How Far Will House Prices Fall? [Volume 6]
Discussion
The rental market is humming at the moment.
I live a commutable distance to London and own a handful of 2 bed flats and houses for BTL.
2 properties have just gone back onto the rental market and have had 20+ viewing requests within the first 3 days, so much interest that the agent wants to qualify who we do viewings with. This is after putting the rent up by another £75 from an already punchy figure.
Not boasting as I agree all BTL landlords are a
holes and think a crash would be good for society. Just sharing some data.
Do you think these yields will support the bottom end of the market? There is nowhere else to go for a return at the moment and very strong demand.
I live a commutable distance to London and own a handful of 2 bed flats and houses for BTL.
2 properties have just gone back onto the rental market and have had 20+ viewing requests within the first 3 days, so much interest that the agent wants to qualify who we do viewings with. This is after putting the rent up by another £75 from an already punchy figure.
Not boasting as I agree all BTL landlords are a
holes and think a crash would be good for society. Just sharing some data. Do you think these yields will support the bottom end of the market? There is nowhere else to go for a return at the moment and very strong demand.
Edited by dmahon on Wednesday 24th February 18:57
dmahon said:
The rental market is humming at the moment.
I live a commutable distance to London and own a handful of 2 bed flats and houses for BTL.
2 properties have just gone back onto the rental market and have had 20+ viewing requests within the first 3 days, so much better interest that the agent want to be picky about who we do viewings with. This is after putting the rent up by another £75. I think we are benefiting from the London exodus which will surely support prices.
Not boasting as I agree all BTL landlords are aholes and think a crash would be good for society. Just sharing some data.
Encouraging. Where is this out of interest? I’ll have a place soon available to rent (Henley). I live a commutable distance to London and own a handful of 2 bed flats and houses for BTL.
2 properties have just gone back onto the rental market and have had 20+ viewing requests within the first 3 days, so much better interest that the agent want to be picky about who we do viewings with. This is after putting the rent up by another £75. I think we are benefiting from the London exodus which will surely support prices.
Not boasting as I agree all BTL landlords are a
holes and think a crash would be good for society. Just sharing some data. z4RRSchris said:
Neat project, congrats chris! I am most definitely not your clientele though even If had the funds.. I would probably be getting a Malibu Pad, rather than paying taxes into "Red" Khan's new town of London. 
https://www.themalibulife.com/properties/17819-cas...
DickP said:
As a FTB I’ll be going with whatever comes up that’s right and affordable for me now.
I think there is a risk the bulk of housing sales will have happened soon and there’ll be very little new to the market in the latter half of this year and into next.
Almost feels a bit like beggars can’t be choosers when it comes to finding a house as a FTB.
As a ftb myself who bought a house back last year completed in December if you find something you like that is in budget put a offer in waiting is a mugs game atm. A colleague of mine is looking for her first house all of last year she was putting it of building up more savings as she was sure prices would crash into 2021. They haven't in fact what is happening is the market has gone flat very little good stock coming up in the area she is looking in (Cardiff). I think there is a risk the bulk of housing sales will have happened soon and there’ll be very little new to the market in the latter half of this year and into next.
Almost feels a bit like beggars can’t be choosers when it comes to finding a house as a FTB.
Im just about ready to move in just finishing the kitchen hoping to move in next month while she may have another 6-12 months wait depends on what happens this year.
Good luck in the search its a mega stressful process that gets dragged out took mine 14 weeks to be completed but it is worth it in the end.
dmahon said:
...think a crash would be good for society.
This is an interesting one, I think it depends how you look at it. I like the idea of property being affordable for people and there being a high percentage of owner-occupiers, it looks like an increase in equality and wealth distribution across society. I do actually think property is affordable for the majority of people in most parts of the country as it stands though.With regards to perceived high prices in the hotspots, specifically London, home counties, south east, this has effectively been determined by market forces. People have the money to afford property at the current levels, if they didn't there would have been more of a correction already. If houses in these areas look relatively high, then I think we have to look at the wealth distribution in terms of wages and other income, because higher house prices seem to be a symptom of people on higher incomes being able to compete with each other to buy them and drive prices up. So from this perspective it's more likely to be sentiment that causes a fall in prices if that happens, not the fundermentals of affordability. So far in the face of the pandemic, brexit, etc. sentiment has been very solid, to my surprise intially.
So, I think we would need more equal pay to result in more affordable house prices. But again, market forces seems to determine renumeration, there is generally high demand for high skill workers and even something of a shortage in some fields, and an over-supply of low skill workers at the bottom end of the hierarchy. We've needed minimum wage, higher tax treshold, tax credits, etc. to artifically drive up income for those people. How far you want to go with wealth redistribution obviously depends on your political persuasion.
A point regarding a house price crash, this would impact quite a number of people in terms of negative equity. The would-be FTB's may well be attracted to the idea, but if banks get jittery and restrict lending then it may become even harder to buy for some. Plus the supply of decent properies may well dry up, people will be relucant to sell (unless it's a forced sale) and transaction volumes will take a dive. I think to a certain degree there's something in so called disaster capitalism idea, where in an economic crash senario it's actually the individuals and business with money that will in a favourable position to hoover up some of the bargain properties, assets, etc. and it's a lot of regular people that will get stuffed. There would be winners and losers I guess.
Why would a crash be good? What you mean is, you want to buy a house you currently can't.
That's natural but doesn't consider the conditions in place for it to happen or the wider implications if (very big if) it did.
Perhaps we should ask the house price crash dot com bunch:
What needs to happen/conditions be in place for there to be a house price crash in a zero interest rate environment? (House price crash = say 25pc + drop in nominal uk house price index for the next 5+ years)
That's natural but doesn't consider the conditions in place for it to happen or the wider implications if (very big if) it did.
Perhaps we should ask the house price crash dot com bunch:
What needs to happen/conditions be in place for there to be a house price crash in a zero interest rate environment? (House price crash = say 25pc + drop in nominal uk house price index for the next 5+ years)
number2 said:
What needs to happen/conditions be in place for there to be a house price crash in a zero interest rate environment? (House price crash = say 25pc + drop in nominal uk house price index for the next 5+ years)
Put up interest rates I suppose. Though I think the low rate landscape is here to stay for the time being, the medium term at least.dmahon said:
Not boasting as I agree all BTL landlords are aholes and think a crash would be good for society.
Were you around in 2008-2009 ? The last crash only benefited for those who has loads of cash, or big equities on USD by using the advantage of low GBP and low property prices, multiplying more into their portfolios. Not to mention, many young people were unemployed or lost jobs, did not have a chance to jump into the ladder... Not really good for society imhoholes and think a crash would be good for society. Edited by dmahon on Wednesday 24th February 18:57
MX-6 said:
This is an interesting one, I think it depends how you look at it. I like the idea of property being affordable for people and there being a high percentage of owner-occupiers, it looks like an increase in equality and wealth distribution across society. I do actually think property is affordable for the majority of people in most parts of the country as it stands though.
With regards to perceived high prices in the hotspots, specifically London, home counties, south east, this has effectively been determined by market forces. People have the money to afford property at the current levels, if they didn't there would have been more of a correction already. If houses in these areas look relatively high, then I think we have to look at the wealth distribution in terms of wages and other income, because higher house prices seem to be a symptom of people on higher incomes being able to compete with each other to buy them and drive prices up. So from this perspective it's more likely to be sentiment that causes a fall in prices if that happens, not the fundermentals of affordability. So far in the face of the pandemic, brexit, etc. sentiment has been very solid, to my surprise intially.
So, I think we would need more equal pay to result in more affordable house prices. But again, market forces seems to determine renumeration, there is generally high demand for high skill workers and even something of a shortage in some fields, and an over-supply of low skill workers at the bottom end of the hierarchy. We've needed minimum wage, higher tax treshold, tax credits, etc. to artifically drive up income for those people. How far you want to go with wealth redistribution obviously depends on your political persuasion.
A point regarding a house price crash, this would impact quite a number of people in terms of negative equity. The would-be FTB's may well be attracted to the idea, but if banks get jittery and restrict lending then it may become even harder to buy for some. Plus the supply of decent properies may well dry up, people will be relucant to sell (unless it's a forced sale) and transaction volumes will take a dive. I think to a certain degree there's something in so called disaster capitalism idea, where in an economic crash senario it's actually the individuals and business with money that will in a favourable position to hoover up some of the bargain properties, assets, etc. and it's a lot of regular people that will get stuffed. There would be winners and losers I guess.
Absolutely.With regards to perceived high prices in the hotspots, specifically London, home counties, south east, this has effectively been determined by market forces. People have the money to afford property at the current levels, if they didn't there would have been more of a correction already. If houses in these areas look relatively high, then I think we have to look at the wealth distribution in terms of wages and other income, because higher house prices seem to be a symptom of people on higher incomes being able to compete with each other to buy them and drive prices up. So from this perspective it's more likely to be sentiment that causes a fall in prices if that happens, not the fundermentals of affordability. So far in the face of the pandemic, brexit, etc. sentiment has been very solid, to my surprise intially.
So, I think we would need more equal pay to result in more affordable house prices. But again, market forces seems to determine renumeration, there is generally high demand for high skill workers and even something of a shortage in some fields, and an over-supply of low skill workers at the bottom end of the hierarchy. We've needed minimum wage, higher tax treshold, tax credits, etc. to artifically drive up income for those people. How far you want to go with wealth redistribution obviously depends on your political persuasion.
A point regarding a house price crash, this would impact quite a number of people in terms of negative equity. The would-be FTB's may well be attracted to the idea, but if banks get jittery and restrict lending then it may become even harder to buy for some. Plus the supply of decent properies may well dry up, people will be relucant to sell (unless it's a forced sale) and transaction volumes will take a dive. I think to a certain degree there's something in so called disaster capitalism idea, where in an economic crash senario it's actually the individuals and business with money that will in a favourable position to hoover up some of the bargain properties, assets, etc. and it's a lot of regular people that will get stuffed. There would be winners and losers I guess.
I think the important word there is 'correction'. I take that to mean a reversion to prices that are affordable by buyers in the market, but that affordability is actually very different to 20 years ago, even if wage levels have been broadly static on average. For example:
Mortgages at up to 5x joint income rather than 3.5% single income, with near zero interest rates..
BTL much more popular.
More foreign investment (decreasing perhaps, but still more than 20 years ago).
Much more family money entering the market through inheritance and BOMAD.
Far more Government support for house prices (HtB etc).
Housing seen as a 'one-way-bet' meaning people will happily put in a higher percentage of their income than they might have done before.
More people at both extremes of wage structure even if average pay per role type hasn't moved much.
A 'correction' down to a level that includes all of those factors might actually be a far smaller movement than a lot of people think.
Not sure how relevant this is to the discussion in 2021, but I recently learnt that the 3 bed detached house my parents bought in 1994 and still living in, was purchased for 65k.
Asking price was 57k.
Extrapolating the numbers, this suggests paying 650k for a house marketed at 570k.
Madness, if you ask me.
Asking price was 57k.
Extrapolating the numbers, this suggests paying 650k for a house marketed at 570k.
Madness, if you ask me.
okgo said:
Also most people waiting for a crash still wouldn't buy if there was one.
Ona broader investment scale, you are told not to try and catch a falling knife. As has been said, trying to second guess the housing market, now with the introduction of all sorts of mechanisms seemingly aimed at maintaining it and/or continuing its rise, is almost impossible. If you are paying rent at the same time, which could otherwise be paying down a debt, then the statistics rarely look in your favour.
I can see some caution in wanting to avoid negative equity and the implications for those who are in the early stages of ownership and then face remortgage difficulties as a consequence. Otherwise you may as well crack on. Nice if you "win" your gamble and time it perfectly, but limited opportunities to do that in a market rigged against you so and the odds are stacked against you to get it right.
Shnozz said:
okgo said:
Also most people waiting for a crash still wouldn't buy if there was one.
Ona broader investment scale, you are told not to try and catch a falling knife. As has been said, trying to second guess the housing market, now with the introduction of all sorts of mechanisms seemingly aimed at maintaining it and/or continuing its rise, is almost impossible. If you are paying rent at the same time, which could otherwise be paying down a debt, then the statistics rarely look in your favour.
I can see some caution in wanting to avoid negative equity and the implications for those who are in the early stages of ownership and then face remortgage difficulties as a consequence. Otherwise you may as well crack on. Nice if you "win" your gamble and time it perfectly, but limited opportunities to do that in a market rigged against you so and the odds are stacked against you to get it right.
Better to base buying decisions on what is best for you life situation, where you need to work, if you plan to start a family so need space, schools, etc. I wouldn't want to put my life on hold for years for what equates in practice to saving a few quid a month in mortgage payments.
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