Is housing market set to crash ?

[Moominsweetie]

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

It blows my mind there are those of you who think supply/demand outstrips the fact people will no longer be able to get mortgages.

It’s interesting isn’t it @DeadHouseBounce
I always find that if you insult people they come round to your way of thinking, what a brilliant method of debate I’m surprise more people don’t try it ?
anyway I had a bit of a flat plus week worrying about the mortgage rate increases so I called up both the Halifax and Natwest I do have 50% loan to value so of course that is gonna influence the decision-making but I could still get 3% fixed in for five years. The credit tap has absolutely not been turned off.

Similarly, the U.K. does not actually have a shortage of housing supply, but a misallocation of housing supply.

The energy crisis will concentrate the minds of asset-rich but income-poor boomers sitting in leaky, energy-inefficient too-big houses. Only, when they try to sell them, rising rates and credit tightening will prevent the people who would like to buy them from affording to buy them — at least at current prices.

It does not matter how much people think their houses ought to be worth, if no-one can get credit to buy them at that price. And it does not matter how many people would like to buy houses if they can’t get the mortgages to do so.

I called up both the Halifax and Natwest I do have 50% loan to value so of course that is gonna influence the decision-making but I could still get 3% fixed in for five years

Nothing close to that is on offer today. Around 4.5% seems to be the best 5yr available.

@AuntSalli the key question here is that if you wanted to sell your house right now, do you think the majority of the people who might want to buy it would also have 50% LTV….?

I think too many people are shooting their load at the moment. Just sit back don’t panic as my advice to everybody including myself 🤣

No.

Yep, it is definitely delusional (desperate?) thinking.

My house would appeal to a landlord, one that maybe particularly is priced out of London I’d be a good second choice my understanding is when I bought it there was a queue round the street of people wanting to pay cash for it.

A better example would be my brothers house that’s literally just sold on 19th September for 50 K more than they paid for it 3 yrs ago, time will tell whether that goes through or not.
I think it’s a bit early to get excited and believe me nobody will be happier than I if Price is do you go back to 2020 levels. I had a sale agreed on a property at £228 which fell through, similar is now selling for 320.

I just don't see how it is sustainable as it is. Certainly moving / buying will be out of many peoples reach with job losses, less mortgage products etc. however it may still get pumped up by foreign investment in the short term before a bigger crash.

Honestly word for word I’ve heard people saying exactly what you’ve written for the last 23 years.

my poor father nearly had an aneurysm when I told him I was going to pay £66,000 for a three bed semi with a garage in 2001. Literally he couldn’t comprehend how I was going to cope with all that debt 🙄

"And it does not matter how many people would like to buy houses if they can’t get the mortgages to do so."

Yep, the "supply and demand" nutters can`t see that though.

You massively underestimated the amount of cash buyers around and that is your fly in the ointment

We’re looking just great right now as a place for foreigners and landlords to invest, aren’t we? 😂 A full blown sterling crisis will just pack em in! If the U.K. gets downrated on the credit markets I’m sure even more will be flocking! You won’t be able to move for Russian oligarchs buying up cheap semis as buy to let investments 🤣

Why are you talking to yourself?

Excuse me ?

Why would a cash buyer pay over the odds in a crashing market, they hold all the cards?

Sorry, my bad.

Cash buyers look for bargains.

Doesn’t everyone?

The price of houses is going to be directly linked to how many people default. People know the value of their asset - and only look to move if it ia worth it for them.

Those at the top of the market wont be looking to sell their asset at a "loss", meaning supply for people to move up the property ladder will probably be restricted.

That will leave probate sales, and those forced by change in circumstanced which will seriously limit supply. Demand is unlikely to change overall, as there are so many people in rented or parents looking to move, or people outgrowing existing homes. So it is likely that while people will be able to borrow less money, there will be more people competing in the middle and lower end of the market.

Fundamentally until supply far outstrips supply, prices wont drop too far as people just wont sell.... the issue is a behavioural one, not a purely economic one.

We therefore may have a correction, but i dont think we will have a long term or sustained freefall in property prices - and they will end up increasing again over time unless the government increasea the rate at which it builds home, limits construction firms ability to sell new homes at a premium and improves the quality and size of new build homes (ie build homes that people want to buy).

No, a lot of people seem to be programmed to pay (borrow) as much as possible for even the most basic shit-heap of a house, it is quite funny actually.......

How can people "know the value" of their asset when the value is only what others are willing to pay for it?

Doesn’t everyone?

Judging by the fact that 950 sq ft 3 bedroom terraces in my overpacked street routinely go for 650k, I would say no, no they don't.

This is a nice fantasy.

Just one question though — what do you project is going to happen with probate sales over the next decade or two?