Is housing market set to crash ?

[Moominsweetie]

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

SKY running with this today........

www.cnbc.com/2022/10/04/mortgage-mayhem-sparks-fears-of-a-housing-market-crash-in-britain.html

........so are you hoping for a crash because you want to be able to buy? If so, you'll only stand a chance if you also have a large cash deposit.

I'm bemused too! I thought several people had explained things clearly.

Maybe he's busy browsing mansions on Rightmove

"you'll only stand a chance if you also have a large cash deposit."

How do you know this, can you predict the future? Banks might be perfectly happy to lend on a crashed market at 8-10% interest rates with a 10% deposit, why wouldnt they do this because most people wont have a "large cash deposit", are you saying that banks will stop lending on property in future? If we have learned anything since the 2008 crash it is that they will want to keep lending whatever happens!

Of course banks will continue to lend at that rate. Of course the scrutiny of whether you can afford to service the mortgage will still apply. And stress testing will be at a higher rate too.

As @Londongent says. I'm sure banks will continue to lend, just at a much, much higher interest rate.

I'm sure house prices will come down, but I can't see how they could possibly drop to a point where they are affordable for most people. If that did happen, it would be a real blink-and-you'll-miss-it crash, because everyone will rush to buy and that will drive prices right back up again.

But in a crashed market all this balances out, right? In past decades people bought property at reasonably affordable prices and paid a higher interest rate on the debt if they had a mortgage, it is the last few years that has been the blip with stupidly high prices driven up and then maintained by stupidly low rates (which have led us to the world of pain we are now entering)

Also bowled over by the irony of you asking me "How do you know this, can you predict the future?"

Pretty much ALL your posts on this thread are you making fantastical predictions for the future! And posting links to other people's predictions.

Not sure what you mean by balances out?
Will a house that is unaffordable to you now be affordable to you because of a decrease in house prices? Only if you have a large deposit.
You have to remember that the ost of your mortgage is going to rise significantly, even if it is on a smaller amount, it doesn't mean the amount you would have to pay out each month will necessarily be smaller.

I am talking about a proper correction, not 10k off an overpriced sky box or cardboard cut out new-build, someone who keeps their job and was stress tested at say 4% can afford an 8% mortgage on a flat previously for sale at 200k and now up for 100k. The bank will be very keen to give them this IMO, and they dont need to find any more deposit, the price crash has done the work for them. Even if the monthly amount you pay out isnt smaller (if rates really spike) you will have the debt for a lot less time, and be debt free much sooner.

My question to you was - Why would the banks make it difficult to borrow for people who keep their jobs after a crash? You still have not answered it.

Well, I imagine it'll work in exactly the same way it has for decades, through booms and crashes.

People on high incomes, or with a decent sized deposit (or both) will find it relatively easy to get a mortgage for a nice house.

People with lower incomes and a small deposit will find it harder to get a mortgage. Not prohibitively so, but they'll be able to afford a smaller mortgage for a less nice house.

And people scraping by on minimum wage will struggle, as they always have.

And you won't ever get a scenario where the majority of people can afford a nice house, because there aren't enough nice houses to go round. And there aren't any plans to build lots and lots of affordable nice houses.

Here is one from your go to source.....

news.sky.com/video/house-prices-overvalued-by-around-30-12717367

So do you seriously believe that house prices are going to halve?

I don't think they will halve but a 30% drop is quite likely IMO.

It wouldn't surprise me if there are drops of up to 30% for certain types of property in certain parts of the country. Particularly all those rural properties that shot up in value during lockdown.

30% off just takes the crazy rises of the past 3 years off tbh. So house prices will be back at 2019 levels where they were unaffordable, and so will remain unaffordable.
Unless you bought in the past 3 years you will still be better off

Its definitely stagnated where we are. We’re waiting to complete but there’s a delay further up the chain. The market here is mad - some houses have gone for 100+% compared to 2015/16.

When we offered it was crazy with huge open houses and everything going to best and final - we’ve been keeping an eye out in case our chain collapses it feels like there’s been a sudden change. Houses are staying up for much longer and more are being reduced. No more open houses, v flexible viewings and there’s also a lot more rentals coming up for sale. We’ve decided to stop viewing now because we’re worried about negative equity.

Our mortgage offer expires at the end of the year and we’re looking at a 60% increase on our repayments if we reapply. We can afford that and we’ll pass an increased stress test (we’ve both had a promotion this year and want to borrow less than 50% of our max) but we’re buying a fixer upper. Losing a chunk of our monthly savings when we need to pay for so much work isn’t hugely appealing so, depending on the market then, we might offer less.

If enough people are thinking like us and the reductions continue, prices could easily start to fall round here in the next few months. It’s so over inflated I don’t think it would take much.

"So house prices will be back at 2019 levels where they were unaffordable, and so will remain unaffordable."

Cant really see them stopping at 2019 prices with mortgage rates heading for 10%, something just doesnt work in your thinking there. I think SKY must have meant 60% surely?

The last crash was 30 years ago, the last time it wanted to crash was 2008, but that was stopped by massive money printing and zero rates, that is why this is the big one, it will be absolutley epic.

30% average. So 20% cheaper areas up north, 40% areas that have seen the most rampant speculation i.e. London suburbs, SW and SE.

30% off just takes the crazy rises of the past 3 years off tbh. So house prices will be back at 2019 levels where they were unaffordable, and so will remain unaffordable.
Unless you bought in the past 3 years you will still be better off

No way did a house that costs 600k near me today only cost 420k in 2019.

And here's my counter-prediction. In 2 years' time, and 5, 10, 20... you'll still be saying that.