Is this the start of the house price plummet?

[Home2018]

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 always find threads predicting big job losses a bit concerning - the only situation in which house prices seriously crash in the UK is linked to large scale job loss and then there will be more losers than winners.

@potterspotter huge job losses isn't a prediction, its a reality. There would definitely be more losers than winners. But some of the previous posters are FTB. They could potentially gain from this crisis with a decent deposit. Better some people win.

Its unfortunate I bought last year, but hindsight is 20/20.

@potterspotter I don’t think anyone is celebrating here, in particular I’m very concerned for the outlook of our economy. Unfortunately house prices which a lot of people rely on for their pension are going to take an unprecedented and catastrophic hit.

First time buyers are also the most likely to lose their jobs - people under 40 are true worst affected by unemployment. I can’t blame people who fancy their chances holding onto their jobs and finally getting into the housing ladder, a decent amount of house building would be a better solution.

It's clear that the house prices will drop but as previous posters have already said - even if you understand that it'll happen it's still hard to benefit from it and not many people will.

We are FTBs hoping to progress the purchase when and if we're able to but only because we're planning this to be our forever home.

I don’t think anyone knows who will lose their jobs and remain unemployed and who will just go back to work.

The amount signing on for UC and the government’s furlough scheme sounds disastrous but as soon as this is all over a good many will be going back to work.

Only then will we see the true extent of the unemployment.

I know we are all in UC atm and dd is on the government self employed scheme

As soon as this eases we can all get on with our life.

Will they all be going back to work though? In certain sectors of hospitality & travel sectors I'm not sure the demand will be there.

I see those sectors shrinking massive personally.

“Brexit is a fundamental adverse affect to the UK economy and that didn’t have a serious sustained effect”

That’s because we’re still in a transitional period when everything exactly the same as pre-Brexit. If we don’t extend this transitional period or agree a tariff free access deal, then come 1st January 2021, we’ll find out exactly what what the impact of Brexit really is.

And who works in hospitality and travel? Majority younger people, it’s not conjecture, youth unemployment is already hardest hit.

We moved into our house on the 28th of Feb so before we even knew a lockdown was going to happen. Thankfully our mortgage is fixed for 3 years. I am just hoping the house prices will right themselves in that time.. otherwise I have no idea what will happen?

I would definitely try and get out of buying now or try and get a better price if I was buying now.

at present we are in a catch 22 situation my partners mom died in December in a care home when she went in we got a tenant for her flat, (Essex)when she died and we were going to sell it he was going to buy it then he spotted one in the same complex cheaper but not as good as hers, so we gave him notice so he could buy the other one and move out when his sale went through then lockdown happened so he is still the tenant till he can move, just hoping the price of the flat wont go down too much as there are five inheritors, the care home ate £170000 of her money over two years it would be a shame that her wish to leave some money to her heirs will be decimated further by corona virus

If I'm going to pay money to a landlord or a mortgage company, I'd rather it was a mortgage company.

@sbplanet

Agreed, when I think about how much money I spent on rent over the years it makes me feel sick. I would rather be paying off my own mortgage on a house that yes might temporarily lose some value, but will more than likely recover, than pay someone else’s and be left with nothing at the end of it. At least once your mortgage is paid you get to live in a property for free (excluding bills and maintenance etc obviously) and have an asset, with rent you will pay for the rest of your life and gain nothing.

I don’t see how anyone can claim they’ve saved money by paying thousands and thousands in rent over a few years despite just to make a relatively modest saving when they do eventually buy a house. I’m not advocating buying a house in an extremely uncertain economy like right now, but people have been advising to not purchase property for the past few years due to brexit, now it’s Covid, how many years until it’s a “good” time to buy? And how many years of money spent paying someone else’s mortgage? 5? 10? 15? How much money will you actually save with inflation?

Renting can save you money if you end up having to sell after 5 years or less as happened to us when we were younger - mostly it’s worth avoiding renting but not always, sometimes you need to move a fair bit in your 20s etc for job reasons.

sbplanet

I take it you have never been in negative equity!! Very upsetting to no your home is worth 20% less then you paid for it.

If I was a first time buyer I would be trying to get my rent lower at the moment, then try and buy later on in the year, the market is definitely going to crash, and we have not had the BREXIT shambles yet!!

Are people actually doing the numbers with the assumed mortgage is better than rent stance?

A poster above said their mortgage savings would be £700pcm vs rent.

Let's assume, best case scenario, as widely being reported widely that houses take 5 years to recover, their saving would be £42,000.

If they bought at say £400,000 and saw a reduction of 15%, that's £60,000 not including fees.

Of course my numbers are based on very little, they could be buying at £200,000 which changes everything, but these boards have a lot of ftb's in London talking about numbers much larger than this which is utter madness.

I think flats and especially flats bought on the htb scheme in london since 2015 will get hammered... 450 for a new 2 bed flat when around the corner a 3 bed semi sells for the same price, that was utter madness and quite frankly stupidity, and unfortunately we the tax payers are on the hook for 40% of the loss!!

@Alexalee HTB is mad, as a FTB, i bought an old 2 bed flat. However in my area, the prices for terraced houses have been going down much more than the prices of flats. Cos the average price of terraced house is £800k and the average price of flats is £450-480K. flats are much more affordable. while the terraced houses are not affordable and for that price, most people can afford to commute and get a bigger place outside London. The terraced houses in my area tend to be 2 up 2 down. So it really depends on the area.

@Home2018 I bought my 2 bed London flat for £392K. I had a 70K deposit.

My mortgage is £1020 every month, the exact 2 bed flat rents for £1500. Even with service charges of £1700 per annum, its still cheaper. I dont have ground rent, and the residents own the freehold so we do have control over the service charges. Meanwhile my neighbour downstairs is renting and his landlord refused to fix his boiler so he ended up with no water for 2 weeks. When my boiler didn't work, i called a gas engineer the next day.

I guess it depends on the individual case.

Desperate to buy a particular house that the owner isn’t desperate to sell? Good luck negotiating a drop!

I reckon there will be a blip then it’ll return to normal in some places, though there are a few new build estates where buyers have loaned money from the developer as part of the scheme (my cousin has one) and that could be problematic.

I bought my house for £165k last year (3 bed semi in the midlands) we paid £800pcm rent for the same sized house in the same area on a worse street, my mortgage is just over £600 so I’m £200 a month better off for buying, that’s not counting that I’m now paying off my own mortgage not our landlord’s and will eventually own the house outright and be mortgage and rent free, but I also have peace of mind that I have a permanent home and can make it how I want it, which is invaluable to me, especially as we have pets so finding a good rental property was very hard. Our jobs are nhs frontline and very secure, so really made no sense to me to continue renting indefinitely hoping that house prices might reduce as we had a modest deposit and mortgages would probably then also become out of reach for us. I have no regrets at all and am not too concerned about negative equity as we plan to stay in this home for a long time and as we bought way below our affordability and have both had significant pay rises we could afford higher interest payments. I don’t think blanket advice for people to hold out for cheaper houses is applicable to everyone or makes financial sense to everyone as if house prices fall lending will become stricter and many people could miss out of home ownership through trying save what they’ve ended up spending on rent anyway.

Agreed, HTB is a dreadful scheme, the damage of which will also be coming to fruition in the very near future.

It's used to artificially prop up the market but what such measures really show us is that affordability at the bottom is an issue. This will be the cause of a crash.

Covid has only increased the rate and severity in which this has all come to fruition, but there is a cap on affordability, and with wages not rising, the idea that house prices wont correct themselves is quite frankly illogical.

People weren't saying Brexit was the cause, but they were saying it could act as the switch to start a series of events that is due to happen.

Especially, as we know the market is literally propped up by a government scheme based on yet more temporary borrowing.

How are you managing to find places where the mortgage is cheaper then rent? Is this London? I rent in Camden and if I were to buy this apartment, I’d have to pay around 40% more as mortgage each month. The logic is simple, my landlord bought the apartment 9 years ago and therefore, while I am paying his mortgage, I am paying his mortgage taken against the value of the house back in 2011. Also I don’t have to worry about building insurance, maintenance costs etc.

I’m also looking to buy in Finchley and it’s the exact same case there as well (we are going to rent for the next 6-12 months given the current market before buying). Houses are renting for much lower than what I’d end up paying in mortgage in every single instance!