House Prices

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Anything re: prices is pure market speculation, no one can say with any degree of certainty. Personal opinion is: remember recessions aren't all the same, all recession actually means is two consecutive quarters of decline it's just hard to disentangle from the catastrophe of the last one (or ones before that for people who were cognitive then). The factors causing this (inevitable, imo) recession are so very different I think we'll see a faster recovery & house prices will largely remain unchanged. It'll be the market itself that undergoes a few months of weirdness where people are scared to sell/buy, the UK already has a housing supply problem though so nothing really that new there...

The one thing I will say is lenders have already reduced their risk appetite and apparently they've already revoked most of their 95% LTV products. I've heard of people even having credit card limits reduced (!!) so it may be worth re-mapping your savings goals?

Oh and those awful HTB / new build schemes will be even more fucked I suspect. Those houses are already overpriced + shabby so best to avoid anyway, but I imagine they'll have to reduce their prices but that'll just be to reflect their true value tbqh??
 
heretoreaditall2019 said:
Anything re: prices is pure market speculation, no one can say with any degree of certainty. Personal opinion is: remember recessions aren't all the same, all recession actually means is two consecutive quarters of decline it's just hard to disentangle from the catastrophe of the last one (or ones before that for people who were cognitive then). The factors causing this (inevitable, imo) recession are so very different I think we'll see a faster recovery & house prices will largely remain unchanged. It'll be the market itself that undergoes a few months of weirdness where people are scared to sell/buy, the UK already has a housing supply problem though so nothing really that new there...

The one thing I will say is lenders have already reduced their risk appetite and apparently they've already revoked most of their 95% LTV products. I've heard of people even having credit card limits reduced (!!) so it may be worth re-mapping your savings goals?

Oh and those awful HTB / new build schemes will be even more fucked I suspect. Those houses are already overpriced + shabby so best to avoid anyway, but I imagine they'll have to reduce their prices but that'll just be to reflect their true value tbqh??
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Help to buys are so scary and dangerous. I know some friends who bought houses through the scheme and don't really understand the financial implications of the repayments of loan after the initial 5 years!
 
Italy2 said:
Help to buys are so scary and dangerous. I know some friends who bought houses through the scheme and don't really understand the financial implications of the repayments of loan after the initial 5 years!
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It’s so bad, a friend has done the same and the loan goes up with the house value?!

The WORST I’ve heard of is the shared ownership (the ones I’ve seen IRL have been out of London), the only examples I’ve seen have been horrific properties that require £30k+ of work to get them even livable, utter slums. They’re selling off dilapidated social housing stock dressed up as a scheme to help low income people get on the housing ladder. I know someone living in a glorified squat who pays for for 100% of all repairs / upkeep whilst paying rent, will never own the whole thing and can’t pass it onto her kid? And if they came to sell you can’t recoup the £3k boiler or the re wiring etc etc before splitting profits with your HA! Why on earth would anyone ever do it?!!
 
heretoreaditall2019 said:
It’s so bad, a friend has done the same and the loan goes up with the house value?!

The WORST I’ve heard of is the shared ownership (the ones I’ve seen IRL have been out of London), the only examples I’ve seen have been horrific properties that require £30k+ of work to get them even livable, utter slums. They’re selling off dilapidated social housing stock dressed up as a scheme to help low income people get on the housing ladder. I know someone living in a glorified squat who pays for for 100% of all repairs / upkeep whilst paying rent, will never own the whole thing and can’t pass it onto her kid? And if they came to sell you can’t recoup the £3k boiler or the re wiring etc etc before splitting profits with your HA! Why on earth would anyone ever do it?!!
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I have read up about Shared Ownership schemes and the statistics show that hardly anyone ever manages to buy more equity in the house. This scheme is such a trap for young people or low income people to lure them into buying a house they will never ever own. You are essentially just paying someone else's rent whilst paying for all the repairs in the house. Sadly, many people don't read their leases, tenancy agreements or property ownership document to understand the implications of what they are signing up for.

I work in commercial property law and it's alarming how many people sign a lease without understanding what they are signing up for.
 
Italy2 said:
I have read up about Shared Ownership schemes and the statistics show that hardly anyone ever manages to buy more equity in the house. This scheme is such a trap for young people or low income people to lure them into buying a house they will never ever own. You are essentially just paying someone else's rent whilst paying for all the repairs in the house. Sadly, many people don't read their leases, tenancy agreements or property ownership document to understand the implications of what they are signing up for.

I work in commercial property law and it's alarming how many people sign a lease without understanding what they are signing up for.
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This is so interesting to read - I had no idea people were genuinely ignorant to it? I guess it’s not that surprising when most people struggle with personal finance as it’s never taught or discussed, and most of us are taken for a ride by banks chucking overdrafts etc at us as the clock strikes midnight on our 18th birthday...

I just can’t believe they’ve managed to swindle people into having all the pitfalls of home ownership with literally none of the benefits - it’s outrageous. I can’t imagine any one ever does staircase either because the properties I’ve seen require SO much work to them you wouldn’t have a spare penny left to buy more equity.
It’s sad cos most the people who “own” them would be eligible for council housing anyway so could have a comparatively secure letting agreement with people to do repairs etc for them.

What happens to these properties when an “owner” dies in them out of interest? They always have quite short leases of like 90 years, so say mum dies owning £70k of a £140k property with 40 years left on the lease, does kid own the remaining 40 years on it? Could kid them sell that, but surely it wouldn’t sell for £70k it’d be pennies to the pound like those odd flats you see every now and then or those retirement deals where a house is 1/3rd of market value cos you’re leasing it for 20/30 years?
 
Italy2 said:
Help to buys are so scary and dangerous. I know some friends who bought houses through the scheme and don't really understand the financial implications of the repayments of loan after the initial 5 years!
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Help to buy was only ever helping the house builders to prop up house prices.

I'm pretty confident they will fall, but we're going to have rampant inflation with all the money printing like last time so the fall might be masked somewhat by that again. In 2008 they had lots of tools in their war chest like lowering IR but this time we're coming into it at near zero interest rates.

House prices are way too high, but the banks have all these overpriced assets on their books. I think they'll try to keep them high for long enough so that inflation eats away at them and most people can service their mortgages with such low rates. It's a bit like a spinning plate trick. If you have cash and can buy at an auction you might very well get a property for significantly less in the coming months. The three D's - divorce, debt and death will no doubt be increasing so there will still be people selling.
 
Obviously everything is just a guess at the moment, but I think you’ll see prices in towns and cities drop considerably. I do wonder if the countryside will be less affected as people are now realising that you can work full time from home and still have a job in London etc
 
Yel said:
Help to buy was only ever helping the house builders to prop up house prices.

I'm pretty confident they will fall, but we're going to have rampant inflation with all the money printing like last time so the fall might be masked somewhat by that again. In 2008 they had lots of tools in their war chest like lowering IR but this time we're coming into it at near zero interest rates.

House prices are way too high, but the banks have all these overpriced assets on their books. I think they'll try to keep them high for long enough so that inflation eats away at them and most people can service their mortgages with such low rates. It's a bit like a spinning plate trick. If you have cash and can buy at an auction you might very well get a property for significantly less in the coming months. The three D's - divorce, debt and death will no doubt be increasing so there will still be people selling.
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agree with all of this!

Also on remote working, I think that’s a distant dream for a LOT of companies as they simply lack the infrastructure or the ability to tbh? Experienced hires 100% but midweight and under needs the support, which in turn means their managers need to be about as a point of contact?

Most big companies have had some degree of remote working (as desk space is a constraint) anyway but expect you in the office 3 days a week so there will always be demand on London / commuter belt housing. If jobs were to go fully remote it’d be to Eastern Europe or India where it’s a third of the cost, not a 10-15% discount to a bloke in Hull.
 
heretoreaditall2019 said:
This is so interesting to read - I had no idea people were genuinely ignorant to it? I guess it’s not that surprising when most people struggle with personal finance as it’s never taught or discussed, and most of us are taken for a ride by banks chucking overdrafts etc at us as the clock strikes midnight on our 18th birthday...

I just can’t believe they’ve managed to swindle people into having all the pitfalls of home ownership with literally none of the benefits - it’s outrageous. I can’t imagine any one ever does staircase either because the properties I’ve seen require SO much work to them you wouldn’t have a spare penny left to buy more equity.
It’s sad cos most the people who “own” them would be eligible for council housing anyway so could have a comparatively secure letting agreement with people to do repairs etc for them.

What happens to these properties when an “owner” dies in them out of interest? They always have quite short leases of like 90 years, so say mum dies owning £70k of a £140k property with 40 years left on the lease, does kid own the remaining 40 years on it? Could kid them sell that, but surely it wouldn’t sell for £70k it’d be pennies to the pound like those odd flats you see every now and then or those retirement deals where a house is 1/3rd of market value cos you’re leasing it for 20/30 years?
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I think most people who do not read and understand the agreements they sign up for have a few reasons. Firstly, some people are not that educated or possess the ability to understand unfortunately to be able to read and understand the leases etc. Secondly, leases for example are not the easiest read and it requires alot of training and special expertise to be able to read and understand a lease but obviously there are certain clauses that anyone can read and understand for example, tenant should pay rent to the landlord yearly. Thirdly, it is unfortunately alarming how many people simply don't care enough to learn. They may be young and too excited to have bought their first house and don't bother reading the obligations and responsibilities that may come with it.

Mortgage lenders prefer a lease to be at least 75- 90 years term and anything less may not be considered a 'good lease' so it is recommended that when your lease reaches the stage where you have less than 90 years left on it then you should extend your lease.

If you have 40 years left on the lease then you would have to extend the lease. In order to extend your lease you have to pay a premium which is like a deposit/money to the landlord to extend the lease for 99/999 years. Now lots of people in this situation may not be able to afford the premium and they may also not be able to afford the charges and bills the house comes with.

This is one of my pet peeves when grandpa's or parents leave their hard-earned assets like houses to children who don't earn enough. For example a grandmother who has worked hard all her life to be able to buy this house and didn't enjoy her money which she could have if she sold the house. Anyway so the grandmother leaves the house to her grandson as a gift and grandson doesn't have a job or doesn't earn enough, the grandson may not be able to pay the house bills and rent which would make him go in debt. If he owes the landlord debt for charges payable under the lease, then the landlord can take very serious actions against the grandson including possession of the house. It happens all the time and it's so heartbreak to see! Wish grandparents would enjoy their assets and money they work so hard for rather than leaving it for grandchild who can't afford those houses! Such a shame!

heretoreaditall2019 said:
agree with all of this!

Also on remote working, I think that’s a distant dream for a LOT of companies as they simply lack the infrastructure or the ability to tbh? Experienced hires 100% but midweight and under needs the support, which in turn means their managers need to be about as a point of contact?

Most big companies have had some degree of remote working (as desk space is a constraint) anyway but expect you in the office 3 days a week so there will always be demand on London / commuter belt housing. If jobs were to go fully remote it’d be to Eastern Europe or India where it’s a third of the cost, not a 10-15% discount to a bloke in Hull.
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I know more companies are encouraging remote working now but there are still thousands of companies who don't encourage remote working especially in the legal sector. For example I know so many places who wouldn't even allow remote working for Corona if the government didn't rally for it as much. If given the chance then my employer wouldn't allow remote working either. Our company is a national law firm and we have a zero remote working policy except few senior managers and the rest of us have only been allowed it because of Corona and lockdown.
 
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I agree remote working is unlikely to take off hugely, any companies it works well for probably were doing it before.

The big issue in coming years is all the white collar jobs being replaced by algorithms. It's been creeping in and slashing the amount of people needed per department. A recession will really kick start it.

High house prices is so damaging for an economy, it ties up so much money in unproductive bricks rather than investing into businesses and innovation. It's like a ponzi scheme. I'm not from the UK, but I find the obsession with house prices weird. Headlines everytime "good news for homeowners" everytime there's an increase even though it's just paper gains and long term the whole of society suffers.

There has to be some rebalancing, the current crop of youngsters will no doubt never retire but it would be beneficial if there was some relationship between earnings and house prices. I don't hold my breath though, the economy is largely based on house prices and many MPs are big into buy to let. I'll stop now before I get onto that 😬
 
I wouldn't buy yet. I would wait but not too long. It's going to be a buyers market. I sold my house a few months after the 2008 crash. Then bought from a developer who was desperate to sell. The only reason my buyer didn't pull out was because she was a cash buyer and the crime in her area had got so bad she was desperate to move. I was lucky! It had to be the worse time to sell and buy. Some sellers will sit tight but the buy to lets will start to hit the market. Second homes and people who need to sell because their income has been badly affected because of Covid-19.
 
going back to the help to buy schemes.
my husband and I bought our flat with the 5% help to buy scheme and it’s worked out well for us, as we’ll make around £50k when we sell (we had it valued just before COVID). My brother in law and his wife did the help to buy scheme where they put down a deposit but the company owns a large percentage still, ie they’re essentially renting part of their house. They’ll make around £15k if they sell it. They cannot afford to move now.We told them while they were thinking about buying it to wait, save up more of a deposit and just do the 5% help to buy scheme but they couldn’t afford to live where they live without it. It’s ridiculous.
 
Bronx said:
going back to the help to buy schemes.
my husband and I bought our flat with the 5% help to buy scheme and it’s worked out well for us, as we’ll make around £50k when we sell (we had it valued just before COVID). My brother in law and his wife did the help to buy scheme where they put down a deposit but the company owns a large percentage still, ie they’re essentially renting part of their house. They’ll make around £15k if they sell it. They cannot afford to move now.We told them while they were thinking about buying it to wait, save up more of a deposit and just do the 5% help to buy scheme but they couldn’t afford to live where they live without it. It’s ridiculous.
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It is really sad how so many people are forced into these schemes or else they may never be able to own a house!
 
Italy2 said:
It is really sad how so many people are forced into these schemes or else they may never be able to own a house!
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It's sad that people think these schemes are actually to help them. Without all these props they might be able to actually afford to buy a house.

Politically the will to keep house prices inflated will diminish as the number of have-nots is on the rise each year.

I'm seeing houses coming up for sale at above pre-covid prices, even if they get someone to pay that I expect it will fall through come the survey valuation.

Once furlough ends I think there's going to be huge unemployment, it's just masked for the moment. Sadly this isn't a V shape recession, more likely to be an L shaped.

www.thisismoney.co.uk

Homes face 14% price slump says Nationwide

The boss of Britain's second largest mortgage lender said first-time buyers and those stepping up the ladder into their second home would be deterred from purchasing in the midst of a recession.
www.thisismoney.co.uk www.thisismoney.co.uk
 
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Also I have noticed that house prices are priced slightly higher than pre covid at the minute so if the potential buyer suggests a lower figure, it would probably be around the actual house value and hence avoid the sale at a lower price. I think this is only a strategy that estate agents are probably trying to help sellers sell their houses without any losses but we will have to see if it actually works

I definitely agree that furlough is only masking unemployment and there would be many redundancies after it ends. Sadly alot of people don't realise this right now.
 
It's expected that asking prices increase, estate agents want to get the property on their books and the asking price is often decided on by the seller. They're not going to be quick to accept that everything has changed.

If I was buying I'd look to buy in 6-9 months when sellers that need to sell have accepted the reality and before real inflation starts to kick in.
 
I do a fair bit of predictive modelling but the housing market is really difficult to predict at the moment. For the current period it’s not going to change much due to furlough, closures etc. The period after is anyone’s guess
-prices could remain stable because no one wants to move until they’re sure there will be no disruptions
-prices could rise due to something like people not wanting to sell because they’re anticipating negative equity/ a housing crash. Those willing to sell can drive up prices because available property is less than the demand
-prices could drop- I know this sounds morbid but the volume in deaths will likely increase the number of available properties. A drop can be caused by an increase in availability combined with a decrease in demand.
If it were just those variables alone then it makes things simpler but it’s all tied to extra variables and outcomes. Like the economy etc. And is region specific.
For now there’s no harm in waiting and building your deposit. At least then you’re ready to buy and can get in the ladder at a time that’s an advantage to you.
 
Guys I have found a house that I really like and would be perfect for us. It is exactly what I want and the location is perfect! We would have to save up a little bit more for the deposit though and would like to wait until the market settles to make the offer! Hoping it is still on the market in a few months time.😂
 
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