sure, for applying a pinch of salt to your economic predictions.

you can apply whatever flavouring you want, the facts it didn’t affect us, this one won’t affect us because much as the sky is always on the verge of falling in it never quite does does it because the threat that they like to keep hanging over all of our heads that one disaster after another is only a few moments away never quite comes to fruition does it. It’s a bit like crying wolf nobody listens any more.

so I’ll leave you to your predictions and you can do all the worrying for the rest of us.

we just get on with living our lives stressfree. I know which one of us will have lower blood pressure

Are we just mad to try and buy now? We've had an offer accepted on a reasonably sized ex council house. So scared about the market that I'm just full of worry.
Knowing our luck, it will probably be downvalued anyway!

You're not mad of you're happy to stay there for an extended period. And if the alternative is renting then you're definitely not mad.

I hear you OP but something will give. House prices have to fall as this is unsustainable. If banks are already downward evaluating then it will happen.

this one won’t affect us because much as the sky is always on the verge of falling in it never quite does does it because the threat that they like to keep hanging over all of our heads that one disaster after another is only a few moments away never quite comes to fruition does it. It’s a bit like crying wolf nobody listens any more.

Still with the Chicken Licken thing? You really are priceless. Who are ‘they’?

You still think that thinking and being a bit sceptical can cause a recession. And that the past is a solid basis on which to predict the future. And that the government will pay everyone’s mortgage if they get into difficulty.

This thread was started by the OP, remember? She was expressing her dismay at high housing costs and asking whether it would be a mistake to buy now. She got opinions from people who understand economics. She also heard from you.

I can give you weekly updates if you like ?

Thanks but I prefer to get my information from knowledgeable sources. Those that use evidence to inform their analysis.

Not this again. The confident statement that prices will recover eventually. That will be cold comfort to the OP if she buys something now that she could have got for 30% less in two years’ time.

Prices may recover eventually (or they may not; ask somebody who bought an apartment in Japan in 1991 how confident they are of that. Prices are still >30% lower than the peak, 30 years later) but she might have to wait ten years for that, and she’d still have a mortgage 43% bigger than she could have had if she’d bought when prices corrected. Which will cost her a whole lot more over the term. So you’ll understand if she isn’t rejoicing at that potential outcome.

So far, we are seeing unprecedented govt intervention to stabilise the economy / bail out families struggling - QE was new in 2008, you may see further new ideas if there is another crisis.

We are locked into how we think mortgages have to work in the UK but globally there is a lot of variation in mortgage products.

Nothing is inevitable as far as I can see so far.

We last bought just after the brexit referendum when everyone involved was very scared and some deals did collapse.

We went ahead despite similar worries @spuddy56 because we loved the place we were buying and it would work for us for many years and we had both secure jobs.

We’ve seen the ‘new ideas’: allowing housing benefit to be included in mortgage lending calculations, for example. That’s not going to help with interest rate increases. I wait with bated breath for more sparkling new ideas from the same source.

More QE would fuel inflation, so that’s not happening.

Here’s what I think will happen. If a load of borrowers get into difficulty I wouldn’t be surprised if in exchange for government help a charge (like another mortgage for a % of the value, varying according to how long the mortgage payments are subsidised) is applied to the house, to be recovered when the house is sold or when the borrower dies. Solves several problems, redistribution of wealth for example, and dissuades further reckless borrowing and lending if the government’s charge ranks above that of the lender.

And monetary easing wasn’t a new idea either.

it the extent to which it was used was certainly new. What is wrong with the govt effectively coming up with an expansion of shared ownership schemes?
Seems like a good idea.

I'm not sure what will happen with inflation re interest rates either - if cost energy and food prices are pushing inflation, that pushes people's ability to afford huge mortgages itself - does the Bank of England need to worry that much about interest rates?

The pandemic has again changed expectations on what govts can do.

I'm not sure the future is obvious whatsoever.

Good luck @spuddy56

The pandemic has again changed expectations on what govts can do.

Yes, there seems to be an expectation of constant bail outs from the government now. I think the magic money tree is bare though and the money will have to be repaid in terms of future help. Iamthewombat prediction is something that could happen.

Unless the government are just planning on inflating away all their (and over stretched borrowers) debts?

The problem here is that people like you have been confidently predicting an imminent crash for years, and getting it wrong.

Of course one day you may get it right, but that doesn’t imply any particular knowledge.

Is it safe to assume that you’ve sold your house now and are renting, planning to buy back in later?

Not years, decades house price crash.com started in 2002 so we are now 20 years into waiting for this imminent impending doom that never quite seems to happen.

all of the experts have been predicting how they can’t possibly come up with anything else to keep the Ponzi scheme go in and yet they do because what is the alternative literally paint me a picture what the alternative looks like ?
apparently we have children living in Victorian esq poverty and yet actually that’s bullshit. Relative poverty yes absolutely that’s a thing.

but quite frankly we will keep consumerism and capitalism going until the meteor lands.