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/

Interesting article but as long as both hotels and holiday let owners give a very flexible cancellation policy and everything has been given a deep clean with disinfectant and occupancy left for 24 hours between guests I think the Holiday Let type places come out on top.

It comes down to choice
If I go to a hotel, aside from having to share a lift, pool, meals, even a cup of coffee with other people we usually also have to have 2 rooms instead of one which bumps the price up.
A holiday let has so much more space than a single hotel room.
Far nicer to sit by a private pool or on a sofa or at a table that isn’t next to your bed to ear and drink.
Getting a private house you could have your own private swimming pool even

If anything the article started to make out that Holiday let’s weren’t as good as hotels but ended up coming across as if Holiday Let’s tweaked a couple of things then they were better than hotels

www.theguardian.com/money/2020/may/22/uk-mortgage-payment-holiday-extended-by-three-months-covid-19

Wouldn't expect a fall till october/end of the year as people can just take payment holiday until then.

@Oliversmumsarmy Honestly before this crisis, I wanted airbnb banned as airbnb artifically increases house prices. Which isn't good for anyone, even someone like me who bought her London flat in 2019. In Singapore, airbnb is banned as the majority of housing is government housing(which are homes for locals, not investment objects and the law states that if they are let, they can only be let for 6 months minimum anyway)

I have never used an airbnb either. one of the pluses of the crisis is that I hope airbnb would not survive the crisis. If people don't holiday, they wouldn't be using hotels or airbnb. Hopefully apartments which became long term rentals now that there is no airbnb demand would stay as long term rentals or perhaps even purchased by FTB.

@Oliversmumsarmy no one should rely on property price appreciation to repay the mortgage. That just shows a dysfunctional property market and is hugely risky for the borrower.. I think as long as they are negative equity mortgages that allow people to port the negative equity to the next home (which enables moving), house prices dropping is no bad thing for anyone. Yes you feel cheated that you lost £50K by not waiting but then there was no guarantee you could secure your present home by buying 2021 as the choice is somewhat limited.

Desiringonlychild

Which brings me back to my point of if people wanted more long term rentals then why the need to make it more difficult for btl landlords.

You can’t have it both ways.

Either you let btl landlords put their mortgage interest against tax and stop trying to make things more difficult or you have lots of Holiday Let’s springing up.

Holiday let’s have their place. We are moving soon. We don’t want a long term let it would be a waste of money. We will be going into a holiday let for 6-8 weeks.

If I go on holiday I really don’t want to be holed up with 1 tv, 1 bathroom in 1 very stuffy room with 3 other adults and sharing a pool with a hundred other people.

Dp has had operations because of cancer and is very self conscious of his scars so likes to swim but will only go in a private pool. Airbnb has been a lifeline.

@Oliversmumsarmy i think the idea was that the flats/houses should be neither holiday lets or BTL rentals but homes for FTB. And that renting out properties was a full time job/profession (my dad does it for a living and is a developer, he is proud of his job and takes good care of his tenants), and not something that someone should get into just because they have a spare 100K in the bank. Its a job with a lot of responsiblity and also an investment that shouldn't be entered into lightly (being able to pay mortgage without rent).

I think the new BTL hit the amateur landlords really hard and tbh I don't think its wrong that they are priced out of the market. UK has a really weird state of affairs where so many landlords only own 1-2 properties for investment purposes, which means buying property for investment is normalized and seen as a sensible thing to do. Of course this decreases the housing supply.

Many, many BTL houses coming back on the market in the last few weeks. Will be great for ftbs to be able buy an appropriate property at an appropriate age in this area.

This thing about the tax incentives around holiday lets us just bizarre. The vast majority of houses in this country are not suitable for profitable use as a holiday let. It’s just not an option for most BTL landlords. And if it did become such a popular option that it began to distort the property market, the government would just change the tax regime, obviously.

The vast majority of houses in this country are not suitable for profitable use as a holiday let

The term holiday let covers not just where people go on holiday.

When Dd and Ds have been on a course or had work where they have to provide accommodation or when we have decided to go somewhere and need to get there first thing we have stayed in houses and flats that you wouldn’t consider to be suitable “holiday let” accommodation.

I would say most places are suitable for very short term lets

There is always someone needing accommodation for a short while even if it is just to visit family for a weekend.

Whilst FTBs might want to buy the influx of BTL properties coming on the market I think from my understanding you have to take into consideration that the mortgage companies have changed their criteria and bigger deposits are needed now so unless the FTB has much more deposit then they are going to miss out.

We also have to take into consideration that with Brexit and lockdown there has been a nearly 4 year wait and see what happens wait to see what this year will bring.

I think even without lockdown there was going to be a huge explosion in properties of any sort coming into the market this spring after the sky didn’t fall in after January and the fact that we were definitely leaving the EU and all the talking of will we won’t we was finally laid to rest

Even if people were taxed on Holiday let’s in the same way as Btl then I still don’t think you would get the influx people expect.

I can see a lot of houses just left empty or as before rents increased to cover the shortfall.

@Desiringonlychild

i think the idea was that the flats/houses should be neither holiday lets or BTL rentals but homes for FTB. And that renting out properties was a full time job/profession (my dad does it for a living and is a developer, he is proud of his job and takes good care of his tenants), and not something that someone should get into just because they have a spare 100K in the bank. Its a job with a lot of responsiblity and also an investment that shouldn't be entered into lightly (being able to pay mortgage without rent).

I think the new BTL hit the amateur landlords really hard and tbh I don't think its wrong that they are priced out of the market. UK has a really weird state of affairs where so many landlords only own 1-2 properties for investment purposes, which means buying property for investment is normalized and seen as a sensible thing to do. Of course this decreases the housing supply.

This is crucial, imo. People like your Dad have factored in for losses, voids, etc and can cope throughout a downturn because they are not dependant on teh income. many of teh newer landlords are people who are dependant on people paying the rent in their property for their income - so if they have a house that has a mortgage on it of 1200 a month that the rent out for 1600 a month the extra 400 is used a their living costs or goes into paying another mortgage on the place they actually live in. Thses are people who supplement their salary with income from renting out houses - but are not in such a strong position that they can cope with the intensity and force a London crash creates.

Older, more experienced landlords like your Dad can ride it out but they are not so plentiful compared to the weaker positioned landlords - who also make up the bulk of owners of potential ftb properties (studios, one bed flats, etc in cheaper areas). That foundation level has to be strong and imo, this timeit is not so solid. The Goevrnment knows this and wants those landlords out and ftbs buying up those properties as they are secure and will push upwards, keeping teh ladder moving and a spare for a generation to come through after them. To cut off your oxygen at its point of entry is one of teh most profoundly stupid things to do with a market so many are reliant on.

@Desiringonlychild and what about accidental landlords like myself? I bought and lived in my property but then lost my job. Couldn’t get a new job in commutable distance for love nor money but eventually found a job abroad and moved away, renting out the property. This was only 8 months after I’d bought it so had I sold I’d have made a huge loss in terms of fees, stamp duty etc.

As it happens I’ve stayed abroad and married and made my home here and the place has stayed rented out. I’m not a professional landlord and didn’t buy to let, circumstances worked against me so I did what was sensible. Should I be penalised for that?!

@burntpinky its not great for accidental landlords and is also a big factor why i bought my flat in London which has the most jobs so the next job is likely to be in London. Government policy has to be geared towards the majority and the situation is that the majority of first time buyers find it hard to buy.

rather than punitive measures against landlords, what would solve the problem more easily is if the government built homes for FTB and middle class families that earned £100K and below a la social housing but on a larger scale and a wider demographic. However most MUMsnet people would not agree to that judging from the flak someone got on a thread for daring to live in social housing. Also I doubt there is enough money for that. Also mass home ownership has been a key principle of the tory party, so if middle class people can't even buy a flat in a decent neighbourhood, what hope do they have really? The landlords would never vote labour anyway so its a no brainer to prioritize those younger voters who could easily swing.

@Desiringonlychild - I take your point re majority, it’s just not all us landlords are the same/using it as a business. My property is in London too but it was other circumstances why I couldn’t get a job which I won’t go into on here.

I would love to get rid of the property but I now have a family to think about (1 child, 1 in the way and we might like 1 more after that) and want to make sure their future is secure financially. So no way am I going to put it on market for sale if prices dropping.

so if middle class people can't even buy a flat in a decent neighbourhood, what hope do they have really

Ultimately you go where you can afford and work up from there.
We have lived in some seedy neighbourhoods with police coming out to arrest neighbours or break up a fight happening outside our window.
Unless you have parents who gave you a massive amount or there was an inheritance involved you bought what you could afford no matter how tiny the place was or how violent the neighbourhood was.

@Oliversmumsarmy i lived with my MIL for 3 years so that I could buy a 2 bed flat in East Finchley at the age of 27. This is very normal in Asia, but not in the UK. I dont think it is unreasonable that the cost of an average home should not be more than 5X average household income. As average london income is between 35-40K, average household income is 70K, so the average home should not be more than £350K. Average london house is 480K. Therefore, a 25% correction is overdue.

www.google.com/amp/s/amp.usatoday.com/amp/5239532002

I expect more companies who allow their employees to wfh full time would do the same, adjust pay according to local standards. I am not sure about other people but I wouldn't accept a pay cut so that I can wfh.

When we bought our first place I earned £1080 per year and Dp was on similar

Cost of the house was £5000. Neither of us could have afforded the place on our own.

When we came to London dp’s pay had increased but the cost of a place was much more.
The amount we were able to borrow was still no where near the cheapest place on the market we could find.
We worked our f/t jobs and virtually every night and weekend doing other jobs from shelf stacking to bar work for a year to get enough to make up the difference be able to afford a tiny studio flat.

As far as I can see it has always been far more than 5X a single persons salary to buy your first place whether that be in London or a Northern town.
I know lots of people who live with their parents to save for a deposit. I don’t think there is anything wrong with that.

My neighbours have only just got their house back after years of 4 children returning home virtually all at the same time with their spouses/partners so they could all save to buy their first homes

@Oliversmumsarmy

As far as I can see it has always been far more than 5X a single persons salary to buy your first place whether that be in London or a Northern town.

Yes. Fo most people in London it has always been a struggle to get that first deposit together. Most Londoners used to live at home with parents to save. There will always have been some that were wealthier/had family money but not all.

It doesn't have to be the start, life is going to be tough enough for lots of people without devaluation of their assets too. Give home owners a break . Stop scaremongering.

@serenada it is now more than 5 X household incomes (2 average incomes) to buy a place in London. A correction is long overdue and I say this as a homeowner.

We told our Vendor’s estate agent we’d like to renegotiate yesterday. Agent was adamant that the slump was only based on ‘London figures’ (we’re North West) totally refused to consider the knock on effects. Very odd.

Our re offer would mean a 5% reduction on full asking price.

No news yet.

It was already top end of our budget, we have discussed looking for something 100k less and being mortgage free or 50k less and having a very small mortgage. The extra cash per month appeals, I have job uncertainty too.

But, I adore the house.

We moved into rented in January in order to keep our sale.

serenada my first house was in a northern town and was still nearly 5x my wage

I agree with everything @Desiringonlychild has said in this thread. I too was the child of a full time landlord, and I believe there should be greater restrictions placed on landlords.

@Oliversmumsarmy Ultimately you go where you can afford and work up from there.

This is how the poor get driven out of cities like London. What of those that were born here, and it's all they've ever known? Should they move to the NW of the country, because it's more 'affordable'? A correction is long overdue. And I too say this as somebody who has recently purchased in London.

Correction is well overdue, that is for sure.

it's a mistake not to take into account the accrued housing wealth in London though, over and above income and overseas buyers, that's clearly a significant factor in London demand.

I've been thinking houses were overpriced compared to earnings back in 2002 and the situation has been going downhill since the late 1990s, we need to build more houses desperately.