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/

out of interest, if it's interest only how are you going to pay off the capital at the end of the term

If it's interest only then I suspect that a lot of BTL landlords do it for capital gains reasons

I am selling and buying for cash

Not a btl as it is my home.

@Oliversmumsarmy

If, due to covid (and later, Brexit), the amount of people on UC remains high or increases (remember this situation is unprecedented and we don't know how short term or long term this situation is), then that may just set the rental standard for each area.

I did some reading and the cap on rent per area is a reasonably recent thing that the government introduced.

If things get bad with lots of people on UC who would otherwise be in work and renting, then BTL landlords may need to adjust rental amounts to be in line with those set by the government per area - otherwise they'll risk having no tenants.

A lot of people no longer view being a BTL landlord to be as profitable as it once was. How Britain's £239bn buy-to-let bubble burst: Our devastating report reveals landlords ruined by tax penalties - and their pension plans hit.

We are all on UC atm. Dd is the only one who is eligible for the government’s SE scheme.

However as soon as this is over we won’t be on it

Dd and Ds are both looking at lots of work being available. Dd has already lined up jobs that will go ahead at done date in the future Covid permitting.

Dp has a job that he would have started by now if this virus hadn’t been around.

I think there are a lot of people in our position.

The type of work Dd and Ds do, virtually everyone they know whatever their age is on UC Atm. The only ones who aren’t it is because they have partners/spouses who are in work and earn over the set amount.

No one knows exactly how many are in our type of position or where someone has lost their job permanently and will struggle to find work.

Only after this had ended can we see exactly how bad it is.

The UC figures or the figures for those taking a mortgage payment holiday give a false impression that there is permanently going to be an extra 1-2million people claiming UC and if you have taken a mortgage holiday then you are about to get your house repossessed because you can’t afford your mortgage.

When all people have done is take advantage of keeping their money in their own pockets instead of the banks.

I only know one person who has been furloughed, a pilot so his savings means he doesn't qualify for UC. The rest of us are all working & are very busy.
I recognise we are lucky but am saving like mad because I think in 6 months time the economy is going to look like a shit show tbh. I'm a bit of an anomaly amongst my peers because I think I will send dc back & I'm looking forward to holidays. Most of my school mum friends & friends are horrified by these ideas.

Same here Rory

Only one person in all the people I know or are related to has been furloughed and they are a pilot

Everyone else are doctors , teachers, construction workers, IT, recruiters, business owners/directors.

I guess this is lucky but just a common scenario of the location we live in

I don't know a single person (as in friends) in London who was/is furloughed. My brother was furloughed for 3 weeks but has been called back as there's a fair bit of work for him to do. He's in the media industry and was supposed to spend 3 months in Japan for the Olympics. In fact, a great deal of his work involves travel so he was always going to feel the effects, but even so, he's now back on work, conducting meetings with clients abroad on skype etc.

Although the media has suggested a massive increase in UC - it doesn't really seem go into which industries the applicants are coming from. Hazard a guess - hospitality industries? Staff from hotels, restaurants etc.? How quickly are those industries likely to comeback from covid?

A lot of the SE people who previously depended on one-to-one work have found ways of making online work - personal trainers, private tutors etc. Albeit at a discounted rate. Not everyone can do that though.

Dd and Ds are both SE in hospitality. The type of hospitality where the events will go ahead but at a later date and another industry that completely stopped.

After a couple of years of research and learning I was planning a trip to start a business in another country.

Dp “retired” at Christmas but was so bored that he had been looking for work which he thought he had found but hadn’t started.

Friends business in a completely separate industry has been put on hold and they have sent everyone home.

Another friend was just starting her business but because another industry has been put on pause she has had to stop too

I only know one person who wfh but they are the only one I know who has a salaried job

It is quite easy to fall through the net and not unusual to be furloughed or have everything stopped

Even in London.

I think it just comes down to how many people you know in different industries or who have work that doesn’t entail working in an office or something that isn’t as easily transferable to working from your dining room table.

@Oliversmumsarmy if everything goes as you say, then some of your theories make sense. Not all, but some.

However, there is actual data and previous recessions to go by which enable us to model some of this.

There has been a lot in the UK news today about job losses, and the American situation is even more dire. Our financial markets are inextricably linked.

I'd caution against using your own small network of people as a study to gauge what the country is going through as a whole.

Read here: www.theguardian.com/politics/2020/may/18/covid-6m-britons-fear-losing-their-jobs-despite-chancellor-measures

As many as 6 million people in Britain fear losing their job within six months as the coronavirus outbreak causes the biggest economic shock in living memory, a study has warned.

I think we need to look at the wording of the article

It doesn’t say 6million people will lose their jobs it was pointing out that for a lot of people they are within 3 months of not being able to pay the mortgage and fear job losses.

Ask a lot of people and fearing losing their job is a genuine fear for a lot of people even if the country was doing great.

And the Trade Union think tank wants the rich to pay for everything

Yes but the country isn’t doing great.
Not that any country is at the moment,except perhaps China

I was replying to the posters who seem to imply that no one was furloughed who worked in London

I am sure there will be further job losses as everyone gets back to the new normal but equally there will be a lot of people who will just get on with their lives.

I don’t think we can look at past recessions and say for definite this or that is going to happen.
I think it is significant that instead of raising interest rates the news seems to suggest that they might be lowering them further.

For those that lose their jobs I am sure the government doesn’t want a huge housing benefits bill so I assume it would be prudent in effectively legislating for as many people to stay in their mortgaged homes rather than them trying to find places to rent at more than their mortgage costs were in the first place.

Usually in the run up to a recession there has been a period of excess buying. Money flying around and in very broad terms generally of people overspending.
Then it becomes time to repay and people can’t afford to

What we have in the run up to this was a period of nearly 4 years where there was a general feeling of holding ones breath.
This year was going to be the year people moved if things didn’t implode.
When 31st January passed people were looking around and not seeing the world collapsing because we had made the first steps to leave the EU. (Fully aware we haven’t left)
Come spring I think people thought there were going to be loads of houses to hit the market.

Instead we are in unprecedented times and although we have .1% base rate we don’t know who will have a job after this and how cheeky some people will be if you have your house up for sale and how much discount you will take.
Or will it put off people from selling if they start getting cheeky offers

A lot of people won’t be selling because they are desperate but more to do with other reasons people usually sell so too many insulting offers and we might find less houses for sale.

I wonder what the outcome will be? It would probably steady the market.

FCA to debate extending mortgage holidays
Mortgage payment holidays may be extended for up to 18 months to help borrowers who are struggling financially.
www.moneymarketing.co.uk/news/fca-to-debate-extending-mortgage-holidays/

@Didyousaysomethingdarling and banks wouldn't want to give out new mortgages? Would you really want to give out a mortgage if there is a chance your new borrower would be taking a payment holiday for 18 months. Granted it all has to be paid back eventually but its still a long time to not be paying back a loan. Definitely not secure from the bank's perspective.

@Desiringonlychild Yes I'm sure they'd scrutinise your field of employment. Key workers (it's quite an extensive list) should be fine. Somehow I imagine the government would encourage/incentivise them to lend. 18 months would conveniently cover any Brexit horrors too!

What about Civil Service (low wage)? Would have thought that would be OK for a mortgage, no?

Didyousaysomethingdarling

I have suggested that instead of payment holidays that the mortgage becomes interest only for a couple of years that way the banks aren’t losing out. The mortgage gets extended to repay the loan and the much reduced amount is more manageable.
Equally giving out mortgages that for a couple of years start off on interest only so a normal 25 year mortgage would extend to 27 years would I think be more manageable in the long term to keep people in their homes and not have a massive issue with repossessions.

Oliversmumsarmy giving out mortgages that for a couple of years start off on interest only so a normal 25 year mortgage would extend to 27 years would I think be more manageable in the long term
It would probably also encourage banks to issue new mortgages.

Most people just want cheaper housing, not longer mortgages. High house prices only benefit bankers and developers.

@DeadHouseBounce We all want cheaper housing. But we don't want to be in negative equity either. The older ones may have had a lot of plans for the equity they built up in their house that they could release by downsizing. Given that the majority of people in UK are home owners, it would be in their best interest for house prices to stagnate and go down in real terms, which would solve the negative equity problem.

Having been looking around on Rightmove I don’t know how seriously you can take some of the asking prices and then the subsequent reductions

I think it was during the 2008 crisis I think it was in the evening standard an article about how people were having to write £1million+ off their properties and how terrible it was

One of the places that apparently had been up for over £2million had reduced the price to £1million and they were still not getting a buyer

It could have been because the top price of the houses in that particular road was only ever £750,000

I am surprised at the asking price of some houses.
For example I have seen places for instance that are up for sale for £475000 in a terrible condition

Yet next doors has just been sold in pristine condition for £350000

When the house does sell for £300,000 if they are lucky will the place be put down as being reduced because of the “recession wiping 30% off house prices” or because they were asking a ludicrous price in the first place

Planning how to spend "equity" is a fools errand, it was encouraged by the media/banks for years though, but the best way to have some spending money later on is to save and diversify into liquid assets/investments, keep the house for living in.

@DeadHouseBounce I think it was encouraged because home ownership remained untaxed for so many years. It was a tax efficient way of accumulating wealth. For any other venture, there are capital gains taxes, corporate taxes. However if you own the biggest house you can afford, you only pay stamp and maybe slight increase in council tax. There are no property taxes, not US style ones anyway.

Whenever gurus did those articles about how renting your home and investing the rest made more financial sense, it did not apply to the uk at all because we didnt have annual property taxes, you paid council tax as a renter too so we only needed to worry about maintenance.

Therefore it is not surprising that everyone put their money into 1 big ginormous asset.

Seen a few come on the market today, clearly ex rental properties. Couple of reductions, one by £2050 😂🤔