To ask what the UK political and economic situation might mean for the property market?
FourForYouGlenCocoYouGoGlenCoco · 17/10/2022 10:04
Recently, there’s been lots of reports in the media that we’re in a very challenging economic situation. Either we’re heading for a recession (and time will tell about how deep we’ll go into recession) or we’re already in one.
Added to that, our political situation is dire - lots of change and party in-fighting, which is obviously destabilising the markets and panicking them.
There’s been a lot of speculation that this will all affect UK property prices, and it might lead to a steep drop in property prices over the next few years.
Now we’ve got a new Chancellor (who’s getting rid of the recent mini-budget and putting forward a new budget), I’m wondering what this is likely to mean for the economy? I think it will help to reassure the markets and therefore stabilise the economy, so I’m wondering if this will now mean we escape recession and a property price crash?
Obviously none of us can predict the future, and as we’ve seen, lots of change can happen in just a few short weeks and months. I’m just wondering what your thoughts are on this - do you think we can avoid a deep recession and big property price fall?
croon979 · 17/10/2022 10:09
Following with interest. I have no real idea but instinct (based on nothing real) is that there may be a dip in property prices but supply/demand will mean that there will never be a crash resulting in drastic property reductions
juvi · 17/10/2022 10:09
No we can't. Property price correction and recession is inevitable. The math ain't mathing anymore.
juvi · 17/10/2022 10:12
Plus there are other factors that affect things not just supply and demand.
sst1234 · 17/10/2022 10:19
Same as ever. That property will go up in the long term. It has done since the dawn of time. Land. They don’t make it anymore.
ArseInTheCoOpWindow · 17/10/2022 10:19
Property price correction and recession is inevitable
One if the driving forces behind property prices is insufficient stock. There maybe a situation where some houses drop, but some stay the same. I inherited my house from my parents. It’s never ever dropped in price in 70 years. Sometimes it remains flat, but it will always be one of the first to start going up in price.
onthefencesitter · 17/10/2022 10:20
Following. I found my perfect 3 bed flat over the weekend but v concerned about overpaying. Also have to sell my flat but my viewer seem very interested so fingers crossed.
Instinct tells me i should wait a year...
FourForYouGlenCocoYouGoGlenCoco · 17/10/2022 10:25
I’m looking at buying somewhere (hopefully soon), but am sitting tight to see what happens with mortgage interest rates and property prices. I can’t afford the current mortgage interest rates, and also don’t want to risk buying a property that’s overvalued.
DazzlePaintedBattlePants · 17/10/2022 10:28
If inflation becomes embedded, then I'd rather be sitting on an asset than cash, to be honest. But you have to weigh that up with the likelyhood of pay rises coming your way to keep pace with inflation, and the fact that interest rates will be higher because of inflation.
I think this will be how the Govt "avoids" a property crash at first glance, because the sticker price will remain the same for (some) houses - but when adjusted for inflation, the house price has actually dropped.
juvi · 17/10/2022 10:28
@ArseInTheCoOpWindow where is this house? Anyone could say that. Have you ever tried to sell it?
I know of highly sought after properties in highly desirable areas that were affected by the 2008. Unfortunately they had a large correction. It affected me and I had to swallow it and accept it.
ihatesteve · 17/10/2022 10:31
Depends what you are buying. New build flat with high managment charge = almost certain negative equity.
Buying to slap some paint on and turn a profit = negative equity.
Family home in popular area with good schools likely to just stop growing in value.
Maybe if you bought at the peak of the covid price rises you may lose a small bit but it is likely only the money you were given off of stamp duty.
I bought in 2008 and sold 3.5 years later for a small profit. 2 years on it would have been a very large profit.
I think the govt will step in to help families at risk of repossession too. Maybe some kind of tax relief on mortgages.
Our whole economy is a ponzi scheme in my view so they have to keep it going at the bottom.
ihatesteve · 17/10/2022 10:33
@DazzlePaintedBattlePants totally agree about better holding a leveraged asset than cash.
GasPanic · 17/10/2022 10:44
Interest rates will go up in the short term. What they will do in the long term is anyone's guess.
People's living expenses are going up rapidly. Greater cost of fuel/energy, greater cost of food, greater cost of mortgage.
Peoples ability to therefore spend more money on mortgages is being dramatically reduced, so the amount that they can borrow is being dramatically reduced.
Since most people buy a house based on what size mortgage the bank will lend them (usually approaching the maximum) this means there will be less money to buy houses. Less money chasing the same amount of houses means prices will reduce.
It's not rocket science.
Some things that could stop the price reduction :
i) The Fed. If the US decides to stop raising rates and lowers them this could stop it. Given the noises coming out of the Fed this is unlikely.
ii) Government comes up with some sort of insane policy to make the unaffordable affordable as it has done so several times in the past. Insane policies could include stuff like people being able to borrow 10x their income, allowing 110% mortgages or underwriting a proportion of the mortgage with government backing. The result of these insane policies will be to inflate the housing bubble even more, so that when the final housing market crash eventually comes it will be even bigger.
juvi · 17/10/2022 10:47
Property was already starting to be reduced before this mini budget even happened and I live in a very sought after area with great schools in the South East.
Some people will be affected by it others won't, but for the sake of your health there is no point in worrying about things you can't control.
Op if I were you if I could comfortably afford a property I would buy if you can't then don't.
swedex · 17/10/2022 10:50
If you have time search up city trader Gary Stevenson he has made a fortune trading but now is trying to get people to see what is really happening. He is on social media and his views are eye opening to what's really going on. His view is that house prices will continue to rise however the rich will get richer and the poor and middle will get poorer
ArseInTheCoOpWindow · 17/10/2022 22:03
It’s in Sheffield Hallam
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