Is housing market set to crash ?

[Moominsweetie]

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

Bank's will have absolutely no interest in becoming landlords.
That would entail employing people to manage the properties, and dealing with house fixes like a regular landlord.
If you think banks are planning to do that then you are living in cloud cuckoo land. Banks are all about the bottom line and cutting costs. That has made me LOL.

Can you point out a time in history when there was dead calm in the housing market, everyone just sitting on deck (ing) twiddling their thumbs and refusing to take lower offers?

Well you should stop LOL and try putting your brain into a gear that works, if someone already has a mortgage debt on a property they are just in debt to the bank for the property, they don`t have tenants rights the way someone paying rent to a landlord does? They still have to maintain the property they "bought" the only difference is that they are being given longer to pay down their debt.

Yes, these will not be more affordable to the average person just because they are cheaper. The % of income being spent on mortgages will still roughly be the same for the average person

You said that these people will be renting from the banks.
If you can't afford to pay your mortgage, banks will do everything they can to help people, but ultimately if they default on mortgages the houses will be repossessed.

This is denial captured, bottled, and frozen LOL. Price falls happen when one person in a street of similar houses (new-build estate in AnyTown) decides that they will accept the market price, the rest of the houses are now at the new market price whether they sell or not, and when has the UK housng market ever "stagnated" anyway?

"The % of income being spent on mortgages will still roughly be the same for the average person"

That isnt guaranteed, it isnt a uniform predictable process, interest rate rises, recession, cost of living etc. could cause prices to crash to a point where they ARE comfortably affordable at 8%+, maybe even cheaper than mortgage payments now at silly bubble prices.

Yes, but that is a figure of speech not a legal reality, they were always renting the MONEY from the banks, but that is another conversation, they are owners not tenants and just because they get repod for not paying the debt secured on the house it doesnt mean the bank has to fix the toilet.

Please explain your proposed scheme, because I think I could foresee a number of problems with it, that banks definitely would not be interested in.

@DeadHouseBounce I’m neither a teenager or a thirty something. You post on numerous threads, salivating at the thought of people struggling with their mortgages and trying to terrify them. That’s not serious discussion.

I am merely relaying my experience of living through a “crash”…when I was a 30 something. Doesn’t terrify me at all now that I have huge amounts of equity in my house and a substantial savings pot.

Yes, I understand what you mean and agree re OPEC/ BRICS being a concern for the US.
Regardless of the Fed, I wouldn't be surprised if we end up in deep trouble. We've had plenty of warning signs including events two weeks ago.

Depending on the level of defaults and other economic events, surely it may be in the bank's interest to keep these as assets on their books and take over a percentage of ownership which the householder pays them rent for with the option of buying back later. It wouldn't necessarily need to be renting in the usual sense but renting in effect.
Apart from their own balance sheets, if defaults are very high, the government would surely put huge amounts of pressure on the banks to prevent mass homelessness.
Btw, I am not a banker nor anything remotely related so don't ask me to design a scheme. These are just my thoughts.

No. It would be in the bank's interests to recover the amount they lent. They are not in the business of be owing landlords.
They could work with the homeowner to restructure the loan, but not take ownership and allow the previous owner to rent it off them.
If they cannot afford the mortgage, then how could they afford the rent?

"Doesn’t terrify me at all now that I have huge amounts of equity in my house and a substantial savings pot."

Fair enough, do you think people without this should be terrified though, basically anyone who bought in the last ten years?

"but not take ownership and allow the previous owner to rent it off them."

I don`t think anyone but you is suggesting this? "Renting from the bank" is a figure of speech, all I mean is that instead of renting the mortgage money from the bank for 25-30 years as is normal, they will basically have a mortgage all their life and would have been better off renting because then they could walk away from the house without any recourse.

Fine, you think they will go the traditional repo/auction route then? Will be interesting to see how that turns out, maybe the supposedly much needed social housing will eventually get built?

there needs to be a crash, I can’t believe the price of property at the moment. My neighbors house, which is identical to mine is on the market for £700,000. It’s a 3 bed semi. I paid £470,000 6 years ago for ours. It just feels like the craziest situation. Unfortunately some people will get burnt if the housing market goes crash, it’s just such a crazy and unsustainable situation all round.

Have they had many viewings?

Yes, I think that is exactly what will happen as has always been the case. It's fairly clear on the t's and c's that your house is at risk of possession if you default and can no longer afford the mortgage.
Some will have to tighten their belts, some will have to downsize and unfortunately some will lose their houses.
I do not see how paying for life would work at all. The term may have to be extended, but as I said previously that would just be restructuring the loan.

@Londongent

'No. It would be in the bank's interests to recover the amount they lent. They are not in the business of be owing landlords.

They could work with the homeowner to restructure the loan, but not take ownership and allow the previous owner to rent it off them.
If they cannot afford the mortgage, then how could they afford the rent?'

Surely it would depend on what they thought they could recover, the number of defaults and government pressure. One major problem is that we have a serious, chronic lack of social housing. I dread to think what would happen if people on mass became homeless, that's why I am considering whether this sort of thing might happen.

The government may have to act. A bank will only ever think about the bottom line.

Nope. Prices won’t fall much while demand is high and supply is restricted. And people won’t accept a low price that leaves them in negative equity unless they have absolutely no choice because their house is being repossessed.

In order for there to be a big crash there would have to be significantly reduced demand (banks not lending) plus lots of forced sellers (huge economic depression) and banks who are willing to repossess (which they will try to avoid if the houses will be worth less than the outstanding mortgage, because then they can’t get their money back). Oh and there also needs to be nothing more the government can do to prop up prices (which they will try to do because millions of people being in negative equity is a very bad thing).

In short, while there may be a couple of bargains it’s very very unlikely that prices will drop significantly across the board - and if they do then we are all royally fucked because of the broader economic consequences.

It’s curious that despite all of your arguments having been refuted, several times and by different posters, you keep on repeating them. Are you hoping that if you say the same things, over and over again, they might come true?

No, all that needs to happen is that mortgage rates go up to about 6%, then it is game over at these price levels.

@DeadHouseBounce so if the long awaited crash does happen, will you be looking to buy? I ask because that's the only reason I can think of why you'd be so invested in this.

BTW I'm one of the 'sheeple' who's just helped to prop up the 'ponzi scheme' for a little while longer. Soz about that I'm alive to the risk of a dip/correction over the next few years, but if we had delayed by literally one more day (never mind a year) any saving we made on the house price would have been more than wiped out by the interest rate rises.