When the house price will reflect the impact of economy tanking

[rabbitcarrot]

just noticed a few houses have been added to rightmove in past couple of weeks, the price is still pretty much like pre-lockdown..

Just wondering when the property market will be adjusted to reflect the impact of economy shrink?

Oh yeah I forgot that @newbie111

I think the existing young people exodus from the capital could be accelerated by this.

Good point, we would certainly look to move if DH increases his capacity to wfh.

I think HTB on older properties could well be the best solution particularly for FTB however with a lot of newbuilds already unsold, would builders allow this? They want to shift the newbuilds surely?

Having read around on various forums and comments to new articles, most people perceptions of what house prices look like going forward will be significantly down. This sentiment along with mass job cuts, stricter bank lending and possible rate increases (they can’t go any lower) is going to lead to a bloodbath in the property market.

Ultimately, supply needs to exceed demand for their to be any meaningful reduction in short term house prices.

I think people unaffected by death, divorce and debt will be reluctant to move and do any major financial transactions in a recessionary environment. So I would imagine demand will be low.

Death and debt may cause supply, if the debt rate continues to grow exponentially and if there is mass unemployment/salary reductions in the middle sectors, but these are unknowns at this stage. So I agree with posters who say that if there is a marked impact on house prices, it will come sometime in 2021.

I think what may potentially impact house prices even more, is the change of behaviours and requirements of house buying. People may look to buy bigger more expensive places to accommodate working from home, they may also want to be around nature more. Who knows...

I don't think there will be mass movement of people out of cities, as people will need these social hubs even more so, given social distancing creates more 'isolated' home lives and people may want to be close to established social networks and general buzz.

I noticed a lot during lockdown, that many people with gardens were still going to parks etc, as they craved seeing other people and just the general buzz of life around them. I don't think that will change.

Interestingly the Barclays honcho said huge central HQ offices may be a thing of the past.

All the HQ’s are not in cities though. Many are out of town with good parking facilities and transport links

No one is basically selling right now unless they have to, and this will continue. What will happen though is pent up demand will be released, so it will be a sellers market driving prices up

@ChrissieKeller61 he was referring to Canary Wharf

When/if people start to fail to make mortgage payments.

House prices are far too high. And too many people stuck in rentals unable to save enough for a deposit. I think a fall would be s good thing.

@Bluntness100 "it will be a sellers market driving prices up" That's a very interesting take on what's happening. Not sure even the most optimistic estate agents will agree with you though

@Viviennemary. Agreed. House prices are too high if too many people are stuck in the rut with renting and finding it harder to save for a deposit. Shelter is important (Maslow's hierarchy of needs and all that) and owning your own home feels more secure than renting. Hopefully they can keep their jobs in this crisis too as that should put them in a good position for trying to catch up.

I feel very sorry for those that have bought in the last couple of years, after this crash it will take a very long time for house prices to get back to the levels recently seen.

Would you believe that we were offered a 100% mortgage only weeks before the last financial crash so then we couldn’t buy, we then saved and scrimped and saved and in February had saved roughly 5/10% deposit for a property only for this to happen. We are getting on in terms of home ownership and I’m starting to believe this won’t happen for us sadly... hurrah for paying rent until the day we die

That's a very interesting take on what's happening

Not what’s happening now, obviously. But what will happen, it always does. People won’t put their houses on the market unless they have to. Which means when those who need to or want to buy, there is limited stock. Which drives the price up. That’s what a sellers market is, when more wish to buy that to sell. FTB will be screwed, it always starts at the bottom.

But there is no way round it. When there is an economic scare people don’t flood the markets with their properties to sell. They hold tight. Then people who want to buy are in the highest bidder wins position.

Those few buyers buy because they need to buy, because they can afford to buy and are at the bottom of the chain, and then it flows up, those sellers have to pay more for the next property up and so on.

House prices only properly decrease when there are more on the market then people wish to buy Ie many repossessions etc due to financial crisis.

Which is not likely to happen due to this pandemic unless this goes on much longer. Then it could happen. Many people unemployed so houses repossessed, buy to let’s sold, people financially struggling due to increased taxes etc, then the arse could drop out of it.

The difference between now and the early 90s is interest rates were eye watering topping out at 15%

People were selling because they couldn’t afford the mortgage. They were in full employment but just couldn’t manage the monthly payment

We have a much larger mortgage now and pay a fraction of what we were paying 30 years ago.

Hiddentree122 it depends on where you are. Prices around here have risen in the last couple of years.

I know we can’t completely compare to 2008 but one of the reasons prices dropped was because lenders started asking for bigger deposits. I noticed some lenders have withdrawn 5 and 10% deposit mortgages. This will start to reduce demand from first time buyers and chains are always dependent on the buyer at the bottom.

I had a friend who bought a new build in 2007 with a 110% mortgage. No deposit, the bank actually paid him to buy the flat. He was in negative equity for a good 8 years. He sold as soon as he broke even.

Some banks have reduced them — others haven’t. I was offered a 95% mortgage on 5 times salary recently.

I was offered a 95% mortgage on 5 times salary recently.

That seems crazy!

Low salary in London - so still a stretch!

I thought you were going say high salary because I can kind of understand the risk then. Are you going for that?

@sotiredwe

I was offered a 95% mortgage on 5 times salary recently.

That seems crazy!

How is this crazy? This has been happening for years! Most banks, till recently, we’re happy to do LTVs of 90-95% at a approx. 5x multiple times annual income.

The Help to Buy scheme even made people who couldn’t normally get a 95% LTV loan from a bank buy a house with just 5% equity because the government gave you an interest free (for 5 years) equity loan of 40% (in London) so you only needed a loan with LTV 55% from a bank.

This is the fundamental reason house prices have ballooned since 2013! And it will be very interesting to see how these people who bought on Help to Buy fare now as they need to pay the government equity (which would have increased in value significantly) on an interest rate that’s linked to inflation (Years 1-5: 0%, Year 6: 1.75%, Year 7: 1.75% + RPI + 1%).

I think it's crazy to take that option during a pandemic. We have hefty equity so lower LTV & wouldn't consider 5x our income. Most people who bought on those terms over the last few yrs will likely be stuck on the ladder. The real issue with the housing market is not getting on but moving up the ladder.

The H2B was a prop & presume will need to be propped up further.

I’m trying to push a mortgage through at the moment, 20-25% LTV but it’s still 4.5 x my alright salary. Tbh I’d rather hold tight until January see what’s going to happen