[Closed] House prices post brexit - thoughts?

Yeah, do that. Let us know how it goes

Mods - can you leave this thread unlocked for 5 years please

Would it be the smart thing to sell then rent then buy again after brexit?

Unless theres a huge housebuilding boom there will still be a shortage of housing.

If you live in a nice house then I wouldn't worry too much.

Depends on the area you live in, I suppose, how much equity etc

Personally I'd say it'd be a crazy time to make a gamble like selling up with a view to buying again. Your house falling in value won't have any impact on your ability to live in it so why worry about that? House prices are likely to keep on rising anyway imo.

Selling in anticipation of a drop is high risk as you're gambling a long term investment on a short term event, given the wierd volatility of the market over the last decade I really wouldn't do this right now especially since the bank bailout was all about maintaining property values and I'm not sure brexit affect house prices.

Usually doing the thing that involves the less people handling your money is the cheapest. (I have no idea of finance or house moves)

The housing market is due for a dip, but “experts” have been saying that for the past 20yrs since the days of negative equity.
Prices may be forced flat, or even dip a bit (say 10%) in real terms nothing’s happened unless you’ve bought a house recently... that’s when it’ll hurt, or you have to move to find work and are left with a property in an area where your job isn’t.
Biggest issue IMO is the workplace, the uncertainty and major corporations cutting jobs (in the name of Brexit) when the real reason is they’ve wanted to trim headcount for years and this is a perfect excuse...
Which leads right back to housing affordability doesn’t it..

Do what you like, it’s not the first time uncertainty has entered the marketplace.

And FWIW I sold my Appt in London not long after Brexit when prices were still buoyant, now they’ve flattened and dipped in certain areas, but the Chinese are coming over and buying places so they seem to think London’s still a place to aspire to live in. It’s really just a different ethnic profile buying places..

The breeders will still breed and keep demand for housing at a premium

[quote=Fantombiker ]Like most people I suspect, my main asset value is my house and I'm worried that prices will fall following a probable economic fall.

Why, were you planning on realising your asset in the near future? People do have some funny ideas about how rich they are because of the value of something they need to own.

I suspect the overpriced london / home counties houses may fall / stagnate in value as overseas buyer drop out of the market but otherwise? No.

Selling / renting then buying again is a gamble on a huge price drop that I see as unlikely

Houses are to live in, if you need to downsize then probably a good time to sell, bigger houses will lose great £££s than smaller houses in a market downturn.

I know locally 1-2-3 bed houses have really stagnated over the last ten years but 4-5 bedrooms are at a big premium, families demand bigger houses..

I suspect that there will be considerably greater inward investment from countries where investors are keen to offshore their money.
With further devaluation of Sterling and most importantly the UK not signing up to the impending EU Tax requirements we'll be overwhelmed by foreign property speculators building either ethno-claves or PRS.
Whilst central London is unlikely to change significantly there'll be significant foreign funded developments in towns and cities such as Liverpool, Newcastle and Glasgow.

Question is OP do you need to move soon or do you have a plan of when you want to?

The best way to make money out of moving is downsizing (or buying a fixer upper in a crummy area in the hope it gentrifies) so if you can do those then make a plan

And there's everything wrong with our housing market right there.

It's a place to live, not an asset to try to use to hedge Brexit risk.

Brexit is only one variable we should be talking about regarding house prices.

If you want to talk about catastrophic effects on house prices let's talk about what happens when the baby boomers start to die in large numbers.

There are 5 million baby boomers. 80% of them own their own home. Those homes are the top end of the housing stock typically. There are 25 million homes in the UK, which means that in the next five to ten years, 16% of our housing stock is going to come onto the market for sale.

Shall we talk about what happens to house prices then?

Brexit won;t affect prices that much. Building millions of actually affordable homes, council houses that can't be sold to the person renting it and putting in rent caps are the sort of things that would do that and we don't have any progressive enough government for that to ever happen.

Building millions of actually affordable homes, council houses that can't be sold to the person renting it and putting in rent caps are the sort of things that would do that and we don't have any progressive enough government for that to ever happen.

Amen to that!

Housing and pensions are easily this country's two biggest issues.

Naa, the tories have it sussed! House building is going ahead round here, over 900 to be built where we live & around 3000 going up between here & York, near Green Hammerton. (Theyr'e the ones I know about)
Affordable? Oh aye, starting around 280K!

My mortgage has 16 years to run. I’ve just agreed a 2.5% 10 year fix, mainly due to brexit uncertainties. I dont want to be caught unable to remortgage if the market drops.

Doesn't make any odds to me what my house is worth.

The change in agricultural policy may be interesting, given a decade. It's all sheep around me, so trees are cleared and land is drained. Change in subsidies could change the landscape.

And a field that previously yielded no tax return now provides 900 sets of poll tax. Free money for the council.
Of course they could use it to improve the amnesties needed for these houses or...just spunk it.
I say NO MORE HOUSE BUILDING WITHOUT THE FACILITIES FOR THE PEOPLE WHO LIVE IN THEM.
Put a massive tax on overseas buyers to cool the London market and its countrywide ripple.
A single house means 4 more cars parked on the path, longer waits for health care and a struggle to get kids in a school.
New homes just benefit the developer and corrupt council officials.
Save our green spaces.

NO MORE HOUSE BUILDING WITHOUT THE FACILITIES FOR THE PEOPLE WHO LIVE IN THEM

If there is a demand for something the market will provide.

New homes just benefit the developer and corrupt council officials.
Save our green spaces.

There needs to be a lot of houses built in the UK, a lot of empty houses back in use and more amenities unless you have a way of dropping the population.

Just downsized, quids in, pretty relieved we got it sorted before the big recession that's coming tbh.

If there is a demand for something the market will provide

Massive splurge of flats being built and office blocks being converted to residential here in our bit of sw London , no apparent increase in doctors surgeries, schools or hospitals though

Unless theres a huge housebuilding boom there will still be a shortage of housing

More than 250,000 homes are currently empty, there is no shortage.

Massive splurge of flats being built and office blocks being converted to residential here in our bit of sw London , no apparent increase in doctors surgeries, schools or hospitals though

There may be exceptions, both of decrease and increase in demand, but on balance it's the same people in more houses.

My first post...
I think it depends on how affordable your mortgage is. If you have taken out a very big mortgage, say x 10 combined earnings, then downsizing could be a good option.
In the South East, people are now knocking 10 percent off to sell their properties; that could easily turn into 20 percent and then 30 percent off over the next 2-4 years. I think London and South East may be 40 percent overvalued.

We have within a square mile or so 182 flats in an office conversion , a 602 flat development and any spare space seems to have small blocks being chucked up, I think it's a fair guess that demand in the borough is increasing

We have within a square mile or so 182 flats in an office conversion , a 602 flat development and any spare space seems to have small blocks being chucked up, I think it's a fair guess that demand in the borough is increasing

So it's a fair guess demand won't change. Or atleast not proportionally to the number of new homes.

Until the world's leaders collectively talk about population growth and world unity* all of society's problems are just effects of the root cause.

*For obvious reasons this will never happen, so the problems will continue to grow until society breaks.

There’s no such thing as the housing market, there are multiple local markets all subject to different dynamic and variables. It’s so hard to predict what’s going to happen under normal circumstances let alone after a massive event like leaving the European Union. The house building industry virtually shut down during the economic crash. Supply of new housing is inelastic of demand because of the lead in period to build out a site. In some areas we’re still feeling the effects of that curtailing of supply. The biggest worry in the industry is a lack of a skilled workforce and again that will curtail supply. My guess is that there will be an immediate drop after the shock or the exit. Markets, including housing markets often react to fear but I expect to see prices rally faily quickly, particularly if the government pump prime the market. Any lack of supply will sustain this growth.

There are 5 million baby boomers. 80% of them own their own home. Those homes are the top end of the housing stock typically. There are 25 million homes in the UK, which means that in the next five to ten years, 16% of our housing stock is going to come onto the market for sale.

It seems you're expecting every single home-owning baby boomer to die in the next 5 to 10 years. Seems unlikely, unless you've some fiendish plan in mind to help them along.

House prices aren't slowing. Crazy prices round my way and they're being bought.

The government plan to build a million houses isn't the answer. The rational behind it is to provide more supply than the demand and thus prices drop. All that will happen is we end up with a massive over supply of empty houses bought up by foreign investors. There are tonnes of empty properties already anyway, both houses and potential housing in empty office space. Affordable housing is nothing of the sort and developers only have to allocate a small proportion as affordable anyway and wont build unless they can build the rest as luxury homes.

The only way for prices to come down is for inflation to shoot through the roof forcing interest rates to do likewise, a lot of negative equity and a big crash.

Brexit may have an impact on many things, but can't see any impact on housing. As said, the housing shortage isn't about an excess of people and not enough property, it's a lack of affordable housing to buy. Hence the desire to oversupply to control prices. So kicking Johnny Foreigner out of the country won't make a difference.

The problem with building all these new houses is that they only come on the market in small numbers at any one time. So the effect on house prices is zero. Obviously, the developers want to maximise return, hence the slow drip feed so as not to flood the market.
There may be a gradual slowing in house prices, but it will be over several decades. That's what I think, for what it's worth.

As far as I can see you have to pay a certain amount of money to buy somewhere to live. If you own (mortgage) a house paying the mortgage is always going to better than paying rent which you get zero return from.

Renting nowadays is also incredibly expensive. We pay £460 a month mortgage on our house and I’d struggle to get a nice 2 bed terrace for that but ours is a big 3 bed semi in a lovely place.

Existing mortgage you got years ago, yeah. A new first time mortgage though is crazy. One bed flat nearby... £270k! Rough Google estimate, £1400 a month. For a one bed flat!

Rental prices round here are high, but far less than that.

Other thing is UK market isn't suited to rent. We're obsessed with home ownership. Rest of Europe generally rents and prices are low as house prices aren't so stupid, plus renting is a long term thing often with freedom to develop the property a bit.

I would worry less about Brexshit and more about what happens when [s]official stealing[/s] QE ends across Europe and rates start to normalise. Ouch

You can make you own judgement regionally by going to the various survey (Halifax) etc and looking at valuations of houses in various areas and affordability levels. Then you can decide.

Rest of Europe generally rents

Who owns the housing stock?

This country is so ****ed up with housing being used as a form of investment. It's damaging British society and causing mental health issues.
Can't help thinking it's by design. It's almost like a stealth war on the people.

Trailrider Jim - Member
Who owns the housing stock?

Investors and housing associations apparently. Proportions depending on the country. The investors are less likely to be people investing in a property that they'll live in themselves though. Wealthy investors, foreign investors and private companies generally.

Another thing is many countries have strict rent control unlike UK.

5thElefant - Member

NO MORE HOUSE BUILDING WITHOUT THE FACILITIES FOR THE PEOPLE WHO LIVE IN THEM

What do you mean by FACILITIES?

If there is a demand for something the market will provide.

Yeah right - the market will build new state schools and doctors surgeries?

In Edinburgh we have massive brownfield housing schemes - the developers have had to build facilities as a part of planning permission. IIRC its overall 100 000+ people to be housed - its already mostly built. at least one new secondary school was built at the developers cost

deadkenny - Member
Existing mortgage you got years ago, yeah. A new first time mortgage though is crazy. One bed flat nearby... £270k! Rough Google estimate, £1400 a month. For a one bed flat!

Whilst 270k is silly for a 1 bed flat, its likely to be around 1090(2.5%) -1280 (3%). 1400 is only if you have a 4% rate which is pretty high for the current market. Also thats assuming 25 years, when we got our first (late 2016) we were surprised to hear lots of people opt for 30-35 years now!

As Said though, it would have to be a big devaluation to prove worthwhile, when we rented before buying, we'd spent 36k on the last 5 years rent.
So would need an equivalent devaluation to that to break even with renting.
Which, in a not massively posh/expensive area, seems unlikely!

deadkenny - Member

Another thing is many countries have strict rent control unlike UK.

Scotland is diverging from England on this. No more short insecure tenancies will be allowed in Scotland from now on. Must be for a year and no evictions without good cause.

The problem with a devaluation is that a bunch of people get stuck in their houses unable to move due to negative equity trap, potentially losing their job and then house. Most people wouldn't be directly affected to any significant degree (just through the consequential recession etc).

Until world leaders talk about overpopulation

Don't you mean overconsumption? Because the planet can support dozens of brown people for every white person.

.

Usually doing the thing that involves the less people handling your money is the cheapest.

Financial services is well described as “moving other peoples money around untill there is non left”

If you want to talk about catastrophic effects on house prices let's talk about what happens when the baby boomers start to die in large numbers.
There are 5 million baby boomers. 80% of them own their own home. Those homes are the top end of the housing stock typically. There are 25 million homes in the UK, which means that in the next five to ten years, 16% of our housing stock is going to come onto the market for sale.

Worth supplementing this demographic reality of a population with an overweight of old people with this economic reality:

[url= https://www.ftadviser.com/mortgages/2017/11/14/homeownership-dream-fades-for-teenagers/ ]Only 3 in 10 16-18 year olds think they'll be able to afford to buy[/url]

To the extent that real estate is a Ponzi scheme requiring new entrants, that doesn't bode well for continued growth if the new entrants have already decided they won't be bothering...

Other factors to consider
1. [url= http://www.propertyindustryeye.com/foreign-investors-left-nursing-huge-losses-as-they-scrabble-to-get-out-of-off-plan-deals/ ]Foreign investors already bailing out of London[/url]. The Donald's description of Nine Elms as an 'off location' this week wont have helped bring in new investors either
2. Foxtons share price down from 400p in 2014 to 74p last week - never recovered from a big drop after the Referendum which should tell you something about how many foreign buyers are 'pouring into London' and overall transaction numbers
3. Countrywide down from around 680p in 2014 to 109p last week after issuing a profit warning
4. London prices now falling even with government and banks having thrown everything they possibly could to keep prices rising (QE, low interest rates, extended terms, bank of mum and dad, turning a blind eye to foreign money laundering etc) and they're still falling... tells you something about underlying fundamentals of demand/affordability if prices are dropping with such an immense amount of market manipulation...
5. Interest rates beginning to rise, QE beginning to taper off. Up goes the cost of debt. Consumer confidence already on the floor and real incomes falling
6. Tories losing the youth vote - homeowners tend to vote Tory, renters tend to vote Labour - you now have a political motivation for policy to change - Tory base dying off with no young Tories to replace them... The youth appear to be going sharply Socialist in an attempt to force policy change as the Tories refuse point blank to listen to them.
7. Buy To Let dead in the water - likely to increase supply as they sell and reduce demand if no new BTL entrants. As above - Millenials and Gen Z can't afford to replace them - [url= https://www.economist.com/blogs/economist-explains/2018/01/economist-explains-14 ]Why Britains BTL boom is over[/url]
8.A little more economic reality: rising house prices are actually doing very little for the net worth of most households since they occur alongside rising debt burdens which cannot be sustained indefinitely (The Wealth of Humans, Ryan Avent - writer for The Economist)
9. Another economic reality: same writer notes that high housing costs stunt growth, squeeze wages and productivity across the economy and channel the gains from what growth does occur to the rich... Worth noting that since the boom in the UK from 2013 onwards, this is exactly what has happened... Just increases the pressure on the Tories to act if they don't want a recession on their watch (they won't be able to blame Labour this time)

House prices aren't slowing. Crazy prices round my way and they're being bought.

Yep, in the SE they are still increasing at ridiculous rates year on year....

Scotland is diverging from England on this. No more short insecure tenancies will be allowed in Scotland from now on. Must be for a year and no evictions without good cause.

We have also ended right to buy.

One bed flat nearby... £270k!

I rent a brand new two bedroom house with front and back gardens,two bathrooms and balconies for £90.00 a week.Rent is coming down to.It's not in that London as you might have guessed.

Ah my favourite commentator
.

Still waiting for the crash i see brooess every so often you do like to mention it's imminancy.

That's 6 years now iirc .

6 years is alot of rent wasted (assuming you don't need the mobility renting affords)

I would like to think Brexit will hit the landlords sitting on big portfolios, many of whom are renting out properties not fit for habitation.

Especially that guy that said "no Indians" etc etc...

It won't though, of course.

Ah my favourite commentator
.

Still waiting for the crash i see brooess every so often you do like to mention it's imminancy.

That's 6 years now iirc .

6 years is alot of rent wasted (assuming you don't need the mobility renting affords)

Nasty response that. Really nasty. People's ability to get on in life, save for a pension, mental health issues, communities being broken up, homelessness increasing, forcing people into massive debt etc etc.

Why would you gloat about other people's misfortune without provocation?

Go on, give us the argument that unaffordable housing is good for the economy, good for people, good for communities, good for families...

Give it 10 minutes, Jamba'll come along and tell you that no matter what happens it'll be the best outcome

Why would you gloat about other people's misfortune without provocation?

As soon as you commented the same response was inevitable.

Many years back you were in the process of buying a flat/house. For whatever reason it did not go through.

Following this you stated how glad you were not to have bought because interest rates were going to rocket and the prices would tumble.

This may still happen but all the years renting with wage stagnation and rising costs mean that on the outside at least it looks like a bad move.

The housing situation in the UK especially the SE is crazy. As many people will say. If you cannot afford to live somewhere and your quality of life is bad move to where you have a better quality of life. there are many factors for quality of life, affordability of living, proximity to family, services etc. One of the massive issues I see with the UK is the fact we are so static and unwilling to move for a better opportunity.

We all seem very grumpy and argumentative at the moment.I think it's either the weather or politics responsible.Other reasons maybe available.

Politics I reckon.

We really can blame the referendum for that!

And the Tories obvs. 😉

One of the massive issues I see with the UK is the fact we are so static and unwilling to move for a better opportunity.

The global economy is rising at a higher than expected rate which may soften the economic blow of Brexit. As such, and assuming house prices keep rising in tune with base inflation at a minimum, ~3% on your salary isn't going to equate to ~3% of your house.

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Small problem there... House prices are ahead of inflation and wages are behind

Could someone do the maths for me please to compare renting vs 'ownership' of a house/ property?

Until you own your home outright, I think you'll find, when or if the shit hits the fan ( remember the late 80's anyone?) the organisation that has loaned you the capital to 'buy' your home will take first dibs on protecting their asset value.

So, calculation to include: Total costs of ownership to include the compound interest payments, other payments to pay off the capital loan, buildings insurance, all maintenance costs also, which will include things like boilers when they inevitably give up the ghost after their built in life cycle, new central heating systems, re-wiring, roof and building repairs and maintenance, window replacements, when the life cycle of the UvPC windows expires, etc etc.

Compared to paying a monthly rent with no illusion of who actually owns the property and no additional costs for making sure the building is maintained.

Alternatively, defend and justify the massive life changing debt that you're chained to, with the additional concern that the value of your liability may not go up as much as was thought, because that's your 'retirement' fund.

Illusion, hook line and sinker. The English economy is based on housing debt, giving nothing but a false impression of how 'rich' we think we are. The only people who benefit from this illusion are the financiers who earn £bn's in interest, oh and the current administration/government. Apart from all of that, ignoring the social responsibilities, obviously private home ownership is a real winner.

Well done everyone.

I suspect the overpriced london / home counties houses may fall / stagnate in value as overseas buyer drop out of the market but otherwise? No.

I suspect the opposite. If you're talking a minimum 5 year period, the SE is the area where prices will rise most, and a lot of that will be due to overseas buyers (that doesn't have to mean overseas occupants, don't forget). For other areas of the UK, it could be a very different story.

slackalice - Member
Could someone do the maths for me please to compare renting vs 'ownership' of a house/ property?

It swings closer to rent if you move more often as taxes and fees add up.

Could someone do the maths for me please to compare renting vs 'ownership' of a house/ property?

I'd have bought mine several times over if I'd had to have rented it over the last 20 years. The rent per annum* is currently 1/3 the price I paid for it!

* based on market rate for the street

I'd have bought mine several times over if I'd had to have rented it over the last 20 years. The rent per annum* is currently 1/3 the price I paid for it!

On a simplistic level, if renting worked out cheaper in the long term, the BTL market wouldn't exist.

What do you mean by FACILITIES?
If there is a demand for something the market will provide.

The market doesn't provide schools, hospitals, parks, playgrounds or greater road capacity, for starters.

scotroutes - Member
On a simplistic level, if renting worked out cheaper in the long term, the BTL market wouldn't exist.

Rent in Bristol is ~1300 for a detached 4 bed, so total throw away money is £15600PA. This will only get worse over time.

A mortgage in Bristol for a detached 4 bed in a decent area and assuming a 10-15% deposit is ~£1100. At that rate, approximately £650 is interest, so your total throw away money is ~£7.8k PA. This will only ever get better over time.

Buildings insurance difference is negligible ~£90PA.

Average boiler - what £2k? over 10 years? £200PA
Central Heating - £6k over 20-30 years? £240PA
Complete re-wire £4-5k over what 25-30years? £150PA
Re-roofing - £8-10k over 30-40 years £257PA
Electrical goods (assuming comparisson against a rent with them provided - £500PA
General servicing - £300PA
General maintenance ~£500PA

So ~£2000-£2500 a year to run the property. Total outlay for owning is ~£10k vs. ~15.5k for renting.

Also on an average house price of £350k and assuming a house price increase of only 2% per year, your gain on the house (at £7k) more than offsets the cost of maintenance and decorating.

Past performance and future predictions again... If you were to buy it now and factor in the cost of that shed?

Given no one can know the future, it isn't unrealistic to use past performance as a guide to the future. Cost of the shed wouldn't make any difference it only cost about 8 months rent.

@slackalice - once I'd paid off the mortgage I put the same monthly amount into a savings account for "capital expenses" should anything need doing to the house. It's surprising how soon it adds up.

Home maintenance tends to be lots of little things done often that are a few quid here and there and a few very episodic things that are expensive. Only had to dip into the CapEx account once for example. I've not added it up but apart from that one item I reckon our annual maintenance/servicing costs are around £200: oil boiler service, having the chimney swept and cleaning out the septic tank every couple of years.

I've always looked at a house as somewhere to live rather than an investment but then we aren't regular house movers (we've been in our current house over 16 years) so all the fees associated with moving have been absorbed, well forgotten about. I've only a vague idea of the current value of the house.

Some interesting historical perspective
https://en.wikipedia.org/wiki/Housing_in_the_United_Kingdom#1900%E2%80%931939
https://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/

Out of interest how does one save the 10-15% deposit when house prices are rising faster than wages and rents are higher? The figures are showing it's taking longer to get there.

@slackalice - once I'd paid off the mortgage I put the same monthly amount into a savings account for "capital expenses" should anything need doing to the house. It's surprising how soon it adds up.

Given no one can know the future, it isn't unrealistic to use past performance as a guide to the future.

@mikenewsmith - I've been lucky with timing TBH. My father died 20 years ago and my brother and I sold some land that was too far away from the rest of the farm just before land prices crashed so I could put a 75% deposit down on a house. Then I moved jobs and bought a small terraced house to use through the week as it was much cheaper than renting - £120/mnth vs £300 . After a few years of that we bought our current house, the terraced house had nearly doubled in price(!) so sold that and paid the mortgage off. A few months later the last recession started.

There are 5 million baby boomers. 80% of them own their own home. Those homes are the top end of the housing stock typically. There are 25 million homes in the UK, which means that in the next five to ten years, 16% of our housing stock is going to come onto the market for sale.

Shall we talk about what happens to house prices then?

well one option is that the kids/grankids who inherit all this wealth will pump it all straight back into housing. Some of this impact is moderated by care costs, but there's a lot of money still left over

Could someone do the maths for me please to compare renting vs 'ownership' of a house/ property?

there's a few good calculators out there (including the efforts above).

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

The biggest impact of why buying is better vs renting is that rent costs will generally rise with inflation, whereas once you've purchased, the costs are fixed at a given date. Assuming inflation is an average of 3%, over a 25 year mortgage money's value will have halfed - so your mortgage will likely be half of the equivilent of what it is today, yet rent would have gone up in line with money - so even if the 2 have broadly similar costs today, in the long run owning is nearly always cheaper

That does seem like good timing...
But for those starting out now
https://www.ftadviser.com/mortgages/2017/07/13/profile-of-first-time-buyers-in-2017-revealed/
Forgetting the average deposit of 40k and starting at 32 probably means it's a good job the retirement age is being pushed back as it will give people a little more time earning mortgage free.