Is housing market set to crash ?

[Moominsweetie]

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

Another good article but note that they are talking about a reversal in house price growth. That is often confused for straight out prices.

www.thetimes.co.uk/money-mentor/article/will-house-prices-drop/

I think there will be a modest reduction in prices for the next 3 years or so, around 5% maybe 10 in more expensive areas. Can't see house prices falling very far.

'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.'
This is what I have said. I think it's clear. I do not think wages are likely to keep pace with inflation. Of course the unions are pushing for pay increases and rightly so but the government is extremely resistant. We are, no doubt, in line for lots of strikes. Whether that will lead to rises in line with inflation very much remains to be seen. I suspect not.

Interesting how you accuse me (and possibly others as well) of making emphatic statements when your own posts are full of emphatic statements.
I think that the Britain has become considerably poorer and that the prosperity of citizens will fall further. Of course kingdoms rise and wane, look at history, there are plenty of examples and we are another. We had a worldwide empire and now we are much poorer. It's not a question of wanting the UK to become poorer, just not being in denial. People need to make prudent decisions in line with the economic forecasting.

Probably a reversal of the amount they have gone up over the last couple of years over the next couple of years

Okay you must be right. I’m happy to step aside in a world everyone knows the future yet no one can agree on what it is😀. So excuse my insolence.

What’s the point in “I know it all”, “no, it is I who know it all” and round and round the mulberry bush we go.

And in case of interest:

www.gov.uk/government/news/pay-boost-for-millions-as-national-minimum-and-living-wage-rates-go-up-from-today

www.chroniclelive.co.uk/news/cost-of-living/thousands-uk-workers-receive-pay-25080260.amp

@Sheenqueen I’m confused by your post

• the first link is the increase made in April that has been all but wiped out by the energy increases, inflation etc…
• the second is about the real living wage and only affects people working for companies who have committed to pay the Real living wage

Neither of them will have any major impact on how much people can afford this winter tbh.

Also @Sheenqueen , I’d like to print out that ‘increase of wages from negociation with the workers and usually in line with inflation’ currently means that some railway workers are in the strike. So is the Royal Mail.

Actually it seems that Royal Mail is quite set in using a fire and rehire technique so that they can people even less rather than give them the increase they are asking for.
Many other companies/councils have had to go on strike to get anywhere - unprecedented really. It also seems that MSM is not talking about it. Might give ideas to other maybe…

As a general rule, I don’t think we will see increase in line with inflation. My dh company certainly isn’t. They didn’t get a wage increase but a ‘bonus’ worth less than 5%… half of it given in shares that you can’t sell for a year. Nit going to help pay for a higher mortgage or the increase in energy cost.

@Sheenqueen the OP asked for opinions. I gave mine. You can disagree, of course, but I have no idea why you need to get some oddly defensive.

12-24 months - 20%/30% crash, if you don't think this is going to be like 2008 go and look at Credit Suisse, currently failing faster than in 2008, It's going to be worse this time around.

It’ll dip, sure, and basically replay 2007-9.. People who now can’t access a mortgage will lose properties and have to rent longer. So sucks to be them. Sellers will be reluctant to reduce prices, but real market value will have dipped, so a lot of properties will simply sit on the market for a year like they did in 2008. Sucks to be those sellers.

Some people will HAVE to sell quickly and they’ll now get a much lower price. Sucks to be them.

Cash buyers / investors will snap up some great bargains and make a huge profit when they resell in years. Fab to be them.

Sigh. What a stupid way to decide who lives where.

I think it will dip a fair amount.
However, house building will also slow down due to cost of goods /loan financing

Also, lots of people saw this coming and are locked into long, low interest deals, so won't be affected for many years.

I would rather buy and be locked into a long deal than be renting. A friend is being made homeless because her landlord can't afford the mortgage repayments now so has to sell (and this was before Truss drive the economy over the cliff edge)

Sigh. What a stupid way to decide who lives where

Totally agree.

I would happily lose a lot of the equity in my house if it meant we had a sensible housing market. But sadly the cash buyers /buy to letters will once again exploit any dip.

(I do work for a housing association and volunteer for a housing charity though, so am doing what I can!)

Wage increases are following inflation and not the other way round - although it can turn into a vicious cycle. So I’m not sure what you find confusing?

Moreover, if I recall correctly there was a comment that there was absolutely no evidence that wages were trying to keep up with inflation.

Unless the UK is about to become a desperately poor country, I cannot see real wages continuing to fall over a sustained period of time in the future. At some stage real wages must rise otherwise the UK will be a laughing stock. This country has a lot of faults but the institutions are still strong enough to prevent that from happening.

Minimum wage will have to be increased again in the near future.

Also in SW, been trying to buy for 2 years now. Have had same search criteria on Rightmove throughout. Up until 6 months ago, there were never more than 1100 properties on. Sometimes a low as 860. The housing market was red hot and a lot of houses were first listed as STC. About 6 months ago it started to creep up to about 1800, saw a fair few relisted properties and about 5% reduced. In the last month it’s rocketed up to 3400 properties, at least every other one is reduced, houses in very desirable locations that would have been snapped up have been sat on there for over a month and are now being reduced. My boss is an accountant and says he knows tons of friends with buy-to-lets who want shot of them asap. It’s definitely peaked and on the way down. Housing shortage or not, supply and demand means nothing if people simply cannot get a mortgage anymore. We are this close to exchanging on ours, but our mortgage offer expires at the end of the month. If we don’t complete by then, we’ll simply have to pull out as we won’t be able to afford stress-tests on higher interest rates.

But I do think that landlords ( at a much more significant scale than in the past) are a key player in all this.

if interest rates go up and energy ratings/ responsibilities on rented property increase along with more secure conditions for tenants, the profit for landlords reduces and for many it may be more worthwhile to put their money into higher yielding accounts. It was because this wasn’t available in the last -5 years that caused much of the investment in property. Those people will think about where their money is profitable.

At the same time, there have been landlords who don’t have money but simply rent out property and then buy more based on the assumption that they will always cover their rent from tenants.

Lastly, in order to keep it going now that HTB is ending the only other option is another prop for fobs. Individual councils in London are doing go interesting things.

One thing could resolve this problem however as it I did in the 60s. Allow councils to provide mortgages at 90/95/100%

( the GLC did this in 1960s) and it allowed many working people to buy their own homes on the open market.

My friends who were landlords have sold. I’m well paying jobs, I think it is no longer worth the stress/extra work for them

"Also, lots of people saw this coming and are locked into long, low interest deals, so won't be affected for many years."

Even those people can't assume that they won't be affected by the recession. Businesses fail and jobs are lost. Unless they've got lots of savings of course.

People have been speculating on here for years, it hasn't crashed yet. I do think it'll stagnate/dip/lull for a while, but more like a correction than a crash. Housing demand won't go, and It's not as if renting is the cheap option.

'Moreover, if I recall correctly there was a comment that there was absolutely no evidence that wages were trying to keep up with inflation.'

That's definitely not what I said. I didn't see anyone else that either.

But:
Real wages (for a large percentage of people) have been falling since the GFC already.
A recession would result in higher unemployment and those people will suffer lower wages.

I think it will. Myself and my husband are landlords with 30 properties.

Given that it's our main source of income, we are always looking to expand. We are seeing repossessions on the market which haven't been there in a LONG time. We would usually snap these up but given that the interest rates are increasing so dramatically, we aren't prepared to do that. We are also considering selling our 'better' properties because it doesn't make financial sense to keep them with an increased mortgage but a freeze on increasing rent (thanks, Scottish government).

We have diversified into Air bnb with two properties which are doing extremely well. The Scottish government are now making it compulsory to have a licence for these.

With the current financial decisions made by Liz Truss, I am more than certain that the market has lost confidence. These interest rates haven't been around since the 80s. Mortgage lenders literally just pulled the plug and didn't give our mortgages. I wouldn't be entirely shocked if that happens again if this mess isn't sorted out. Problem is, the market would lose further confidence if further changes were made as it looks as though she doesn't know what she's doing.

Long story short, yes I think the market will crash.

thinkplutus.com/uk-interest-rate-history/

This has a chart of interest rates over time. I’m not aware that interest rates are current between 10-15% @junkdrawer .

The series can also be found on the ONS website. What interest rates are you referring to that are currently at 1980s level?

Depending where you are, it already has.

Definitely falling already here, the first pages of RM are all reductions. Some people will need to move out quickly given financial stresses. A panic and price drops.

This is all depends on the areas....mine is holding up....agent friend sold 2 houses yesterday over asking price as demand is high.......