House Price Crash

Yep. I’ve been on a bargain variable deal since 2007 and never even considered fixing as the offers I’ve seen would all be a significant increase.

Looks like we’re good for a while still.

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Funny how it’s the people that will benefit from a crash that are often the ones to keep predicting it.

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I think every single person who is looking for a house will hope it happens

s/predicting/hoping for

It looks like we’re going to be out of luck though.

This is where I don’t really agree. Stamp duty exemptions, HTB schemes, 95% mortgages really make houses roughly as affordable as they’ve ever been.

There are a few people, like those who grew up in inner London zones and work in blue collar jobs, who are stuck but also I don’t think any crash is going to solve that problem.

Which isn’t affordable enough, though.

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Well, this is based on someone using a 20% deposit, and not using the help to buy schemes, and they haven’t factored in stamp duty as far as I can tell. So basically it doesn’t take into account any of the things I mentioned as making things affordable.

Also, as it’s published by one of those shark companies that try to get you to sell your property for cash, forgive me for being skeptical of it. They haven’t actually detailed how they worked out what was ‘affordable’ as far as I can tell.

But these incentives have just increased the price of houses instead, haven’t they? Stamp Duty Holiday means that house prices can go up a bit because people don’t have to pay stamp duty, so the house price increases to encompass that extra amount etc. Etc?

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Yes, they have, I would agree with that. Market interference pretty much always results in that.

Still, that kind of reinforces the point that, affordability is somewhat equivalent even if the sale ‘price’ is much higher.

So, the affordability hasn’t remained constant, because the rate of increase over the last 5 years of salaries is way below the rate of increase of house prices. So if as you point out, all other things are perceivably equal, then the disparity in increase in salaries has reduced the affordability of houses.

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That analysis doesn’t quite work I don’t think, my sentiment that all things remained roughly equal included the house price rise, the lower salaries will also have affected any potential rise (if we all got paid more, houses prices would be even higher).

The main point here is that ‘affordability’ of houses is not a simple correlation between salaries and the list prices. There are many other factors.

Low average salaries - there’s definitely a problem I think needs fixing. I also think it’s what’s responsible for people feeling they can’t afford to save for housing deposits etc. But, a house price crash isn’t the fix for that, it won’t fix that, and it won’t leave that group any more likely or able to buy houses.

As at this completely distorted point it’s a zero sum game I’d be absolutely ecstatic to see billions wiped off the value of the housing market - emphatically yes. A few people would suffer temporarily (those with low equity), but them’s the breaks and it’s happened plenty of times before. But mostly it would be nice to see all those smug people who “accidentally” didn’t sell their previous two houses plunged into negative equity and forced to liquidate under brutal market conditions :fire::fire::fire:.

Prices don’t spring instantly back to their previous highs. This is not how the market works, or has ever worked.

No, I didn’t say that. Nor do the affordability factors dissapear instantly allowing first time buyers to all leap on the market. One tends to move about the same pace as the other.

It’s almost as if the two things are correlated or something :thinking:

Minimum LTVs on second homes are usually 25% plus and have been for some time, most people will be at 30% equity + unless they just relevaraged. And anyway, unless they can’t afford the payments, even if they go into negative equity they can just ride it out.

I wouldn’t get too excited about this group being affected, they probably won’t be. It’ll be newer buyers who bought on 95% schemes and stuff who are most at risk.

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A far bigger problem I think is interest rates going sky high. If my £200k house is now worth £100k, then if I don’t sell it, it makes no difference.

But if my mortgage goes from £500 a month to £900, well that’s a difference that not everyone can swallow.

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I think you’re a little confused here. Salaries are low compared to house prices, so an increase in salary and a decrease in house prices has… the same effect :wink:.

Again; I am not confused, I think you just haven’t really understood.

In the case of deposits, the affordability of a deposit depends both on the house prices AND the deposit percentage. Right now you can buy with 90 - 95%. In a turbulent market you’ll probably need 20%.

Again, affordability for first time buyers is not a simple correlation between list house prices and salaries.

It seems you’re just trying to say the same thing again, but without digesting. It’s not a binary relationship, and FTBs will be, overall, much, much better off as a result. Because they can’t be much worse off than they are in today’s completely distorted, and government-interfered market.

A lot of people will lose their shirts if this happens. And it’s much more likely than a lot of homeowners would like to believe, especially post-pandemic.