House Price Crash Coming?
Discussion
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.
geeks said:
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.
s1962a said:
Aren’t the 33% rented already accounted for in the ‘mortgaged”? So if 33% of properties are mortgaged (residential, BTL), then 100%-33% must be owned outright no? The rental status of a property doesn’t change the fact it’s owned by someone and either mortgaged or owned outright.
It's classified by occupier type, so 'mortgaged' means 'owner occupied with a mortgage'Welshbeef said:
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.
I think the counter argument here is that % of owned/mortgaged doesn't have much bearing on price if the market gets driven by sentiment. 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.
Owners who see prices starting to tumble could start 'cashing in' on equity while they can, before it reduces further, or alternatively, just sit on their asset and simply be a spectator, watching it unfold.
I'm not sure where you are getting that 'vested interest' in a price drop from. For me personally, I just see so many stars aligning in a negative way, that there is a huge risk. I'm a home owner 17 years and like you mention, I've derisked interest rates by fixing my mortgage for 5 years and then I'm home on a boat. I've no vested interest at all in a crash. But I see trouble ahead, so derisked.
I can sit on my asset all day long, but as much as I would like to think I can control the value of my house (ie, I would never sell it for less than £x) the reality is, I can't control it. Its only worth what someone is willing to pay for it, plus, once they are willing to buy it, they also need the bank to agree that its worth that.
There is also a strong argument to say that the banks are derisked (ish) from a crash. As you've illuded too - so much of the value is equity, rather than loan. A crash wouldn't destroy the banks as a whole, although it would still hurt a lot. I would mostly mean a lot of equity simply dissappears.
But I'm also a realist. Its going to be very hard work for banks/govt to keep prices at current levels. Very hard work. Its possible though- they just need to keep the public perception of prices being fair, affordable and realistic.
That's a huge challenge with the long term financial weather forecast on the horizon.
soupdragon1 said:
I'm not sure where you are getting that 'vested interest' in a price drop from. For me personally, I just see so many stars aligning in a negative way, that there is a huge risk. I'm a home owner 17 years and like you mention, I've derisked interest rates by fixing my mortgage for 5 years and then I'm home on a boat. I've no vested interest at all in a crash. But I see trouble ahead, so derisked.
People with a vested interest in price falls are in a different position to you. Some will by FTBs wanting prices to fall so they can get more house for their maximum mortgage multiples, others will be those who want to move up the ladder but need the gap to reduce before they can do so.There will also be the speculators who have sold their home or BTL portfolio in the hope they can buy back in at x% less.
wormus said:
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.
andy43 said:
To be fair the last couple of elections haven't offered much choice to anybody of any age. I'm sure the younger renters will come flooding back under Sir Keir...
But who loses out?We have a very large proportion of OAPs to young ratio. They will die at some point. And naturally those properties will then either flow down to those people or on the open market.
Welshbeef said:
But who loses out?
We have a very large proportion of OAPs to young ratio. They will die at some point. And naturally those properties will then either flow down to those people or on the open market.
Young people become old people, that’s typically how it works out and the new generation of oldies will live even longer.We have a very large proportion of OAPs to young ratio. They will die at some point. And naturally those properties will then either flow down to those people or on the open market.
I have been on PistonHeads for many years now and id say every 6-9 months theres a house prices crashing thread.
It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable.
I just don't see how anyone under the age of about 25 can possibly get into the vast majority of homes. Actually saying that, they can. they have to save save save and do it as a couple.
Affordability is the only thing which will stop them continually going up, i assume a lot inherit money which helps but what about when the next generation comes round? after splitting between the kids and iht there cant be a lot left after a couple of generations.
What does amaze me is where i am 7-900k will get something quite nice, not imo anything which is a bit wow. But you jump to 1.2 and all of a sudden the worlds your oyster (within reason), ive seen some spectacular property come up around that and to be fair it has all sold fairly quick.
I am actually considering in the next few years selling up and buying something special with the inlaws and building them an annex. Its the only way i could possibly even consider some of these houses, and free childcare
How the f
k does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.
It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable.
I just don't see how anyone under the age of about 25 can possibly get into the vast majority of homes. Actually saying that, they can. they have to save save save and do it as a couple.
Affordability is the only thing which will stop them continually going up, i assume a lot inherit money which helps but what about when the next generation comes round? after splitting between the kids and iht there cant be a lot left after a couple of generations.
What does amaze me is where i am 7-900k will get something quite nice, not imo anything which is a bit wow. But you jump to 1.2 and all of a sudden the worlds your oyster (within reason), ive seen some spectacular property come up around that and to be fair it has all sold fairly quick.
I am actually considering in the next few years selling up and buying something special with the inlaws and building them an annex. Its the only way i could possibly even consider some of these houses, and free childcare
How the f
k does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.m3jappa said:
I have been on PistonHeads for many years now and id say every 6-9 months theres a house prices crashing thread.
It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable.
It hasn't happened, and will be unlikely to happen. As it's not a free market.It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable.
The government will get involved and introduce schemes to keep it propped up, as the house price bubble is 'too big to fail.
10%. 20% sure, but won't be allowed to crash.
m3jappa said:
How the fk does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.
Outside of London, is it really that hard to buy? Can get a house up north for £150k, that's £15k deposit. Not too unobtainable by any means. Still higher than it should be, but not difficult with an average salary job even without any help from mum and dad. People just need to be better with money and less picky where they live. k does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.m3jappa said:
I have been on PistonHeads for many years now and id say every 6-9 months theres a house prices crashing thread.
It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable..
Two comments,It still hasn't happened, ok some areas took a hit in 08 and never recovered but houses are still incredibly expensive and seemingly unaffordable..
- There is similarly every 6-9 months a thread saying the stock market is too high and bound to crash.
- These things have never been "affordable", whatever that means.
Drezza said:
m3jappa said:
How the fk does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.
Outside of London, is it really that hard to buy? Can get a house up north for £150k, that's £15k deposit. Not too unobtainable by any means. Still higher than it should be, but not difficult with an average salary job even without any help from mum and dad. People just need to be better with money and less picky where they live. k does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.Once you get North of Cambridge things start to get a lot more reasonable than the crazy South East.
Drezza said:
m3jappa said:
How the fk does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.
Outside of London, is it really that hard to buy? Can get a house up north for £150k, that's £15k deposit. Not too unobtainable by any means. Still higher than it should be, but not difficult with an average salary job even without any help from mum and dad. People just need to be better with money and less picky where they live. k does anyone who hasn't inherited money who is still low down or not on the ladder ever get close to even be able to borrow that amount of money et alone pay it back.Take North Wales as an example you can get 2 bed Terraces for £50k or less that’s a house not a flat. So even on £12.5k a year you could buy one of those and the do er uppers of two bed terraces are even less.
If you earn £12.5k clearly you cannot afford to buy a £150k house why would you be trying to unless you had a windfall.
Drezza said:
Outside of London, is it really that hard to buy? Can get a house up north for £150k, that's £15k deposit. Not too unobtainable by any means. Still higher than it should be, but not difficult with an average salary job even without any help from mum and dad. People just need to be better with money and less picky where they live.
You would need 22k these days. Pretty much all 90% mortgages have been withdrawn rockin said:
Two comments,
I would disagree with this - housing was certainly attainable in the mid to late 1990s following the crash in the early 1990s - I think something to do with tax relief on mortgages was the cause of that...- There is similarly every 6-9 months a thread saying the stock market is too high and bound to crash.
- These things have never been "affordable", whatever that means.
Anyway as noted we've now seen property increasingly viewed as an investment - this BTL boom with amateur landlords started in earnest in the late 1990s and early 2000s - I also remember issues such as "self certification mortgages" ("liar loans") around that time which is when prices really started to go nuts.
We have now have three "black swan" events - the virus, section 24, and EU exit.
A sharp drop in overseas student numbers plus BTL being less profitable may lead to a number of smaller landlords "throwing in the towel" (if they can afford the CGT)
Once sentiment switches it can be very hard to reverse - again anyone around in the early 1990s will remember this very well. And the government has run out of ammo to prop up the market...
One way or another it could get very interesting this year...
hyphen said:
It hasn't happened, and will be unlikely to happen. As it's not a free market.
The government will get involved and introduce schemes to keep it propped up, as the house price bubble is 'too big to fail.
10%. 20% sure, but won't be allowed to crash.
This exactly. If you look at countries that have had a property crash usually they have had massive rises in a short time. Talking 1-4 years of prices doubling or tripling. Since about 1991 house have been rising quickly but not running away until 2008 then just bobbing along since. The government will get involved and introduce schemes to keep it propped up, as the house price bubble is 'too big to fail.
10%. 20% sure, but won't be allowed to crash.
We live in Kew, looking to move to a house from a fiat 2 bed flats start around £450k mark. They won’t drop much because they sell quickly. 3 bed houses start at £1.3 mil, very occasionally you get a house pop up for £1.1 mil and it will get an offer within a week. Chiswick, Richmond, Twickenham, Kew etc row upon rows of terrace houses in the millions and if you go to Kensington, Victoria, Pimlico is even crazier which is why a lot of the 3/4 story town houses are converted to flats.
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