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/

Yes we are facing mass unemployment but with a .1% base rate it isn’t like other recessions

The one in the early 90s had people handing their keys back to the banks and building societies, not just because they had lost their jobs and couldn’t pay their mortgage but in some cases that both people were in f/t employment and still didn’t earn enough to pay the rising mortgage rate.

Yes prices will fall. How far and for how long depends on when this virus no longer poses a threat to the majority of people and so I think there is an almost finite time when things will start to turn.
How many will go back to work and how many businesses can recover and carry on is the question that will be answered as and when the lockdown is fully lifted.

For want of a better name there will be a recession but one like we have never seen before and hopefully never see again.

In the past in the run up to a recession people were out and about spending money people were buying and selling their homes going for bigger and bigger properties and prices were leaping ahead.
We have had 4 years since the Brexit vote where people didn’t know what the future held so prices were going down initially and there was an air of caution. People were a lot more careful in their spending

We “left” the EU at the end of January and I think people who had held on to see what happened realised the world wasn’t falling apart and they could no longer wait.

What ever the reason people were going to be moving as they couldn’t wait any longer and I could see that come the Spring for sale boards would have sprung up every where and property prices would have started to rise.

Instead we have had this virus and it has curtailed it all again.

Will those who need to move and have secure employment go ahead and put their home up for sale or will they sit tight for another year to see how things go

I foresee the number of divorces is going to hit the roof and family homes are going to be sold in order to buy 2 smaller properties

There are going to be a section of society who will put their house up for sale and move. How big that is remains to be seen.

There will be a section of society who just ride it out and sit tight. For a lot paying a mortgage at the level it is, even if someone is initially jobless is going to be less than paying rent and the upheaval of moving.

Dc work in a very niche market of hospitality.
Whilst the industry as a whole will struggle. So much of the work that dc do has been cancelled but it hasn’t been lost. The jobs that should have taken place in April/May/June etc are still going ahead but later. By the time they get back to work they will be doing the stuff that was booked in and the stuff that couldn’t go ahead and had to be rebooked so there is going to be twice as much work for a period of time.

And when it is all over there is going to be one huge party.

Then I see prices rising.

I wouldnt be surprised if there was some collusion to keep this going, ie payment holidays , extending help to buy to 2nd hand houses etc
This. The government does not want millions of home owners to be in negative equity. That doesn’t benefit the economy. They’ve already offered a payment holiday and other schemes to prop up house prices will follow.

H2b will likely be extended, but I think buyers will want to feel like they are getting a good price.
So much of the recovery depends on the UKs appetite to spend. In my case I personally don't feel like eating in a small pop up restaurant or getting a flight or watching a concert anytime soon which are all things I would do without a care previously. Wfh has also taught me I fritter a lot away on rubbish, I will definitely be mindful going forward.

All these house price crash chats are wishful thinking

I am sure prices will come down a bit but ultimately we still have a housing shortage, people have to live somewhere, unless a lot more houses are built they’ll remain very sought after and expensive

We are just about to put our property on the market. The estate agent is coming to take photos while we go out. We were about to do it when lockdown happened. We are continuing to try and move. I just need to hope for a buyer.

I took mine off (it’s rented out) just before this all hit (SW London) but only because it had been on 6 months and I’d had one derisory offer. It’s so cluttered as tenants have 3 kids so really need to get them out and give it a spruce up to sell really. However I found out I was pregnant again so didn’t want the risk of it being empty for months and me having to pay mortgage/utilities

Not planning to put it back on until start 2022 earliest and just hope tenants can continue to pay rent. But so glad I took it off and didn’t give them notice

I’m in the midst of buying (currently renting but not a FTBer) and I’m not asking for a reduction in price. My offer was under the asking price (albeit only by 5%) and I don’t feel there’s anything concrete yet I can use to justify reducing my offer - it’s all just speculation. I think the house is fairly priced for the area.

I’m in the SE and currently paying £1600 pcm in rent while my mortgage will be £400 (I have a low LTV). If I reduce my offer and the vendors walk away, not only do I lose my legal and survey fees, but over the next six months I’ll be spending an extra £7200 in rent (above what I’d be paying on a mortgage). Given my job is looking increasingly vulnerable, it’s a no brainer for me.

If I had a higher LTV, wasn’t in rental, or was taking a big step up in mortgage payments I would probably feel differently however.

I think a lot of people should realise how little emergency cash they had and take that into consideration when buying a house.

Once furlough ends I'm sure redundancies will kick in so people who thought they had a job won't.

It will be a strange time for a while where those who work in supermarkets, hauling, care home assistant etc - traditionally jobs that were perhaps looked down on - will be envied because those jobs will be secure. Not HR, marketing etc.

Dh and I were talking of moving this year but we just didn't know where to go. We'll now stay put for at least 12 months, but probably more like 2-3 years, to see what it all looks like post C19.

I think @SailingAwayIntoSunrise raises an interesting point - we, like her, had intended to move this year (house was under offer at start of lockdown, then our buyers (v low LTV, high salary, no chain) tried for a pretty hefty reduction which took property below current market rate - rightly or wrongly, because we don’t actually NEED to move - were only doing so as the ‘dream’ renovation project had come up - we decided to pull out and sit tight. Quite apart from anything else lockdown has made us recognise the value in where we are - well resourced far-suburbs of a large city, with a garden, and easily walkable access to miles of countryside. Obviously, and sadly, there will be an increased number if people having to move for financial reasons, but I’d hazard a guess that there will be significantly fewer people moving because they want to. So at certain ‘levels’ in the market where demand outstrips supply anyway I wonder whether these might level out to a greater or lesser extent and mean that any drop in price is minimal. This isn’t based on anything except my own postulation but it will be interesting to see.

A few things will happen and none suggest that it will be a buyers market with cheap properties flooding the market.

House prices will fall. When house prices fall, people don't sell if they don't have to so demand will be high but supply will be low which in turn will push the prices back up at some point.

Mortgage companies will lower their interest rates but be less interested in risky borrowing so no 95% or 90% mortgages so less likely for a first time buyer or new buyer to have the initial funds to buy.

Banks have just lent billions of pounds to businesses on low interest rates pushed by the government. They won't want to lend, especially on low interest rates so criteria will be strict. Again, less likely for the average Joe to be able to obtain a mortgage, especially those on a reduced income or have had spells of unemployment over the pandemic.

The upper hand will be with people that have paid off their mortgages or are very near to the end or cash buyers. They will have their pick of the limited market so we'll probably see a lot of property developers buying up any houses that have to be sold due to death/divorce/repossession.

Once things even out a bit and the mortgage lenders feel safe to lend again but the house prices haven't quite recovered so people don't feel safe to sell yet, we will have a situation where maybe only one house comes up for sale in a desired area with lots of interest. Insert bidding wars/the seller being able to maximise what they get for their house.

This all happened right after the last recession, well within a couple of years of it. Rent was high, house prices initially fell then shot up, mortgage rates were low so home owners could hold onto their properties so we had years of it being a sellers market.

If you own a house, don't worry.

If you own a house, don't worry.

I own a house with lots of equity so i'm not overly worried. However when we come to move I certainly won't be paying top end, & certainly if I pay less I'm happy to sell mine for less.

Oh look, another thread on the impending 'crash'.

I'll admit I expect a small fall. If it worries you then don't move, or buy if you're an FTB. I very much doubt that any fall in prices will be that dramatic; they'll dribble downwards for a bit and go static and then back up equally slowly. There is chronic shortages of housing so the market will be pretty resilient; the slowness will almost certainly impact the estate agents though. Shame...

This all happened right after the last recession, well within a couple of years of it. Rent was high, house prices initially fell then shot up

That is true only if you were in London or SE part of the U.K. The rest of the U.K. it took longer for house prices to recover to pre-2008 levels. Some parts of the North still had not fully recovered before COVID hit.

@PlanDeRaccordement is right & it was supported by slashing the interest rates.

My toppy area of London has seen price stagnation for years because people aren't gaining equity like they used to.

Everyone was expecting a crash around the referendum for brexit - we had a few weeks of uncertainty and exchanged at the previously agreed price.

I don’t think anyone really knows what will happen.

Yes we also want to move this year or early next due to new arrival (luckily don’t need to sell my rental property to achieve this) though we don’t NEED to move. Our house was due to go on market now but we are holding off until Jan to see where matters stand. If we don’t move we have £200k equity in our current home so not too worried and we can stay here and re-configure - we just wanted to buy our dream home. Ultimately we’d like to move before Sept 2021 as that’s when we will be paying nursery fees for two which might limit a bit more what we can borrow.

But I’m thankful we have equity, savings and don’t need to move

@PlanDeRaccordement that isn't true. I'm in the North East of Scotland and house prices rose 20% between the end of the recession in 2009 to 2013. We bought in 2014 for way beyond what our house was worth because we were in a position to buy, there wasn't a lot of choice, lots of bidding wars and rent was so high that if we waited any longer, we would be wasting on rent rather than paying a mortgage down so we opted to buy in a sellers market. We were only in that position due to inhertience though.

Since then, house prices have fallen in this area due to the oil crash. However, our mortgage advisor has said to sit tight as she can see what happened in 2013/2014 happening again in the next few years

I don’t think anyone really knows what will happen.

I'm pretty sure my 1.1m ish terrace won't be worth 1.5m in 5 yrs.

I don't think this will happen. I think it's more likely that there might be a very short term mini dip (Brexit uncertainty had contributed to this already a little) then a period of stagnant prices, then a gradual rise.

@PlanDeRaccordement That wasn't the case for the SW, prices briefly dipped then rose quickly.

Brexit is a fundamental adverse affect to the UK economy and that didn’t have a serious sustained effect. This recession is the result of a virus restricting demand and production - it’s unprecedented.

5 years is a longish horizon for prices to gradually ebb, that’s not a crash.

It's hard to know how much the people stating the crash wont happen etc is cognitive dissonance.

We know that the media don't speak about things like a crash until it is almost certain (so not to affect consumer confidence) and bodies like the BOE and the IMF certainly do not.

If our economy has an expected retraction as OPENLY stated (it could be worse, the BOE has used inside data like unemployment benefit applications and applications for mortgage assistance etc.) how could house prices not be affected?

Its different to Brexit as we never saw the economy retracting and actual job/business losses. We have seen that already, and when the market 'opens' and the furlough scheme winds up, that is only going to grow.

Would people really instruct thier own first time buyer children to enter the market right now?

Obviously its impossible to predict how much houses will drop, but when this started the media (well Knight Frank specifically) communicated numbers of 3%. Obviously that should have been taken with a massive pinch of seeing they have vested interests. Other business and bodies have been creeping that figure up to the 15%ish mark.

Since the BOE have made their statement, it seems crazy to me that people are still going with their previous stance and previous offers.

In London, 15% on the average house is over £100,000. Negative equity on numbers like that is no joke. Have people considered that every penny they throw at their house thereafter will be a technical loss, and that they will not be able to move until prices rise again.

Economists are talking about a depression, not a recession, and the V shaped rise is now spoken about as being ambitious. A 'U' is currently our best bet, but an L is increasingly possible, especially if we face another lockdown period.

Property isn't the 'safe' bet that people blindly believe it is. Be wary of people repeating such unevidenced statements. For a lot if people it is, in London that has become most, but every so often a correction happens and the people that buy just before loose massively. That period is now.

In the last 35 years we have seen two periods of massive price drops and even in London, there are people who have still not recovered from the last one. We are approaching another period like this again but this time ALL of the economists and finance experts are singing from the same hymn sheet based on data that already exists!!!

It seems to me people are being led with their hearts rather than their head, and I suspect a lot of remorse will settle in within weeks!

Plus, banks will not be holding onto the valuation prices before entering lockdown so I think we'll find a lot of disappointed sellers. For those buying and selling it should make little difference unless they're already in negative equity.

I understand those concerned about not having a mortgage offer if the banks tighten their lending, but you need to think this out over the long run. I would seriously consider calculating 20% (min) of your property value by your monthly rental savings (difference between mortgage and rent payments per month) and see if you'll be saving if you're in negative equity over 5-10 years.

Yes some people do not need to sale, but people pass on, people divorce, people do (and will unfortunately) loose income and some people just pass the loss up the chain. House sales will not halt over the next 5/10 years as people adjust to the new values, so I would say to anyone who will be facing negative equity wait. You will almost certainly regret it if you dont.

I think what's potentially different this time is that there will/could be a lot of people loosing their jobs and unable to pay their mortgage or rent.

I believe the only help you get if you go onto benefits is support with mortgage interest and this gets paid to your lender.

If people cannot pay their rents and landlords will not reduce rent etc then we could end up with a lot of homeless people and a lot of landlords with no tenants. If they decide to sell then we could see a flood of properties onto the market, provided of course that they need to sell.

Housing will continue to be a massive issue. The council will not help you unless you are actually homeless. You cannot go and say that your landlord is threatening to throw you out, you have to have been actually thrown out.

Anyway sorry went off track there. It will be interesting to see what happens to new build prices as the developers will want to shift stock, I suspect we will see some discounting.

Worst recession in 300 years, nearly a third of the populations salaries being propped up by the government, and most furloughed jobs expected to turn into redundancies, and some people think prices will rise???! Even the estate agents who are ever optimistic on house prices are predicting a fall, I can’t even begin to imagine how bad this will be.

I think rent will go down, but in London it had got insane. Above, someone has stated that landlords won't lower rents and then people will become homeless and landlords won't be able to get tenants? Landlords will have to lower rents to what people will pay. Lending to landlords should have been reduced since 2008 so that LLs have to have more equity. The government may have to roll back some of the changes they made to taxing all of the rent with no regard to mortgage interest being paid - but they may well do this rather than risk the scenario of millions of bankrupt landlords and suddenly homeless people. Even shit landlords are better than none to the government right now, because otherwise the government would have to house all those people.

They should NEVER have sold off the council housing!