Is housing market set to crash ?

[Moominsweetie]

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

As you have replied to me specifically, what is it that you are trying to point out?

LOL HousePriceCrash Forum. Sounds like a place to go to find credible sources of info. 😂

Less demand will in itself only cause a fall if supply doesn't shrink at the same time- some peopel will decide this isn't a time to sell. Supply and demand changes can go in the same direction as each other, or in opposite directions. I think the fall, if there is one, will be most likely driven by lenders lending less overall because interest rates are high and they will deem buyers not to be able to afford to borrow as much at the higher rates.

I think the fall, if there is one, will be most likely driven by lenders lending less overall because interest rates are high and they will deem buyers not to be able to afford to borrow as much at the higher rates.'
This section of what you have written is how supply and demand works.
Demand is based on access to affordable credit. As potential buyers are able to afford less and banks tighten their lending, the 'demand' will dry up.
Some people may decide not sell but quite a lot probably will including landlords and others on interest only mortgages, some distressed sellers and those selling due to death, divorce or needing to move for another reason.
In any case, the house prices are highly unlikely to bounce back this time as there are no more significant levers to pull and the UK does not have the economic fundamentals to support house prices at these levels (without access to super cheap credit, etc)

Where to start with this?

Why do you think that prices rebounded after the 2008 financial crisis? It couldn’t have been because of ultra low interest rates/quantitative easing, could it?

Other posters have explained, eloquently and repeatedly, that asset prices are supported by the amount of credit available, and the affordability of that credit. Thatbfundamental economic truth appears to be falling on deaf ears. Do you genuinely think that a reduction in affordable credit will leave the value of your asset - your house - untouched? Because ‘too many variables’?

That your notions about wages preventing house price falls are wrong. The people who engineered the bubble knew exactly what they were doing, aside from loads of banker bonus one of the political side effects was that lack of wage growth was hidden or ignored as people got distracted counting their "equity"

Where do you find your information, SKY news?

There’s not much doubt that property prices will be coming down, as the thing that governs price levels is the cost and availability of credit, above all other factors.

how much they come down, how fast and whether that represents a crash will no doubt be fiercely debated for a long while yet.

But citing the HPC forum as a reliable source isn’t going to help your credibility. That is a group of people who have been largely incorrect in their predictions for about 20 years.

I have never said that they won't fall, quite the opposite. But I disagree with you that house prices will fall to 2008 levels (mortgage rates for then and now both averaging 6%). This is because average wages have increased since then.
Also because the buy to let market is bigger now and I suspect a rise in interest rates will force many landlords to sell and increase supply. Additionally a lower pound is going to attract foreign investors, increasing demand.
Also, the bubble was not engineered by a specific group of people on purpose. Cheap credit, meant people could borrow more, but mortgage repayments were still affordable versus income. Which is what drove house prices up.
You seem extremely keen for prices to fall. I presume this benefits you in some way. And, whilst I do think they will fall, I do not expect it to be the extent that you do.

Wasn't it the article on the HPC forum which was being linked? I don't think it matters where the article was found; the content of the article itself is what matters.

If prices start to fall, people will stop selling because they don’t want to sell for cheaper, and the market will stagnate. Big falls only happen when lots of houses are repossessed or forced sales, and in those economic circumstances most of the potential buyers can’t afford to buy anyway.

HPC forum is not credible at all. They’ve been wittering on about a possible crash for about 20 years now!

And what about the article the thread on HPC was linking to?

The thread title is misleading. The article says that the rise in house prices has been driven by low interest rates in recent years. It does NOT say that interest rates determine house prices. Yes, low interest rates caused house prices to rise. But that doesn’t mean that high interest rates will cause them to fall.

@Iamthewombat well, where do I start. You may think you are very clever with your condescending response but the point is that all houses will not go down by the same amount and some will recover more quickly than others. In 2010 when I sold my property there were plenty that hadn’t recovered. In fact, some took many more years to recover. There will not be a uniform price reduction across the country. Even within a particular area, it will depend on the house itself. So, yes, there will be many variables.

But that doesn’t mean that high interest rates will cause them to fall.

How can you have high house prices & high interest rates?

"Also because the buy to let market is bigger now and I suspect a rise in interest rates will force many landlords to sell and increase supply."

Wont increasing supply add to downward pressures on prices though?

A high wage economy. Wait……

Why do you think high interest rates will not cause prices to fall?
You are not following your own logic!

Yes. Sorry, I wrote that when I was tired. That was one of the reasons why I can see a fall in prices, but I can see that wasn't clear.

This post has it all:

Petulance

Spiteful attacks on cleverer posters

Lavk of understanding of economics

Denial

The conviction that the poster’s own asset is special.

(She’ll try to start a semantics argument over the use of the word ‘uniform’ next.)

The article says low interest rates = prices go up. It does NOT say high interest rates = prices go down. You cannot use it as evidence when it doesn’t actually say that.

And no, I don’t think high interest rates will cause prices to fall. Because pressures in a rising market are different to pressures in a falling market. In a rising market people want to sell and profit - there’s a lot of movement. Whereas in a falling market people don’t want to sell - there’s a lot of stagnation and government props up the market to avoid the negative consequences of price falls.

High interest rates don’t cause prices to fall significantly. High unemployment does.

tbf for those in secure jobs & with decent equity moving up the ladder in a falling market is easier than a rising one.

High interest rates don’t cause prices to fall significantly. High unemployment does.

Surely interest rates have to impact things. We bought earlier this yr & fixed for a good rate for 5 yrs. That same mortgage would cost me 300 plus a month more now & with the way other prices are going would mean if I was buying now I would just be looking for a cheaper house.
Plus surely higher interest rates can impact jobs as more income servicing debt will mean less in the wider economy.

So unless fundamental economic concepts are explained in that one, specific article, they don’t exist? That’s an interesting approach.

Surely interest rates have to impact things
They cause stagnation. People can’t get big mortgages and they can’t buy. Prices fall slightly. Home owners mostly refuse to sell at a loss so they sit tight and don’t sell. Stagnation results.