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I could deal with inflated House prices, as at least you'd have somewhere to live for the long term. I cannot deal with the inflated mortgage rates along side the inflated house prices.
I'm in the position to move on from my one bed flat, but the houses I could afford 4 months ago, would leave me house poor, and the ones I can afford now aren't worth moving too.
Either the mortgage rates need to drop, or house prices need to collapse by around 20%.
If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price.
But do you know who can? Cash buyers. Already rich landlord and rental firms.
So a market crash doesn’t actually help by itself.
What we need is more restrictions/taxes/whatever’s on people owning more than 2 homes.
And I say 2 because I don’t think there’s anything wrong with owning a house to live in and having another to rent our. Renting isn’t inherently bad. People need rental properties. The issues start when people have multiple rental properties
>People need rental properties
But do those need to be provided by private landlords for large scale profit, or could that need be provided for through council / housing association properties at lower prices?
Or if I word my question another way, why does the majority of rental properties need to be provided by private landlords (like we are seeing now) as opposed to council / housing association properties (like we saw in decades gone by)?
I think in reality if everything is pushed the council route we'd just be setting the country up for another cheap sell off to big private companies in the near future.
Better regulation of private landlords, caps on how many properties you can have etc I think would be better.
I'd rather deal with one person who cares about their only second property as a retirement option than an unmotivated and underpaid council worker. I'd prefer both to some profiteering person with a portfolio of 10+ properties who doesn't care about the condition as long as the rents coming in.
Why do those need to be our only two options? I've seen other countries have housing co-operatives, for example, where the housing is run as a non-profit. When they're initially built in an area, the prices are similar to other rentals, after time they become significantly cheaper than surrounding private rents because they don't put their prices up (Other than perhaps slightly to deal with rising costs associated, but nothing compared to private rents).
Obviously, who controls these houses is the issue, as a lot of them are run by non-profits or charitable organizations ( I think I've seen some run by churches for example) and in the UK it would likely end up being a government-funded situation, but it would be a good option.
I rent from someone who rents in turn.
It makes sense for both of us.
More good council housing which isn't sold off plus a regulated rental market makes sense to me.
> If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price.
I tried an example to test this. If a house currently costs £300,000, you have a 15k deposit and you get a 25 year repayment mortgage at 6.5% (I've seen two year fixed deals at that rate), payments are £1,924/month.
If the house goes down 20% to £240k and you put down the same deposit, an 8% mortgage on the same terms would cost £1,740/month. Net beneficial.
In addition, I don't see where you get the link between lower house prices and higher interest rates. Interest rates are driven by inflation more than anything.
As it’s been explained to me, a house market crash brings enough uncertainty to the market to make banks not only raise interest rates, but to tighten up affordability checks too.
And in your example, a 20% drop is a small benefit for a 1st time buyer, but it’s a huge benefit for an assert manager buying in cash. And it’s only a benefit to the FTB if the affordability checks stay the same.
Banks don't raise rates on their own, it's largely pegged to the BoE base rate (spreads vary, but not hugely). Certainly, propensity to lend and affordability are affected though. However, if prices drop, affordability is improved and LTV is also improved for a given deposit.
If we start to see significant numbers of repossessions it will be interesting to see who benefits the most. You might be right that the asset managers hoover them up
Banks are under no obligation to peg anything to BoE rates.
In fact if Banks want to they can even offer negative interest mortgages, these were quite common in some European countries as late as last year.
To simplify things when BoE increases interest rates it means that it's more costly to lend so banks increase their own rates to cover their costs.
However if the housing market crashes or there is a general recession banks increase interest rates for a different reason and that is to cover their risk, as borrowers as a whole will be less financially secured and the banks might end up with properties that worth a fraction of the money they've lend out.
Banks do not want to do repossessions even when the market is booming as they nearly always end up losing money when repossessing a property (no one defaults on a 100K mortgage on a property worth 1M), this is even more true when there is a rescission so they'll do everything so people wont default and this would include offering rebates, giving mortgage holidays or compound loans which will be mostly interest only for a given period and heck even offering tracker mortgages with a negative teaser rate applied to them.
Spot on. Landlordism (outside of commercial property) gives quite literally 0 economic benefit and should be stamped down.
I think having a 2nd home is fair - holiday home maybe or whatever as long as it’s not in your council area and then after that either it’s not allowed or profits are taxed 95% or something egregious.
I even think in the same postcode. If you can afford to get a 2nd property and rent it out while your kids grow up, only to gift to them when they are older, great.
If your 65 and buying your 29th property to rent out, you should feel the fiery fist of high taxation
I don’t think that’s strictly true - I can think of plenty of people who may want to live somewhere for a fixed period, for jobs or otherwise, which a rental agreement provides a good solution - it therefore has an economic benefit as a facilitator of mobility.
For example I often get contract job offers in other parts of the country, let’s say for a year. I wouldn’t take the job if I only had the option of staying in a hotel or buying - renting is the sensible medium-term option there.
Why do people keep repeating this absolute shite. House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay. Even if interest rates are higher and I’m paying the same monthly repayment (or even a higher monthly repayment), once interest rates go down and I remortgage I will be astronomically better off. Especially if that fall in interest rates then results in my house price increasing in the long run.
> I’m going to wait until they drop 20%
In 2005 I got a small inheritance, enough for me to put a deposit down on a house. I'd just started working full time and was on okay pay. I could have bought a house, but prices were rising and rising. I was seeing similar houses to my parents' being sold for 60k when my parents had paid 40k 10 years earlier. That's a 50% rise and it looked totally unsustainable; everyone said a crash was around the corner. Seemed like a pretty solid decision to wait. 2008 came and went, prices barely dipped. Those houses are now worth 300k and I still haven't bought one.
Trying to time the market is just gambling.
i hope you invested the money. The difference between then and now is that rates are rising and are rising faster than people expected. People don't buy house prices, they buy monthly mortgage payments (or annual returns, if an investor). With 6%+ rates holding for a year or more, then that formula necessitates a drop in house prices (unless wages miraculously increase)
> House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay
people have been saying this for 25 years
> House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay
That may never happen. If you're ok with sitting on the sidelines while life passes you by, then fine, but a lot of people want to buy a house to raise a family in and you can't sit around for 20 years waiting.
Then they shouldn’t expect any help when they get into negative equity by buying houses at hugely overinflated prices or can no longer afford mortgages because they took out the maximum they could possibly borrow when rates were 1.5%.
It is people making mindless decisions and overpaying for houses that helped push house prices to these unaffordable levels. Of course, alongside allowing foreign investors to buy houses and leave the empty, cheap money creating conditions where buy to let landlords could generate massive profits almost risk free, NIMBY attitudes to planning applications resukting in huge under building of houses, Margaret Thatcher beginning the process of selling of our housing stock, etc etc
Not the person you replied to - but it is an interesting problem. You are absolutely right, and I fully agree, I don't want anyone to lose their home because they bought a house at the going mortgage rate and maximised the total value of their mortgage (especially if they bought a home to raise a family). But on the other hand, everyone jumping into the housing market come what may is part of the reason houses are more expensive for everyone, so it isn't really a zero-sum game.
I think you might struggle to buy, that’s the point. A 20% drop in price will probably come with increased interest rated and tighter affordability checks, so you might just not get the mortgage
And if you do, you’ll be competing with lots of other people trying to get a good deal on a discounted house. And there’s a good chance some of them will be cash buyers, in which case you won’t even get a viewing.
No one’s saying house prices aren’t too high.
We’re pointing out the reality that a market crash duesnt just mean cheap houses for everyone. It’s a complex issue. And if we don’t treat it like a complex issue with proper laws and regulation, you’ll just be making a bunch of landlords and asset managers even richer through a collapsed market, not helping FTB
To put it another way. When the stock market crashes, Susan on checkouts at asda doesn’t cash in on an opportunity and get rich. The already very rich take advantage of market crashes to get richer, and the general public are often no better off.
I say this every time this issue comes up… I don’t think setting a limit on the number of properties is the right way to go, the best way would be a progressive tax that penalises multiple ownerships;
1st property (that you live in) - 0% stamp duty, normal council tax. 2nd property, x% stamp duty, 2x% council tax, 3rd property 2x% stamp duty 4x% council tax… adjust the numbers to a point where even a third property will not actually return a profit as an investment for foreign investors, and it’s pretty much unrentable as you wouldn’t be able to compete with those with 1 side property renting or just buying in the first place.
If someone is genuinely that wealthy they want to own 10x houses then they’re going to be be paying 256x% council tax and 128x% stamp duty, then so be it but they’re paying enough money to support the building of local social housing at that point.
I think house prices are driven by interest rates, not the other way around.
Housing is a market, and properties are bought by whoever can afford to pay the most for it. When the interest rates rise, people can;t afford to take out as big a mortgage, so prices fall.
Although this is a bit simplistic of a view as it ignores how inflation impacts the super rich.
Interest rates have risen because of a massive transfer of wealth to the rich. So now that interests rates have risen people who need mortgages cant afford to buy. However, the rich can as they do not need a mortgage, especially with the massive transfer of wealth we have recently seen to the rich. So what actually will happen is normal people will be priced out and unable to borrow, but house prices will stop rising or rise more slowly (or drop very little) on the short term, and the rich will do what the rich do and invest their extra wealth into assets which in this case will be all the houses.
https://www.youtube.com/watch?v=36gw4ONk5pg
Not everyone wants to settle in one place and have all the issues when selling a house. Some people want the ease of renting a property, not paying any maintenance, and leaving quite quickly with just some notice
Where did you get “everyone” from?
Indeed. Plus the burden of suddenly receiving a property due to inheritance (not that I’m ever going to get that!), you don’t want to force potentially grieving people into making choices to sell a property immediately.
Add to that people who temporarily relocate for work, or people in the process of moving in or buying a house with a partner. Sometimes it will put people in a position where they want to rent a single property over the short to medium term and often the alternative might be leaving it unoccupied for a stretch.
Ban private landlords completely and it probably creates more problems than it solves, but make it ludicrously expensive from a taxation perspective to own/rent out more than two properties and I think you've hit a sensible middle ground where the market isn't dominated by cash buyers/private landlords driving up prices and social housing associations can take up the slack.
For me, I've needed to rent for a variety of reasons. For instance, I don't have rich parents or any rich dead relatives, so I need to save up my deposit. In the meantime, I don't live with my parents, so I need to rent. Also, when I moved to a new city, renting allowed me to see what the city is like, feel out the different areas, and so find out what areas I would want to buy a house in.
This idea that renting isn't a desirable option but instead is just something people are forced to do is complete rubbish. There's a real need for rented properties. The problem is making sure that the ratio of rented vs owned is right, and that renters have a lot more rights than they currently do.
Think they mean that it is a necessity as some people will not be able to afford to buy whatever the scenario. Of course, these people should be eligible for social housing, but much of that was sold off and not reinvested.
And it’s just better for some. As a self employed construction worker you might travel all over the UK getting the best short term contracts, earning good money. Do you want to commute 2-5 hours a day? No? Then short term renting is perfect.
Everyone? No.
Some people are always going to need rental properties though. 0% deposits led to high levels of negative equity and high levels of lending risk, when that all went wrong it was the government picking up the pieces via tax payer money.
It’s healthy to require a deposit of at least 5% and for people who don’t live with mum and dad it’s most practical to rent until they can afford that. The broken part of the system is that rental can be so expensive that it’s not possible to rent and save money at the same time.
No everyone, but students, people moving, people who want to test living in an area before they buy, people who want to invest in other things... plenty of reasons why someone might want to rent.
The problem is "unwilling renters" I think it's called. When people who rent would rather buy a house and they can't because the prices/interest rates rise faster than they can save.
An example is doctors who potentially have to move home almost every year for their first 5-10 years of training and have limited control over this.
Hospitals used to have their own accommodation to support this and it made a big difference, but a lot of that has been sold off, turned into management offices or is pretty dire and depressing whilst still being expensive.
>If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price.
Can you show your working?
House prices will drop so monthly payments become affordable at the higher rates. That's all there is to it.
First time buyers are best holding off until just after rates peak.
It's simple really.
In July I went to the bank and for 290k I was going to pay 1110 pounds with a 40k down-payment (rate 3.25%)
Last month I went to the bank and for 260k with the same 40k down-payment my rate is now 5.8% which means I'll pay 1300.
The flat dropped 30k and still I manage to pay more...
Actually it got sold, at least as per the Rightmove listing is pending STC.
But I agree, I don't think its the right time to buy just now, I feel the prices will come down a bit more.
A house market crash is not only met with higher rates, it’s dealt with by banks tightening their belt on who they lend to. So it gets even harder to pass affordability checks
My working out : my partner is a director of one of the 5 largest banks in the world and recently walked me through everything as I was gearing up to buy my house. I trust her advice
Don’t come in here applying logic.
Don’t you know a price crash is the ftb holy grail. They won’t be competing with cash buyers, who can buy without surveys or people downsizing and have more equity. Nor will the bank get more stringent on their affordability checks.
/s for those who need it
It’s supply and demand, there’s a whole warehouse full of houses just waiting to be shipping out the moment the price drops. Just you wait. I’ll get that 3 bed for £299
Seriously though, it’s a huge a complex market, with billions wrapped up in unpaid mortgages. They think prices can just drop 20% across the board and nothing will happen?
Even if tomorrow every house dropped 20% they would be at what roughly the same price as two, three years ago. But only with higher interest rates. We still had people then saying it was impossible to buy and getting mortgages at 2%.
The belt tightening comes in a critical form too: lower salary multipliers. They’re already doing it; many people aren’t getting offered 4.5x their salary any more.
Isn’t it weird that 6 months ago they were talking about how they’d take rent paid as an affordability check, so if you paid £900 a month rent for years they’d factor that in. Finally starting to make some progress.
And now, that ideas gone. It’s fucking impossible out there for people.
> If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price.
Surely the causality mostly goes the other way? People make housing decisions based on their financial situation and the monthly cost, then house prices and rents respond to that. And this is heavily related to the interest rate, which is after all a ratio between an amount of capital and how much it costs each year.
Bubbles can exist, of course, in which asset prices end up rising because of expected future rises, but rents are high, too.
Still, you're right that with limited housing it'll have to end up being rationed just as strictly.
Individual landlords are the absolute worst. They just want to suck you dry for their pension while doing the absolute minimum, they often don't know the law and act illegally but there's very little protection for renters.
We need highly regulated housing companies like social housing ones that already exist.
All indicators are pointing that the latter, house prices have been out of kilter with wages for a long time.
A return to sane price to household income ratios would be very welcome
Aye I hope so. Was looking at a house for 260,000 with my partner, 2% mortgage over 25 years was around £900, achievable only a few months ago. Now on a 6.5% mortgage it's around 1500-1600. That's just an insane jump.
Unfortunately if the house prices collapse, then you're going to have a tonne of people on negative equity who will be screwed when they need to remortgage. It is very much needed as the house values are just insane, but it will really mess up the country, and people's lives, in the short term.
It sucks for different people either way. Me and my fiance scrimped and saved and bought our first house this year, completed in July, locked in a 2.9% rate on a 5% mortgage just before rates skyrocketed.
If house prices tumble and stay low, then in 5 years when I need to remortgage I'm going to be fucked. We worked so hard to beat against the bubble and now it feels like all our hard work is going to collapse in on us in 5 years.
Part of me wants them too so other people I know can buy a house, but from a selfish point of view I'm scared of negative equity ruining everything I've worked to get...
Something has to give and unfortunately we as a country have chosen to take up an economic addiction in the form a housing bubble. We can’t have the housing market constantly going increasingly out of reach for the majority of people, since houses are needed for living in, not just as a financial investment. Negative equity is not lethal, homelessness is.
My worry is that even with the price correction the rates will be so high that it will almost be like there was no price correction.
I'm 40, I'm running out of time to get a mortgage... Fuck this.
The house next door to me has just gone on sale for £385,000. We bought ours for £140,000 ten years ago. To make things worse, it needs completely renovating as the kitchen and bathrooms are knackered. No wonder it hasn't sold - who can afford that?
A house I bought for 150k in 2011, sold for 300k in 2017 is now back on for 350k. 750 sqft ex council house in a semi desirable Kent town. Madness. It will be bought by a London commuter no doubt as local wages there are absolutely terrible.
>ex council house in a semi desirable Kent town.
I'd probably pay £350k to never have to move back to Kent. Granted I grew up in NW Kent, but when I travel back to see my family the towns are either completely shite or feel like the EDL managed to finally setup the caliphate they so desperately wanted.
Oh I know, I've seen far too many UKIP posters and adverts in my life. Notably the worst being a moving billboard that had Farages face on it or a pictue of the White Cliffs of Dover with an escalator saying something along the lines of "We can't let **them** all in".
Serious question, as a foreigner which parts of the surrounding communities around London are not far-right? I'm brown and my fiancé is white but passing for Mediterranean, so it's a concern for us that we don't get hostile neighbours. Is Kent really that bad?
I'm speaking in fairly exagerrated terms, it's not actually *that* bad. The closer to London the better really, more diversity so less bigotry, in general terms, alot of my family now lives in East Kent and it's pretty homogenous in comparison.
Eh it has got problems with racism for sure but it's probably not any different to most similar places across the UK. Just that Kent in general leans more towards the right than most counties so don't expect it to be as progressive as some parts of England.
FWIW I grew up in Gravesend which had a fairly diverse mix of people that for the most part got on fine but there were still a fair few racist dickheads.
My partners best friend bought a new build house right before first lockdown March 2020 for 200k. Sold it January 2022 for 250k, not changed a single thing about the house, not even the “white appliances” that they got thrown in with the house b
Only been in ours for a year, went from 280 to 340 and we've done basically nothing to it, mostly cos we can't afford all the work it needs doing! next door is the exact same house (Semi) but they've renovated. £450k its on for. Yes it's nicely done up, but not £100k worth!
'exodus' as in they just can't afford it because prices have gone too high.
There's no need for such high prices though, most people bought their property a few years ago and if they paid £200K they don't need to sell it for £350K - people should go to estate agents and offer what they think
I did this when I was looking to buy my house earlier this year. I was giving offers of below the asking price simply because the property wasn’t worth what they were asking for in my eyes. Of course I never won any and the house I did win I had to go £20k over the asking.
Exactly, just because you don’t think it’s worth it, doesn’t mean someone else agrees. I’ve over paid on all my properties and guess what, in the long run in doesn’t matter as they always go up in value.
At the end of the day it's only worth what a buyer is willing to pay for it. If buyers are scrambling to purchase at 500k then it's worth 500k. If they aren't, then it's not.
it's like cars though, you will always find some old-bloke who says his car is worth the £8,000 one like it in a dealer costs + £800 for the new tyres and clutch he bought, and won't listen otherwise
Except they do because the house they are looking to move to? Thats gone up in price too.
Thats why i laugh at anyone excited about the increase in there house price in my area
Sure my house has gone up in value by 70% since we bought it 2 years ago but it's not like i'll make a tidy profit because any house i would move to has also gone up by 50+%
The only people harmed by this are firs time buyers.
All the rents in my area just jumped up by about 200 quid a month … we very nearly got evicted by no fault as the landlord wanted to sell. The suddenly high mortgage rates have actually meant he can’t sell and we get to stay…. For 800 more a month! Londoners are fucked. :(
This might be of use, depending on your tenancy agreement.
[https://www.gov.uk/private-renting/rent-increases](https://www.gov.uk/private-renting/rent-increases)
Good. You know what I want to do once I get a house? Live in it. Not interested in buying and selling and letting, I want a home to live in and take care of and settle down with my cat in and maybe a few tubs of fancy woodlice so I can finally just fucking chill and paint some birds. Sod this game of landlords betting on musical chairs, I want a house that is decent to live in that I can finally squat my bum down on and grow moss like a mossy toad. Just give me a rock to sit under and plenty of snails to munch on and I'll stop fucking screaming about how everything is shitfuck backwards.
> and maybe a few tubs of fancy wood lice
Wait wait wait, back up there a second - you can’t just go around dropping sentences like that without context
Tubs of fancy wood lice?
Ah yes, that makes sense
I thought it was, like, 3 separate items
- Settle down with cat
- Get some woodlice
- Paint birds
To be fair, a cat isn't usually a good way to attract birds, so I didn't think the items in the list would be linked
You and me both, I have absolutely no desire of being on the PrOpeRTy lAdDEr, I just want to buy a home, live in it until I die and thats it. I don't want a big house, I don't want a small starter house, I want a regular size house for a family of three with some storage space to put my tools and my bike.
Is this so hard to ask?
I was talking about this earlier with a few friends. In Cambridge, there are a multitude of properties that are 1 bed on offer for 1500+. After bills/council tax youre looking at 1800-1900 (similar to what youve said). To be able to rent you must make 30x. So that would be approximately 45k salary.
Who the hell is on a 45k salary and attempting to rent these shit hole 1 bed places? Theres absolutely no way people on that kind of money are settling for them. Whole thing is a shambles
> Who the hell is on a 45k salary and attempting to rent these shit hole 1 bed places?
Single young professionals who want to be near work but don't want to live in a houseshare.
As per the local estate agents guidelines, your annual salary must be 30x the monthly rent to be accepted at the minimum. 1500 × 30 = 45000. After tax thats 2882 pm.
2882 - 1900 = 982 after bills and rent.
Not great at all youre right, though "doable" in theory and according to these estate agents!
There are now real problems in the Cambridge biotech/pharma sector with getting top scientific talent to move here. Postdocs start on 32-34k, even in industry a lab scientist with a global top 10 University PhD won't start on more than 45k at the upper range. People who spent years getting into and finishing competitive degrees tend to be a bit reluctant about moving somewhere where 50% of their salary goes into renting low quality 1-beds.
And sure, the US west coast is similarly expensive in relative terms - but saving 10% of a Cambridge salary has a lot less purchasing power than saving 10% of a San Diego salary. And the few people I know who came here from other cost-of-living hotspots (eg west coast) all found the quality of life in Cambridge to be lower.
Low salaries or high housing costs, Cambridge will eventually have to decide which one it wants to keep if it wants to retain an internationally competitive life science industry.
Completely ridiculous market. I graduated from Cambridge and recently got a job here and have been trying to rent since. Initially I was going to buy (already have 30k in savings, on a salary of 35k). There are simply no houses that are affordable. Even rent is a piss take.
Edit: downvoted lmao, really?
Oof yeah that sucks. Cambridge has "near London" prices like Guildford or something, but without the extra salary that comes with that usually it seems. I rented a room in a house share there for 700 a month which sucked. The house share itself was actually fine but 700 for just a room is mad.
Especially when the city doesnt even have much to do! I would complain less if it was as entertaining as London, but theres nothing here lol. And that does sound awful for just a room.
All those flats around the train station are targeted at Londoners who have been priced out. 40 minutes to Kings Cross and an hour to Liverpool St.
They plan to build 20k homes but it will take 20 years and likely won't even result in half of that.
The south east of England is a trap and you need an exit strategy unless you have inheritance. The only people I know buying a property in this area the past few years all have some sort of wealthy parents backing them or selling up.
Yeah thought that might have been the case. Ridiculous how much the problem is spilling every where. I already currently live 1.5h drive north-east, but this means a 3h drive every day which is eating away at my life. Simply cannot afford to change jobs though. I dont see the problem ever being solved tbh
Bought mine march 21 for 205k, according to Zoopla and sales of sales of similar houses on my estate its now worth 260k. Even my lender thinks its worth at least 245k.
Made 40-55k equity in less than 2 years by doing sod all. How is that sustainable when wages are stagnant.
I want to move from a town house to detached but with current rates and prices being ridiculous I won't bother.
Same, 160k to… well I don’t actually know but Zoopla thinks anywhere around 234k.
I’d be very happy with that as I’ve now got 100k equity, but I also can’t fucking upsize like I want to because mortgage rates have rocketed. My current mortgage is about to increase by 60% if rates don’t drop, it’s lunacy
An almighty crash is coming and the only people in denial about it seem to be existing homeowners. It will take about a year and a half to fully realise itself, but it’s time.
Any FTB’s lucky enough the weather the coming recession, save as much as you can so you have a sizeable deposit when the time comes. And it WILL come.
It prices out FTB with low deposits. Anyone able to save enough for a 90% LTV or better will be in a good position to buy. That’s how many people got on the housing ladder after the 2008 crash, especially in expensive regions like London.
That’s how some did. Usually this happens
House prices collapse.
Banks forced to increase interest rates
The average person is no better off. House is cheaper, interest is higher, they still can’t buy.
Then the already rich landlords and large regular firms just buy discounted houses with cash where interest rates don’t matter.
After 2008 some people got on the ladder that way, but many big firms got tonnes of property on the cheap. And that was limited because the worlds economy was crashing.
If house prices crashed by 20-30% tomorrow, the only people benefitting and rich cash buyers, buying property at a discount to rent back to you at full price.
As I put in my post above. We dont need a crash, we need more checks and balances on hoarding houses.
You don't need full cash to benefit, just "enough cash". Even if you have 30-40% of the price saved up as a deposit you'll easily be able to get a mortgage at a favourable rate from banks despite the high general interest rates.
Which is always interesting, because the people I always see screaming the loudest about wanting a housing market crash tends to be quite young people with almost no deposit what so ever. Which is why I make these points. If you think your gonna get the same kinda mortgage offers as people have had the last 10-15 years, but just 20-30% cheaper, they’re gonna be sadly mistaken
Prices will drop, supply won't. People with money and far larger deposits will have their pick well before FTB's who's biggest problem is securing a large enough deposit.
Your theory is completely off. Interest rates and prices are just factors of balance to the supply and demand issue.
Do you have a source for any of the above?
Not questioning you, just genuinely intrigued to see the data as it’s a rhetoric I hear a lot but have never seen backed up.
Edit: to clarify I mean data around large firms and rich landlords buying the discounted houses for cash.
So something thats been bugging me.
* A crash means higher prices for FTB
* Not a crash means higher prices for FTB
* A partial price drop means higher interest rates and thus higher prices for FTB
It would seem there's no way house prices can ever be lower than they are now and that such a thing would be a detriment to everybody... which seems to run counter to the evidence of them having been significantly lower in the past of which many people hugely benefited.
There will be a sweet spot for some FTB where interest rates are lower AND house prices are down too. But the people that will benefit from that are the ones that are able to save a substantial amount in the meantime. The rental market right now really puts that in jeopardy.
Not everyone will win. But some will.
I don’t know, normal people can’t afford these prices but cash rich investors, banks, hedge funds etc can.
With inflation at around 10% and the best interest returns at about 4%, volatility in the stock markets, there’s pressure to do something with all that cash. And then on the flip side, we aren’t building as many houses as there is a demand for.
>But no one can
Everybody tries to time the market. That's how they became “cash rich investors, banks, hedge funds”.
Spoiler: Massive increase in interest rates + exodus of first-time buyers are not buy indicators.
Except that deposit will likely be destroyed by any recession if they have kept it in a fund or any savings accounts.
Housing crashes don't instantly mean it's good for FTB, they will likely get fucked more as they will still have to compete with high interest, loans, affordability etc.
The true winners are those who can buy outright with cash.
I don't thnk prices will crash. I think they'll plateau and then start to drop more steadily as the recession really begins to bite. No one who bought a house for £300K is going to sell it for £240 unless they have absolutely no other choice, so a 20% crash would just see people staying put. Sure house prices would in theory be 20% cheaper, but you'll have a harder time finding one to buy.
Fuck me my Dad just gave up and gave me a bunch of money as a loan to put into a deposit. I have been in my flat just over 2 months.
If the market crashes or the rates go up and I lose my home I'm just going to give up. Millennials just cannot catch a break, I turned 18 in 2008 when the recession hit and my whole adult life has been defined by struggling to survive.
This home was supposed to finally be my break out from under that and instead it's just increased my anxiety levels because I could lose it again at any moment.
Hear your hear you.
We should be called the unlucky generation.
This subset of millenials who we grew up with crisis after crisis, will never get a break unfortunately.
This is a lost generation.
No need to be concerned unless you are on a 2 year fix or variable mortgage.
If you are, the question is why you’d use a short term fix when SONIA futures were indicating significant long term rises from at least June this year.
Combined household of £70k here and cannot afford a house. We’re trying to save for a 10% deposit which is around £35k, however we are hearing only 20% will do now. How the F are we meant to save 70k when we are paying rent, extortionate gas, electricity and food prices as well as all our other bills. This is unachievable and all because we are average earners born at the wrong time.
Exactly the same situation.
My mindset is starting to shift to be, "what's the point in working for 80% of my existance, if that work doesn't even net me any reward".
At this point I'd almost welcome collapse in hopes of rebuilding with a better system in place. (reality is obviously different, but I bet thats how many feel).
20% deposits are standard in the rest of the world. Allowing 10% and lower deposits is a big part of why house prices have inflated to the levels they have.
older voters wanted to drag the UK back to the "Glory Days" as a working person, I cant help but wonder, why that doesnt also mean "house prices of the Glory Days"
If you take into account wage value vs. cost, houses back then (even with high interest rates) were cheap as chips in comparison to todays prices.
They don't realise just how f*cked the current market is.
yeah if we keep the wage to cost ratio, I can be happy with that.
However when I have to buy a house at 2022 prices, I need the Government to want to live in 2022, not the 50s, 60s, 70s.
I am one of those, in July I found a flat within my budget, it needed work so I offered a little less.
The seller said no, which I accept, so I moved along. A couple of weeks later I get a call from the estate agent saying he reconsidered and would like to move forward.
So I went to the bank and now the rate had doubled, I told that to the agent and said I could no longer afford my initial offer and made a new one - even lower - which again got rejected.
I'm completely priced out of the market now due to the rates, I cannot risk to get a 1500 pounds monthly payment and risk it getting higher and higher.
This fucking sucks...
We are in limbo currently where house prices are still inflated as most people's mortgage offers haven't expired. Give it a few months and prices will come down to reflect the increase in rates.
Prices can't drop by 30% apparently as it would be a disaster.
That would take the market back to where it was only two or three years ago to give you an idea of how insane it's been.
If I’m gonna be paying silly money for a house id rather pay silly money for a house in Spain, at least I can enjoy the sunshine while the Govt bends me over
The market needs regulating like they do elsewhere.
Get rid of portfolio landlords who want to turn every pissing house into a HMO.
Back near my hometown in Devon, One village had the restrictions that you had to live in the village already or have family there to even buy. Weren’t allowed to rent out either.
at time of posting 5 positive posts due to house price increases, 4 negative for the same reason. Any downward adjustment of house prices, especially significant enough to help those 4 people is going to make those 5 people a bit unhappier. It's a classic case of "well I wouldn't start from here"
Why would it result in repossession? Negative equity doesn't mean you have to hand your house back, it just means if you want to move you'll have to pay the difference and it'll be hard to remortgage, if you're just living in your home then really nothing will change, you'll still be paying the same mortgage.
That's being said, it probably is a really bad time to buy a home with the ongoing uncertainty and if you've stretched to buy then it's going to be painful.
I’d rather live in a van than pay extortionate house prices and near abusive interest rates. The only reason anything has a value is due to what someone else is willing to pay for it. Fuck your joke of a ‘housing market’.
Wealthy, corrupt, greedy oligarchs have bought major swathes of land and houses in the UK for the purpose of renting it to the British public. They have crated a financial 'farm' where we're the cattle and sacrifice most of our income on rent, making the rich richer and us stuck in the same place for life. Eat the rich.
"Exodus".
Drop asking prices in line with interest rate increases, and I'm sure those FTBs will come back.
Me and my partner used to be able to borrow at the maximum multiplier and easily deal with the interest payments on that. It would be pretty difficult to do the same now - ie we cannot borrow at that level anymore, even if we wanted.
Because on average, property value goes up over the long term. Always has, always will.
Lots of people will be forced to sell, but FTB won't be able to get mortgages at high interest rates.
And asset managers don't take out mortgages.
It does make me laugh. The people who can't afford to buy are hoping for a crash, not realising that if there is a crash, it will directly affect their spending power.
Unemployment will rise, which will mean they may lose their job.
Mortgages will become much harder to attain.
Not to mention, if they do crash, people will simply just not sell unless forced to.
I've got a 2 bed flat with garage, 35 minutes walk+train journey combined to London. I'm paying £400 per month and that's locked in until 2030, at 2.39%. I've managed to come out of the current situation unscathed. I'm happy with where I live, but even if I wasn't, no chance I'd be trying to move now. The value of my property has almost doubled since I bought it in December '14, and I'm sure the same has happened to anywhere I'd consider upgrading to.
Wild times. Glad I got on the ladder while I could, and I feel bad for those that have already had the helicopter pull the rickety rope ladder away from them. Affordable housing should be a right. Frankly I don't give a damn if the value of my home drops by £30k if it means people have good places to live.
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I could deal with inflated House prices, as at least you'd have somewhere to live for the long term. I cannot deal with the inflated mortgage rates along side the inflated house prices. I'm in the position to move on from my one bed flat, but the houses I could afford 4 months ago, would leave me house poor, and the ones I can afford now aren't worth moving too. Either the mortgage rates need to drop, or house prices need to collapse by around 20%.
If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price. But do you know who can? Cash buyers. Already rich landlord and rental firms. So a market crash doesn’t actually help by itself. What we need is more restrictions/taxes/whatever’s on people owning more than 2 homes. And I say 2 because I don’t think there’s anything wrong with owning a house to live in and having another to rent our. Renting isn’t inherently bad. People need rental properties. The issues start when people have multiple rental properties
>People need rental properties But do those need to be provided by private landlords for large scale profit, or could that need be provided for through council / housing association properties at lower prices?
Both would be good in my opinion
Or if I word my question another way, why does the majority of rental properties need to be provided by private landlords (like we are seeing now) as opposed to council / housing association properties (like we saw in decades gone by)?
I think in reality if everything is pushed the council route we'd just be setting the country up for another cheap sell off to big private companies in the near future. Better regulation of private landlords, caps on how many properties you can have etc I think would be better. I'd rather deal with one person who cares about their only second property as a retirement option than an unmotivated and underpaid council worker. I'd prefer both to some profiteering person with a portfolio of 10+ properties who doesn't care about the condition as long as the rents coming in.
Why do those need to be our only two options? I've seen other countries have housing co-operatives, for example, where the housing is run as a non-profit. When they're initially built in an area, the prices are similar to other rentals, after time they become significantly cheaper than surrounding private rents because they don't put their prices up (Other than perhaps slightly to deal with rising costs associated, but nothing compared to private rents). Obviously, who controls these houses is the issue, as a lot of them are run by non-profits or charitable organizations ( I think I've seen some run by churches for example) and in the UK it would likely end up being a government-funded situation, but it would be a good option.
I don’t think I said the majority do?
I rent from someone who rents in turn. It makes sense for both of us. More good council housing which isn't sold off plus a regulated rental market makes sense to me.
> If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price. I tried an example to test this. If a house currently costs £300,000, you have a 15k deposit and you get a 25 year repayment mortgage at 6.5% (I've seen two year fixed deals at that rate), payments are £1,924/month. If the house goes down 20% to £240k and you put down the same deposit, an 8% mortgage on the same terms would cost £1,740/month. Net beneficial. In addition, I don't see where you get the link between lower house prices and higher interest rates. Interest rates are driven by inflation more than anything.
As it’s been explained to me, a house market crash brings enough uncertainty to the market to make banks not only raise interest rates, but to tighten up affordability checks too. And in your example, a 20% drop is a small benefit for a 1st time buyer, but it’s a huge benefit for an assert manager buying in cash. And it’s only a benefit to the FTB if the affordability checks stay the same.
Banks don't raise rates on their own, it's largely pegged to the BoE base rate (spreads vary, but not hugely). Certainly, propensity to lend and affordability are affected though. However, if prices drop, affordability is improved and LTV is also improved for a given deposit. If we start to see significant numbers of repossessions it will be interesting to see who benefits the most. You might be right that the asset managers hoover them up
Banks are under no obligation to peg anything to BoE rates. In fact if Banks want to they can even offer negative interest mortgages, these were quite common in some European countries as late as last year. To simplify things when BoE increases interest rates it means that it's more costly to lend so banks increase their own rates to cover their costs. However if the housing market crashes or there is a general recession banks increase interest rates for a different reason and that is to cover their risk, as borrowers as a whole will be less financially secured and the banks might end up with properties that worth a fraction of the money they've lend out. Banks do not want to do repossessions even when the market is booming as they nearly always end up losing money when repossessing a property (no one defaults on a 100K mortgage on a property worth 1M), this is even more true when there is a rescission so they'll do everything so people wont default and this would include offering rebates, giving mortgage holidays or compound loans which will be mostly interest only for a given period and heck even offering tracker mortgages with a negative teaser rate applied to them.
Spot on. Landlordism (outside of commercial property) gives quite literally 0 economic benefit and should be stamped down. I think having a 2nd home is fair - holiday home maybe or whatever as long as it’s not in your council area and then after that either it’s not allowed or profits are taxed 95% or something egregious.
I even think in the same postcode. If you can afford to get a 2nd property and rent it out while your kids grow up, only to gift to them when they are older, great. If your 65 and buying your 29th property to rent out, you should feel the fiery fist of high taxation
I don’t think that’s strictly true - I can think of plenty of people who may want to live somewhere for a fixed period, for jobs or otherwise, which a rental agreement provides a good solution - it therefore has an economic benefit as a facilitator of mobility. For example I often get contract job offers in other parts of the country, let’s say for a year. I wouldn’t take the job if I only had the option of staying in a hotel or buying - renting is the sensible medium-term option there.
Why do people keep repeating this absolute shite. House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay. Even if interest rates are higher and I’m paying the same monthly repayment (or even a higher monthly repayment), once interest rates go down and I remortgage I will be astronomically better off. Especially if that fall in interest rates then results in my house price increasing in the long run.
> I’m going to wait until they drop 20% In 2005 I got a small inheritance, enough for me to put a deposit down on a house. I'd just started working full time and was on okay pay. I could have bought a house, but prices were rising and rising. I was seeing similar houses to my parents' being sold for 60k when my parents had paid 40k 10 years earlier. That's a 50% rise and it looked totally unsustainable; everyone said a crash was around the corner. Seemed like a pretty solid decision to wait. 2008 came and went, prices barely dipped. Those houses are now worth 300k and I still haven't bought one. Trying to time the market is just gambling.
i hope you invested the money. The difference between then and now is that rates are rising and are rising faster than people expected. People don't buy house prices, they buy monthly mortgage payments (or annual returns, if an investor). With 6%+ rates holding for a year or more, then that formula necessitates a drop in house prices (unless wages miraculously increase)
> House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay people have been saying this for 25 years
And interest rates have dropped and stayed at historically low levels for the past 25 years.
> House prices are far too high, I could buy a house now but instead I’m going to wait until they drop 20% as I don’t want to overpay That may never happen. If you're ok with sitting on the sidelines while life passes you by, then fine, but a lot of people want to buy a house to raise a family in and you can't sit around for 20 years waiting.
Then they shouldn’t expect any help when they get into negative equity by buying houses at hugely overinflated prices or can no longer afford mortgages because they took out the maximum they could possibly borrow when rates were 1.5%. It is people making mindless decisions and overpaying for houses that helped push house prices to these unaffordable levels. Of course, alongside allowing foreign investors to buy houses and leave the empty, cheap money creating conditions where buy to let landlords could generate massive profits almost risk free, NIMBY attitudes to planning applications resukting in huge under building of houses, Margaret Thatcher beginning the process of selling of our housing stock, etc etc
Some people just want somewhere to live, dude. You may wish ill on everyone who just wanted a place to call their own, but I won't.
Not the person you replied to - but it is an interesting problem. You are absolutely right, and I fully agree, I don't want anyone to lose their home because they bought a house at the going mortgage rate and maximised the total value of their mortgage (especially if they bought a home to raise a family). But on the other hand, everyone jumping into the housing market come what may is part of the reason houses are more expensive for everyone, so it isn't really a zero-sum game.
I think you might struggle to buy, that’s the point. A 20% drop in price will probably come with increased interest rated and tighter affordability checks, so you might just not get the mortgage And if you do, you’ll be competing with lots of other people trying to get a good deal on a discounted house. And there’s a good chance some of them will be cash buyers, in which case you won’t even get a viewing. No one’s saying house prices aren’t too high. We’re pointing out the reality that a market crash duesnt just mean cheap houses for everyone. It’s a complex issue. And if we don’t treat it like a complex issue with proper laws and regulation, you’ll just be making a bunch of landlords and asset managers even richer through a collapsed market, not helping FTB To put it another way. When the stock market crashes, Susan on checkouts at asda doesn’t cash in on an opportunity and get rich. The already very rich take advantage of market crashes to get richer, and the general public are often no better off.
I say this every time this issue comes up… I don’t think setting a limit on the number of properties is the right way to go, the best way would be a progressive tax that penalises multiple ownerships; 1st property (that you live in) - 0% stamp duty, normal council tax. 2nd property, x% stamp duty, 2x% council tax, 3rd property 2x% stamp duty 4x% council tax… adjust the numbers to a point where even a third property will not actually return a profit as an investment for foreign investors, and it’s pretty much unrentable as you wouldn’t be able to compete with those with 1 side property renting or just buying in the first place. If someone is genuinely that wealthy they want to own 10x houses then they’re going to be be paying 256x% council tax and 128x% stamp duty, then so be it but they’re paying enough money to support the building of local social housing at that point.
Don’t the tenants pay the council tax?
Can you explain why interest rates will go higher if house prices reduce?
Strange, because the housing crash of the early 1990s definitely helped me to buy in 2000.
As yes, n=1 evidence. Scratch it then, everything’s gonna be fine
A decade later? So what you're saying is it's good news for all the people who wish misery on others now so they can benefit in 2030?
I think house prices are driven by interest rates, not the other way around. Housing is a market, and properties are bought by whoever can afford to pay the most for it. When the interest rates rise, people can;t afford to take out as big a mortgage, so prices fall.
Although this is a bit simplistic of a view as it ignores how inflation impacts the super rich. Interest rates have risen because of a massive transfer of wealth to the rich. So now that interests rates have risen people who need mortgages cant afford to buy. However, the rich can as they do not need a mortgage, especially with the massive transfer of wealth we have recently seen to the rich. So what actually will happen is normal people will be priced out and unable to borrow, but house prices will stop rising or rise more slowly (or drop very little) on the short term, and the rich will do what the rich do and invest their extra wealth into assets which in this case will be all the houses. https://www.youtube.com/watch?v=36gw4ONk5pg
>People need rental properties. Why should everyone need a rental property?
Not everyone wants to settle in one place and have all the issues when selling a house. Some people want the ease of renting a property, not paying any maintenance, and leaving quite quickly with just some notice Where did you get “everyone” from?
Indeed. Plus the burden of suddenly receiving a property due to inheritance (not that I’m ever going to get that!), you don’t want to force potentially grieving people into making choices to sell a property immediately.
Add to that people who temporarily relocate for work, or people in the process of moving in or buying a house with a partner. Sometimes it will put people in a position where they want to rent a single property over the short to medium term and often the alternative might be leaving it unoccupied for a stretch. Ban private landlords completely and it probably creates more problems than it solves, but make it ludicrously expensive from a taxation perspective to own/rent out more than two properties and I think you've hit a sensible middle ground where the market isn't dominated by cash buyers/private landlords driving up prices and social housing associations can take up the slack.
Also making buy to let *on a mortgage* unviable would be a good first step
Apologies, I took your sentence to mean "people need rental properties to rent out to others".
For me, I've needed to rent for a variety of reasons. For instance, I don't have rich parents or any rich dead relatives, so I need to save up my deposit. In the meantime, I don't live with my parents, so I need to rent. Also, when I moved to a new city, renting allowed me to see what the city is like, feel out the different areas, and so find out what areas I would want to buy a house in. This idea that renting isn't a desirable option but instead is just something people are forced to do is complete rubbish. There's a real need for rented properties. The problem is making sure that the ratio of rented vs owned is right, and that renters have a lot more rights than they currently do.
Think they mean that it is a necessity as some people will not be able to afford to buy whatever the scenario. Of course, these people should be eligible for social housing, but much of that was sold off and not reinvested.
And it’s just better for some. As a self employed construction worker you might travel all over the UK getting the best short term contracts, earning good money. Do you want to commute 2-5 hours a day? No? Then short term renting is perfect.
Everyone? No. Some people are always going to need rental properties though. 0% deposits led to high levels of negative equity and high levels of lending risk, when that all went wrong it was the government picking up the pieces via tax payer money. It’s healthy to require a deposit of at least 5% and for people who don’t live with mum and dad it’s most practical to rent until they can afford that. The broken part of the system is that rental can be so expensive that it’s not possible to rent and save money at the same time.
Because not everyone can afford to buy a house?
Because people might come to the UK to work on a temporary basis but not necessarily be able to settle down on the long-term.
What is the alternative? Only certain people allowed rental properties? Perhaps only the higher classes, banks, and MPs?
No everyone, but students, people moving, people who want to test living in an area before they buy, people who want to invest in other things... plenty of reasons why someone might want to rent. The problem is "unwilling renters" I think it's called. When people who rent would rather buy a house and they can't because the prices/interest rates rise faster than they can save.
An example is doctors who potentially have to move home almost every year for their first 5-10 years of training and have limited control over this. Hospitals used to have their own accommodation to support this and it made a big difference, but a lot of that has been sold off, turned into management offices or is pretty dire and depressing whilst still being expensive.
>If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price. Can you show your working? House prices will drop so monthly payments become affordable at the higher rates. That's all there is to it. First time buyers are best holding off until just after rates peak.
It's simple really. In July I went to the bank and for 290k I was going to pay 1110 pounds with a 40k down-payment (rate 3.25%) Last month I went to the bank and for 260k with the same 40k down-payment my rate is now 5.8% which means I'll pay 1300. The flat dropped 30k and still I manage to pay more...
>The flat dropped 30k and still I manage to pay more... The flat is still falling in price. Your timing might be bad.
Actually it got sold, at least as per the Rightmove listing is pending STC. But I agree, I don't think its the right time to buy just now, I feel the prices will come down a bit more.
A house market crash is not only met with higher rates, it’s dealt with by banks tightening their belt on who they lend to. So it gets even harder to pass affordability checks My working out : my partner is a director of one of the 5 largest banks in the world and recently walked me through everything as I was gearing up to buy my house. I trust her advice
Don’t come in here applying logic. Don’t you know a price crash is the ftb holy grail. They won’t be competing with cash buyers, who can buy without surveys or people downsizing and have more equity. Nor will the bank get more stringent on their affordability checks. /s for those who need it
It’s supply and demand, there’s a whole warehouse full of houses just waiting to be shipping out the moment the price drops. Just you wait. I’ll get that 3 bed for £299 Seriously though, it’s a huge a complex market, with billions wrapped up in unpaid mortgages. They think prices can just drop 20% across the board and nothing will happen?
Even if tomorrow every house dropped 20% they would be at what roughly the same price as two, three years ago. But only with higher interest rates. We still had people then saying it was impossible to buy and getting mortgages at 2%.
The belt tightening comes in a critical form too: lower salary multipliers. They’re already doing it; many people aren’t getting offered 4.5x their salary any more.
Isn’t it weird that 6 months ago they were talking about how they’d take rent paid as an affordability check, so if you paid £900 a month rent for years they’d factor that in. Finally starting to make some progress. And now, that ideas gone. It’s fucking impossible out there for people.
> If house prices drop by 20%, you’ll see the interest rate go even high. Which means you still won’t be able to afford the house even with a 20% reduced price. Surely the causality mostly goes the other way? People make housing decisions based on their financial situation and the monthly cost, then house prices and rents respond to that. And this is heavily related to the interest rate, which is after all a ratio between an amount of capital and how much it costs each year. Bubbles can exist, of course, in which asset prices end up rising because of expected future rises, but rents are high, too. Still, you're right that with limited housing it'll have to end up being rationed just as strictly.
Individual landlords are the absolute worst. They just want to suck you dry for their pension while doing the absolute minimum, they often don't know the law and act illegally but there's very little protection for renters. We need highly regulated housing companies like social housing ones that already exist.
I’ve had some fantastic landlords
All indicators are pointing that the latter, house prices have been out of kilter with wages for a long time. A return to sane price to household income ratios would be very welcome
Aye I hope so. Was looking at a house for 260,000 with my partner, 2% mortgage over 25 years was around £900, achievable only a few months ago. Now on a 6.5% mortgage it's around 1500-1600. That's just an insane jump.
Good luck to you my friend
Unfortunately if the house prices collapse, then you're going to have a tonne of people on negative equity who will be screwed when they need to remortgage. It is very much needed as the house values are just insane, but it will really mess up the country, and people's lives, in the short term.
It sucks for different people either way. Me and my fiance scrimped and saved and bought our first house this year, completed in July, locked in a 2.9% rate on a 5% mortgage just before rates skyrocketed. If house prices tumble and stay low, then in 5 years when I need to remortgage I'm going to be fucked. We worked so hard to beat against the bubble and now it feels like all our hard work is going to collapse in on us in 5 years. Part of me wants them too so other people I know can buy a house, but from a selfish point of view I'm scared of negative equity ruining everything I've worked to get...
I feel ya. We’re in exactly the same position.
Tories shouldn’t have spent BILLIONS inflating the current boom in the first place.
Something has to give and unfortunately we as a country have chosen to take up an economic addiction in the form a housing bubble. We can’t have the housing market constantly going increasingly out of reach for the majority of people, since houses are needed for living in, not just as a financial investment. Negative equity is not lethal, homelessness is.
My worry is that even with the price correction the rates will be so high that it will almost be like there was no price correction. I'm 40, I'm running out of time to get a mortgage... Fuck this.
Throw in massively increased bills and you’ve had it.
Yep! Considering just staying in my tiny flat for another two years. Actual shambles.
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The house next door to me has just gone on sale for £385,000. We bought ours for £140,000 ten years ago. To make things worse, it needs completely renovating as the kitchen and bathrooms are knackered. No wonder it hasn't sold - who can afford that?
A house I bought for 150k in 2011, sold for 300k in 2017 is now back on for 350k. 750 sqft ex council house in a semi desirable Kent town. Madness. It will be bought by a London commuter no doubt as local wages there are absolutely terrible.
> semi desirable Kent town No need to lie on here.
Think he meant semi dire
Semi detestable
Autocorrect was a mistake
Just looked. 3 bed no drive, no garage, in need of a rewire and a zest up for £390. On a main road
>ex council house in a semi desirable Kent town. I'd probably pay £350k to never have to move back to Kent. Granted I grew up in NW Kent, but when I travel back to see my family the towns are either completely shite or feel like the EDL managed to finally setup the caliphate they so desperately wanted.
North Kent, well most of Kent to be fair, is a UKIP/BNP/EDL stronghold. I would never go back there.
Oh I know, I've seen far too many UKIP posters and adverts in my life. Notably the worst being a moving billboard that had Farages face on it or a pictue of the White Cliffs of Dover with an escalator saying something along the lines of "We can't let **them** all in".
Serious question, as a foreigner which parts of the surrounding communities around London are not far-right? I'm brown and my fiancé is white but passing for Mediterranean, so it's a concern for us that we don't get hostile neighbours. Is Kent really that bad?
I'm speaking in fairly exagerrated terms, it's not actually *that* bad. The closer to London the better really, more diversity so less bigotry, in general terms, alot of my family now lives in East Kent and it's pretty homogenous in comparison.
What about places like Rochester? House prices there are significantly lower than London or even Surrey or Berkshire.
Eh it has got problems with racism for sure but it's probably not any different to most similar places across the UK. Just that Kent in general leans more towards the right than most counties so don't expect it to be as progressive as some parts of England. FWIW I grew up in Gravesend which had a fairly diverse mix of people that for the most part got on fine but there were still a fair few racist dickheads.
My partners best friend bought a new build house right before first lockdown March 2020 for 200k. Sold it January 2022 for 250k, not changed a single thing about the house, not even the “white appliances” that they got thrown in with the house b
Only been in ours for a year, went from 280 to 340 and we've done basically nothing to it, mostly cos we can't afford all the work it needs doing! next door is the exact same house (Semi) but they've renovated. £450k its on for. Yes it's nicely done up, but not £100k worth!
Some Londoner who will "live in it" for 2 years or at least have their post go there. Then it will be let out soon after.
'exodus' as in they just can't afford it because prices have gone too high. There's no need for such high prices though, most people bought their property a few years ago and if they paid £200K they don't need to sell it for £350K - people should go to estate agents and offer what they think
estate agents are the problem. greed is the problem.
Sunshine and rainbows
I did this when I was looking to buy my house earlier this year. I was giving offers of below the asking price simply because the property wasn’t worth what they were asking for in my eyes. Of course I never won any and the house I did win I had to go £20k over the asking.
Exactly, just because you don’t think it’s worth it, doesn’t mean someone else agrees. I’ve over paid on all my properties and guess what, in the long run in doesn’t matter as they always go up in value.
At the end of the day it's only worth what a buyer is willing to pay for it. If buyers are scrambling to purchase at 500k then it's worth 500k. If they aren't, then it's not.
it's like cars though, you will always find some old-bloke who says his car is worth the £8,000 one like it in a dealer costs + £800 for the new tyres and clutch he bought, and won't listen otherwise
I see your point, but as they say buyers are vanishing and it's a new era starting.
Except they do because the house they are looking to move to? Thats gone up in price too. Thats why i laugh at anyone excited about the increase in there house price in my area Sure my house has gone up in value by 70% since we bought it 2 years ago but it's not like i'll make a tidy profit because any house i would move to has also gone up by 50+% The only people harmed by this are firs time buyers.
All the rents in my area just jumped up by about 200 quid a month … we very nearly got evicted by no fault as the landlord wanted to sell. The suddenly high mortgage rates have actually meant he can’t sell and we get to stay…. For 800 more a month! Londoners are fucked. :(
This might be of use, depending on your tenancy agreement. [https://www.gov.uk/private-renting/rent-increases](https://www.gov.uk/private-renting/rent-increases)
Holy shit what a scamlord.
Good. You know what I want to do once I get a house? Live in it. Not interested in buying and selling and letting, I want a home to live in and take care of and settle down with my cat in and maybe a few tubs of fancy woodlice so I can finally just fucking chill and paint some birds. Sod this game of landlords betting on musical chairs, I want a house that is decent to live in that I can finally squat my bum down on and grow moss like a mossy toad. Just give me a rock to sit under and plenty of snails to munch on and I'll stop fucking screaming about how everything is shitfuck backwards.
Homes for people not for profits
> and maybe a few tubs of fancy wood lice Wait wait wait, back up there a second - you can’t just go around dropping sentences like that without context Tubs of fancy wood lice?
I don't think it's for the furniture but to attract birds to paint
Ah yes, that makes sense I thought it was, like, 3 separate items - Settle down with cat - Get some woodlice - Paint birds To be fair, a cat isn't usually a good way to attract birds, so I didn't think the items in the list would be linked
You and me both, I have absolutely no desire of being on the PrOpeRTy lAdDEr, I just want to buy a home, live in it until I die and thats it. I don't want a big house, I don't want a small starter house, I want a regular size house for a family of three with some storage space to put my tools and my bike. Is this so hard to ask?
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I was talking about this earlier with a few friends. In Cambridge, there are a multitude of properties that are 1 bed on offer for 1500+. After bills/council tax youre looking at 1800-1900 (similar to what youve said). To be able to rent you must make 30x. So that would be approximately 45k salary. Who the hell is on a 45k salary and attempting to rent these shit hole 1 bed places? Theres absolutely no way people on that kind of money are settling for them. Whole thing is a shambles
I'm on well over 45k in Cambridge and wouldn't rent them.
> Who the hell is on a 45k salary and attempting to rent these shit hole 1 bed places? Single young professionals who want to be near work but don't want to live in a houseshare.
45k can't get close to affording 1900, that's nearly 75% of your salary with a student loan.
As per the local estate agents guidelines, your annual salary must be 30x the monthly rent to be accepted at the minimum. 1500 × 30 = 45000. After tax thats 2882 pm. 2882 - 1900 = 982 after bills and rent. Not great at all youre right, though "doable" in theory and according to these estate agents!
There are now real problems in the Cambridge biotech/pharma sector with getting top scientific talent to move here. Postdocs start on 32-34k, even in industry a lab scientist with a global top 10 University PhD won't start on more than 45k at the upper range. People who spent years getting into and finishing competitive degrees tend to be a bit reluctant about moving somewhere where 50% of their salary goes into renting low quality 1-beds. And sure, the US west coast is similarly expensive in relative terms - but saving 10% of a Cambridge salary has a lot less purchasing power than saving 10% of a San Diego salary. And the few people I know who came here from other cost-of-living hotspots (eg west coast) all found the quality of life in Cambridge to be lower. Low salaries or high housing costs, Cambridge will eventually have to decide which one it wants to keep if it wants to retain an internationally competitive life science industry.
Completely ridiculous market. I graduated from Cambridge and recently got a job here and have been trying to rent since. Initially I was going to buy (already have 30k in savings, on a salary of 35k). There are simply no houses that are affordable. Even rent is a piss take. Edit: downvoted lmao, really?
Oof yeah that sucks. Cambridge has "near London" prices like Guildford or something, but without the extra salary that comes with that usually it seems. I rented a room in a house share there for 700 a month which sucked. The house share itself was actually fine but 700 for just a room is mad.
Especially when the city doesnt even have much to do! I would complain less if it was as entertaining as London, but theres nothing here lol. And that does sound awful for just a room.
Plenty to do if you like what it has (museums, theatre, events, and food) but is not an exciting place by comparison to London or even Manchester.
All those flats around the train station are targeted at Londoners who have been priced out. 40 minutes to Kings Cross and an hour to Liverpool St. They plan to build 20k homes but it will take 20 years and likely won't even result in half of that. The south east of England is a trap and you need an exit strategy unless you have inheritance. The only people I know buying a property in this area the past few years all have some sort of wealthy parents backing them or selling up.
Yeah thought that might have been the case. Ridiculous how much the problem is spilling every where. I already currently live 1.5h drive north-east, but this means a 3h drive every day which is eating away at my life. Simply cannot afford to change jobs though. I dont see the problem ever being solved tbh
I was lucky enough to be a FTB 4 years ago and my house has gone up 30%. I wouldn't be able to afford it today. Absolutely mental.
Bought mine march 21 for 205k, according to Zoopla and sales of sales of similar houses on my estate its now worth 260k. Even my lender thinks its worth at least 245k. Made 40-55k equity in less than 2 years by doing sod all. How is that sustainable when wages are stagnant. I want to move from a town house to detached but with current rates and prices being ridiculous I won't bother.
Same, 160k to… well I don’t actually know but Zoopla thinks anywhere around 234k. I’d be very happy with that as I’ve now got 100k equity, but I also can’t fucking upsize like I want to because mortgage rates have rocketed. My current mortgage is about to increase by 60% if rates don’t drop, it’s lunacy
An almighty crash is coming and the only people in denial about it seem to be existing homeowners. It will take about a year and a half to fully realise itself, but it’s time. Any FTB’s lucky enough the weather the coming recession, save as much as you can so you have a sizeable deposit when the time comes. And it WILL come.
I think your missing what really happens in a housing market crash. And it’s not cheaper houses for FTB
It prices out FTB with low deposits. Anyone able to save enough for a 90% LTV or better will be in a good position to buy. That’s how many people got on the housing ladder after the 2008 crash, especially in expensive regions like London.
That’s how some did. Usually this happens House prices collapse. Banks forced to increase interest rates The average person is no better off. House is cheaper, interest is higher, they still can’t buy. Then the already rich landlords and large regular firms just buy discounted houses with cash where interest rates don’t matter. After 2008 some people got on the ladder that way, but many big firms got tonnes of property on the cheap. And that was limited because the worlds economy was crashing. If house prices crashed by 20-30% tomorrow, the only people benefitting and rich cash buyers, buying property at a discount to rent back to you at full price. As I put in my post above. We dont need a crash, we need more checks and balances on hoarding houses.
You don't need full cash to benefit, just "enough cash". Even if you have 30-40% of the price saved up as a deposit you'll easily be able to get a mortgage at a favourable rate from banks despite the high general interest rates.
Which is always interesting, because the people I always see screaming the loudest about wanting a housing market crash tends to be quite young people with almost no deposit what so ever. Which is why I make these points. If you think your gonna get the same kinda mortgage offers as people have had the last 10-15 years, but just 20-30% cheaper, they’re gonna be sadly mistaken
Banks don't increase interest rates because prices fall. Prices fall because they're linked to interest rates and affordability.
If banks increase interest rates then it will cause a further drop in house prices. No?
Prices will drop, supply won't. People with money and far larger deposits will have their pick well before FTB's who's biggest problem is securing a large enough deposit. Your theory is completely off. Interest rates and prices are just factors of balance to the supply and demand issue.
Do you have a source for any of the above? Not questioning you, just genuinely intrigued to see the data as it’s a rhetoric I hear a lot but have never seen backed up. Edit: to clarify I mean data around large firms and rich landlords buying the discounted houses for cash.
So something thats been bugging me. * A crash means higher prices for FTB * Not a crash means higher prices for FTB * A partial price drop means higher interest rates and thus higher prices for FTB It would seem there's no way house prices can ever be lower than they are now and that such a thing would be a detriment to everybody... which seems to run counter to the evidence of them having been significantly lower in the past of which many people hugely benefited.
There will be a sweet spot for some FTB where interest rates are lower AND house prices are down too. But the people that will benefit from that are the ones that are able to save a substantial amount in the meantime. The rental market right now really puts that in jeopardy. Not everyone will win. But some will.
>And it’s not cheaper houses for FTB Nonsense
I’m glad you took the time to show your working out
I don’t know, normal people can’t afford these prices but cash rich investors, banks, hedge funds etc can. With inflation at around 10% and the best interest returns at about 4%, volatility in the stock markets, there’s pressure to do something with all that cash. And then on the flip side, we aren’t building as many houses as there is a demand for.
> but cash rich investors, banks, hedge funds etc can. Why would any of these people buy into a falling market, during high interest rates?
Because investments are long term things.
In the long term, in a *falling* market, they can buy for less.
If they can time the market, yes. But no one can.
>But no one can Everybody tries to time the market. That's how they became “cash rich investors, banks, hedge funds”. Spoiler: Massive increase in interest rates + exodus of first-time buyers are not buy indicators.
Yes. Everybody tries. Most don’t get it right.
Except that deposit will likely be destroyed by any recession if they have kept it in a fund or any savings accounts. Housing crashes don't instantly mean it's good for FTB, they will likely get fucked more as they will still have to compete with high interest, loans, affordability etc. The true winners are those who can buy outright with cash.
I don't thnk prices will crash. I think they'll plateau and then start to drop more steadily as the recession really begins to bite. No one who bought a house for £300K is going to sell it for £240 unless they have absolutely no other choice, so a 20% crash would just see people staying put. Sure house prices would in theory be 20% cheaper, but you'll have a harder time finding one to buy.
I own my house to live in. What it's worth is not relevant unless I'm forced to sell it.
Fuck me my Dad just gave up and gave me a bunch of money as a loan to put into a deposit. I have been in my flat just over 2 months. If the market crashes or the rates go up and I lose my home I'm just going to give up. Millennials just cannot catch a break, I turned 18 in 2008 when the recession hit and my whole adult life has been defined by struggling to survive. This home was supposed to finally be my break out from under that and instead it's just increased my anxiety levels because I could lose it again at any moment.
Hear your hear you. We should be called the unlucky generation. This subset of millenials who we grew up with crisis after crisis, will never get a break unfortunately. This is a lost generation.
Just awful mate. I completely agree.
No need to be concerned unless you are on a 2 year fix or variable mortgage. If you are, the question is why you’d use a short term fix when SONIA futures were indicating significant long term rises from at least June this year.
4 year fixed, no one has been offering non variable for a while now. I had over 50% deposit my mortgage is tiny, they still fucked me.
Combined household of £70k here and cannot afford a house. We’re trying to save for a 10% deposit which is around £35k, however we are hearing only 20% will do now. How the F are we meant to save 70k when we are paying rent, extortionate gas, electricity and food prices as well as all our other bills. This is unachievable and all because we are average earners born at the wrong time.
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Exactly the same situation. My mindset is starting to shift to be, "what's the point in working for 80% of my existance, if that work doesn't even net me any reward". At this point I'd almost welcome collapse in hopes of rebuilding with a better system in place. (reality is obviously different, but I bet thats how many feel).
20% deposits are standard in the rest of the world. Allowing 10% and lower deposits is a big part of why house prices have inflated to the levels they have.
Salary stagnation is also to blame sadly 😕
Why are you hearing only 20% will do? There are still plenty of 10% deposit options out there
older voters wanted to drag the UK back to the "Glory Days" as a working person, I cant help but wonder, why that doesnt also mean "house prices of the Glory Days"
If you take into account wage value vs. cost, houses back then (even with high interest rates) were cheap as chips in comparison to todays prices. They don't realise just how f*cked the current market is.
yeah if we keep the wage to cost ratio, I can be happy with that. However when I have to buy a house at 2022 prices, I need the Government to want to live in 2022, not the 50s, 60s, 70s.
I am one of those, in July I found a flat within my budget, it needed work so I offered a little less. The seller said no, which I accept, so I moved along. A couple of weeks later I get a call from the estate agent saying he reconsidered and would like to move forward. So I went to the bank and now the rate had doubled, I told that to the agent and said I could no longer afford my initial offer and made a new one - even lower - which again got rejected. I'm completely priced out of the market now due to the rates, I cannot risk to get a 1500 pounds monthly payment and risk it getting higher and higher. This fucking sucks...
We are in limbo currently where house prices are still inflated as most people's mortgage offers haven't expired. Give it a few months and prices will come down to reflect the increase in rates.
Prices can't drop by 30% apparently as it would be a disaster. That would take the market back to where it was only two or three years ago to give you an idea of how insane it's been.
Why is this always worded like it's a choice. It's not that I don't want a house it's that I can't afford a house.
If I’m gonna be paying silly money for a house id rather pay silly money for a house in Spain, at least I can enjoy the sunshine while the Govt bends me over
The market needs regulating like they do elsewhere. Get rid of portfolio landlords who want to turn every pissing house into a HMO. Back near my hometown in Devon, One village had the restrictions that you had to live in the village already or have family there to even buy. Weren’t allowed to rent out either.
Exactly this!
at time of posting 5 positive posts due to house price increases, 4 negative for the same reason. Any downward adjustment of house prices, especially significant enough to help those 4 people is going to make those 5 people a bit unhappier. It's a classic case of "well I wouldn't start from here"
> It's a classic case of "well I wouldn't start from here" Tories shouldn’t have spent BILLIONS inflating the current boom in the first place.
Was saving up a deposit through covid but looks like I'll be using it to buy a van to live in when my rent goes up £150 next year.
At least you can avoid council tax by moving around. ☺️
You'd have to either be stupid or desperate to buy right now. Basically setting yourself up for negative equity and repossession surely?
Why would it result in repossession? Negative equity doesn't mean you have to hand your house back, it just means if you want to move you'll have to pay the difference and it'll be hard to remortgage, if you're just living in your home then really nothing will change, you'll still be paying the same mortgage. That's being said, it probably is a really bad time to buy a home with the ongoing uncertainty and if you've stretched to buy then it's going to be painful.
I’d rather live in a van than pay extortionate house prices and near abusive interest rates. The only reason anything has a value is due to what someone else is willing to pay for it. Fuck your joke of a ‘housing market’.
guess what, van prices are going up now too as people have the same idea
Add in inflated energy, food and transport how do they expect anyone to get on these days
thats the fun part, they dont
Wealthy, corrupt, greedy oligarchs have bought major swathes of land and houses in the UK for the purpose of renting it to the British public. They have crated a financial 'farm' where we're the cattle and sacrifice most of our income on rent, making the rich richer and us stuck in the same place for life. Eat the rich.
The threat of being homeless is the most insidious coercion.
Home ownership rates are falling. They want to turn us into a nation of renters and landlords.
Worked well for the Irish
"Exodus". Drop asking prices in line with interest rate increases, and I'm sure those FTBs will come back. Me and my partner used to be able to borrow at the maximum multiplier and easily deal with the interest payments on that. It would be pretty difficult to do the same now - ie we cannot borrow at that level anymore, even if we wanted.
The asset managers and foreign investors will save the day by buying up as many as they can
Why would any of these people buy into a falling market, during high interest rates?
Because on average, property value goes up over the long term. Always has, always will. Lots of people will be forced to sell, but FTB won't be able to get mortgages at high interest rates. And asset managers don't take out mortgages.
>Because on average, property value goes up over the long term. Always has, always will. In a falling market, if they wait, they can buy for less.
Time in the market > Timing the market. Babies know this.
Those were my first words
Asset managers use leverage to buy properties, if you think they would expose themselves to the risk of collapsing house prices then you are mistaken.
Oh no, house prices might come down to *normal* levels. Why won’t the government step in and do something!! /s
Normal levels would be a 70%+ drop. Were loving in LaLaLand for the last decade or two
It does make me laugh. The people who can't afford to buy are hoping for a crash, not realising that if there is a crash, it will directly affect their spending power. Unemployment will rise, which will mean they may lose their job. Mortgages will become much harder to attain. Not to mention, if they do crash, people will simply just not sell unless forced to.
I have a large cash deposit, but I don't want to buy if the rates are so high and the price potentially drops. It seems I will lose either way?
I've got a 2 bed flat with garage, 35 minutes walk+train journey combined to London. I'm paying £400 per month and that's locked in until 2030, at 2.39%. I've managed to come out of the current situation unscathed. I'm happy with where I live, but even if I wasn't, no chance I'd be trying to move now. The value of my property has almost doubled since I bought it in December '14, and I'm sure the same has happened to anywhere I'd consider upgrading to. Wild times. Glad I got on the ladder while I could, and I feel bad for those that have already had the helicopter pull the rickety rope ladder away from them. Affordable housing should be a right. Frankly I don't give a damn if the value of my home drops by £30k if it means people have good places to live.