Debate House Prices


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How will a house price crash affect us renters?

OK I keep seeing house price crash headlines etc which are making me nervous, but I rent (us 20 somethings generally have to choose between having baby and single income/buying a house). I can't help thinking it could result in a rent hike, despite the fact my landlord owns outright. What do you think? Is being a single income family going to be a thing of the past even for renters?
£4000 challenge

Currently leftover - £3872.15
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Comments

  • beingjdc
    beingjdc Posts: 1,680 Forumite
    Rents generally go up in a housing crash - as more people want to rent, but fewer want to be landlords - I'm seeing a lot of BTLers selling up at the moment, or trying to.

    But there is a stronger affordability constraint on rents than mortgages - no bank will lend you money to pay the rent, long-term. So they may not go up that much.

    The big unknown in this cycle, and the one I think will have the biggest impact, is recent immigrants (eg Poles). If they ship off home when the economy turns ugly, rents will fall. If they stick it out, we could see sharp rises.
    Hurrah, now I have more thankings than postings, cheers everyone!
  • teabelly
    teabelly Posts: 1,229 Forumite
    Part of the Furniture
    Worst case is the LL is repossessed and you are tipped out on your ear and left to compete for dwindling supply of rental property as more of it becomes vacant if LLs do bail out. Banks are less likely to lend so houses could be left empty and former renters homeless. FTBs won't be able to buy as they won't have saved up enough to reach new deposit levels so it will be left to investors to clean up the mess. They'll make a killing as most FTBs still won't have managed to save up a decent deposit meanwhile those that mewed merrily in advance of this will have good cash deposits and a larger pool of renters to pick and choose from.

    Banks will also be more inclined to lend to experienced BTL investors so they will be hoovering up any cheap property. It is hard to say what will happen over the longer term; rents may fall back to where they are now or LLs may decide they want decent rental returns as capital appreciation isn't guaranteed so rents just may get pushed up to ensure their future returns rather than keeping rents low and using HPI to subsidise tenants.
  • Microstar_2
    Microstar_2 Posts: 433 Forumite
    I was a LL through the late 80's early 90's house price drop and rents did not really change that much. At the end of the day the cost of accommodation (whether houses or rents) is linked to people's ability to pay. You can't get blood out of a stone. If they don't have the money they can't rent/buy. They go back to mum and dad, they live with a relative, they lodge instead of renting a flat etc etc. so demand drops accordingly.
    I don't think rents will change much this time. Many cities have plenty of new-build flats. They may not be a first choice for many renters, but at the end of the day they are decent accommodation, and if the price is right (desperate BTL LL's) then people will take them.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    My guess is that rents will rise a little over the next few months and then fall a lot as the real economy gets hit by the credit crunch - people and businesses don't spend if they think hard times are around the corner (or worse upon us).
  • Gorgeous_George
    Gorgeous_George Posts: 7,964 Forumite
    Part of the Furniture Combo Breaker
    Just as in the boom, I expect rents to track RPI.

    There is no reason to expect them to rise or fall significantly.

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Just as in the boom, I expect rents to track RPI.

    There is no reason to expect them to rise or fall significantly.

    GG

    Oooh I'm tempted to offer you double or quits! My belief is that rents wil go down the pan with the economy.

    We'll see.
  • poppy10_2
    poppy10_2 Posts: 6,583 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Generali wrote: »
    Oooh I'm tempted to offer you double or quits! My belief is that rents wil go down the pan with the economy.

    We'll see.

    There's only one way to find out........ FIGHT!!!!!
    poppy10
  • nicola1982_2
    nicola1982_2 Posts: 593 Forumite
    Thanks guys, feeling more confident now :)
    £4000 challenge

    Currently leftover - £3872.15
  • PasturesNew
    PasturesNew Posts: 70,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If I ran out of affordable rental property, I'd book into a cheap B&B for few days while I joined the Caravan Club and bought a camper van.
  • PasturesNew
    PasturesNew Posts: 70,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Microstar wrote: »

    Many cities have plenty of new-build flats. They may not be a first choice for many renters, but at the end of the day they are decent accommodation, and if the price is right (desperate BTL LL's) then people will take them.
    They haven't been my rental of choice because they are significantly more expensive than older stock.

    And rent comes down to the cheapest you can find in a place you are prepared to live.
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