House Price Crash Coming?
Discussion
soupdragon1 said:
I bought in 2004, moved in 2008 (right in the middle of the crash) and could see as clear as day that the only thing that really controls house prices in a situation like that is sentiment, and sentiment only.
Forget about banks, forget about Estate agents, forget about experts.....they just scratched their heads like the rest of us. Its all about sentiment when you strip it back to its very core, and as I mentioned, most in the UK haven't lived through a switch in sentiment like that before. Its crazy when it happens - been there, got the T shirt
This does make you think. Everyone has this outlook here and it's not surprising given the last 40 odd years. But everything seems abnormally rosey given the backdrop of 'indicators'. To think of the headlines years ago when we get two quarters of negative GDP of a few %, they were far more pessimistic than we seem to have now on the back of a potentially far bigger impact and for a much longer time. Forget about banks, forget about Estate agents, forget about experts.....they just scratched their heads like the rest of us. Its all about sentiment when you strip it back to its very core, and as I mentioned, most in the UK haven't lived through a switch in sentiment like that before. Its crazy when it happens - been there, got the T shirt
When no one wants it to 'give' then it'll carry on until, credit or the ability to pay disappears?
Getragdogleg said:
I just had the house valued and its up from 475 ( five years ago) to 525, demand is up and loads of people are trying to move here from out of county.
If we say that £15k of that is the stamp duty drop, which will go away in March - £475k to £510k in 5 years is a real terms decline (1.4% annualised vs inflation at 2%+)NickCQ said:
Getragdogleg said:
I just had the house valued and its up from 475 ( five years ago) to 525, demand is up and loads of people are trying to move here from out of county.
If we say that £15k of that is the stamp duty drop, which will go away in March - £475k to £510k in 5 years is a real terms decline (1.4% annualised vs inflation at 2%+)
I plan to be carried out of this house in my box.
Scootersp said:
soupdragon1 said:
I bought in 2004, moved in 2008 (right in the middle of the crash) and could see as clear as day that the only thing that really controls house prices in a situation like that is sentiment, and sentiment only.
Forget about banks, forget about Estate agents, forget about experts.....they just scratched their heads like the rest of us. Its all about sentiment when you strip it back to its very core, and as I mentioned, most in the UK haven't lived through a switch in sentiment like that before. Its crazy when it happens - been there, got the T shirt
This does make you think. Everyone has this outlook here and it's not surprising given the last 40 odd years. But everything seems abnormally rosey given the backdrop of 'indicators'. To think of the headlines years ago when we get two quarters of negative GDP of a few %, they were far more pessimistic than we seem to have now on the back of a potentially far bigger impact and for a much longer time. Forget about banks, forget about Estate agents, forget about experts.....they just scratched their heads like the rest of us. Its all about sentiment when you strip it back to its very core, and as I mentioned, most in the UK haven't lived through a switch in sentiment like that before. Its crazy when it happens - been there, got the T shirt
When no one wants it to 'give' then it'll carry on until, credit or the ability to pay disappears?
Some thoughtful viewpoints already but I didn't see much on interest rates.
To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
sideways sid said:
Some thoughtful viewpoints already but I didn't see much on interest rates.
To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
Not to sure the interest rates will have a massive difference unless they go sky high as Darn Sarf the biggest factor is peoples ability to actually borrow the money. To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
My daughter was renting at £1600 a month and could easily afford it. Yet the biggest loan she could get on a repayment mortgage was £1,150 a month. The restrictor is earning levels set at a multiple of 4 not interest rates.
NickCQ said:
Getragdogleg said:
I just had the house valued and its up from 475 ( five years ago) to 525, demand is up and loads of people are trying to move here from out of county.
If we say that £15k of that is the stamp duty drop, which will go away in March - £475k to £510k in 5 years is a real terms decline (1.4% annualised vs inflation at 2%+)Harry H said:
sideways sid said:
Some thoughtful viewpoints already but I didn't see much on interest rates.
To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
Not to sure the interest rates will have a massive difference unless they go sky high as Darn Sarf the biggest factor is peoples ability to actually borrow the money. To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
My daughter was renting at £1600 a month and could easily afford it. Yet the biggest loan she could get on a repayment mortgage was £1,150 a month. The restrictor is earning levels set at a multiple of 4 not interest rates.
What I see as a lot of the house price crash vocalists have a vested interest ie they are FTBs or sold out and trying to buy in and get a deal (fair enough).
However what they fail to see is of total U.K. housing stock something in the order of 75% of property is owned outright no mortgage don’t have to sell or buy it’s up to them.
Then of the remaining 25% you have some a month away from last payment then debt free as well of course those who have just paid their first - I’d imagine the split is possibly average length of remaining mortgage 13 years ish.
Crash or need to sell.
Divorce
Lost job cannot pay
Lost job cannot pay from salary but have savings so possibly downsize.
Have to move location / bigger house/smaller house
So these people May HAVE to sell / change but as per 2008-2014 supply was more or less non existent. Those who had sat on their pile paid 4 more years off and in that time market recovered and punched on.
This is the crux of it even in the most extreme situation it’s only a very small % of people who will sadly lose their pile and possibly never be able to buy again as repossessed.
A number of people I know remortgaged within the last year but did so fixed rate which meant the fixed rate took them to the end of the mortgage. They have NO mortgage interest risk it’s still possible go 5/7/10 year fixed rates are not going to get that much lower so it utterly de risks.
However what they fail to see is of total U.K. housing stock something in the order of 75% of property is owned outright no mortgage don’t have to sell or buy it’s up to them.
Then of the remaining 25% you have some a month away from last payment then debt free as well of course those who have just paid their first - I’d imagine the split is possibly average length of remaining mortgage 13 years ish.
Crash or need to sell.
Divorce
Lost job cannot pay
Lost job cannot pay from salary but have savings so possibly downsize.
Have to move location / bigger house/smaller house
So these people May HAVE to sell / change but as per 2008-2014 supply was more or less non existent. Those who had sat on their pile paid 4 more years off and in that time market recovered and punched on.
This is the crux of it even in the most extreme situation it’s only a very small % of people who will sadly lose their pile and possibly never be able to buy again as repossessed.
A number of people I know remortgaged within the last year but did so fixed rate which meant the fixed rate took them to the end of the mortgage. They have NO mortgage interest risk it’s still possible go 5/7/10 year fixed rates are not going to get that much lower so it utterly de risks.
Welshbeef said:
This is the crux of it even in the most extreme situation it’s only a very small % of people who will sadly lose their pile and possibly never be able to buy again as repossessed.
You are omitting the fact that only 5-10% of the housing stock changes hands in any one year.Therefore if 10% of mortgaged owners become distressed, that's really 10-20% of underlying transaction volumes, which is going to disrupt even the most liquid market (which resi of course is not).
sideways sid said:
Some thoughtful viewpoints already but I didn't see much on interest rates.
To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
Obviously interest rates can't stay where they are forever. If we can save up a healthy sum over three years to negate the need for a mortgage that wouldn't be the worst idea in the world.To the OP, during the foreseeable future, do you think interest rates are more likely to rise or fall?
If they rise (from current historic lows), that will have an immediate impact on mortgage costs, and hence affordability, reducing the amount that those buying property with a mortgage can pay for a house.
As others have said, there will be regional effects, as commuting reduces, WfH becomes more normal for more people, etc. One impact will be reducing demand (and relative prices) for homes where people need to live and increasing them where people want to live.
untakenname said:
The voting demographic is rapidly shifting as older people die and young people can't afford to own housing so political parties will be keeping that in mind for the next election as generally older home owners will vote Conservative whilst younger renters vote Labour so the pro house owner policies we've had for the past 30 years may be coming to an end.
What do you call old? Anyone above the age of 30 who’s made something of their lives will want to keep what they have and won’t want tiny box housing estates on their doorstep.Edited by untakenname on Wednesday 12th August 10:16
By the time you’re 40, have worked hard and maybe have a couple of kids, the last thing you want to do is give it away to somebody else. It’s not just geriatric buffoons who vote Tory as the last election made perfectly clear.
Sheepshanks said:
Welshbeef said:
However what they fail to see is of total U.K. housing stock something in the order of 75% of property is owned outright no mortgage
That's wrong. It's very roughly thirds - owned outright / mortgaged / rented.Either way that plus the rest of my points all basically nullify the doom mongers or Vested interest crash supporters. They simply don’t see this side of it - also on an extremely sad point the c50,000 excess deaths this year predominantly older people will have had “estates” these will now be inherited by their younger family which may clear their mortgage or decrease it to such a point that it’s an irrelevancy from a pcm basis.
Welshbeef said:
Sheepshanks said:
Welshbeef said:
However what they fail to see is of total U.K. housing stock something in the order of 75% of property is owned outright no mortgage
That's wrong. It's very roughly thirds - owned outright / mortgaged / rented.Either way that plus the rest of my points all basically nullify the doom mongers or Vested interest crash supporters. They simply don’t see this side of it - also on an extremely sad point the c50,000 excess deaths this year predominantly older people will have had “estates” these will now be inherited by their younger family which may clear their mortgage or decrease it to such a point that it’s an irrelevancy from a pcm basis.
I'm not ruling out a crash, but its unlikely to be caused by variations in local wages or employment. more likely some global black swan.....
NickCQ said:
The fact that IHT brings in almost as much revenue to the Treasury as SDLT per annum suggests that is not correct.
Unless you know the size of the estates involved I’m struggling how you can draw that conclusion?A quick google seems to hint at an average of 1million house transactions a year - not sure how many are above the SdLT threshold though.
Last year there were about 509,000 deaths
Stamp duty 2017/19 year appears to be c£12billion
IHT tax receipts are £5billion so half SDLT
https://www.google.co.uk/amp/s/amp.ft.com/content/...
So IHT means on average £10k per death is paid whereas for every House transaction It’s £12,000 on average.
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