Finally seeing house prices drop?

getmore4less

A lot of people as a result of 2020 realised you can't put you life on hold you really need to just  get on with it.

The real losers are those that do put their lives on hold with any excuse

The property cycle is long you really don't get much choice as the real live transition points are shorter it almost impossible to  synchronise if you are not on the right point

We are still working out the late 2000 downturn even Brexit and covid failed to stop it.

HotPantsCruiser

Ramouth said:

MobileSaver said:

Ramouth said:

MobileSaver said:

Fundamentally, the property market is based on supply and demand and while there will always be short-term spikes and troughs there won't be a general long-term downward trend until the supply side of the equation is addressed... and I can't see that happening any time soon...

If the general population believe that prices are likely to fall in the foreseeable future they will hold off buying, reducing demand in the shot term, and therefore putting downward pressure on prices.

I genuinely do not believe that many people will hold of buying because they think "prices are likely to fall in the foreseeable future".

Perhaps it would be different if houses were like say iPhones where there was practically unlimited supply and you could buy the same thing from pretty much anywhere.

Houses people want though are in short supply and people don't just move house on a whim; they have very specific needs such as a new location, bigger size or better environment - only the HPC zealots will sacrifice all those things for ever and a day just to try and get something cheaper.

I think I mostly agree with you.  Which is why long term I can only see prices going up. But possibly have less faith in the general population making sensible decisions based on the numbers in the short term.  I have always thought that if enough people think that a slowdown is coming, it will come.  It definitely felt like that was part of the driver in 2008.  Perhaps there is more pent up demand now though and it just won’t happen.  Who knows.  I have been surprised by every vote and election for the last 10 years so perhaps am not representative of the general population and therefore shouldn’t be making a guess!

The main driver was a credit market crisis, people were hoovering up mortgage debt right up until it crashed, the difference this time is that interest rates badly need to go up not down! That will make any crash/slowdown in the market a whole lot worse.

lookstraightahead

MobileSaver said:

HotPantsCruiser said:

If it is hard for most people in the UK to buy a house it will be VERY hard for a lot of people to sell a house in the UK.

Agreed, it will be harder for both, the difference being that every month that goes by the homeowner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage. Given the choice I know which group I'd rather be in...

Well my experience during hard times was that interest rates were sky high and people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. Cheaper to pay a landlords mortgage than going into debt and paying the bank thousands in interest. And then possibly losing 'your' (the lender's) house.

lookstraightahead

theartfullodger said:

With Covid and Bre##it to be paid for (HUGE sums) and Ukraine then Putin turning the gas off there's going to be a painful recession.

Tighten your belts folks!

Totally agree 

jimbog

lookstraightahead said:

MobileSaver said:

HotPantsCruiser said:

If it is hard for most people in the UK to buy a house it will be VERY hard for a lot of people to sell a house in the UK.

Agreed, it will be harder for both, the difference being that every month that goes by the homeowner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage. Given the choice I know which group I'd rather be in...

Well my experience during hard times was that interest rates were sky high and people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. Cheaper to pay a landlords mortgage than going into debt and paying the bank thousands in interest. And then possibly losing 'your' (the lender's) house.

In truth many were using credit cards to pay their rent too  Rising prices affects everyone - being a tenant offers no protection

ProDave

So the OP thinks a house price crash is a good thing?

Has he ever lived through one?  Does he think it is a good idea?

You put your house on the market, and NOBODY comes to look at it, because nobody wants to buy when prices are falling, if they wait they will get it cheaper, and that becomes a self fulfilling prophesy because nobody buys prices continue falling.  Then people reach the point they can't afford to go lower so everyone just stays put instead.

With the present war in Ukraine, I would expect the market to slow considerably, people don't like uncertainty when buying a house so many will now be waiting to see what happens.  That will certainly slow sales, the same has happened before e.g. when we invaded Iraq in 2003, but prices did not actually fall then, just we had no viewings for 6 months until the direction of travel became clearer and people started buying again.

spoovy

theartfullodger said:

With Covid and Bre##it to be paid for (HUGE sums) and Ukraine then Putin turning the gas off there's going to be a painful recession.

Fear of a painful recession is what caused the money printing and low interest rates in the first place, which I think we all agree are the main factors behind recent (last decade) house price rises.

Has any Western government given any indication at all that it has any other tools in it's toolbox other than doing the exact same thing again?

MobileSaver

lookstraightahead said:

MobileSaver said:

Agreed, it will be harder for both, the difference being that every month that goes by the home-owner is still paying off their own mortgage while the renter is still paying off their landlord's mortgage.

people were using credit to pay their mortgages. Renting is probably cheaper in those circumstances. ... And then possibly losing 'your' (the lender's) house.

As @jimbog pointed out, renters will be hit with rising costs the same as home-owners are. Renters already pay more of their wages towards rent than home-owners pay towards their mortgage so it stands to reason that in fact renters are more likely to need to use credit cards to pay their monthly housing costs.

Even in the worst times the number of home-owners who lost their home was tiny. New policies and rules introduced in the last decade or so mean that the number who lose their home in the future will be even smaller.

getmore4less

ProDave said:

So the OP thinks a house price crash is a good thing?

Has he ever lived through one?  Does he think it is a good idea?

You put your house on the market, and NOBODY comes to look at it, because nobody wants to buy when prices are falling, if they wait they will get it cheaper, and that becomes a self fulfilling prophesy because nobody buys prices continue falling.  Then people reach the point they can't afford to go lower so everyone just stays put instead.

With the present war in Ukraine, I would expect the market to slow considerably, people don't like uncertainty when buying a house so many will now be waiting to see what happens.  That will certainly slow sales, the same has happened before e.g. when we invaded Iraq in 2003, but prices did not actually fall then, just we had no viewings for 6 months until the direction of travel became clearer and people started buying again.

Prices fall to the point where landlords can cash in on the demand for rentals because people won't buy.

Most people just stay put and wait it out.

If we see millions displaced from Ukraine the UK will be taking a share and putting demand on the housing stock.

Even the worst dip in many  life time was not that bad. transactions fell ~50% from a peak and recovered over the next 7year to the norm 
(chart 5)

https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary


The 1989 crash took about 11y inflated adjusted to to return to previous prices and  18y before the next dip.
Actual prices hardly dropped and just flatlined for ~10years

https://www.housepricecrash.co.uk/indices-nationwide-national-inflation/


The 2007 crash is yet to return to previous levels probably because of brexit and then covid which stalled everything.

Actual prices was a ~20% drop and started climbing out after 5years


What might be interesting is the bottom of the dips are to around around the 3 year previous level.
Even the little dip that started in 2016 bottomed out in 2019 just above 2013 levels.  

SuseOrm

So genuine question,  if everybody took out fixed mortgage rates for at least two years if not five in many cases in the last 12 months why would they raise interest rates ? what will be the point of that ? how would that affect anything because the only people I can see that would then pay more are those who bought at least three,  potentially five years ago and they will all have enough equity to Cushion themselves anyway.  

I just don’t see what purpose it would serve people are getting 10 to 20% pay rise is when they have the balls to move jobs,  the issue is at the moment not many people do.  But any wage inflation is getting hoovered up by increase in food energy and Travel costs and therefore I just don’t see what raising interest rates would do to control the inflation ?