Property Crash

[Etiquetteworry]

I'm is there likely to be a huge crash in the property market? Looking at the news last night it seems we're heading for a recession. Am I mad to be looking for a more expensive house at present?

Just been on phone to a mate who lives in Bath.....houses flying off the shelves there.....

I live in an area known to have its own "property bubble", due to outstanding schools and easy commute to town/motorways/countryside. The market here is really powering along.

My next door neighbours have just gone back on the market with 21 viewings booked, 8 of which took place today.

The market in Manchester seems even quicker than before lockdown. Anything nice is selling in a couple of days

If you're moving from one house to another it doesn't matter whether prices go up or down. Prices go up you'll get more for your house but pay more for another. And vice versa. Unless different areas trend really differently or you're massively moving to a different price bracket. We're looking to change from one £400k house to another so it makes no difference if they are both £300k or £500k by the time we sell/ buy.

I just can't see prices dropping significantly, particularly for properties in a good area. I think they will stall, and fall back a bit, but no huge drops. There's just not enough supply, a large population and low interest rates. I've seen the attention grabbing headlines, but as a previous poster said, they don't translate into large price drops.

I do think that certain properties will be harder to sell, particularly as working from home (at least partially) could be more popular. That city centre, slick open-plan flat may be a lot less appealing than a small house farther out, which has enough garden space for a home office. The slightly run-down 3 bed terraced house down the lane from me has just gone to best and final offers, the garden is huge, and I know the estate agent dealing with it - 3 couples who viewed it were looking for somewhere they could build an annex or home office. We are rural south east.

What until Brexit shit hits the fan. No Deal is going to screw the economy.

House price will only drop if people force to sell due to loss of job. People can't afford the mortgage payment. Nobody is willing to sell in a loss if they still can hold on until economy recovery.

The key factor to decide house price drop is high unemployed rate. People bought the house early this year or last year pay overpriced property, then come across the redundancy, can't find another job in current recession climate, then they have to sell in a dropped price.
Furlough & mortgage holiday only delayed the impact on the house market.

Of course above doesn't include the old people downsize or inherited property, people can still hold the price waiting years for property market bounce back.

I think first class property will sell at the right price. There are plenty of people who don’t get overly affected by recession. NHS employees for example. Teachers and many state employees tend to keep their jobs. It’s not all doom and gloom.

Anything obviously overpriced, not in a great location and presented badly will not sell.

@serenada so for ftb (sorry to butt in) when would you recommend? 2022/2023 for the dust to settle and see where we are?

Don't make the mistake I did it. I was consistently waiting around for the 'right' time. If you can afford it now, I'd go ahead and buy. We'll get to 2021 and then there will be another reason to delay (brexit etc) and you'll find yourself stuck in a rut. I spent 4 years waiting for that bargain to fall into my lap. Whilst I feel I did well with the flat I ended up purchasing, I can't help but feel I'm no better off for waiting (aside from bolstering my deposit but I also had to spend on rent during this period so it's all relative).

@WowLucky There's a house a few doors down from here that went on the market at £700k in Feb and has just dropped to £650k. Now, in my view it was always over priced but that's a significant drop.

If it was overpriced by 50k, it's hardly a significant drop.

@WowLucky that's only a 7% drop, and if you felt it was overpriced to start with it really isn't a significant drop.

@Smallgoon

Well, funnily enough, I feel secure now - whereas I didn't in the past - nit just in terms of job but in other ways so, yes, if it was within reach, I would buy now - subject to clearing debts, saving deposit, LTVs changing.....

@serenada I guess my advice would be to try to purchase sooner rather than waiting until 2022/2023. That's a long time away, and you may find that the housing market is not too different then than it is now.

and (I may have asked this before) but my first thought is to clear any debts but I am starting to think don't worry about that so much - just build up the deposit and try for the mortgage and see what they say.

I think it will drop not crash & then stagnate.

Loss of jobs, impact of more people remote working long term, likely more wage stagnation which was a legacy of the 08 crash.

I would approach it from the pov of buying what works for you & that if possible future proof. I think the days of increasing the equity by 200k in 3 years are gone.

Nobody is willing to sell in a loss if they still can hold on until economy recovery.

That presumes everywhere is in the same position though. My area of London has had stagnant prices for probably 6 yrs. They are toppy but the ceiling seems to be reached & one issue is that some can sell for " less" because of when they got on the ladder.
For example neighbour A bought his home in 2018 for 1m so he thinks I won't sell for less than that. However in the terrace next door Mrs B bought in 2010 & has 700k of equity so will take that offer of 900k.

tbh I think prices in many parts of London were already stagnating before Covid & lots are stuck on the ladder.

@serenada Depends on what sort of debt you're referring to. How far are you from clearing it and what does it relate to? Clearing debt is probably not a bad idea, but if you can get yourself into a position whereby it's manageable whilst also being able to save, this would be a good option. Bear in mind that outstanding debt can affect lending criteria too.

The only debt I had was student finance, which wasn't too problematic for my lenders.

Are you renting currently?

@minniebinnie I would approach it from the pov of buying what works for you & that if possible future proof. I think the days of increasing the equity by 200k in 3 years are gone.

I think this is good advice. I was looking to buy middle of last year, at a time when there was talk of a property crash hitting due to brexit negotiations stalling. And this was the same advice given to me by a trusted friend who is a keen investor. I'd found a property I liked but was panicked about putting an offer down due to all the talk of a crash coming. His advice was that if I felt I was bagging myself a good deal, that I should go ahead and purchase. But if I felt my offer was an ok/fair offer albeit towards the top end of my budget, then perhaps I should sit tight for a while and see how the market played out.

@minniebinnie tbh I think prices in many parts of London were already stagnating before Covid & lots are stuck on the ladder.

Agree with this too. I've mentioned this on several other threads, but in London in particular, I've felt that properties go onto the market at an overpriced rate in any case. People really do believe property in London is a goldmine, and therefore why wouldn't somebody be willing to pay £50-75k over what the property is actually worth...?

i bought my property in 2003, i honestly tell you even that time people were talking about the house crash.
one thing, make sure your property isn't overpriced at the time of purchase and get on with your life.

I wouldn’t buy at the moment. The country is in economic limbo and we need to get back to some degree of normality to assess how badly Covid has impacted us in its wake.

I was very lucky in 2008 to sell a property at the peak. The house I was buying fell through so I moved into rented accommodation to stop a long chain collapsing.

It depends what you are after. Myself, I have always seen properties as money makers so I like to get them below market value. I’ve stuck letters through doors of houses I am very fond of with my details saying if you decide to sell in future let me know. That has resulted in a house purchase.

The house I’m in currently was a great buy. It was on the market about £100k too much so didn’t have many viewings. I kept my eye on it and a year later the couple were now at war and accepted £200k less. Sadly you win some and you lose some as I’m now splitting from my partner and we’re having to split what we own. Pre-covid we would have been putting them all on the market.

If you can I would say hold back. What’s a few months of waiting? I know people that bought at the peak of 2008 and have been in negative equity since.

We’re trying to buy and prices are going for above asking round here (argh). So if it’s coming, it won’t be for a few months.

It will surely be starting to bite in a year when the effects of a recession and lots of redundancies
There may well be a wave for the moment with all sorts of deals and the vested interests all trying to ramp it up
Just look at the devastating effects that this virus has already had on our economy and then ask yourself honestly if you think prices will not drop in the next few years ?

Myself, I have always seen properties as money makers so I like to get them below market value.

Herein lies the problem.