Will The Housing Crash Be More Devastating Than The Early 90s?

[TonyTeacake]

It looks like mortgages approvals have falling off a cliff from last summer.

Morgage Approvals
Aug 22 = 74443
Sep 22 = 66785
Oct 22 = 58018
Nov 22 = 46112
Dec 22 = 35612

You can see from the interest rate chart the rise in interest rates for mortgages has hampered affordability for most people.

The pendulum has now swung from a sellers to buyer's market. With 8% of the market being cash buyers this won't be enough to stop property prices from going down further as there isn't enough demand due to mortgage approvals falling substantially and there is so much more stock coming on the market with not enough buyers. Lower affordability means one thing house prices have to come down much further. Supply is now outstripping demand.
You can see this chart by RICS Chart: New Buyer Enquiries & New Vendor Instructions.

Also if we look at average wages they are not keeping up with inflation which you can see in the chart below.

To sum it up with inflation proving to be sticky we can expect more interest rate hikes this year which is only going to affect the affordability of people buying houses even more. It looks like this crash has already started and I expect YOY average drops for 2023 to be around 10-15% with further drops going into 2024.

Please share your thoughts.

I suppose the gvt would want to put a charge on the property and the tax could be paid when it was sold?

these are traditional cultures with little or no welfare state where there is no choice but to rely on the extended family network, where women have fewer choices and it's easy to railroad them into being unpaid carers for elderly family members, who, as pointed out do not live as long as and will not have the complex and overwhelming care needs of the older elderly people in modern countries.

But I don't think it would incentivise people to downsize, it would be more of an incentive to stay put until they are carried out in a box. And it would punish people moving up the ladder too, meaning that they would have to spend some of their equity on tax. The only way you can encourage people to move is to make it increasingly expensive for them to stay where they are - so perhaps start ratcheting up council tax for people who have been in their homes for more than 20 years... but I'm not sure that's entirely fair either. The government could also make buying/selling in England and Wales much simpler - the sheer lack of transparency and certainty put a lot of people off.

@GasPanic ”My guess is it would have to be phased in gradually because there are a lot of people living in huge houses who are effectively completely skint, so any reasonable tax on them would largely be unpayable.”

Just let the council put a charge against the house, payable on death.

our ridiculous & byzantine house buying procedures are just a joke really arent they, never mind the lack of suitable properties for older people to downsize into.
HOuse builders dont build properties that suit people needs, they build what they WANT us to want, ie whatever they can make the most amount of profit from and we just have to lump it because they are all in the gvts pockets!

Labour put an end to that. MIRA’s was the only reason that my parents manage to buy a house in the 70s.

And probably Many before them. My dad made a comment that when he was clearly now is dad’s personal effects he found some wage slips, and it’s sometimes in his life. My grandfather was working for less than £3000 a year. And yet when he died, he lived in a 400 grand house in today’s money. My Nan never worked ever. Raised 2 children.
The world’s gone bloody mad. I just don’t think anybody actually wants to change it. Otherwise Corbyn would’ve been voted in. There was such an extreme reaction to a man wanting to do good in the world that I have acquaintances who are X military who were talking about a coup 🤦‍♀️

The council should not be able to do anything of the sort. The council should not be able to tax the population. However, they should stop subsidise in with these bloody heating allowances. There’s absolutely no way that should’ve gone to anybody who didn’t live in a council tax band of A. And every time they trot out that it would be too expensive to implement means testing bollocks. It boils my blood because I absolutely would not. It’s a couple of buttons and a few lines of code these days.

It's not just buttons and code though. It's about an entirely different quality of house that we haven't built in the UK.

From reading, not personal knowledge, I understand that there are energy efficient kit houses, manufactured offsite that can be placed where wanted. I think we need to make greater use of such units, for starter homes to stabilise the market, and to put them on brown field areas.

Some types of houses can be built quite cheaply in terms of construction costs but, in the areas that most people wish to live - near amenities, transport, schools, jobs etc - the land prices are prohibitive.