Asking for a Reduction on House Price

Scotbot

2m jobs or 6% additional unemployment is quite a lot in my mind! Do you not think that would impact house prices?

Not all of them will be house owners and some of them that are will have enough equity to remortgage. The question is how many won't, I  have no idea. If I were a FTB I would hang on at least 6 months to see what happens. If I  were looking to downsize I would stay put.

Crashy_Time

AdrianC said:

Benteken said:

dani17 said:

another point. when the houses prices dropped 18% in 2009, the ftse dropped almost by more than 30%. Now the ftse is only -13% than pre covid level. Do you thini really that houses will drop more than the ftse? i will be very very surprised. 

I would think it is fair to say we probably haven’t seen the FTSE bottom out yet given COVID is far from over and we don’t know what the long term impacts are going to be on companies/general public

The FTSE100, 250 and Allshare all dropped very sharply at the expectation of lockdown, and have risen ever since, recovering half of that initial drop already.

https://www.londonstockexchange.com/indices/ftse-100
https://www.londonstockexchange.com/indices/ftse-250
https://www.londonstockexchange.com/indices/ftse-all-share

If you'd bought into a FTSE250 tracker in mid-March, a week before lockdown, you would now be looking at a near-on 20% profit.

2008 was a very different situation to now.
In 2008, the lenders were in trouble. They had no money. They'd been lending profligately to anybody + dog. They strapped down their lending criteria tight, and many of the people who had been buying before found they couldn't after.
Now, the lenders aren't in trouble. They're still lending. Their affordability criteria are more or less unchanged. Yes, some people will have affordability issues because of their employment situation changing. But, on the whole, the reason transactions have fallen drastically is simpler - nobody's buying OR selling, unless they absolutely have to. And where they have to, distress sales mean lower prices. That doesn't normally affect the market averages, because there's relatively few of them - but, now, it does because they're still the same number, but a much higher proportion.

2008 was banks, this is the whole economy, the bail outs are bigger and more desperate, and they don`t have the rate cut tool any more. Transactions are about half what they were at the peak and it just takes something like a load of twenty somethings who no longer have a job in travel or hospitality giving up their rental and going home to Mum to cause a whole load of empty flats to hit the market.

Crashy_Time

Scotbot said:

2m jobs or 6% additional unemployment is quite a lot in my mind! Do you not think that would impact house prices?

Not all of them will be house owners and some of them that are will have enough equity to remortgage. The question is how many won't, I  have no idea. If I were a FTB I would hang on at least 6 months to see what happens. If I  were looking to downsize I would stay put.

Many will be potential house buyers/renters who will now have to go back to Mum and dad in many cases. That definitely affects house prices/demand for loans.

dani17

Crashy_Time said:

AdrianC said:

Benteken said:

dani17 said:

another point. when the houses prices dropped 18% in 2009, the ftse dropped almost by more than 30%. Now the ftse is only -13% than pre covid level. Do you thini really that houses will drop more than the ftse? i will be very very surprised. 

I would think it is fair to say we probably haven’t seen the FTSE bottom out yet given COVID is far from over and we don’t know what the long term impacts are going to be on companies/general public

The FTSE100, 250 and Allshare all dropped very sharply at the expectation of lockdown, and have risen ever since, recovering half of that initial drop already.

https://www.londonstockexchange.com/indices/ftse-100
https://www.londonstockexchange.com/indices/ftse-250
https://www.londonstockexchange.com/indices/ftse-all-share

If you'd bought into a FTSE250 tracker in mid-March, a week before lockdown, you would now be looking at a near-on 20% profit.

2008 was a very different situation to now.
In 2008, the lenders were in trouble. They had no money. They'd been lending profligately to anybody + dog. They strapped down their lending criteria tight, and many of the people who had been buying before found they couldn't after.
Now, the lenders aren't in trouble. They're still lending. Their affordability criteria are more or less unchanged. Yes, some people will have affordability issues because of their employment situation changing. But, on the whole, the reason transactions have fallen drastically is simpler - nobody's buying OR selling, unless they absolutely have to. And where they have to, distress sales mean lower prices. That doesn't normally affect the market averages, because there's relatively few of them - but, now, it does because they're still the same number, but a much higher proportion.

2008 was banks, this is the whole economy, the bail outs are bigger and more desperate, and they don`t have the rate cut tool any more. Transactions are about half what they were at the peak and it just takes something like a load of twenty somethings who no longer have a job in travel or hospitality giving up their rental and going home to Mum to cause a whole load of empty flats to hit the market.

So why the ftse is recovering then? Do you think the market is completely wrong? today the ftse is on -13% than the level before covid. Do you think that a house drop may be bigger than a ftse drop? keep in mind, in 2008 a 16% drop in house prices was associated a 35% drop of the ftse .
TBH we are living in very very strange time. I will not say no one knows only, i will say no one understand. look at the US, COVID + trade war with china + political instability and the S&P keeps recovering .  what is happening now is much bigger than the house market itself, and IMO there are only 2 possibilities: 1/ assume that the market is right and economy is recovering and the crisis is over ( or delayed to be more precise). 2/ the whole market is wrong and in that case we need to short the economy itself rather than waiting for a house price drop.

grumiofoundation

dani17 said:

Crashy_Time said:

AdrianC said:

Benteken said:

dani17 said:

another point. when the houses prices dropped 18% in 2009, the ftse dropped almost by more than 30%. Now the ftse is only -13% than pre covid level. Do you thini really that houses will drop more than the ftse? i will be very very surprised. 

I would think it is fair to say we probably haven’t seen the FTSE bottom out yet given COVID is far from over and we don’t know what the long term impacts are going to be on companies/general public

The FTSE100, 250 and Allshare all dropped very sharply at the expectation of lockdown, and have risen ever since, recovering half of that initial drop already.

https://www.londonstockexchange.com/indices/ftse-100
https://www.londonstockexchange.com/indices/ftse-250
https://www.londonstockexchange.com/indices/ftse-all-share

If you'd bought into a FTSE250 tracker in mid-March, a week before lockdown, you would now be looking at a near-on 20% profit.

2008 was a very different situation to now.
In 2008, the lenders were in trouble. They had no money. They'd been lending profligately to anybody + dog. They strapped down their lending criteria tight, and many of the people who had been buying before found they couldn't after.
Now, the lenders aren't in trouble. They're still lending. Their affordability criteria are more or less unchanged. Yes, some people will have affordability issues because of their employment situation changing. But, on the whole, the reason transactions have fallen drastically is simpler - nobody's buying OR selling, unless they absolutely have to. And where they have to, distress sales mean lower prices. That doesn't normally affect the market averages, because there's relatively few of them - but, now, it does because they're still the same number, but a much higher proportion.

2008 was banks, this is the whole economy, the bail outs are bigger and more desperate, and they don`t have the rate cut tool any more. Transactions are about half what they were at the peak and it just takes something like a load of twenty somethings who no longer have a job in travel or hospitality giving up their rental and going home to Mum to cause a whole load of empty flats to hit the market.

So why the ftse is recovering then? Do you think the market is completely wrong? today the ftse is on -13% than the level before covid. Do you think that a house drop may be bigger than a ftse drop? keep in mind, in 2008 a 16% drop in house prices was associated a 35% drop of the ftse .
TBH we are living in very very strange time. I will not say no one knows only, i will say no one understand. look at the US, COVID + trade war with china + political instability and the S&P keeps recovering .  what is happening now is much bigger than the house market itself, and IMO there are only 2 possibilities: 1/ assume that the market is right and economy is recovering and the crisis is over ( or delayed to be more precise). 2/ the whole market is wrong and in that case we need to short the economy itself rather than waiting for a house price drop.

The FTSE (or any global stock market) and Uk house prices are not inextricably linked. 

dani17

grumiofoundation said:

dani17 said:

Crashy_Time said:

AdrianC said:

Benteken said:

dani17 said:

another point. when the houses prices dropped 18% in 2009, the ftse dropped almost by more than 30%. Now the ftse is only -13% than pre covid level. Do you thini really that houses will drop more than the ftse? i will be very very surprised. 

I would think it is fair to say we probably haven’t seen the FTSE bottom out yet given COVID is far from over and we don’t know what the long term impacts are going to be on companies/general public

The FTSE100, 250 and Allshare all dropped very sharply at the expectation of lockdown, and have risen ever since, recovering half of that initial drop already.

https://www.londonstockexchange.com/indices/ftse-100
https://www.londonstockexchange.com/indices/ftse-250
https://www.londonstockexchange.com/indices/ftse-all-share

If you'd bought into a FTSE250 tracker in mid-March, a week before lockdown, you would now be looking at a near-on 20% profit.

2008 was a very different situation to now.
In 2008, the lenders were in trouble. They had no money. They'd been lending profligately to anybody + dog. They strapped down their lending criteria tight, and many of the people who had been buying before found they couldn't after.
Now, the lenders aren't in trouble. They're still lending. Their affordability criteria are more or less unchanged. Yes, some people will have affordability issues because of their employment situation changing. But, on the whole, the reason transactions have fallen drastically is simpler - nobody's buying OR selling, unless they absolutely have to. And where they have to, distress sales mean lower prices. That doesn't normally affect the market averages, because there's relatively few of them - but, now, it does because they're still the same number, but a much higher proportion.

2008 was banks, this is the whole economy, the bail outs are bigger and more desperate, and they don`t have the rate cut tool any more. Transactions are about half what they were at the peak and it just takes something like a load of twenty somethings who no longer have a job in travel or hospitality giving up their rental and going home to Mum to cause a whole load of empty flats to hit the market.

So why the ftse is recovering then? Do you think the market is completely wrong? today the ftse is on -13% than the level before covid. Do you think that a house drop may be bigger than a ftse drop? keep in mind, in 2008 a 16% drop in house prices was associated a 35% drop of the ftse .
TBH we are living in very very strange time. I will not say no one knows only, i will say no one understand. look at the US, COVID + trade war with china + political instability and the S&P keeps recovering .  what is happening now is much bigger than the house market itself, and IMO there are only 2 possibilities: 1/ assume that the market is right and economy is recovering and the crisis is over ( or delayed to be more precise). 2/ the whole market is wrong and in that case we need to short the economy itself rather than waiting for a house price drop.

The FTSE (or any global stock market) and Uk house prices are not inextricably linked. 

During crisis, they are highly correlated. 

scrola

The FTSE (or any global stock market) and Uk house prices are not inextricably linked. 

During crisis, they are highly correlated. 

 So dani17, you appear to be correct FTSE 100 down 15%  fits well with BoE prediction of 16% fall in house prices.

dani17

what i meant by correlated is having similar shape not similar value. You can compare the curves between 2007 and 2010. "Normally", housing market is more resistant than the ftse. but we are not in a normal crisis. Personally, I think that at the end of the day, the smartest will be the people who managed to put huge pressure on their vendors and made them accept a big discount.

Crashy_Time

dani17 said:

grumiofoundation said:

dani17 said:

Crashy_Time said:

AdrianC said:

Benteken said:

dani17 said:

another point. when the houses prices dropped 18% in 2009, the ftse dropped almost by more than 30%. Now the ftse is only -13% than pre covid level. Do you thini really that houses will drop more than the ftse? i will be very very surprised. 

I would think it is fair to say we probably haven’t seen the FTSE bottom out yet given COVID is far from over and we don’t know what the long term impacts are going to be on companies/general public

The FTSE100, 250 and Allshare all dropped very sharply at the expectation of lockdown, and have risen ever since, recovering half of that initial drop already.

https://www.londonstockexchange.com/indices/ftse-100
https://www.londonstockexchange.com/indices/ftse-250
https://www.londonstockexchange.com/indices/ftse-all-share

If you'd bought into a FTSE250 tracker in mid-March, a week before lockdown, you would now be looking at a near-on 20% profit.

2008 was a very different situation to now.
In 2008, the lenders were in trouble. They had no money. They'd been lending profligately to anybody + dog. They strapped down their lending criteria tight, and many of the people who had been buying before found they couldn't after.
Now, the lenders aren't in trouble. They're still lending. Their affordability criteria are more or less unchanged. Yes, some people will have affordability issues because of their employment situation changing. But, on the whole, the reason transactions have fallen drastically is simpler - nobody's buying OR selling, unless they absolutely have to. And where they have to, distress sales mean lower prices. That doesn't normally affect the market averages, because there's relatively few of them - but, now, it does because they're still the same number, but a much higher proportion.

2008 was banks, this is the whole economy, the bail outs are bigger and more desperate, and they don`t have the rate cut tool any more. Transactions are about half what they were at the peak and it just takes something like a load of twenty somethings who no longer have a job in travel or hospitality giving up their rental and going home to Mum to cause a whole load of empty flats to hit the market.

So why the ftse is recovering then? Do you think the market is completely wrong? today the ftse is on -13% than the level before covid. Do you think that a house drop may be bigger than a ftse drop? keep in mind, in 2008 a 16% drop in house prices was associated a 35% drop of the ftse .
TBH we are living in very very strange time. I will not say no one knows only, i will say no one understand. look at the US, COVID + trade war with china + political instability and the S&P keeps recovering .  what is happening now is much bigger than the house market itself, and IMO there are only 2 possibilities: 1/ assume that the market is right and economy is recovering and the crisis is over ( or delayed to be more precise). 2/ the whole market is wrong and in that case we need to short the economy itself rather than waiting for a house price drop.

The FTSE (or any global stock market) and Uk house prices are not inextricably linked. 

During crisis, they are highly correlated. 

Maybe, but the stock markets disconnected form the real economy as soon as CB`s started with the massive bailouts, so many years of disconnection now, on the other hand the property market can be propped up and "stimulated" but will still be heavily affected by wage growth or lack of, sentiment and lending appetite plus willingness of banks to lend. (IMO they will be lending but 70-80% LTV will be the new norm)