Has the market crashed?

MobileSaver

GDB2222 said:

MobileSaver said:

If/when prices drop it's pretty much a certainty that supply will drop too - the unknown is by how much but the last time this happened transactions dropped by 50% so literally half as many people were able to buy and sell property; it's another of those inconvenient truths the HPC crowd like to gloss over while celebrating falls in house prices.

I don’t know why a 50% drop in transactions matters to most people?

The majority of house purchases are not for fun or as an investment, they're people buying a home for themselves.

So if there's a 50% drop in transactions then doesn't it follow that that means an awful lot more people are having to live in a less than ideal home situation? Whether that means they're paying their landlord's mortgage instead of their own or living in their parent's home under their parent's rules or living in a home that's simply too small or in the wrong location - whatever the reason I'd say that matters to most people.

Sarah1Mitty2 said:

shows that true demand for shelter isn`t really a major part of housing costs.

It's always funny when the HPC crowd have to switch to terms such as "true demand" when it's clear that their arguments don't stack up using universally accepted definitions of terms.

[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.

Curious thing isn't it. Six years on from 2016 and all we need to happen now is a 40% crash and we will all be grand (ie back to where we started in 2016!). 
Even if prices fall drastically mortgage interest rates wont regress to 2016 levels. All told if anyone finds themselves as onto a winner in this market, fair play. 

[Deleted User]

theartfullodger said:

The UK seems to be much more badly affected than most of Europe.  Wonder why....

My agent tells almost no viewings, market dead.

Sunlit uplands eh?

Badly affected by what and in what way? 
In terms of natural gas supply, the UK has less to worry about than many countries in central Europe. 
Not that I would give any of our politicians any credit for that. It's just geography and logistics. 

Where do you get most of your news from? 
(Genuine question, not trying to start an argument about politics etc). 

[Deleted User]

Martisha said:

In my county each day I see about 15 houses being reduced on Rightmove.
Houses that had been added during the summer with offers over £400k are now being advertised as £375k guide price…

Which country is that? 

[Deleted User]

GiantTCR said:

The market has not collapsed but we're almost there.

With interest rates so high compared to months ago and with everyone pretty much saying the housing market is about to collapse (but this time it really is about to collapse), nobody in their sane mind would want to buy a house now, unless they desperately need one.

Real estate is illiquid and the data lagging, so the market will always react more slowly than bonds, commodities and equities. 
History doesn't repeat, but it does rhyme. 
I don't think the UK will see a major house price crash this time, because that was 2008. 
Cracks have already appeared in the leveraged sovereign bond market (who knew?!), so that could prove interesting. 

I have read that large pension funds have started selling off commercial real estate (partly to cover their bond exposure), so maybe this time it will be commercial, rather than residential, that takes the hit?  

[Deleted User]

RM_2013 said:

@Sarah1Mitty2 locally to us there were 3 planned new developments, one barratt and 2 TW.  The first ti launch hasn’t had much building work started.  They are advertising plots - a couple of smaller properties have been reserved but they’ve reduced a 4 bed one by £20k and are still offering deposit contributions and upgraded kitchen.  The other 2 developments were due to release around now but still no details on their website.  Historically new builds around here used to get snapped up off plan 

...by lunatics. 

Sarah1Mitty2

BV88 said:

MobileSaver said:

GDB2222 said:

I think one of the lenders reported a drop of 0.9% month to month. This was on actual transactions.

That wouldn't surprise me and pretty much proves the point that fackers seeing 5% drops in asking prices doesn't correspond to a 5% "crash" in house prices.

GDB2222 said:

There’s going to be lots of people who will simply refuse to sell if prices drop, or simply cannot sell. There are others for whom it might not matter much.

Exactly. If/when prices drop it's pretty much a certainty that supply will drop too - the unknown is by how much but the last time this happened transactions dropped by 50% so literally half as many people were able to buy and sell property; it's another of those inconvenient truths the HPC crowd like to gloss over while celebrating falls in house prices.

A drop in prices in no way means a certainty that supply will drop. There may be less speculative sellers, but housing supply can and should be measured in ‘months of supply’. This is the number of months it would take to sell all current available inventory at the current sales pace if no new properties came into the market. 

This data is very mature in the USA and quite revealing. Looking only at existing homes, not new builds, the months of supply has increased from 1.7 in December 2021 to 3.2 in October. This is an almost 100% increase in supply of existing homes for sale, during a period of falling prices. Even more revealing is that this is a country where selling your home now means giving up your 3% 30 year fix if you sell your home, so there is a huge disincentive not to sell in the existing home stock. Remember this data excludes new build supply.  Exactly the same dynamic is playing out in the UK. This may only be anecdotal evidence but within 0.5 miles of my search area, average available stock is around 120 compared to 35 during the covid boom. New listings seem slower but now basically everything just sits unsold. 

The point you are missing is you don’t need a rush of new sellers to increase supply when there is a dramatic drop in the pace of sales, which is exactly what is happening. Indeed you can have a dramatic fall in the pace of new listings coming onto the market, but if the pace of sales falls even more dramatically then supply increases. Again this is precisely what is happening as it takes longer for existing stock to sell. 

Yes, that makes sense, developers are seeing a big drop in demand but there are still plenty of people who want/need to sell. In a recession people will sell extra property or even existing too big for them property to get access to cash.

[Deleted User]

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. 

[Deleted User]

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.

[Deleted User]

1616six said:

The Tories have happened. 

The Tories know that they will not survive a house price crash - if it's close enough to the election. 
Unlike commodity prices, UK house prices can be relatively easily manipulated by politicians. 
This is why the MSM always focus on the housing market.