House prices and recession

DespairingHomeowner · 09/03/2022 16:54

More likely they will stagnate & anyone who can avoid moving will do so, meaning fewer properties are on the market

This is what happened c 2008 in London , I was a child in earlier recessions so cannot comment

What I can say though is it was CRAP and wages stayed surpressed for the best part of a decade so I don’t see this as a good thing

Roselilly36 · 09/03/2022 16:56

@Mumof22020

Whats everyones thoughts on house prices are they likely to come down in price if theres a recession? The prices are crazy at the moment and with the cost of living going through the roof we're surely going to hit a recession.

I think there will be an adjustment, research what happened to the uk property market in the early 90’s. I remember it well, absolutely horrendous time.

lorking · 09/03/2022 17:01

Stagnate is more likely although I guess it depends if people lose their jobs/interest rates keep going up. Who knows

lorking · 09/03/2022 17:02

We have sold but our moving in with family. We will still buy but will not be extending ourselves at all which we would have done last yr.

MiniDaffodils · 09/03/2022 17:04

No I don’t think they will drop. Just stay as they are. People will still need to move and there aren’t many houses around.
Perhaps people will buy a three bed whereas they might have tried to stretch to a 4. Or maybe look at cheaper areas so they aren’t overstretched.

TheYearOfSmallThings · 09/03/2022 17:09

I've been thinking for all of my adult life that house prices were overdue for an adjustment. But it just hasn't happened in London, and I no longer believe that it will. The market just stops, waits, then picks up again. Interest rates are no longer allowed to force sales.

Even where prices really plummeted in 2008 they are now worse than ever (Dublin I am looking at you).

FinallyHere · 09/03/2022 17:11

what happened to the uk property market in the early 90’s.

I sold a jointly owned house and bought one by myself in the very early '90s.

There were a few scary moments when our buyers reduced their offer, I think, two or three times. On each occasion, I passed the info onto the people selling g my house. Each time they agreed to split the difference. No impact on me because I was sharing the selling price with exDP and then sharing the buying price with the person I was buying from.

Not ideal, but not the end of the world. I stayed in the house for ten years and the price went up significantly in that time.

I knew of people in negative equity riding out the storm. Others in negative equity, whose relationship had run its course and wanting to split up, but stuck together in a one bedroom flat. They had to take the hit.

In those days, 100% plus mortgages were not unusual, so it was possible to wrap up your equity loss into the mortgage for the new house.

Still better value than renting over a decade or so.

OhMygodddd · 09/03/2022 17:13

They will never fall enough for a standard Joe bloggs to buy with a standard job who doesn’t have a substantial deposit so I wouldn’t hold your breath as people have been saying a crash is coming for atleast 20 years now and it never does, once prices stayed the same, but they didn’t fall. Houses will always be expensive

lorking · 09/03/2022 17:13

In my part of London which was expensive to begin with prices haven't changed much since Brexit once you factor in SD & other costs.

RitaFires · 09/03/2022 17:30

In Ireland we had a massive crash in house prices after the global financial crisis in 2008 but it took til around 2014 for things to hit rock bottom. While houses got cheaper, banks were very restrictive about lending so the ultra low prices only really benefited cash buyers.

I'm not expecting things to follow the exact pattern if there is a reduction in house prices, but I wouldn't expect it to be quick or to make things very easy for people looking to buy.

Original poster

Mumof22020 · 09/03/2022 17:57

I thought if there was a recession the house prices would drop, would this not be the case?. I was speaking to a friend about this and they said the house prices could possibly fall around 20% are they being daft?

OP posts:

lorking · 09/03/2022 18:00

They could fall a bit but I can't really see 20%. A lot of people will have that much deposit/equity so won't necessarily be forced to sell. Although if rates rocket they may have no choice & if people stop spending this will hurt some people's incomes.

The gov don't have the option of slashing rates like they did in 08 though so actually I don't know what will happen tbh.

RealRaymondReddington · 09/03/2022 18:19

I doubt they will fall, they may slow for a while but demand will still be there and supply will continue to be challenging.

lorking · 09/03/2022 18:22

A lot will depend on interest rates

lorking · 09/03/2022 18:22

See what the bank does in March

lorking · 09/03/2022 18:31

We've also not had the NI rises yet

thinking123 · 09/03/2022 18:39

People have been saying "houses prices will fall by 30%" for the last twenty years.

I remember in approx 2002 there was a woman on a panorama type show, she had sold her house and was moving into rental as she was certain prices where about to fall through the floor and she would be ready to snap up her dream
House. I often wonder what happened to her

ToExtendOrNotToExtend · 09/03/2022 19:35

I started house hunting early 2019, it was buyers market then because of Brexit, but there weren't many nice properties on the market.

I believed a correction was on its way because some people would leave the country after Brexit. Then Covid started, I was certain house price would drop significantly. There was no job security, people lost jobs, income reduced, so much of uncertainty, etc. Reality was house price just started to drop, Govt introduced stamp duty holiday and the price went crazy...

Then I believed once the SD holiday ended, house price would fall. I have been proved wrong.

One thing to point out though, because of Covid and WFH, the demand of larger properties increased and larger properties are usually more expensive, which makes house price look higher statistically. House price outside London increased faster because many Londoner are moving out to work remotely. Prices of small flats in London did drop a bit.

If house price falls by 15%, that will definitely cause another round of recession, which means businesses shutting down, unemployment rate going up, etc. We all have seen how the Govt handled 2008 and Covid, they will introduce policies to stimulate the market again. How about another stamp duty holiday?

lorking · 09/03/2022 19:41

One thing to point out though, because of Covid and WFH, the demand of larger properties increased and larger properties are usually more expensive, which makes house price look higher statistically. House price outside London increased faster because many Londoner are moving out to work remotely. Prices of small flats in London did drop a bit.

This is a good point, I know loads of people who moved up the ladder because they stamp duty change meant they weren't stuck on the ladder.

lorking · 09/03/2022 19:41

How about another stamp duty holiday?

I don't think they will do this though

JesusInTheCabbageVan · 09/03/2022 19:50

@OhMygodddd

They will never fall enough for a standard Joe bloggs to buy with a standard job who doesn’t have a substantial deposit so I wouldn’t hold your breath as people have been saying a crash is coming for atleast 20 years now and it never does, once prices stayed the same, but they didn’t fall. Houses will always be expensive

House prices did fall by 20% on average in 2008, and up to 50% in some areas. I know London and the home counties escaped relatively unscathed, but the UK does extend quite a bit beyond London...

caringcarer · 09/03/2022 19:51

In last recession in 2007-8, which I can remember well house prices dropped a bit, like 5-8 percent. Then they stagnated for 2-3 years. Then by 2011 they crept back up again. People with negative equity could not move and some lost their homes through repossession. Interest rates have been lowe for so long now many with mortgages won't ever have paid high rates of interest. It will come as a shock to many if interest rates really go up steeply again. I think I read a few weeks back that base rate might go up to 2.75 by Xmas. But that is still low. I would advise anyone worried about interest rate rises to get a cheap 5 year fix whilst they are still available.

PeakyBlender · 09/03/2022 19:56

I remember the early 90s and think we could see the same with negative equity but hopefully not the repossessions we saw then.

It was a tough time for lots of people

RagzRebooted · 09/03/2022 19:59

I don't think they will fall, but I do think they will stop rising so steeply. I hope so, we are finally in a position to plan to buy in the next 18 months. However, interest rates are likely to rise and may make it unaffordable. We're lucky that we'd be buying the house we rent, so no competition.

thedarkling · 09/03/2022 20:13

If interest rates go up then people just won't be able to afford big mortgages, I think that may have an impact. We have a 400k mortgage and there's no way I'd think about increasing it right now. But there are also a lot of people trying to get on the ladder so I think the demand will be there at the bottom of the chain unless there's a steep rise. I reckon they may fall a little, but I don't think a crash will happen.