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.

Estate agent always say no it’s good Properties moving fast etc

reality house here was on for £600 K sale agreed Nov feel through December within hours - back on at £580 K now feb and it’s just dropped to £550 and it’s still not selling. Nothing wrong with the house …

There’s unlikely to be anything wrong with the onward purchase for half a million or more as that will also have dropped in value, by as much as your house or more, you will only loose out if you are relocating to a premium area like dorset or london from a much cheaper area, or if you are downsizing substantially as lower value properties are definitely not crashing in price.

@Zapzep My little area of interest has all the activity sub 300k and zilch moving above 400k, so I believe you are spot on.

Please warn me before using this phrase as just heard it for first time,and snorted on my tea🤣🤣🤣

Manchester is nuts atm. Just outside Manchester is much cooler.

It's usually Dances with Sheeple that pops over from HPC, under a pseudonym., DeadHouseBounce. I can spot him easily by the grammar and terrible use of "LOL" Then he trots off back to his Incel HPC mates, posting links about Mumsnet. Tragic.

@SilentHedges why do you go on HPC?

I rarely do, only on occasions when there's a spate of their posters coming over here. I think the question is more why are certain members of HPC fixated on Mumsnet and insist on posting over here? I'd wager its huge insecurity about the validity of the message they are trying to push.

I've said it before but i'll say it again.

In the long term, property always increases in value.

@SilentHedges I'm sure there is but perhaps we should just ignore them. I've never been on HPC, heard it here a few times but i've no interest.

I am very cynical.

Property and other asset prices have been artificially inflated since 2008. I don’t see any real will within the BOE to get ‘ahead of the curve’. In the past, with current inflation levels, we would have had interest rates of 10-12%, property and stock market crash, and the ability for the new generation to buy houses and invest at affordable prices.

The BOE now creates dodgy inflation forecasts and tries to keep interest rates as low as possible. In this way, people on fixed salaries pay for the bailout of people with assets.

If we do have a property market correction, it will probably be achieved np by prices staying stable against an inflationary back drop. But the top end will remain supported by the rich not needing a mortgage at all.

I get the feeling that Tony here might be this chap.

www.housepricecrash.co.uk/forum/index.php?/topic/248374-we-have-entered-a-property-ice-age-–-here’s-what’s-coming-next/

Where my mum lives houses go on the market at 9.00am & the estate agents are getting people offering without viewing because the area is so popular. Most agents have lists of customers waiting for properties going on the market. Unless the area is suddenly flooded with properties for sale I can't see prices dropping & the only way that will happen is if the buy to let landlords suddenly decide to sell up. It would take the government making buy to let very unattractive for that to happen.

Hmmm.... I know this is an old thread from 3 months ago but wonder if any posters have revised their views on the market in their area? I am looking on SE coast and most 3 bed properties are hanging around, with many price reductions.

£1+ million market still moving in my area of C London. There are plenty of reductions but properties are going under offer. I was outbid by developer on a flat that needed updating. I don’t think there will be a massive crash - a slowing down. A lot will depend on how overstretched people will feel once interest rates head to 5+% and the global economy. The US debt default seems to have been averted - for now….

Think it is just going back to pre-covid. Good places priced right sell quickly. Crap, overpriced dumps that sold in 3 seconds during covid are now sticking around with lots of reductions.

In my area the local rag does a market report. April 23 cf April 22 :

Agreed Sales -30%
New Properties on the market : +25%
Available Properties : +100%
Price Reductions : +250%

Make of that what you will.

I think we are in uncharted waters🚣‍♀️ and it's just too hard to call🔮

I’m on SE coast, decent properties in sought after areas that don’t need much work are selling within a week or two so I assume close to asking price. Others are hanging around for months even after reductions. Asking prices haven’t reduced much if at all from what I can see but it feels like the days of offers over and bidding wars are over.

Interest are expected to go up this year because core inflation is unexpectedly high.

Different market and perspective but in Australia here as we are slightly ahead of you guys on rate rises. I think 13 consecutive increases have taken us from 0.5 to 3.85 as a cash rate.

Fixed mortgage rates are around 6-6.5% rather that 1.7-2ish a year ago.

Overall we had a dip of around 15% on the housing market, and now it's predicted we are close to the end of date rises prices are increasing again.

I'm divorced and trying to find my way onto the housing ladder again so at the bottom end of the market and what's happened is people are so desperate to buy they are basically buying anyway at the lower end.

Because of the media around the prices going down there is a reluctance to sell so very little on the market which is actually propping up prices.

Meanwhile rates are now so high that my borrowing capacity has gone down so much I can't afford what I could a year ago,

Obviously this is very area dependent but no I don't think it will be a 90s crash if my experience is anything to go by.

We expected it and it never actually materialised.

IMHO the fall is likely to be long and slow due to people being on fixes - same as mortgage rate rises not being felt by that many yet, and therefore no benefit to waiting if you are renting in the meantime. It probably will fall 20% from peak to pit and recover quite quickly just like last time.

@GasPanic roughly where are you? 250% is a lot!

@Karmatime Are you looking around Brighton? My impression that the slow down in the market is not affecting Brighton much (yet?)

Interesting @BobShark is the Aussie property market like the US where 10 year fixes are the norm? Or more like 2 or 5yrs as in the UK?

I could see a similar scenario here.