Viewing 40 posts - 1 through 40 (of 510 total)
  • What would it take for house prices to REALLY plummet?
  • jambourgie
    Free Member

    Happy Sunday STW!

    So last night we were having a chat about house prices. Yes, I know, terrible way to spend a Saturday night. Apparently, some time ago I’d said that the only thing to make prices plummet would be a pandemic. Well, that’s happened and nothing has changed. It’s back to business as usual, living in a building site with flats and conversions going on all around.

    So I swear, the earth could become a post-apocalyptic waste-ground inhabited by ghosts and a poxy terraced house would still go for £175k.

    So what would it take for prices to REALLY plummet. And I don’t mean was £175k last week, now on at £169k… I’m talking about £30k or something, houses becoming places to live rather than assets to buy and sell. Lots left empty, no profit in rental/buy to let etc… Houses cheap enough that pretty much anyone who wanted a home could buy one? Older STW’ers, has this happened before?

    jerseychaz
    Full Member

    All that might happen is that prices stagnate and incomes slowly rise so that the income multiple reduces. But, it would be over a long period of time.

    wordnumb
    Free Member

    Once everybody gets spaceships.

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    binners
    Full Member

    some time ago I’d said that the only thing to make prices plummet would be a pandemic. Well, that’s happened and nothing has changed.

    The economic impact of the pandemic hasn’t even started yet. We’re in a weird limbo. That’s going to hit like a tsunami when the furlough scheme ends in October

    Then we’ll see how the price of anything, let alone houses, stands up to mass unemployment. The Worst-case predictions are unemployment of 5 -6 million

    The only people buying houses will be opportunistic landlords snapping up the properties that have been repossessed from the newly unemployed who can no longer make their mortgage payments

    wordnumb
    Free Member

    The only people buying houses will be opportunistic landlords

    And investment funds, registered abroad for tax purposes.

    jambourgie
    Free Member

    Binners, who’s going to live in the houses snapped up by the scumbag landlords? Those 6 million will be shoved into old offices at £420pppm paid for out of housing benefit. Whilst billions of ‘luxury flats’ are still flying up all over the place… it’s weird.

    MoreCashThanDash
    Full Member

    House prices won’t fall until there is an adequate supply of affordable, social rental housing for the maybe 25% of the population who probably will never be able to afford to own their own home, who are currently forced into the private rental sector, so pushing up demand and rents and the housing benefits budget.

    I’m in no way blaming private landlords for the situation, it’s the result of 30 years of Tory policy and 13 years when New Labour did **** all to address the problem.

    twinw4ll
    Free Member

    You can get a house for £30k but you probably wouldn’t want to live there.
    If you bought a speculative plot for £10k then got planning and built a modest two bedroom house on there with your own labour it still wouldn’t be £30k.
    We have folk talking about spending £30k to build a garage.
    A nice static caravan will eat up £50k.
    I’ve just put in for planning for two semi detached bungalows in my garden, estimated build cost £90k each.

    chestrockwell
    Full Member

    The economic impact of the pandemic hasn’t even started yet. We’re in a weird limbo. That’s going to hit like a tsunami when the furlough scheme ends in October

    This is what I fear. We’ve been considering extending our house for a while but have put additional borrowing on hold until the economic picture is clearer.

    With the amount of for sale signs going up and how quickly they are selling it seems many others don’t share my concerns.

    House prices will only go down is they are not selling for whatever the price at the time is. That will only happen if people either can’t afford to or decide not to move so mass job losses for the middle classes or interest hikes are the only thing I can see lowering prices. Not sure how likely either are.

    jambourgie
    Free Member

    “I’ve just put in for planning for two semi detached bungalows in my garden, estimated build cost £90k each.”

    Why? Seems a bit excessive just to get out of mowing the lawn…

    EDIT: Could somebody please tell me how to quote. It’s all changed around here.

    reluctantjumper
    Full Member

    The pandemic isn’t going to be enough on it’s own. Even lumping Brexit on top won’t be enough as the rich will just invest in BTL’s and screw the poor people as per usual. They would feast on building up their portfolio at repossession auctions, do minimal work to the properties and wait for the govt to pay them to house the homeless families via the benefits system.

    The other option is Civil war.

    It would have to be large enough to bankrupt the country and violent enough that the cast majority of infrastructure and businesses would be destroyed. Only then would the wealth be completely stripped out of the country enough that house prices might fall enough that the majority could afford to buy but then there would be no jobs so we’d still be stuck.

    Basically it’s not going to happen any time soon. It’s easier for me to resign myself to the fact I’ll most likely never own my own place but continue to save money so that if a massive price correction does happen I’m in the best possible position to take advantage of it. But that correction will never happen as the health of the country would have to deteriorate so far to make it happen that it will never be allowed to happen.

    That is really depressing to write but it’s true.

    binners
    Full Member

    so mass job losses for the middle classes or interest hikes are the only thing I can see lowering prices

    The middle classes are about to experience the mass unemployment that deindustrialisation visited on the working classes at the end of the 80’s. It’s started already. Employers are already viewing this as an opportunity to massively reduce both their wage bills and the nature of their contracts. See what British Airways are presently up to as an example.

    The immediate future in an economy with few jobs and millions of highly-educated, highly-skilled, desperate people chasing them, is part-time, zero-hours on massively reduced rates of pay and no holiday, sick pay or any other perks.

    You’re going to need a degree to make coffees in Costa for minimum wage.

    Those with large amounts of ready capital are going to have a field day increasing their property portfolios, that they can then milk the housing benefit system to rent back to their unemployed former owners

    rone
    Full Member

    While interest rates remain low and they will for a long time under this paradigm – this is how things will be.

    The BoE is running out of ground with adjusting interest rates to control the economy.

    But there will be a paradigm change eventually.

    But also like Binners, I agree we have not felt the worst of the pandemic yet in terms of economic fall-out.

    n0b0dy0ftheg0at
    Free Member

    Not so a much a plummet, but we might see a small drop once the Stamp Duty exception ends in early 2021, plus furlough scheme should have ended by then.

    molgrips
    Free Member

    I’m talking about £30k or something, houses becoming places to live rather than assets to buy and sell.

    I dunno who you hang out with but everyone I know just buys a house where they want to live and lives in it. Why do you have to paint us all as capitalist pigs?

    Anyway. A £30k drop isn’t much, pretty sure that happened in 2007 and that was because of credit restrictions amid a recession. I don’t think house prices will plummet suddenly as people will simply not sell at too low a price; or if they need to move they will rent the old one to someone who cannot buy because either their low wages can’t afford the still high buy prices or they cannot find a house to buy because no-one is selling.

    jambourgie
    Free Member

    I meant 30k total not a drop… 🙂

    And I wasn’t calling you a capitalist pig honestly. Most people I know are exactly the same. Although a lot of them then become obsessed with ‘the game’. “this time next year this place will be worth eight times what I paid for it, If I put a stud wall up the middle of each room it’ll be worth TWENTY TIMES MWUHAHAHA! etc etc

    Malvern Rider
    Free Member

    Not going to happen.

    maybe 25% of the population who can’t afford their own home

    I’d say closer to 50% going forward

    https://www.thisismoney.co.uk/money/article-6250931/Four-ten-young-adults-afford-cheapest-homes-area-researchers-finds.html

    Lucky news for landlords. Self-fulfilling prophecy. I remember a bright fellow who back in the Right To Buy selloff got a new job that paid well so he decided to buy the family council house that had been home to a big family for decades. He moved their mom out to a smaller council home. He said ‘I’m buying the family home to safeguard it so the whole family will always have somewhere to live if they need it’. The former home somehow instead got done up and sold off quickly for him to buy a bigger house/investment in the country for him and his wife 🤣

    That was over 30 years ago. Today? Watch this and read the comments

    If it doesn’t make you weep then you’re already raking it.

    kerley
    Free Member

    Interest rates rising to 15% would do it, that completely wrecked the house prices back in early 90’s. A lot of people just had to hand the keys back as they couldn’t afford the mortgage and the house was worth a lot less than the mortgage.

    Another thing would be for the government to build say 5 million houses which were actually affordable (government acquired “free” land, houses sold at cost) with deeds that only ever allow the buyer to sell at purchase price plus inflation. That would cause oversupply and allow people paying ridiculous rents to actually buy and the whole market would drop massively.

    Just let me know first so I can get the half million out of my house before the massive crash…

    hols2
    Free Member

    So what would it take for prices to REALLY plummet.

    Severe population decline. It’s a supply-demand thing. Supply is not going to massively increase, so only a massive decrease in demand would do it. Millions of deaths due to pandemic would do it, so would deporting millions of people. Or pandemic + Brexit being so bad that anybody who could leave, did.

    Malvern Rider
    Free Member

    *Just to be clear, that’s not the same guy in the video. Just the same situation where houses have been viewed increasingly (by their owners) less as homes, but as business opportunity, currency and leverage. The UK home rental market is also about to explode and set it’s trajectory.

    The smart investor loves a war etc.

    But this is the way it will most likely go (in the UK)

    – Housing will become more expensive as the percentage of income

    – Limited supply means house prices continue to rise, therefore:

    – Growth/switch to the private rented sector will continue

    – Growth in wealth inequality. Rising house prices benefit homeowners (typically older people). However, it reduces living standards of those without a home. The UK will increasingly become divided between those who own a home and those who don’t.

    – Upward pressure on rental prices. The shortage of housing will put upward pressure on the price of rented accommodation. Housing costs will take a bigger share of people’s incomes (affecting their discretionary income)

    One day I hope that our great-grandchildren will wonder what we were thinking when we decided ‘why make a home when we can build a pyramid scheme’?

    sillysilly
    Free Member

    Just when you think it’s gonna happen Elon Musk gonna watch Armageddon, fly up to that gold laden asteroid, fly bk with a 100t weight load of gold and buy all our houses, then jack up rent for all. Mwaaahhhh haaa haaaa

    Caher
    Full Member

    In the west of Reading terraced houses were being bought and turned into HMO’s. However, there is a steady migration back to Eastern Europe so prices are dropping. Not sure if a family would want to buy such a property though.

    MoreCashThanDash
    Full Member

    In the west of Reading terraced houses were being bought and turned into HMO’s. However, there is a steady migration back to Eastern Europe so prices are dropping. Not sure if a family would want to buy such a property though.

    Was happening in the Fens a year or so back – landlords who saw the market for shared housing converted them, and were just beginning to see that they were either going to have convert them back to family houses or sell them as unattractive properties to someone else to do the conversion.

    The Eastern Europeans who were planning to stay were already looking to buy/rent nicer, more modern family homes.

    slowoldman
    Full Member

    A 90% reduction in the population?

    jam-bo
    Full Member

    What happened to that poster from here who’d pop up fairly frequently ranting about how overpriced his local property market was and how his lowball, what he thought he should pay offers kept getting refused. Except every time he did, the market had risen another few % and got even further out of reach.

    I bet he’s still waiting for the big crash….

    bentandbroken
    Full Member

    Interest rates rising to 15% would do it, that completely wrecked the house prices back in early 90’s. A lot of people just had to hand the keys back as they couldn’t afford the mortgage and the house was worth a lot less than the mortgage.

    This!

    I bought my first property for £55,000 in the late 80’s and promptly watched it drop by ~30% while my mortgage went up every month (and for about 6 months I really do mean every month).

    The only thing helping me keep my sanity was we bought it second hand while new ones less than 50meters away were still selling for £65,000 which would have put me nearer a 50% loss.

    At the same time I (and many others) found themselves being Ade redundant regularly (about 4 times for me and roughly every 12-18 months).

    I have just checked now and my first house last sold in 2006 for £134,950

    In all honesty, I agree with some of the comments above. We have not seen the real financial impact of Covid yet. I would be surprised if house prices did not drop significantly as more and more people find themselves without a job

    Edukator
    Free Member

    The same as Spain and Greece following sub-prime.

    People can’t pay the mortgage and can’t afford to rent either, the banks repossess, the people move in with parents or grandparents and the banks hold onto the property dripping it back onto he market in the hope of avoiding a total price crash. New developments stop and some are never finished, many existing properties sit empty. A Spanish funded development locally has been finished this year having been started in 2006 with an original delivery date of 2008.

    MoreCashThanDash
    Full Member

    As others have said, it’s about supply and demand. An economic crash might force people to sell up or get repossessed, but unless we are wanting to cull all these homeless families, then the lack of affordable accommodation hasn’t actually gone away.

    So it’s about building suitable affordable social housing for those who need it, and taking the pressure off the rest of the market.

    cynic-al
    Free Member

    There’s a post lockdown mini boom just now.

    I can’t imagine prices not crashing, given the inevitable impact on the economy from Covid, which is barely in evidence yet.

    molgrips
    Free Member

    why make a home when we can build a pyramid scheme

    I don’t think the pyramid scheme was planned. There just weren’t any government plans to prevent it, so the natural actions of people with money created and sustained it. And this is Toryism in a nutshell. Let whatever happens happen, people (including Tory ministers and donors) take advantage of it, and if you are disadvantaged then it’s your own fault obviously because if I became rich why can’t you? And of course they prefer this explanation rather than actually thinking about their privilege and power and how much they are screwing people.over by doing nothing.

    It’s like creating a zoo with no cages, and if the lions eat the visitors then hey, that’s your own fault for being too slow. Except the only shop selling cheap food is in the zoo and the expensive one is outside away from the lions.

    thisisnotaspoon
    Free Member

    You can get a house for £30k but you probably wouldn’t want to live there.
    If you bought a speculative plot for £10k then got planning and built a modest two bedroom house on there with your own labour it still wouldn’t be £30k.
    We have folk talking about spending £30k to build a garage.
    A nice static caravan will eat up £50k.

    This +1

    While land values in big cities and the South might be stratospheric and pushing up prices, the rebuild cost of a house in a lot of The North is probably higher than the houses value!

    You want a terraced house for £16k, here you go, and it’s far from the cheapest house in town too! I used to work with a guy who ran the project to install central heating into social housing in Teesside, he reckoned the value of the copper alone was higher than the property values in a lot of cases, just have a look at auction catalogs, plenty of houses sold for <<£1000, with the heating ripped out!

    https://www.rightmove.co.uk/property-for-sale/property-78252430.html

    somafunk
    Full Member

    There’s a post lockdown mini boom just now.

    This ^ , my bro put in his maximum bid of £118k for a 2bed house in our wee Galloway town, sold to a developer from Yorkshire for £140k who buys properties for holiday rental, he already owns3 properties in my mother’s street alone, stopping **** like this buying properties would be a start

    Kryton57
    Full Member

    With the amount of for sale signs going up and how quickly they are selling it seems many others don’t share my concerns.

    My work colleague, who’s air hostess  wife has just been made redundant and who is constantly now complaining about the lack of commission he’s currently earning, is trying to buy new £430k 4 bedroom house near Harrogate.  Not only has the bank increased the deposit from 10% to 15% which he’s mitigated by the current stamp duty removal leaving him no cash for decor and repairs, the survey just turned up some damp issues.

    Rather him than me, it feels so 2019…

    jam-bo
    Full Member

    ^^^

    How is a £430k new build house damp?

    But yeah, some people attitude to risk is more cavilier than others.

    Caher
    Full Member

    …he already owns3 properties in my mother’s street alone, stopping **** like this buying properties would be a start

    This. When homes are used for living and not treated as a commodity might help. One of the guys in our cycling group has 10.

    Kryton57
    Full Member

    How is a £430k new build house damp?

    Apologies – new to him not a new build.

    greentricky
    Free Member
    BillMC
    Full Member

    In housing you’ll getting an increasing concentration of ownership, they have the money to keep the market buoyant. But it will be standards of living that REALLY plummet as the keys and cars get given back. Apparently a high proportion of urban dwellers looking to buy are looking for a rural relocation so the pattern will be uneven.

    hels
    Free Member

    In a localised way – oversupply. This happened on the south coast of Spain – loads of British pensioners retired out there – development companies built concrete ghettos on flood plains and just kept building – the pound dropped against the euro and they all tried to come back to UK. Houses that were bought for 100k euro now lucky to get 20k.

    Marin
    Free Member

    Something so bad we’d all loose our jobs and not be able to afford them. A friend predicted doom and gloom and was holding on for a huge drop about 10 years ago. He’s still renting and I’m 4 houses down the line. If anyone here really knew they’d have much better things to do with a Sunday than come on here. If you can afford it buy one if you can’t and you’re down South those prices will never be reasonable I’ll wildly predict!

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