Is housing market set to crash ?

[Moominsweetie]

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

Yeah you see you’re about the sixth person to attempt to make that joke but it is our reality. And all your doom mongering is actually only going to hurt you in the end, a positive mental attitude takes you a lot further in life and lowers your blood pressure for a start.
Unemployment is that its lowest since World War II.

There will be those who originally wanted to buy a £550k house who will now replace that person. In other words the size of properties people can afford will fall.

Although this is repeated by many, there are so many who will say supply is outstripping demand. In the UK where housing stock is limited and where rents are expensive, the demand to own your own home will always be higher unless more homes are built.

I don't see the point of squabbling. We'll all know for sure in a month or two.

Although this is repeated by many, there are so many who will say supply is outstripping demand. In the UK where housing stock is limited and where rents are expensive, the demand to own your own home will always be higher unless more homes are built.

Not if people can't get mortgages it won't.

But they can get mortgages, you can always get whatever you want it just depends on what you prepared to pay for it.

But they can get mortgages, you can always get whatever you want it just depends on what you prepared to pay for it.

Yes and that makes a massive difference IMO. Way more people would be prepared to get a mortgage at 2% than would still be prepared at 7%.

Well no not if the alternative is renting, The British hate renting. It’s actually harder to get a rental property then it is to get a mortgage these days.

I'm certainly not predicting the housing market is doomed BTW, but I think to stubbornly insist that the fact demand outstrips supply means it will continue to be as buoyant as it has been recently, under the current economic turmoil, is naive in the extreme.

Well no not if the alternative is renting, The British hate renting. It’s actually harder to get a rental property then it is to get a mortgage these days.

We are actively choosing to rent at the moment when we could buy. I have no issue with renting. At the moment, I would much rather have my money in the bank where I can access it than tied up in a property.

And if my rent goes up, so what? Our rent is cheaper than our mortgage would be anyway, and I still would not want to be tied in long term to somewhere that is now much more likely to end up in negative equity. I don't like being trapped.

DS chooses to rent, he could afford to buy a house and has enough for a deposit but doesn't want the bother and also likes to live in the city centre which isn't always ideal to own somewhere

DS chooses to rent, he could afford to buy a house and has enough for a deposit but doesn't want the bother and also likes to live in the city centre which isn't always ideal to own somewhere

Yes this is similar to us. We were going to buy in the next few months but holding off now. I really can't see prices going up any time soon so even if we wait a year I can't see we'll be any worse off for it - interest rates will still be high!

Obviously there will be some people whose circumstances it suits to rent. I lived abroad for 10 years and rented a city centre apartment that as you say you wouldn’t want to own.

i’m not at all blindly suggesting that there won’t be a correction but as I did point out probably about nine hours ago if it drops 30% that still only brings down to 2020 prices, it’s nothing to get excited about.

But interest rates will be higher. So what would you gain by waiting?

You don’t believe the unemployment figures do you? Hundreds of thousands of people working 16 hours a week and claiming benefits is not full employment, looks great on the employment stats though.

Or the price of chocolate biscuits will increase too.

Have you seen the overall trajectory of house prices? Do you think they’ll go back to 2010 or 2015 prices?

Closer to your example, do you think you’ll see a return to a 1litre bottle of milk at 95p?

We are not in a deflationary period and highly unlikely we will be. You may get a dip in house price growth or even a fall in price of 10% -15% as predicted. However, with higher interest rates there is no gain. Higher level of prices across the board is here to stay.

Good for cash buyers or large deposits. They are no longer having to match the borrowing power of those with access to 1.3% loans

Do you understand that asset inflation and deflation is not the same as general price inflation abc deflation? 😂

You can perfectly well be in a deflationary period whilst asset prices inflate. And an inflationary period whilst asset prices deflate.

The experts are saying a 10% fall in house prices next year. That seems reasonable to me, depending on how interest rates rise it could well be more.

Aye, right.

So you’re saying that if a 600k house were to drop by 30%, it would just go back to 2020 levels? That’s 420k. Where are these houses that were 420k in 2020 and are 600k now?

Not near me in the sunny south east, where the houses are pretty much exactly the same price they were in 2020.

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Of course they are

Yeah, I agree. A 30% drop here takes us back to 2015 prices

They are going to hate negative equity WAY more i think.

Well no not really because negative equity is only an issue if you have to sell, as I’m beginning to sound like a broken record here I’m gonna leave you to it.

given that you’ve been sat in your bed sit since 2001 waiting for this I suppose we should allow you a little bit of excitement, this is about as good as it’s gonna get for you.

The increase came when people had loads of money (debt) to buy biscuits (houses) the crunch comes when the debt starts to cost a lot more to borrow, then the biscuits go stale waiting for a buyer.