Property Price Crash Incoming?

HungryHippos · 2 Jul 2017 at 16:44

Hard to predict the future house pricing.

Steadily upwards seems to be the trend, maybe the odd pause for breath, I don't see an imminent crash coming though.

kinetic747 · 2 Jul 2017 at 16:56

So much for the Tories putting an end to the boom/bust scenario, the perfect storm is brewing. Rising inflation, record low savings, record amounts of debt, poor wage increases and a housing market that is yet again broken. A lot of people will once again end up in negative equity and it's not going to be pretty.

Rifte · 2 Jul 2017 at 17:17

The houses I have in the UK have theoretically earned me far more than the dividends I pull from my business over in India. Quite simply there is no comparison.

For all intents and purposes 2008 was a bad year for property but it has taken less than a decade for prices to recover and move far, far beyond the valuations then.

With new development failing to meet demand, and a growing population it is difficult to see how it will be reversed.

If it comes it would have to be absolutely epic to really dent the market and I am not sure if it would be allowed to happen again.

As another poster said, even if prices did crash, a lot of owners (including myself) wouldn't sell because history tells us after every crash there is usually a boom. It might also trap some home owners into negative equity (happened to me in 2007/2008), so they might not be able to sell anyway without having a heavy cost.

Its all paper value and unless you sell up and move overseas, rent, move in with your parents etc its all relative to the next home you plan to buy.

danlightbulb · 2 Jul 2017 at 18:05

Shoza said:
London property market crashed already but doubt the rest of the U.K. will follow as much since prices weren't as inflated. I do a lot of new build in London and my clients have had to drop prices by 10% - 15% + various incentives to shift new build properties recently.

That's not a crash because those initial prices were probably speculative in the first place.

Kemik · 2 Jul 2017 at 18:31

johnny6 said:
However whilst I'm not sure there will be a sudden drop in house prices, I can definitely see a slowing down of the rate of increase. I suppose it entirely depends on whether crossrail creates a second bump in 2019 when it is fully operational.

Reading? I'm seriously worried. I've part exchanged for a new build but the house builders can't shift my two bed. A year ago it would have gone for slightly more in the space of a week.

UTmaniac · 2 Jul 2017 at 18:31

Going on what my mum has experienced since last Novmber, having had four different house offers accepted, sellers are far too often setting a high price to make easy money... But then won't budge when the surveyors find serious issues that will cost £5-15k to sort out.

A fifth property is on the verge of falling through because the seller has jetted off to to USA for 3 weeks without notifying the agents and my mother beforehand, when they knew the sale of my mother's home was on the verge of being cancelled because it has taken over six months for my mother to be happy moving out (and they were sleeping of sofas because their old rental contract expired). And that's before we even talk about whether they have satisfactorily removed the non-compliant 6-foot garden fence and then repaired the wall behind it that was in a dire state of disrepair!

HungryHippos · 2 Jul 2017 at 18:53

The right house will sell at the right price, I often see people asking for too much as well, and those houses just sit on the market for eternity.

johnny6 · 2 Jul 2017 at 19:16

Kemik said:
Reading? I'm seriously worried. I've part exchanged for a new build but the house builders can't shift my two bed. A year ago it would have gone for slightly more in the space of a week.

Lol not that classy. Slough.....

Much like Reading I believe there are flats going up all across the town and multiple offices being converted into flats.

I think the council have committed to building 1000 council homes a year for the next 5 years. So what's that 6000-8000 total homes (council/non council) a year.

I read an article somewhere that people 'in the know' expected a 50% increase in house prices by the time crossrail went live. That seemed to happen within the first 12 months. So I can definitely see a levelling off/slowing down of how quickly property prices increase.

Regy53 · 2 Jul 2017 at 20:29

We are in a commuter town 40 miles from london and the housing market here has been dead for 8 months. The previous year before hand was list for sale today, receive 8 offers tomorrow and settle 4% over what you originally wanted.

defo a slump around london

purplesky · 2 Jul 2017 at 22:16

Wage increases won't help. Wages go up, so do house prices and the price of just about anything you need to buy.
This stupid emergency interest rate measure, together with Quantitative Easing, has created a zombie economy with no price discovery being allowed to occur. These tools were only meant to be used on a short term basis. We're in a right mess now, and I suspect there is a massive crash coming to just about everything, once the artificial props are removed and the markets find their true baseline. Unfortunately, there will be many job losses, repossessions and an increase in crime. 2008 will seem like a walk in the park compared with what's coming soon.

daz · 2 Jul 2017 at 23:28

Rather than a crash, what will most likely happen is a prolonged slow down or pause in growth. So 5+ years at 0-1% growth.

Psycho Sonny · 3 Jul 2017 at 00:32

mattyg said:
I can't see that working

As soon as wages go up people can afford more and supply and demand will raise house prices. Pretty much everyone I know lives beyond there means.

I know this is only one case and probably not the norm but I gave a driver a £100 per week payrise a few years back ( 10 yrs) as he was a mate and I knew he was struggling. He had to do a little bit more work for it but only about an hour a day.
Did it make his life better..No he went out and financed a more expensive car.......And got further into debt.

People that "struggle" tend to be morons and completely terrible with money.

At my old workplace there was a woman who had half her annual salary on credit cards and a car on finance. She lived at home too with her mum. She was always complaining about being broke. So she then took up a second job in a bar in the evenings and weekends. She finally managed to pay off the car finance and what does she do? Look at leasing a new car since her friend just got a new audi tt on lease. I made a remark about her loving her finance and she bit my head off. All she had done constantly for the past 6 months was constantly whinge about being broke too.

If people were more careful and wiser with their money they could live within their means. However they want everything and will finance to get it. I think the last 5 phones I've bought have all been second hand. I could go out tomorrow and drop £800 on a phone. I've got cash sitting there, but I won't. However plenty of people out there who don't have the cash sitting there will go out and take a contract out for 2 years on a £800 phone then complain they are broke.

I don't have a credit card. I don't have any loans in my name either apart from student loan and a mortgage. I was thinking of getting one as rates are so low. Even lower than my mortgage, take a 4 year loan out and use it to overpay the mortgage. Obviously banks would never let me borrow it for that reason, so I wonder what they would say if I was to take such a loan as a home improvement and then say after I got the cash I decided I didn't want to do it so I used it to overpay instead. I was thinking of maybe using part of it for solar panels, then running my 2 pc's as mining rigs whilst i'm at work during daylight hours.

Steeps · 3 Jul 2017 at 00:36

Regy53 said:
We are in a commuter town 40 miles from london and the housing market here has been dead for 8 months. The previous year before hand was list for sale today, receive 8 offers tomorrow and settle 4% over what you originally wanted.

defo a slump around london

We're further out and prices are still going up. In 2-3 years the flats that were 120k are 160k, the 160k flats are at 190k, can't get a 2 bed terrace for under 200k. A developer admitted they made a mistake when they sold off some 2 bed ex-RAF housing at 180k 2 years ago, now listed at 260k. As a single person I missed the boat so I bought a depreciating asset instead and will continue to save until prices drop again. If it does happen within 2 years I'll have a 20-25% deposit ready.

delta0 · 3 Jul 2017 at 08:04

I'm in London and prices are definitely still going up. It is only too end of the market where prices are 10's of millions that has slowed. Once those have filtered out three it will be a bit more obvious the market is growing strongly still. Properties are still going on the same day they are listed. The main driver is still that there are very few properties being built relative to demand. This isn't likely to change for the foreseeable future.

mattyg · 3 Jul 2017 at 11:21

Psycho Sonny said:
People that "struggle" tend to be morons and completely terrible with money.

At my old workplace there was a woman who had half her annual salary on credit cards and a car on finance. She lived at home too with her mum. She was always complaining about being broke. So she then took up a second job in a bar in the evenings and weekends. She finally managed to pay off the car finance and what does she do? Look at leasing a new car since her friend just got a new audi tt on lease. I made a remark about her loving her finance and she bit my head off. All she had done constantly for the past 6 months was constantly whinge about being broke too.

.

This particular mate of mine is nicknamed nought percent nige

SPG · 3 Jul 2017 at 13:28

I know a couple of people who have moved to Derby who work in London now.

1.5hrs on train, with the annual price is 9k a year though, which is eye watering to me.

Psycho Sonny · 3 Jul 2017 at 17:14

SPG said:
I know a couple of people who have moved to Derby who work in London now.

1.5hrs on train, with the annual price is 9k a year though, which is eye watering to me.

They will be making at least £12k a year more than the equivalent job in Derby though. And it's not as if people outside of London pay nothing to get to work.

I know I'm anywhere between £10 - £17 a day. Depending on whether I take the car or the train.

purplesky · 3 Jul 2017 at 21:19

delta0 said:
I'm in London and prices are definitely still going up. It is only too end of the market where prices are 10's of millions that has slowed. Once those have filtered out three it will be a bit more obvious the market is growing strongly still. Properties are still going on the same day they are listed. The main driver is still that there are very few properties being built relative to demand. This isn't likely to change for the foreseeable future.

See, this is the problem with booms and busts. People who have never experienced a bust cycle don't believe that prices can go down, and are very surprised when the crash comes. To be honest, even as someone who owns my house outright with no mortgage, I'm very concerned with ever rising house prices. The way I see things is, it's not a case of house prices going up, but a currency that is going down. So not only are people paying more for property, they're paying more for everything else they need such as food and fuel.

Emergency interest rates and Quantitative Easing are the real reasons for house price inflation, not a lack of properties. The can was kicked back in 2008, now there's no road left, so I think people best be as well prepared as possible over the coming months. There's absolutely no signs of any strong economic forecast coming soon and pretty much everyone I speak to is concerned about the direction we're heading.

delta0 · 3 Jul 2017 at 21:30

purplesky said:
See, this is the problem with booms and busts. People who have never experienced a bust cycle don't believe that prices can go down, and are very surprised when the crash comes. To be honest, even as someone who owns my house outright with no mortgage, I'm very concerned with ever rising house prices. The way I see things is, it's not a case of house prices going up, but a currency that is going down. So not only are people paying more for property, they're paying more for everything else they need such as food and fuel.

Emergency interest rates and Quantitative Easing are the real reasons for house price inflation, not a lack of properties. The can was kicked back in 2008, now there's no road left, so I think people best be as well prepared as possible over the coming months. There's absolutely no signs of any strong economic forecast coming soon and pretty much everyone I speak to is concerned about the direction we're heading.

London barely went down in 2008 and quickly recovered. London is absolutely driven by lack of properties. I have experienced previous property cycles and London is very constrained by lack of building that does not meet demand. With lenders being very careful it is very hard for the market to suffer in the short term and medium at least.

purplesky · 3 Jul 2017 at 21:40

delta0 said:
London barely went down in 2008 and quickly recovered. London is absolutely driven by lack of properties. I have experienced previous property cycles and London is very constrained by lack of building that does not meet demand. With lenders being very careful it is very hard for the market to suffer in the short term and medium at least.

I suspect emergency interest rates and quantitative easing played the biggest role in stopping house prices from crashing though otherwise a significant number of people (and banks) would have defaulted. The increase in house prices in London since 2008 is frightening. People have been living in a zombie economy because of government interference, emergency interest rates and quantitative easing. Once these measures are removed, the market will fall hard. Of course this doesn't affect cash rich people who can swoop up bargains, it's the average punter who gets stung.