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/

I've seen a lot of houses go Sold STC near me, but then a lot of those may not translate into actual mortgage offers. The market now is totally not representative of what it could be in a few months time, just like the queues outside Primark are not representative of shopping in a few months time.

I've also seen a lot go Sold STC then back on the market a bit later

Lots on the market doesn’t necessarily mean they will sell though. May isn’t really representative as it was during the house move shutdown wasn’t it?

Agree with a previous poster that lots of houses ‘sold’ then coming back into market.
I enquired about a property today, the EA was telling me the market is ‘hot’. Hmm

@SilverLiningSearching

I have actually noticed something similar with 2nd hand property sales too. However, I'm not sure if EA can play games like that, as has been inferred, because aren't they regulated by the FCA or anything?

@GreyGardens88 Where are all the frantic house purchases coming from then?

There aren't any "frantic house purchases". That information is based on anecdotes from a small sample of the population and it's being propagated by recent buyers (who want to justify their decision), sellers and real estate agents.

The reality is most buyers and lenders are being cautious as we're at the precipice of one of the greatest recessions in nearly a hundred years. The job cuts are only now being announced and they will gather pace as we move closer to the end of the furlough support scheme. Banks are expecting to lose billions in loans are they expect companies and people's ability to pay is going to be affected. As this materialises, they will tighten lending criteria even further making it even harder to buy feeding this downward cycle.

@thequantofmontecarlo

I agree a lot of stuff on here is anecdotal. Yes, we're heading into a recession - and it's likely to be severe with Brexit to contend with too.

However, people still need to live somewhere - Maslow's hierarchy of needs etc. The covid death toll stats will probably support the idea that there are likely to be more people who have come into some inheritance lately - some of those people may now be in a position to have a larger deposit or buy outright etc.

Things are still working themselves out...

I think the market where I live was frantic just as lockdown kicked in but it has definitely slowed down now. Less houses coming on to the market at the moment and less being marked as sold even. We are looking and have listed ours on the market but i'm not holding my breath.

A couple of previously sold houses back in Feb/March have come back on the market. When we had our house valued last week the EA mentioned some clients having been furloughed which meant that the original offer DIP figures were different at the time of full application for a mortgage so some sales fell through.

[quote thequantofmontecarlo]Mortgage approvals for May at the lowest since mid 1990s.

www.theguardian.com/business/live/2020/jun/29/markets-nervous-covid-19-cases-news-uk-mortgages-facebook-shares-business-live?page=with:block-5ef9b2788f0811612711975a[/quote]
It's almost as if something was happening in May which made it difficult for some people to go out and view houses with the objective of finding something to buy.

Thank f* for @Mildura! Let me get Andrew Bailey on the phone and tell him not to panic.

@ChocoTrio people still need to live somewhere - Maslow's hierarchy of needs etc

Yes but house prices are primarily driven by availability of credit not simply "need". Demand = "need" + affordability (credit). In the last recession, the "need" for housing was stable but the availability of credit fell (aka "credit crunch") and this resulted in prices falling.

@thequantofmontecarlo

Using mortgage approval data for May 2020 is hardly going to tell anyone a great deal now is it?

It doesn't suggest the market is falling, it doesn't suggest the market is rising, it is an entirely useless set of data.

In my area flat prices seem to be racing to the bottom whilst house prices are just getting stupidly affordable. Although i think this is more to do with the huge number of new builds in the area which are purely flats driving the cost of flats down.

The last week or so so much has gone under offer and people are starting to add houses at massively inflated prices. We aren't looking til October for various reasons and hoping people might get a bit more realistic by then although worried the prices are gonna get even more overinflated.

thequantofmontecarlo

Mortgage approvals for May at the lowest since mid 1990s.

www.theguardian.com/business/live/2020/jun/29/markets-nervous-covid-19-cases-news-uk-mortgages-facebook-shares-business-live?page=with:block-5ef9b2788f0811612711975a

It's almost as if something was happening in May which made it difficult for some people to go out and view houses with the objective of finding something to buy.

nice one @Mildura

Re the London flat vs house divide.

Most house sales in London are flats, not because people don't want houses, but because there are accessible to more people. To buy a £400K London flat, you need a combined income of £70-80k which is possible for people from a wide range of industries. For a London house that cost £700k - 1 million and up, you need a lot of equity and probably 6 figure salaries. However, this means that while the price fluctuations of London flats are more representative of the economic situation of the average Londoner, the houses are very much a 'luxury good' reserved for the wealthy who are far less affected by the pandemic. Also of course a lot of Londoners are moving further out, which is lowering the demand for flats. However, richer people can easily afford the overpriced houses.

THere was a report today about how 75% of employers are firing staff. This would have an effect on the housing market, on flats in London and houses in places where an average income can buy a house. I was hoping that the pandemic might lower the price of a house in my area so that it is less than a million, but my worry is that the people who can afford a million pound house are probably not going to be in financial distress.

@Desiringonlychild my worry is that the people who can afford a million pound house are probably not going to be in financial distress

House prices of £1M+ doesn't necessarily mean the current owners have six figure salaries or have significant equity (unless it was bought recently). We've been looking at Finchley Central area and every house we viewed thus far was bought years ago for 300 - 400k.

The owners, some of whom we've met, are regular folks, not six figure earners, and were actually moving out of the area because they were being priced out and needed a bigger property.

The current market conditions would affect them as well and, in some circumstances, it could lead to financial distress. It doesn't matter if the house is "valued" at £100M, if you're unable to make your monthly £500 mortgage payment to the bank, it will be taken from you. Extreme example but I'm sure you understand the logic.

www.nationwide.co.uk/-/media/MainSite/documents/about/house-price-index/2020/Jun_Q2_2020.pdf

Houses selling quicker than ever where I live in the northwest. 2 freinds in the middle of a chain when lockdown started are now due to complete in the next few weeks.

It appears a momentary pause in the house market rather than a plummet at the moment. Not sure where we will be in 6 months but wouldn't be basing opinions on mortgage stats from May 2020 that's for sure

@newbie111 and @Desiringonlychild

I see what is meant by new owners maybe requiring 6-figure salaries and/or high equity.

However, I'd agree with newbie that not everyone owning a London house now worth £1 million is wealthy. There are quite a few London homeowners who bought decades ago, way way before the London property boom.

I'm probably not the only person who has plenty of anecdotal evidence of older family members who own London houses that are worth over £1 million - but they are regular people, who had regular jobs, who just bought their home a long time ago. They either didn't move or if they did move they sold for top dollar so they could afford something a bit swankier or in a nicer area than before.

Often, their outgoings (what its living in London) tend to still be quite high. Except, of course, I remember a few years ago when the the family members in Westminster told me their council tax - it was the lowest I'd ever heard of! Think Westminster council are changing that though.

Anecdotally the property market is pretty busy here. Could be pent up demand but who knows

House buying is a hard thing to do for most people.
Thinking back to the crash around 2008, we seriously considered moving but decided to improve our house instead by converting the loft space which once the market started to move again proved a good investment and gave us extra space - it was costly to do at the time but did a lot of it ourselves ( took a little while to complete however ).

@ChocoTrio I actually never understood how living in London is more expensive apart from the cost of property. Surely its cheaper in many ways. my MIL owns a london house worth 700k, her council tax is £1483 per annum (which is in line with UK average). She doesn't run a car even though she raised 4 kids in London. I pay £150 per month for a zone 1-3 travel card which is cheaper than running a car. In London, you have supermarkets within walking distance so no need for the car, just a £15 granny trolley. You have Lidl, Aldi and ethnic supermarkets within a reasonable distance so you can really shop around if you are on a budget. Buses are £1.50 and we have hopper so you can go to many places with just a bus. Surely, fuel, water and internet are the same across the country. Entertainment can be free (museums), there are £10 classical music concerts at Conway Hall.

There are a lot of cheap restaurants in London. £10 per person is plenty at the vegetarian indian restaurants at euston. There is so much choice and competition, as opposed to a small town.

Childcare is more expensive in London (though I do have family here). However childcare isn't really for a very long time. The difference is that in London you are constantly reminded that there are many people richer than you and psychologically that might induce people to spend more in an effort to shore up their self esteem. in a small town, perhaps there isn't that level of inequality so you are happier with less. But as soon as you recognize that you are a small fish in a big pond, its easier to live frugally in London and still enjoy the city.

@Desiringonlychild - good question.

The like for like data of prices of things in London versus outside-London shows that London is more expensive. A long time ago, I was told that you can tell how expensive a place is compared to other parts of the UK by the cost of a pint - it's a good litmus test apparently lol . Just did a google search and London comes on top, followed by other places I'd consider affluent too (Oxford, Edinburgh etc) - www.savethestudent.org/news/the-cheapest-place-to-buy-a-pint-in-the-uk-revealed.html

It seems like it's the knock on effects that make London more expensive for people. So, rent/land price is higher, meaning a business needs to cover their overheads through their products being a bit more expensive than if they had a business outside London etc.

Both of us are only talking anecdotally, of course.

You've given some great examples of free or cheap things going on, but sometimes (not always) you do get what you pay for. Free museums/art galleries are great - no doubt about it! However, the extra seasonal exhibitions that you have to pay for are often worthwhile to get a more diverse experience/understanding (and they tend to be time limited, unlike the free exhibitions, too). Those extras can feel culturally richer for some people and worth paying for.

As for the £10 per person Indian place near Euston (sounds fantastic btw - what are they called?) - it might not be everyone's cup of tea etc. Then again, there are those vouch codes you could use for the chain restaurants that can feel like good deals - but even then some of the London restaurants are excluded from those voucher deals because they're prime locations.

In some areas of more central London areas they don't have many of the big supermarkets (land being at a premium) so local residents can end up spending more in the convenience Express/Metro/Local stores. The extra pennies add up. It depends on which part of London you are in - it's a big place after all. It's a bit better now with online shopping though.

I think it boils down to the London lifestyle being more expensive; having more things to do can usually mean a more expensive lifestyle. My family who live in London like to be able to fit in with what's going on and do social activities - West End theatre etc. So, it's the London lifestyle that can add up more so than other places, simply because other places don't usually have as much going on as London. And it's part of what makes London a great place to live - loads to do!

Housing is in very short supply. Because of this, I can't really see how they would crash.