How far will house prices fall [volume 5]

[anonymous-user]

UpBeats said:

Houseprices will implode. We will have 5 years of record unemployment. Very few will be buying houses. Lots will have to sell if have no children to get the bennies.

I think you underestimate the lengths the government will go to to prop up house prices. The posters on the HousePriceCrash forum have been convinced a crash has been coming for the last 15 years. I agree looking back on historic data their arguments make complete sense, what they didn't see coming was Help to Buy, 0.1% interest rates, stamp duty abolition etc. every time the market started to look shaky.

I personally think selling to rent with a view of buying back in when prices fall is a very risky game to play. I think you are more likely to see prices go up and be unable to buy the house you had before once you lose your bottle and buy back in.

If that doesn't happen then you will be in the same boat as the HousePriceCrash cult. Seeing prices continually rise and being terrified to buy for fear that the promised crash will happen.

You are also underestimating just how much money a lot of people have with nowhere to put it. Lots of people have a lot of family money or are inheriting crazy amounts of money due to inheritance caused by house price rises. What do you think they are going to do with that money?

I just think the chasm between rich and poor is going to get bigger and if your parents don't own property then you have little chance of ever owning your own house.

Edited by anonymous-user on Tuesday 21st July 09:18

[UpBeats]

Sounds like a pyramid scheme. Will need huge wage inflation to happen. Simply not going to happen. I say that as someone with a dad with a 1.5million pension in a trust and a million quid house. It is not that easy to pass money down without paying 40pc tax. Not everyone wants eye watering levels of debt. Those who want large debt have nothing to lose. I.e no deposit. Not everyone wants to parasite their parents money continously either.

[kingston12]

Joey Deacon said:

UpBeats said:

Houseprices will implode. We will have 5 years of record unemployment. Very few will be buying houses. Lots will have to sell if have no children to get the bennies.

I think you underestimate the lengths the government will go to to prop up house prices. The posters on the HousePriceCrash forum have been convinced a crash has been coming for the last 15 years. I agree looking back on historic data their arguments make complete sense, what they didn't see coming was Help to Buy, 0.1% interest rates, stamp duty abolition etc. every time the market started to look shaky.

I personally think selling to rent with a view of buying back in when prices fall is a very risky game to play. I think you are more likely to see prices go up and be unable to buy the house you had before once you lose your bottle and buy back in.

If that doesn't happen then you will be in the same boat as the HousePriceCrash cult. Seeing prices continually rise and being terrified to buy for fear that the promised crash will happen.

This.

In a traditional economy, house prices would definitely fall heavily now, just as they would have fallen more significantly after 2008.

This is anything but a traditional economy.

Of course, it gets more difficult (and more expensive) to prop up each time, but the government will be even more motivated to find a way as prices are ramped up so far now any fall would have even bigger negative effects on the economy.

[anonymous-user]

DAX is up on the year. Starting to feel the same about equity markets!

[kingston12]

UpBeats said:

Sounds like a pyramid scheme. Will need huge wage inflation to happen. Simply not going to happen. I say that as someone with a dad with a 1.5million pension in a trust and a million quid house. It is not that easy to pass money down without paying 40pc tax. Not everyone wants eye watering levels of debt. Those who want large debt have nothing to lose. I.e no deposit. Not everyone wants to parasite their parents money continously either.

A pyramid scheme is exactly what it is.

Whilst I’d agree that not everyone wants huge debts, where the government has been successful is in persuading more people not to worry about personal debt levels. House ownership and prices seems to be more of an obsession with the under-40s than it was with the previous generation, and that is saying something!

It is understandable, as successive governments have created a ‘false’ environment where house prices have only ever gone one way during their lifetimes and they have seen their forebears make fortunes in the previous booms of the 70s and 80s.

The amounts borrowed are fairly frightening to me, but money is cheap, repossessions increasingly unlikely..

Any short term reverse is written off as a ‘blip’, which has proven to be true so far. They do need to do a bit of work in some parts of London/SE where prices have been fairly stagnant to reinforce this view.

[z4RRSchris]

https://www.rightmove.co.uk/property-for-sale/prop...

Buyers bought in January for £740k, have put on market at £785k and have 3 offers over asking.

Young kids in lockdown forcing a move closer to parents im told. They will get their cash back at least.

[z4RRSchris]

UpBeats said:

Houseprices will implode. We will have 5 years of record unemployment. Very few will be buying houses. Lots will have to sell if have no children to get the bennies.

whilst i agree without government intervention this would happen, but we have a government who will do almost anything to keep prices up.

[Gecko1978]

z4RRSchris said:

UpBeats said:

Houseprices will implode. We will have 5 years of record unemployment. Very few will be buying houses. Lots will have to sell if have no children to get the bennies.

whilst i agree without government intervention this would happen, but we have a government who will do almost anything to keep prices up.

look at the announcement today 900k public sector workers to get a 3% pay rise (that is a over simplification). It will drive inflation, make thoes 900k feel better off and also trikle into private sector. The government will not let people loose there homes on mass, as it would mean that party would be unelectable for a generation or more.

Until we have mass house building an oversupply houses are the golden goose an no government wants to ruin that.

[marky911]

Trouble is, how many tools do they have left to use?

How much more money can they print?
Interest rates have nowhere to go (apart from negative).
They’re already looking at ways to take extra money back.

Whether they crash or not who knows but what we are seeing at the moment is not the way things will now be forever. No way. I give it until Xmas.

[red_slr]

marky911 said:

Trouble is, how many tools do they have left to use?

How much more money can they print?
Interest rates have nowhere to go (apart from negative).
They’re already looking at ways to take extra money back.

Whether they crash or not who knows but what we are seeing at the moment is not the way things will now be forever. No way. I give it until Xmas.

This is what I was posting about yesterday.

We have seen everything thrown at this. Historic stuff.

The govt are clearly in full panic stations trying to do everything they can to prevent a crash.

Which is a good thing.

But eventually they will run out of options. Personally I think the SDLT exemption has been a massive help. I can see it being extended a further 6 months.

The last recession saw HTB and the really worrying thing is that a lot of HTB purchasers are the people who are really now at risk and the govt owns 20% of these properties.... its a crazy situation we have got the country into!

[Leicester Loyal]

Joey Deacon said:

I think you underestimate the lengths the government will go to to prop up house prices. The posters on the HousePriceCrash forum have been convinced a crash has been coming for the last 15 years. I agree looking back on historic data their arguments make complete sense, what they didn't see coming was Help to Buy, 0.1% interest rates, stamp duty abolition etc. every time the market started to look shaky.

I personally think selling to rent with a view of buying back in when prices fall is a very risky game to play. I think you are more likely to see prices go up and be unable to buy the house you had before once you lose your bottle and buy back in.

If that doesn't happen then you will be in the same boat as the HousePriceCrash cult. Seeing prices continually rise and being terrified to buy for fear that the promised crash will happen.

You are also underestimating just how much money a lot of people have with nowhere to put it. Lots of people have a lot of family money or are inheriting crazy amounts of money due to inheritance caused by house price rises. What do you think they are going to do with that money?

I just think the chasm between rich and poor is going to get bigger and if your parents don't own property then you have little chance of ever owning your own house.

Edited by Joey Deacon on Tuesday 21st July 09:18

That pretty much sums up my thoughts on the subject. I'll be buying this year, 100%. If they drop by 5-10% then so be it, they'll only rise again in a year or two.

[anonymous-user]

red_slr said:

The last recession saw HTB and the really worrying thing is that a lot of HTB purchasers are the people who are really now at risk and the govt owns 20% of these properties.... its a crazy situation we have got the country into!

I was looking to buy a property at the end of 2013, just after HTB was introduced. Even thought I was not looking to buy a new build things were absolutely crazy, every house had an open viewing and there would be 25 couples all walking around the house at the same time. Looking at the other potential buyers you could see they were all thinking the same thing "If we don't buy now we are never going to get a house". The estate agent would then stand in the middle of the living room and inform everyone that he had already had a full asking price offer from someone who had not viewed the property yet so it was going to sealed bids.

Everyone would then walk as a group to the next house that was doing an open day rinse and repeat.

Speaking to one estate agent he told me he had another house that was going on the market on Monday, but he would ask the seller if we could have a look that Saturday afternoon. We viewed the property and I offered full asking price as I left. On Monday I got a call saying they had three full asking price offers that afternoon so it was going to sealed bids.

Crazy situation, 3 years later the house was up for sale again for 50% more.

Don't underestimate how much prices can still increase by when you already think they are massively over inflated.

[dan98]

I purchased in 2007 - within 6 months the property had lost between 1/4 and 1/3rd of it's value.
Over the next few years it was impossible to sell and when I needed to move I was forced to rent it out and become a landlord, which was a total nightmare.
It eventually returned to it's previous value, but I never want to go through that again.

Exactly the same frenzied mindset existed at the time.. property can only go up..you can't lose..don't miss the boat etc. etc..

Edited by dan98 on Tuesday 21st July 11:05

[kingston12]

red_slr said:

This is what I was posting about yesterday.

We have seen everything thrown at this. Historic stuff.

The govt are clearly in full panic stations trying to do everything they can to prevent a crash.

Which is a good thing.

But eventually they will run out of options. Personally I think the SDLT exemption has been a massive help. I can see it being extended a further 6 months.

The last recession saw HTB and the really worrying thing is that a lot of HTB purchasers are the people who are really now at risk and the govt owns 20% of these properties.... its a crazy situation we have got the country into!

HTB was the move that really showed desperation for me. The market was plainly broken, in that most of the people who wanted to enter it couldn’t raise the money to do so. The traditional response might have been to let prices stagnate or fall slowly naturally, allow wage inflation back in or even to further deregulate standard lending further.

HTB was easier as it provided faster inflation and had the added advantage of bailing out property developers.

[red_slr]

dan98 said:

I purchased in 2007 - within 6 months the property had lost between 1/4 and 1/3rd of it's value.
Over the next few years it was impossible to sell and when I needed to move I was forced to rent it out and become a landlord, which was a total nightmare.
It eventually returned to it's previous value, but I never want to go through that again.

Thats kind of what happened to us.

Bought 2005 for 180k
Wanted to sell around 2008 but was told it was worth 150k.
Finally around 2015 the market seemed to be moving again and bought a new place and rented out the old place.
It was not till 2019 that the house was worth somewhat more than we paid, sold it for £220k.

So 15 years and we went from 180k to 220k but if you adjust for inflation it actually lost 20k!!!

The only saving grace was in the 3 years we rented it out we probably made that £20k. So we broke even.

[Leicester Loyal]

red_slr said:

dan98 said:

I purchased in 2007 - within 6 months the property had lost between 1/4 and 1/3rd of it's value.
Over the next few years it was impossible to sell and when I needed to move I was forced to rent it out and become a landlord, which was a total nightmare.
It eventually returned to it's previous value, but I never want to go through that again.

Thats kind of what happened to us.

Bought 2005 for 180k
Wanted to sell around 2008 but was told it was worth 150k.
Finally around 2015 the market seemed to be moving again and bought a new place and rented out the old place.
It was not till 2019 that the house was worth somewhat more than we paid, sold it for £220k.

So 15 years and we went from 180k to 220k but if you adjust for inflation it actually lost 20k!!!

The only saving grace was in the 3 years we rented it out we probably made that £20k. So we broke even.

How much would rent have cost in those 3 years though? About the same 20k you generated through renting it out? The only other option is live at home with your parents for another 3 years (or longer). There's always a risk that prices will go down, just one of those things you've got to accept when purchasing a property.

[red_slr]

Rent would have been £12k a year, so £36k. Ish. Not for me though nor is living with parents.

I think the way we did it was probably he most efficient. What I was getting at is the housing market is really very fickle and very much depends on where you buy and its a myth that its impossible to lose money on property over long periods of time.

15 years and we probably just about broke even, but that did not take into account mortgage interest, SDLT and general home improvements. Its about quality of life though I guess.

But the days of buying a property and then living in it for 10 years and selling it for twice what you paid are probably long gone.

[kingston12]

Joey Deacon said:

Crazy situation, 3 years later the house was up for sale again for 50% more.

Don't underestimate how much prices can still increase by when you already think they are massively over inflated.

Yep, and it can bite quite hard if you get it wrong.

IIRC you are in a similar area to me. We were looking to buy in 2013 as well - sold our current place through sealed bids, got an offer accepted on another through sealed bids.

The one we were going to buy was withdrawn and eventually our buyer pulled out because we couldn't find anything else. The EA was understandably keen to sell ours so went through another sealed bids process and got a higher price even though the buyers were made aware there would likely be a delay.

It happened again a couple of months later and we went under offer for more again. It was increasing in value at faster than I was earning from a relatively good job at that point!

We didn't find anywhere in the end, and the prices have really moved against us. Ours may have gone up 10-15% in cash terms from that last offer we received, the house we wanted to buy would now be around 40% more!

[MaxFromage]

It's all very well saying the Government will do all they can to keep house prices 'up', but short of guaranteeing home-owner mortgages, they aren't going to be able to get lenders to provide credit like they have done pre-COVID.

With the mass of redundancies being lined up on the lead up to the end of furlough, I can't see how the market can continue as is.

[Sheepshanks]

MaxFromage said:

With the mass of redundancies being lined up on the lead up to the end of furlough, I can't see how the market can continue as is.

Isn't the split in the UK approx 30% owned outright, 30% mortgaged and 30% rented? I look at my road where houses rarely change hands and I'd reckon there's only a handful that are still mortgaged.

Even the new estate that was dropped onto the edge of our village a few years ago has a surprising number of older occupants - they expanded the village school expecting more kids and they never came!

So the point is that a lot of property is going to be unaffected.