Has the market crashed?

[Deleted User]

[Deleted User] said:

[Deleted User] said:

In my area a 40% crash is required to hit 2016 prices and a 20% crash to roll back to 2020 figures. 

With the supply and demand aspect  it will be interesting to see what happens to this market. I dont expect prices to increase but I suspect that there will remain some demand for the very few properties available.

40% would be good, and keep in mind we are at the start of a long recession. The main problem is buy to let. As investments and pensions do poorly people look to becoming a landlord for income. We must keep the pressure up to make it less attractive.

'investments and pensions' is a pretty broad term. What asset classes are you talking about? 
I could have 100% of my pension (SIPP) in a single uranium miner if I wanted to. 

I think real estate and general equity markets usually correlate pretty well together in price terms. 

[Deleted User]

Sarah1Mitty2 said:

[Deleted User] said:

Sarah1Mitty2 said:

[Deleted User] said:

Sarah1Mitty2 said:

Articles like this really make people pause and consider their options I think,  New builds are going to drop in price because help to buy (or help to borrow as I have heard it referred to) has been cancelled.

But it can easily be restarted, if and when the politicians decide it will help them get votes. 

My bet is that 6 to 12 months before the next election we'll see a return of H2B, MIRAS and "whatever else it takes" to pump up the housing market. 

People won`t get involved in help to buy schemes when they see that higher interest rates lower prices, and there are going to be plenty of horror stories about people trapped in HTB properties as well making it even less appealing. If US rates are "higher for longer" it doesn`t really matter what the UK government does to be honest.

I think you under-estimate the British public's desire to own their own home - at almost any cost. 

I think you overestimate the UK governments ability to influence things, they can do a lot of tinkering when rates are low, different story now though.

The government can institute compulsory* financial repression to hold rates below inflation. 
Create a load of GBP and give it to FTB. 
Buys votes and keeps housebuilder party donors happy at the same time. 

(*I think a lot of pension funds have already been quietly helping with financial repression. Buying bonds at high prices to keep the government happy and let their scheme holders take the hit.) 

GDB2222

[Deleted User] said:

GDB2222 said:

[Deleted User] said:

Noneforit999 said:

Exodi said:

[Deleted User] said:

As someone who would like to buy I'm holding off for now.

I think many will be doing the same.

You have many sellers, who have seen there houses absolutely balloon in value over the past couple of years (using my house as example I bought for £300k in mid 2019, and have seen similar houses for sale during this summer up for sale between £400k - £500k)... absolutely madness.

You have to wait for these sellers to come back to Earth which is not going to be quick. Take the OP - "it doesnt feel over priced compared to recent sales in the summer". This will be a common theme amongst current sellers, and if they're not willing to come back to Earth, they'll see demand disappear.

People just can not afford high energy bills, soaring food prices, increased fuel prices, with pay-rises that in most cases are real terms pay cuts, on top of ~£500 extra on a mortgage to buy someones now overpriced house.

I wouldn't dream of buying in the next few months.

What is going to be different in six months time though? Even if house prices drop say 10% in that time, unless you are a FTB then your existing house will have likely dropped a similar amount so you have less equity to roll onto a new house and unless mortgage rates drop substantially, its going to make little difference.

If you put moving off for several years then things may change (perhaps) but I don't see how 6-12 months is going to look much different from now.

More like six years time. Get the recession over with, election at the end of 2024, then time for the new government to make a little progress towards stabilising things.

The UK won't be right for at least a decade, probably much longer. Brexit isn't going away soon and the last 12 years have really racked up the debt - government, household, and social. We also have 2 million with long COVID, massive loss of productivity and massive increase in healthcare and benefits costs.

The long Covid figures may be a bit exaggerated. Only 16% of sufferers reported that it interfered with day to day activities a lot. Whilst acknowledging the personal issues, the economic impact for many of the remainder is probably quite small.

Those are the official government figures. Keep in mind that COVID is not over either. By interfered with day to day activities "a lot", in the terms used for disability assessments that means things like can't dress themselves, can't prepare food for themselves. It takes a lot less than that to hit productivity.

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/prevalenceofongoingsymptomsfollowingcoronaviruscovid19infectionintheuk/3november2022

There’s a link there to the questionnaire, and it seems to be a simple self assessment, without the guidelines you mentioned. Maybe, you can see otherwise? 

[Deleted User]

Sarah1Mitty2 said:

I think you overestimate the UK governments ability to influence things, they can do a lot of tinkering when rates are low, different story now though.

It's the government's "tinkering" (ie QE, etc) which has kept rates so low, for so long. 
The pension funds also have questions to anwer (IMO), as to why they kept buying bonds at such low yields. 
And if the big boy (ie the PRA) made them do it, did they (the fund managers) vocally raise any objections? 

I speak to a lot of pension scheme members (DB and DC) and they are all completely out of touch with their own investments. 

[Deleted User]

[Deleted User] said:

As someone who would like to buy I'm holding off for now.

I also want to see if this government is stable, where inflation goes, where interest rates go. The UK is in for a long recession.

If you want to sell quickly then you need to offer big discounts to offset the uncertainty and wrecked economy.

I was speaking to someone this week, who I have known for a while. 
He works in retail, in a very discretionary sector - ie sells things that are in no way essential. 
I was expecting him to tell me his trade was dead. 
He told me they have been busier than ever. 
He told me they can't keep up with demand (meaning they haven't spent enough on staff, storage space and equipment etc). 

Gycraig

[Deleted User] said:

[Deleted User] said:

As someone who would like to buy I'm holding off for now.

I also want to see if this government is stable, where inflation goes, where interest rates go. The UK is in for a long recession.

If you want to sell quickly then you need to offer big discounts to offset the uncertainty and wrecked economy.

I was speaking to someone this week, who I have known for a while. 
He works in retail, in a very discretionary sector - ie sells things that are in no way essential. 
I was expecting him to tell me his trade was dead. 
He told me they have been busier than ever. 
He told me they can't keep up with demand (meaning they haven't spent enough on staff, storage space and equipment etc). 

It’s a very weird moment tbh I sell sofas and it just feels like the middle and lower end have been gutted. 

Our amount of orders have gone down but our amounts of large orders have made up for it. 

It’s very hard decision to expand, take on more staff and buy storage etc in a discretionary sector going into a recession 

jonnydeppiwish!

Gycraig said:

[Deleted User] said:

[Deleted User] said:

As someone who would like to buy I'm holding off for now.

I also want to see if this government is stable, where inflation goes, where interest rates go. The UK is in for a long recession.

If you want to sell quickly then you need to offer big discounts to offset the uncertainty and wrecked economy.

I was speaking to someone this week, who I have known for a while. 
He works in retail, in a very discretionary sector - ie sells things that are in no way essential. 
I was expecting him to tell me his trade was dead. 
He told me they have been busier than ever. 
He told me they can't keep up with demand (meaning they haven't spent enough on staff, storage space and equipment etc). 

It’s a very weird moment tbh I sell sofas and it just feels like the middle and lower end have been gutted. 

Our amount of orders have gone down but our amounts of large orders have made up for it. 

It’s very hard decision to expand, take on more staff and buy storage etc in a discretionary sector going into a recession 

There are still plenty of people who have finances to purchase the big ticket items, many of our friends haven't spent money frivolously since CoVID, so are able to purchase what they want, when they want it.  They're also happy to wait for items to be in stock/delivered rather than 'I want it now'.  

jonnydeppiwish!

With regards to the Market crashing, it'll be sometime till we find out.  Lots of anecdotal evidence ie reductions, lack of viewings leading to a lack of sales, plenty of house on the market.

It's Winter, and some of these things are normal.  Even as Nationwide etc were saying house prices were up in September, everyone knew that was the results of offers during Feb-May when the offers over was the way to go.

My money would be on a correction of back to pre-CoVID values, then, depending on the political situation, reverting back to slight increases, more on par with inflation for a few years.

That said, these are only my uninformed thoughts, but they've served me well so far.  As for people blaming one government and it would be better under another, what a crock of .....  They're all in it to make themselves money  

Exodi

[Deleted User] said:
I was speaking to someone this week, who I have known for a while. 

He works in retail, in a very discretionary sector - ie sells things that are in no way essential. 
I was expecting him to tell me his trade was dead. 
He told me they have been busier than ever. 
He told me they can't keep up with demand (meaning they haven't spent enough on staff, storage space and equipment etc). 

I find anecdotes posted in this context strange - do you mean to imply that consumer spending has not decreased?

I work as the sales director for an international manufacturer of 'non-essential' or 'delayable' products, and it's incredibly noticeable the decline in sales over the past 6 months, especially coming off the coattails of the suprising surge in spending during the pandemic.

I don't think this is particularly ambigious or controversial either. Cost of living crises are happening in most countries across the world, not just the UK. There's no telling that your friend who sells non-essential products may have seen his competitors all close up shop, he may sell very upmarket products (in which the clientel are likely to be less concerned about their heating bill increasing) or he may sell thermal throws.

Exodi

[Deleted User] said:

[Deleted User] said:

jimbog said:

[Deleted User] said:

[Deleted User] said:

In my area a 40% crash is required to hit 2016 prices and a 20% crash to roll back to 2020 figures. 

With the supply and demand aspect  it will be interesting to see what happens to this market. I dont expect prices to increase but I suspect that there will remain some demand for the very few properties available.

The main problem is buy to let. As investments and pensions do poorly people look to becoming a landlord for income. We must keep the pressure up to make it less attractive.

Who are we pressurising? And how do we 'keep the pressure up'? 

Potential and existing landlords. Keep making the rules more and more in the tenant's favour, increase taxes on BTL and 2nd homes etc. At the moment it looks like a good investment and income stream, so the goal is to make it look unattractive.

What makes you say that? 
Do many people you know still like the idea of becoming a BTL landlord? 
From what I see, it's becoming less and less appealing. 

I'd have thought so, yet I had my parents with me just last week telling me about their new master plan to create a nest egg, which goes as follows:

Step 1: save up a small amount of money to use as a deposit on a new house purchase
Step 2: buy new house using the deposit and a mortgage
Step 3: rent it out
Step 4: wait 20-30 years
Step 5: congratulations you are now the proud owner of another house

When asked about what research they'd done on landlord responsibilities, how they pay the mortgage during void periods, what their plan was to cover repairs, whether they'd use a letting agent, etc.

"dunno"

[Deleted User] said:

I'm not sure this makes sense from a logical perspective - but I agree it has been a popular attitude in the UK. 

But how many people still have this attitude in the UK? 
I think any small time investors getting into BTL in the last 5 years or so, definitely represent the 'dumb money' crowd. 

Can't help but agree with this. It's sad that those with the least knowledge think of BTL as a wealth cheat-code.

I think many on this forum wouldn't touch the idea of being a landlord with a ten-foot bargepole.