Is this the start of the house price plummet?

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Slowly but surely the papers are reporting reductions in line with the projected economic difficulties.

The Telegraph has today published an article which says those under offer should 'definitely try to negotiate a reduction'. The 'expert' then goes on to suggest trying for a reduction of 10-20%.

Is this the start of things to come?

www.telegraph.co.uk/property/buy/buying-house-coronavirus-advice-lockdown/

@ChrissieKeller61 "The emotional aspect cannot be under estimated"

Sigh. No one wants to lose their job, lose a house, lose savings etc. However, wishful thinking isn't going to prop up a property market when the underlying fundamentals are broken.

Ps. If someone can repossess an asset, guess what, you don't own it. Electrifying your fence is similar to what plenty of Americans did in 2009 when they couldn't afford to pay their mortgage anymore - they went and bought guns and expected the bank to be too afraid to proceed with the repo. Maybe you want to ask them how that played out.

@thequantofmontecarlo as some people have said upthread, they took extreme measures to prevent repossession. living on beans on toast. Borrowing. It makes sense if your house is your only asset.

Different country but my dad bought my family home in Singapore at 50% of the original price during the Asian Financial Crisis. In singapore, most homes are government housing i.e. built by the government as housing for the masses , naturally they do not get repossessed at the same rate as they fulfil a social function. However the same does not apply to private housing which tend to be luxury condos and houses with gardens, all priced at above a million dollars at least. The guy who sold the house to my father was an Indonesian businessman who decided to sell his house at a bargain price to save his business and avoid bankruptcy. He was ok with doing that because a 2 million dollar house in singapore was a tiny fraction of his net worth and the business is worth much more. But for most people, they are simply not eligible to buy such property that are aimed at the higher end of the market and so cannot take advantage of such steep discounts.

India is cheaper. That's what a lot of banks are doing. Or the Phillipines.

Actually India is not cheaper. Banks often need to build their own cities with piped gas / generators / water supplies / dormitaries to combat the piss-poor infrastructure and traffic in India, staff are paid similar salaries to the UK (but as non-grads can’t get jobs in India it’s seen as better value), female staff often can’t work the hours required especially when nights are needed due to lack of safety and so private transport needs to be arranged. Indians working for international companies also expect benefits similar to European colleagues and so paid maternity and paternity leave and sick leave has also worked to drive up costs.

So when you tot everything up India actually costs more (especially when you add up the costs of having a workforce that is neither customer nor business facing - manana culture / lack of prioritisation / lack of a get it right first time culture / needing to employ two people for every one person in other countries due to lack of productivity is common). So basically the only benefit there is, is a tax related one - India doesn’t charge international banks the same amount of tax as local ones, but this won’t go on forever and banks know it.

This is why large international banks are moving Indian operations either closer to China (Vietnam is popular) or automating them as much as possible with essential ops returning to Europe.

@GrumpyHoonMain What? There are so many things wrong with this post I don't know where to begin!

I worked at several global banks that have had a presence in India and none of what you've mentioned is true!

Banks have to build their own cities!? What are you on about? I don't see a "New JPMC-abad" or "HSBC-lore" . All the major banks have offices in cities like New Delhi, Mumbai, Bangalore etc. so they don't need to "build" their own city!

People in India making the same salaries as people in the UK?
You must be out of your mind! London, Paris, New York and HK pay the highest salaries in the Financial Services space. Throw a stone in Canary Wharf at lunchtime and you're pretty much guaranteed to hit a banker earning £120k base. The Head of Retail Banking in India at our bank makes that.

Needing 2 people in India to do one English person's job?
Wow. Seriously, how do you come up with this sh*t?

Brexit is still to be negotiated, a lot of those transactions were from before people realised/accepted that we actually were going to leave, and transactions are about half of their peak before the 2008 collapse, so not really signs of a strong market IMO. Anyone pushing to buy now without a really compelling reason is taking a massive gamble IMO.

Just heard from a colleague who has their property on the market that their buyer who has revised their offer from £600k down to £500k, sounds like the reductions are already happening.

Sounds like a chancer

There’s still plenty of people with transactions going through without £100k price drops

@Hiddentree122 - that sounds like an offer rather than a sale. Did your colleague accept or reject? I would probably agree with @Rebelwithallthecause that it sounds like an opportunist because £100k is over 16% of the asking price. I could maybe understand 5-10% as being a serious offer under the circumstances - and I get that everyone is nervous, but there's a risk of losing goodwill of a seller too (assuming they are not desperate to sell).

FWIW on the new build development I'm looking at, the houses are still being reserved/exchanged/sold and the prices have gone up a tiny fraction too (only between £5k to 10k, but it's better than dropping in value or staying the same. Although developers are offering more incentives than before and that might skew things).

I’ll ask tomorrow. They’re considering it as I think they have a fair bit of equity in it and don’t want to risk going back on the market and finding a new buyer.

@hiddentree I'll tell the buyer to do one. Clearly using this situation as an excuse to capitalise.

@Hiddentree122 If they're considering the 100k drop, sounds to me they'd drastically over-valued the property and got lucky with the initial offer. I certainly would not be accepting a revised offer taking that much of a hit. I'd put the property back on the market

16% isn`t too far fetched in this climate of House Price Deflation IMO.

I think if house prices plummet then mortgage rates will go up so you'd be no worse off financially on a day to day basis - the lenders are still going to want money out of you one way or another. I can see there could be an issue if you wanted to buy now and then move again in the short term if prices drop but you shouldn't look at property investment for short term gain. Essentially there isn't enough housing in the country anyway so I doubt they will drop much.

@DeadHouseBounce - well given nothing’s actually happened yet it’s a bit premature to be asking for a 16% drop before any unemployment which is being held off by furlough for now at least and self employment support. The whole idea of those schemes is that nothing has or does change.

The global credit situation for banks has changed, that is all that really matters, schemes to keep people in jobs are just sticking plaster, many commentators think that a lot of companies will be cutting headcount anyway and there is no way the government will be able to run this scheme long term.

The key word there is THINK
Not seeing it, my clients include cap gemini, JP Morgan, no head count changes as yet, appreciate it's early days but employees working from home, not furloughed. Business as usual.

I read somewhere that the current money the Govt are pumping in now is peanuts to that used to keep banks afloat or that used for quatitive easing, but what do I know...

@ChrissieKeller61 DH works for an investment bank. They are looking at completely restructuring the office particularly with smaller hubs & although he could wfh before it's likely now to be a couple of days a month in the office. Opens up a load of options for us.

The global recession we face is frightening. Interest rates will rise to protect the pound. That alone could lower house prices.

@bumfaceweb, I see that as a positive !

@ChrissieKeller61 why

Reduced commuting costs, reduced fixed costs for the business. More agile environments for all of us is a good thing, more reactive.

sorry i thought you meant in relation to house prices.

tbh I'm slightly freaking out about house prices plummeting. My new home is going through the process because we exchanged before lockdown and committed now - yes, I'm definitely happy with the new home, location and it is a forever home (took ages to find and secure the lot etc.).

However, the feeling that we may have bought at the peak and it might go into negative equity so soon is annoying and makes me feel a little foolish (not that anyone was to know that this coronavirus would act as a catalyst for a major recession). It's causing some anxiety - and I think it's normal - but just have to remind myself that we did the best we could (bought in a desirable location, good schools for dc, good transport links and with good amenities etc.). Will just have to see. Affordability is fine - it's just the whole knowing the value may drop and I feeling like we overpaid like a fool when could have got something bigger/better in the same location in a few months time etc!

Oh well! C'est la vie!

@sbplanet

I saw something similar and just seen this on the BBC News: Coronavirus: How much will it cost the UK?