Is housing market set to crash ?

[Moominsweetie]

Talk to me, clever people - what’s the outlook over the next 6-12 months?

No one knows. Maybe. Maybe not.

Might be a slight reduction, but don't think a crash is very likely at all.

I doubt it.

I’m not entirely convinced that it would be allowed to completely collapse to be honest.

I think we’ll see a correction perhaps back to 2020 prices pre the SDLT waiver, when uncertain markets meant a lot of people out plans to sell or buy in hold for a bit. But overall demand is still in excess of supply, so prices are unlikely ever going to tank. People who desperately need to move, or are forced to sell up because their mortgage payments have become unaffordable when their fixed term runs out and they’re having remortgaging at higher interest rates are going to have to price competitively to appeal to buyers who are also looking at higher mortgage payments then they were a year ago and so will be less able or willing to pay inflated prices. The rest of us will just absorb higher costs and / or stay put if we don’t need to move or remortgage for several years.

What’s SDLT please ?

Stamp duty - was waived for a period of about a year in 2020-21 and has just had the thresholds changed temporarily in the last mini-budget.

I thought this was a permanent/long term change?

I’m trying to work out when would be optimum time to repay some / all of an equity loan (help to buy ) , now or give it a while and see if market reduces !

I read it as temporary but could be long term, perhaps somebody else knows better: I’m neither selling nor buying currently or in the near future so haven’t looked into the detail.

Down down, deeper and down. The arse gas just fallen out of the market.
It will take months to see the fallout from last week and the forthcoming interest rate increases. Today, next couple of months, people will complete on deals already arranged so it may appear to be business as usual.

Time will tell, but I wouldn’t want to buy say a 500k house now when it could be had for 400 this time next year. People saying ‘long term doesn’t matter’ aren’t factoring in the interest payments on 100k over the next 25 years.

Huge increases in my area - up 43% in 5 years (SW) - is this the peak is the 10£ dollar question !

No one knows but the stock is low for the demand of houses so can’t see a crash. People will be buying in different locations where they can get mortgages. Compromise a bit or stay put. In prime locations the low sterling will attract foreign wealthy buyers even more. Tbh I do not see it happening at all.

I think there will be some repossessions. Mortgage rate increases plus cost of living increases just aren't going to be affordable for all.

If there's repossessions then usually property prices will start to fall.

Permanent change

Absolutely no chance of seeing that much wiped off the price of properties of that value on average.

It is important to take into consideration the economic situation in the UK. Demand is greater than supply always because you have limited stock. Price falls will be driven by people in financial distress but you would need a critical mass as seen in 2008 plus a destruction of bank’s financial stability for a similar crash to happen.

That’s not what is happening here. Banks are also not going to sell their assets at a loss. They would rather agree arrangements with the mortgagee than foreclose and make a massive loss. There will be distress sales but not enough to drive a crash.

Prices of good and services are also not going to crash. High prices are part of the new normal. When prices go up, they very rarely return to previous lower levels. Wages will rise to keep up with higher prices.

The government has also said it expects it’s economic plans to show fruits in 12-18 months. Fingers crossed that happens though I don’t hold my breath.

Demand WAS greater than supply, and banks only need to get their outlay back, the borrower is still on the hook for their part, or indeed, if the bank can’t recover their original outlay.
Example, the bank loans 180k on a 220k purchase, and it forecloses, the bank only needs to get it’s 180k back at the auction.
But supply is a massive issue. Governments need to stimulate, ie tax, undeveloped Land that has PP passed. Labour say they will build, but the government doesn’t own any builders, so I don’t know how. Hopefully their manifesto has some details.
Let’s see what happens. Tories are toast even if Liz Truss starts shitting gold bars.
The chicken of 20 years of near free borrowing and printing money is on it’s way back to the roost.

I agree we won't see masses of re-processions unlike last time when the banks got their money back via insurance so were happy for the houses to be sold for peanuts through auction. That's been regulated against now. so banks are more incentivised to help people find a way through.

I think that's very unlikely and would expect to see very significant falls in asset values. I also expect to see a big stock market/ financial sector collapse.
The main 'demand' is the availability of (cheap) credit. That has reduced significantly in recent months with multiple interest rate rises and rates are widely expected to continue to rise, probably a lot more. That will inevitably lead to defaults, particularly when combined with the cost of everything else (particularly essentials) going up. Banks will start to tighten their lending criteria and down value more. They have already raised rates this last week in expectation of more rises. Buyers confidence has changed, particularly in the last few days. There is nothing to suggest that wages will rise to keep up with inflation; the opposite has happened so far, on top of wage stagnation in the last 10 years already. The government will certainly be keen to keep the public sector wage bill as low as possible.
The Truss borrowing plan is never going to lead to growth. That's nonsensical.

The costs of mortgages just went up, meaning people can afford less. Less demand means prices will fall. For how long and how much is anyone's guess. Some experts saying between 10-20%.
I think 20% is unlikely but 10% drop in prices wouldn't surprise me.

Wages will not rise to account for inflation? Well how the mighty UK had fallen! Truly kingdoms rise and wane. Then welcome to a 3rd world country in a pretty short space of time. However, all across the country, even within government salaries are being negotiated to do just that - catch up with inflation. This is precisely why the trade unions are fighting and will eventually get those pay rises. The issue is not if but when. To avoid wage push inflation it is better if pay rises take a while to feed through.

I appreciate everyone is clairvoyant and knows how things are going to pan out but some assumptions and emphatic statements people are making are beyond strange.

Some people want to see this country collapse but that won’t happen.

What do you make of this?

www.lettingagenttoday.co.uk/breaking-news/2022/9/rightmove-tries-to-steady-housing-market-nerves?source=newsticker

What it says on fall-throughs is also interesting.

What sort of timeframe for 10% i wonder

If prices drop 10%, I think mid to late summer next year

I do think that prices will fall but I who knows by what % as nobody knows and it's pure speculation.

I read everything I can about this and it is really only those with a vested interest who are talking the market up now - housebuilders, estate agents etc

Other more objective sources appear divided on whether it will be a fall or a long period of stagnation.

I don't see how falls, however modest, can be avoided in the face of rising interest rates and a contracting mortgage market - people can afford less even if they stay in their jobs during the recession. Chains will collapse in coming weeks and months. People struggling to afford their existing home will be forced onto the market. People forced to move for work or due to relationship breakdowns will have to price competitively to sell.