Should I be wary buying a house in the current climate?

GDB2222

50Twuncle said:

GDB2222 said:

50Twuncle said:

Prices will only drop when there's a housing surplus - Which is not the case

You also said “there may be a slight correction of around 10%”.  That was yesterday.

It’s good that you are hedging your bets. Regardless of the outcome, you’ll be able to point to a post where you predicted it.

Ok I meant '' DROP' as opposed to."fluctuate"
There is still an incredible shortage of housing stock in UK

There certainly is a shortage, I agree. But there was also a shortage in 1988, yet prices dropped by 30% and remained low for the best part of 10 years. That was caused by very high interest rates, which we don’t have now. I’m not saying that is going to happen again, just that we are living in ‘interesting times' and anything could happen.

GDB2222

Actually, this is a moot point. Mortgages have more or less dried up already. Barclays have withdrawn all loans with an LTV over 60%.  Michael Gove has told people not to move. Removals firms are shutting up shop. Or so says the DM.

https://www.dailymail.co.uk/news/article-8150357/Chaos-housing-market-banks-stop-mortgage-lending.html

MobileSaver

Crashy_Time said:

It is driven by sentiment and cheap credit/mortgage availability, both about to be severely tested IMO.

You have been saying that since at least 2014, remind me again how house prices have gone since then?

Crashy_Time said on 6 August 2014:

My basic stance is that property prices are dictated by sentiment and availability of credit and we are headed for a crash and slump lasting many years.

As we all know even a stopped clock is correct twice a day. Saying "prices are driven by sentiment" every year for six years and being demonstrably wrong does not magically turn you into a prophetic property guru if prices happen to drop at some point!

One of your fundamental flaws is that you repeatedly ignore the basics of our capitalist economy: supply and demand. A lesser demand accompanied by a smaller supply means prices won't move much, similarly a higher demand accompanied by a larger supply means the same.

If prices fall then many people will simply choose not to sell their property thus limiting supply; just think about it, unless you absolutely had to, why would you sell something for less when you can be pretty confident you'll get more for it in the not too distant future? The answer is that most people wouldn't.

MobileSaver

Crashy_Time said:

Are you denying (or trying to) that transactions are about half their peak number, and that prices have risen since that peak?

Er, no, I am not denying that and I am really not sure what point you are trying to make?

triathlon

MobileSaver said:

Crashy_Time said:

It is driven by sentiment and cheap credit/mortgage availability, both about to be severely tested IMO.

You have been saying that since at least 2014, remind me again how house prices have gone since then?

Crashy_Time said on 6 August 2014:

My basic stance is that property prices are dictated by sentiment and availability of credit and we are headed for a crash and slump lasting many years.

As we all know even a stopped clock is correct twice a day. Saying "prices are driven by sentiment" every year for six years and being demonstrably wrong does not magically turn you into a prophetic property guru if prices happen to drop at some point!

One of your fundamental flaws is that you repeatedly ignore the basics of our capitalist economy: supply and demand. A lesser demand accompanied by a smaller supply means prices won't move much, similarly a higher demand accompanied by a larger supply means the same.

If prices fall then many people will simply choose not to sell their property thus limiting supply; just think about it, unless you absolutely had to, why would you sell something for less when you can be pretty confident you'll get more for it in the not too distant future? The answer is that most people wouldn't.

Go to housepricecrash.com where they go back as far as Professor Oswald who predicted a property crash in the late 1990's and early 2000's and who was their hero, is it even possible to get a worse financial call?

stehouk

People are dying all over the country mostly the old, in some cases their houses will sold, companies may never open for business again (pubs & restaurants) and many other companies will use this opportunity (as they have in the past) to shed jobs to keep profits high, people will try and sell houses prior to them being repossessed or before the inevitable crash because they ran up so much debt due to no work, to say that people will simply not sell their houses is only true if they have no mortgage others may not have a choice.

Crashy_Time

triathlon said:

Crashy_Time said:

Windofchange said:

GDB2222 said:

50Twuncle said:

stehouk said:

Iv'e been looking at the property market in my area for a while now and prior to the pandemic hitting the country there were only 2-3 houses per week/fortnight all of a sudden there are between 3-5 houses per day being listed, are people trying to off load their houses before the crash........ i think they are.

There will NOT be a crash - there are still too many potential buyers - there may be a slight correction of around 10%

I'm not predicting a crash, either. But I think that a 10% price correction is more than 'slight', and if I were buying I'd certainly wait a few months in order to get that sort of reduction.  

But there is no guarantee you are going to get that reduction. Drops in prices can be very region specific, and very situation specific. Forced and desperate sellers may have a bit more pressure, and there may be some bargains to be had, but given how strong the property markets were at the start of the year before corona virus, it really wouldn't surprise me if certain parts of the market just carried on as they were. There are so many nuances to buying a property that are specific to each situation that you cannot just chuck a blanket over it all and say sit it out.

In my n=1 case, we are building towards hopefully exchanging contracts in the next few weeks once the country is allowed to move again, and I am not going to be pulling out or trying to re-negotiate. In my part of SE London, demand was through the roof, and we had to fight off multiple offers to get what we have. That demand won't have gone away overnight regardless of the wider economy - not everybody is on a zero hours contract, and certainly in the price range we are buying in, people have resources. We are both NHS workers, and our jobs could not be more secure, particularly in this time. We are planning to start a family in this house, stay for at least 10 years, if not longer, and any short to mid term drops just aren't a factor to my thinking. 

The issue with trying to guess the property market is that it is not driven by economics. Of course economics affect it, but there is a lot of heart and emotion that goes into something. I love our potential new home, and if it takes a hit for the next few years then it's not something I will cheer about, but at the same time, it's not something I will lose sleep over. If you find somewhere you love, and you can see yourself there for the long term, then look at the positives - never seen before low interest rates, the security of owning somewhere whilst you sit any recession out, building equity in the long term even if you are going to take a slight bath immediately. Circumstantially, I cannot wait much longer to do this as I won't get a mainstream lender 25 year term, and for us it is a case of fortune favours the brave!

It is driven by sentiment and cheap credit/mortgage availability, both about to be severely tested IMO.

Its always your opinion and has been for years/decades. If the next doors cat is run over it will "severely test the markets"

Do you now regret not selling all your rental properties last year? Do you seriously not think that sentiment and credit/housing markets will be under pressure after this?

Herzlos

stehouk said:

People are dying all over the country mostly the old, in some cases their houses will sold, companies may never open for business again (pubs & restaurants) and many other companies will use this opportunity (as they have in the past) to shed jobs to keep profits high, people will try and sell houses prior to them being repossessed or before the inevitable crash because they ran up so much debt due to no work, to say that people will simply not sell their houses is only true if they have no mortgage others may not have a choice.

The people inheriting houses via estates may sell them but if the prices drop they may also just hang onto them and rent it out (or move into it and rent their own out). The only ones that have to be sold are where it's needed to clear a debt or there's arguments over how it should be split.
It's sort of the same for those losing jobs - they'll still need to stay somewhere and it could easily cost £5k to move - more if you're paying stamp duty on the other place, so people may not actually be in a position to sell. Sure, some will be able to downsize but most will just run into arrears for a while and stay put.
Again, the only ones who'll sell when the demand drops are the ones with no choice - divorces and repossessions, and even then it'll only drop a bit (maybe 10-20%) because if they get cheap enough (50%) they'll start getting snapped up by investors and driving the prices back up. Remember that whilst the bottom 95% of the country may be skint, the top 5% are still going to be sitting on huge funds and won't think anything of speculating a few million on some cheap investment properties.

stehouk

The herd that were  panic buying have  started panic selling in my area, 43 new properties since monday, that is more than in the last 5 months, I'm getting inundated with new alerts both from new build offers and estate agents with reduced properties.

triathlon

Crashy_Time said:

triathlon said:

Crashy_Time said:

Windofchange said:

GDB2222 said:

50Twuncle said:

stehouk said:

Iv'e been looking at the property market in my area for a while now and prior to the pandemic hitting the country there were only 2-3 houses per week/fortnight all of a sudden there are between 3-5 houses per day being listed, are people trying to off load their houses before the crash........ i think they are.

There will NOT be a crash - there are still too many potential buyers - there may be a slight correction of around 10%

I'm not predicting a crash, either. But I think that a 10% price correction is more than 'slight', and if I were buying I'd certainly wait a few months in order to get that sort of reduction.  

But there is no guarantee you are going to get that reduction. Drops in prices can be very region specific, and very situation specific. Forced and desperate sellers may have a bit more pressure, and there may be some bargains to be had, but given how strong the property markets were at the start of the year before corona virus, it really wouldn't surprise me if certain parts of the market just carried on as they were. There are so many nuances to buying a property that are specific to each situation that you cannot just chuck a blanket over it all and say sit it out.

In my n=1 case, we are building towards hopefully exchanging contracts in the next few weeks once the country is allowed to move again, and I am not going to be pulling out or trying to re-negotiate. In my part of SE London, demand was through the roof, and we had to fight off multiple offers to get what we have. That demand won't have gone away overnight regardless of the wider economy - not everybody is on a zero hours contract, and certainly in the price range we are buying in, people have resources. We are both NHS workers, and our jobs could not be more secure, particularly in this time. We are planning to start a family in this house, stay for at least 10 years, if not longer, and any short to mid term drops just aren't a factor to my thinking. 

The issue with trying to guess the property market is that it is not driven by economics. Of course economics affect it, but there is a lot of heart and emotion that goes into something. I love our potential new home, and if it takes a hit for the next few years then it's not something I will cheer about, but at the same time, it's not something I will lose sleep over. If you find somewhere you love, and you can see yourself there for the long term, then look at the positives - never seen before low interest rates, the security of owning somewhere whilst you sit any recession out, building equity in the long term even if you are going to take a slight bath immediately. Circumstantially, I cannot wait much longer to do this as I won't get a mainstream lender 25 year term, and for us it is a case of fortune favours the brave!

It is driven by sentiment and cheap credit/mortgage availability, both about to be severely tested IMO.

Its always your opinion and has been for years/decades. If the next doors cat is run over it will "severely test the markets"

Do you now regret not selling all your rental properties last year? Do you seriously not think that sentiment and credit/housing markets will be under pressure after this?

I accept there will always be difficulties, but I lead my life anyway. You have been waiting for destruction in some form for decades now and predicting all sorts of reasons why house prices will collapse.  Now you might be partly right, but prices of houses won't fall anything like you want/need them too, and besides you never or anyone else could have predicted this virus.

Also even if prices fell 70% I would still be in profit after all these years and would have had a life rather than hoping for one. Whatever happens I will get work with what I have got and live life in a positive way.