HOUSE PRICE CRASH? POLL 18 June 2004 at 7:12PM in Money Saving Polls 16 replies 7.1K views

MSE_Martin

The following poll currently appears on the front page of the site

Poll Started 18 June. Will House Prices Crash? What will happen to UK house prices over the next year. (to discuss this and for past poll results see Money Saving Polls in the Chat Forum)

Decrease 10-20% (smaller crash)
Decrease 2-5%
Decrease 5-10%
Decrease over 20% (crash)
I really have no idea
Increase 10-20%
Increase 2-5%
Increase 5-10%
Increase over 20%
No Real Change


To discuss it click reply

System

it amazes me that anybody can seriously check anything other than 'i really have no idea'.
people who have predicted an increase or a decrease -- explain yourselves! even the professional market analysts are wavering on this one. is there a genuine shortage of houses? how will the buy to let market effect things? will interest rates keep going up? how will this effect people? especially the 'amateur landlords'? is it *really* sustainable that first time buyers can only get on the property ladder by the minor fraud of self-certification?

I bought my flat in London 7 years ago. since then it has almost trebled in value. i now want to sell it and move out of london, but the housing market is crazy. it seems that the world is full of idiots who want to brag about how large their mortgages are, estate agents with one eye on the back door in case the market comes tumbling... bonkers.

lisyloo

it amazes me that anybody can seriously check anything other than 'i really have no idea'.
people who have predicted an increase or a decrease -- explain yourselves!

My own opinion is that the market is constrained by affordability but that fundamentals are strong (good demand, low interest rates, high employment etc).
However people are now constrained by affordability so I think rises will be much lower.

My opinions concur with those of the CEBR below.

I can't claim to KNOW what's going to happen but I do claim to have an opinion after taking an interest in the subject for avout 2 years (I also have a vested interest like everyone else).

http://www.thisismoney.com/20040621/nm79600.html

MSE_Martin

Actually I think this is one of the most important polls ever done. The result is important because attitudes to house prices actually have a direct impact on house prices. For me its fascinating that the last two times i did this people almost all thought prices would rise they now thing they'll likely fall.

In it self that means people will be more cautious - decreasing demand and its a self-fulfilling prophesy.

Fascinating.

MSE_Martin

Poll Started 18 June. Will House Prices Crash? What will happen to UK house prices over the next year. (to discuss this and for past poll results see Money Saving Polls in the Chat Forum)

Increase 2-5% 14.5% - (327 Votes)
Increase 5-10% 13.3% - (300 Votes)
Decrease 5-10% 12.9% - (292 Votes)
Decrease 2-5% 11.8% - (267 Votes)
No Real Change 11% - (250 Votes)
I really have no idea 10.5% - (238 Votes)
Decrease 10-20% (smaller crash) 9.9% - (224 Votes)
Decrease over 20% (crash) 9.8% - (221 Votes)
Increase 10-20% 5.1% - (116 Votes)
Increase over 20% 0.8% - (20 Votes)

Total Votes: 2255

MSE_Martin

Some analysis of these results.

The average view (after taking out the don't knows) of MoneySavers is a drop in house prices of 3.2% over the next year. The prediction of a fall is actually quite radical and has some rather worrying consequences for home owners.

If people believe prices will drop they are likely to change their behaviour to take this into account. This behavioural change means people are less likely to enter the housing market and decrease demand. This in itself has an impact on house prices and you have the potential for a self-fulfilling prophesy.

Looking at the figures in more detail, 22% of people, more than one in five (excluding the 'don't knows') are predicting a drop of over 10% - which would have a serious impact. This compares to just 6% of people who think house prices will rise by that amount.

Martin

DiggingOut

I read something this weekend (don't remember where) that 80%+ of BTL investors say they are in it for the long term and won't bail out if prices drop.

Since most people own their homes and will stay in them if prices drop, doesn't that argue that a large crash is pretty unlikely? Because a real crash is only likely to occur if current owners start to get out, given the housing shortages.

Pal

80% of BTL investors would say that as they have a vested interest in prices staying high, so they are more likely to give the answer that talks the market up. Just like the Nationwide and Halifax surveys in fact.

It is not the price of the house that matters to them, it is the profit (if any) they make each month because their rent is higher than their mortgage payments. If their mortgage payments start to go up, many will sell, rather than pay out each month to keep the BTL going, especially if their own home mortgage and credit card costs are going up at the same time.

Former_MSE_Andrea

We're repeating this poll as we really want to see how views have changed over time.

Poll Started 6 October. Will House Prices Crash? What will happen to UK house prices over the next year?

a. Increase over 20%  
b. Increase 10-20%  
c. Increase 5-10%  
d. Increase 2-5%  
e. No Real Change  
f. Decrease 2-5%  
g. Decrease 5-10%  
h. Decrease 10-20% (smaller crash)  
i. Decrease over 20% (crash)  
j. I really have no idea  

To discuss it click reply

Jezza101

explain yourselves!

Seems obvious to me (ah the impetuous youth) ;D!

I believe there will be a nice healthy decrease to get back to the 'real' value of homes. As a potential first time London buyer, not only would I refuse to pay these crazy prices on principle, but I simply cannot afford to anyway >:(!

Me and my partner are both recent graduates earning nicely above the national wage and are both savers by nature (no debts, big deposit ready and growing ) and we are still way way way short of buying the sort of place we want. And no we arent going to compromise by buying an ex crack den in Camberwell .

All I see when I speak to my colleagues who got in just 5 years earlier and looking to sell their little pokey places for their 1st 'family home' is a string of 'fantasy' chains:

My agent tells me my 60k 5x10ft East-end bedsit is now worth £120k, I'll use this theoretical 120k to put in an offer on a 1 bed 170k house that cost 110k a few years ago. This person then uses the 170k they think they will get to put a 240k offer in on a 2 bed house that cost £150k five years ago etc. This is the classic fantasy chain that many people I know are involved in. The bottom line is, no one can afford or wants to pay 120k for a one bed coakroach infested bedsit in Newham ::).

The chain is pure fantasy. Eventually the bedsit owner, desperate to escape to Surburban bliss, will accept a lower offer and put in a lower offer on the next place which will be accepted as the property has been on the market for a year and little Josh really needs his own room now, etc, etc... :-/

Unfortunately we got to the current state by a lot of people jumping in and snapping up less than ideal properties at higher prices than they should have thanks to irresponsible mortgage lenders throwing money round and estate agents playing people off each other in the frenzy to get on the ladder over the last few years (and boy do I have some scandalous agent stories! >:(). The greedy buy-to-let brigade have kept the whole thing turning by snapping up cheaper, traditional first time properties at non-traditional first time prices - out bidding the genuine 1st time buyers by whatever amounts necessary thanks to their established finances and nice interest rates. My bankrupt '80's yuppy' uncle reminds me that greedy buy-to-let investers wont all have the easy ride they expect...

So here we are, Im saving lots of dosh thanks to the stupidly low rent I pay for my luxury two bed/two bathroom flat (I struggle to see how my landlord will make a profit at the rate I pay...) that was on the market for 200k ;D. I have no desire to pay such a large sum of money for a property that just isnt worth that much 8). The facts and my experience of my year group all point to first time buyers dropping right out of the market - it isnt even a matter of choice now, we just cant afford it !

I urge people to take a reality check and remember that a property is only actually worth as much as someone will pay for it. The estate agents may say your property has trebled in value - but until you make that sale you havent made a penny :P.

A nice healthy tax on second homes will sort this mess out. If not Im off to France with my savings - I can already afford a 5 bed country house in my cousins village.... still think UK houses arent way overpriced? Where do I sign up to French classes..?

GL all

nightrider_1uk_2

Hi I agree with the last message, houses are only worth what people are prepared to pay for them. I am looking at an ex pub on a council housing estate in suffolk, great building but at £250K I fail to see where the money is since it will cost about 50K to either fionish converting to a house (my prefrerd option) or to convert into flats. Being on a council estate, i fail to see how u will get £300K+ for 3 flats anyway.
This I know because my large 3 bed semi on a council estate about 8 miles away is only worth about £110K (if im lucky).
Its the estate agents that give the vendors a false hope in the first place. I think an estate agent as part of the valuation process should give a written justification of the price along with any listing.