Housing market after the election

[FutureFeelsBleak]

I realise the ink is still wet on the ballot papers, but what is the general consensus over what a Labour gov is likely to mean for the market? Things stopped moving here (Surrey) at about the time we went on the market, so I'm hopefully that things will pick up again now.

@TonyTeacake the derivative situation and the over leveraging in the financial system in general is utterly crazy. I work in a totally different sector and can't get my head around how crazy it is! Lots of US banks would be bust if they were forced to mark their losses to market now. And then there are the NBFI which aren't regulated at all; that's even worse! The Japanese Yen is also in trouble and some commentators say they are selling USD so this could obviously have a knock on effect. No one knows exactly what will happen but there are lots of worrying signs.

I agree with your take here @usertaken
'Really it would be better for a government to wean the public off obsessing about high prices and actually lower ones would be better for future generations. But most people are compromised because of their own situation so would never vote for it.'

Unfortunately the kids are breaking up soon, the summer holidays are notoriously bad for selling.

You are bang on about the banks and to be honest I do believe all of the banks would be insolvent if they were forced to mark their losses to market now. We are talking serious losses here. One other reason the banks in America are losing so much money is all of those 3% mortgages dished out during the pandemic which are for 30 years. Raters are now between 7-9% in the US and the banks would love to rip these mortgages up and start again. The US housing market is now stagnant and I believe they are now in a recession.

We should be keeping a very close eye to what happens over the pond.

@TonyTeacake I agree that the US banking situation could go horribly wrong but the UK economy overall looks even worse. I'll be keeping an eye, as I'm sure you will be too!

I agreed with @usertaken's post, and also your comments. I work in a finance-adjacent sector, and some of what I'm seeing is really worrying.

That sounds a bit concerning @TarantinoIsAMisogynist.
I hope we are all wrong (but don't think so)!

Can't really add much to most of the sensible commentary above ..... other than to ask if you voted at all on Thursday. They use pencils - not pens!

Seriously though, it would be great if Labour ripped up the planning laws and let developers run free to boost housing (probably independent developers rather than the FTSE ones) and other projects for growth.

Just out of curiosity do you know what the situation is on stats with people failing to meet mortgage payments. Reason I ask is I have a feeling more people are using the Mortgage Charter scheme as they cannot afford these higher rates now their cheap fixes have finished.

I saw an agent the other day who said that the market often pauses for the first couple of weeks after an election as people wait to see if any quick changes come in. In fact he said not to rush to put ours on the market because of that.

The government doesn't affect the property market unless your name is Liz Truss! Seriously though the main issues are the cost of borrowing, confidence in the economy etc and the change of government won't make much difference because outside factors are so important. Gradually interest rates are expected to decline but not to the historical lows of the 2010's.

This isn't really true. Policies like stamp duty holidays or Help to Buy have both impacted the housing market (for the worse - prices get pushed up, and with HtB that extra cash went straight to the large housebuilding firms). And economic policies will indirectly affect interest rates, which again has a knock-on impact.

Just because the impact isn't usually as immediate and catastrophic as it was after Truss' disastrous budget, doesn't mean there is no impact at all.

I agree they are the main issues so don’t expect the change in government to make much difference.

Any government can introduce things like a stamp duty holiday at any time, hopefully Labour won’t ( though I can understand the short term appeal to struggling buyers of course).

Possession proceedings brought by mortgage lenders have increased significantly.

What does “significantly” mean? Do you have any statistics on the increase in repossessions?

https://www.lpc-law.co.uk/news/current-repossession-and-arrears-trends-in-the-uk-mortgage-market/

Chronic undersupply will keep prices moving up. It will only reverse with a deep recession and large numbers of homeowners losing their jobs.

This is what I am hoping. Put my rental which is the same road as the best local state primary on the market a few weeks ago -have had several viewings and two offers from young couples with pre school children. Typically in this area a lot of people go private and seems that people are spoked
by the VAT threat, especially as those same people will be the ones who will be squeezed on other new taxes this govt decides to impose.

Article says that while repossessions are slowly rising - partly because of a Covid backlog and partly due to higher mortgage rates - they remain low by historical norms.

Mortgage orders for possession (3,019) are up 19%, warrants issued (2,881) are up 9% and repossessions (759) are up 4%. All mortgage possession case types have been steadily increasing since Q2 2021 (apart from a small dip in Q4 2021 and Q4 2022).

It depends to what you are comparing. If you're comparing with 2008 to 2014 when repossession was relatively high due to the 2008 crash then they are lower. But a 19% increase this year to my mind is hugely significant. It shows the pressure homeowners and landlords have been under in trying to meet their obligations due to the previous governments hugely damaging policies.

I would imagine they would be a lot higher if it wasn't for the Mortgage Charter which allows mortgage holders to go 6 months interest only or extend the mortgage term.

To be honest I see a lot of pain in the housing market and economy over the next few years. To put it bluntly I think we are heading for a crash of a monstrous scale.

well I know you do TT because we have chatted on the House Price Crash website (I'm Adrian Mole there, but you're still TT of course).

But tbh you have been expecting a house price crash on a monstrous scale for many years haven't you?

👏🏻🤣🤭

The trend in defaults is upwards. That isn't just mortgage defaults but other types eg credit cards/ BNPL. I can't see it suddenly reversing.
I know that some people seem to think the government/ banks will just sort it all out but it's not that easy in reality. I expect QE/ similar on a massive scale at some point but that will just cause massive inflation now and will not have the desired effect at all. Things may continue to happen gradually (as they have since at least the GFC) or they may happen rapidly but the trend is definitely down rather than up.

If they build the houses they say they want to then logically prices should drop a few years down the line, but also they can't risk half the country in negative equity, so I think the medium term is that they will manage the market to keep it level and stop prices rising rather than seeing significant decrease. I doubt the market will pick up this year until interest rates drop and their plans become clearer.

You say I have been predicting this for many years so tell how many years is this?