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What could happen to UK house prices if markets crash this year

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With Brexit negotiations and Donald Trump's presidency still to come, a lot could go wrong. So online estate agent Emoov has helpfully donned its tinfoil hat and worked out what could happen to UK house prices if there is a 2008-style market apocalypse. The bad news is, homes in the capital could stand to lose £850 in value a week in the event of another financial crisis. The good news? Er, there is no good news. Emoov modelled its data on the 21 months between the end of 2007 and the beginning of 2009, when the previous financial crisis was at its worst. It applied the same percentage decrease to the current average house price - and found £36,393, or 16.7 per cent, could be wiped off the average UK house price.  CityAM

houseocalypse-now-average-price-fall-if-

 

I think the crash will come later 2018-19 but could be wrong.

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13 minutes ago, rollover said:

I think the crash will come later 2018-19 but could be wrong.

I don't see why it should be a constant percentage across the board.  The bigger they are, the harder they fall.

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If markets fail I expect massive stimulus packages, negative interest rates and house prices tending towards infinity.

After all, my unborn children are generous like that.

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Just now, btd1981 said:

If markets fail I expect massive stimulus packages, negative interest rates and house prices tending towards infinity.

After all, my unborn children are generous like that.

No chance.

It's the peoples turn to take the banks losses.

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Problem is how much of a crash. Houses around my way have risen between 5s0 and 80% since 2010, so for a crappy 3 bed semi that are now up for £425,000 they need to lose £175,000 just to get back to 2010 levels :o(

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The good news is, homes in the capital will drop in price by £850 a week in the event of another financial crisis. The bad news? Er, there is no bad news, cheaper homes are a good thing.

EFA

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1 hour ago, fandanman said:

Problem is how much of a crash. Houses around my way have risen between 5s0 and 80% since 2010, so for a crappy 3 bed semi that are now up for £425,000 they need to lose £175,000 just to get back to 2010 levels :o(

This is it.  Their "houseocalypse" is exactly how I guessed the MSM would describe a 20% crash, which is basically what they think a "major crash" looks like.  Sadly I think they are right.  20% crash (retracement), then slaves, back to work, prices plateau at best, rise at worst.  Honestly, where is the 70%+ crash coming from? Not possible :(

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5 minutes ago, ThePiltdownMan said:

A crash of that magnitude is hardly worth worrying or being excited about. 

Yes, Excatly,  16.7% isn't going to make much difference, looks like predictive programming!  

If I see more articles saying the same thing I'll be fairly sure that is the the agenda.

Thing is that is the kind of fall that sets up a panic, it starts to gain momentum. 

so by putting out a moderate number like 16.7% (how did anyone can calculate to this degree of accuracy).

Oh they must so clever to be able to do this. They must know what is going on? Complete BS

it re-enforces the idea that it won't be to bad and that its a small correction coming.

2008 was turning in to a complete melt down, people forget that, only the lowest interest rates in 300+ years stopped the meltdown last time, and re-inflated the bubble.

So the idea that negative interest is possible is realistic-next HPC crisis we get , I think it will happen. 

 

 

 

 

 

 

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I think these are wildly pessimistic. Going back a few years to 2008 would be a much bigger number for london and the south east. I would expect those figures to about double. Especially if wages are reduced at the same time as inflation.

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3 hours ago, rollover said:

I think the crash will come later 2018-19 but could be wrong.

I thought the crash would come in 2002.I was wrong.

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2 hours ago, fandanman said:

Problem is how much of a crash. Houses around my way have risen between 5s0 and 80% since 2010, so for a crappy 3 bed semi that are now up for £425,000 they need to lose £175,000 just to get back to 2010 levels :o(

Christchurch road Norwich 350 > 550 since 2011

27% falls (200k) to get to a price that was falling in 2011

At the time I calculated fair value as 280k as they only rent out for 1200 pcm (circa 5%)

Maybe it will crash to that but now you talking high IRs + a few years of grinding down so i am out of there.

 

Edited by Fromage Frais

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2 hours ago, Stateless said:

Yes, Excatly,  16.7% isn't going to make much difference, looks like predictive programming!  

If I see more articles saying the same thing I'll be fairly sure that is the the agenda.

Thing is that is the kind of fall that sets up a panic, it starts to gain momentum. 

so by putting out a moderate number like 16.7% (how did anyone can calculate to this degree of accuracy).

Oh they must so clever to be able to do this. They must know what is going on? Complete BS

it re-enforces the idea that it won't be to bad and that its a small correction coming.

2008 was turning in to a complete melt down, people forget that, only the lowest interest rates in 300+ years stopped the meltdown last time, and re-inflated the bubble.

So the idea that negative interest is possible is realistic-next HPC crisis we get , I think it will happen.

Thing is - WHO is going to panic? Nobody seems to move house anymore.  It's too expensive to move.  Boomers don't move.  My dad's street is full of 4 and 5 bed detached properties with one or two people living in each one, all over 65. Only FTBs who bought recently would panic, but they bought recently, so again, why move and guarantee the negative equity?  Sure, BTLs will sell up, but I see a BTL panic giving way to 20% max in price falls (yes, I am guessing, but based on the fact that a lot of people simply can't afford to / don't want to move).

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Big crash?

UK goes back to the IMF for a bailout.

Hedge funds and other luvvies ransack the currency & UK markets.

More austerity, enforced by non-UK entities.

UK asset fire sale accelerates.

Defacto landlords will be the international banks. Just like in New York 1980's. Trump types start massive gentrification programmes.

Be careful what you wish for.

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49 minutes ago, canbuywontbuy said:

Thing is - WHO is going to panic? Nobody seems to move house anymore.  It's too expensive to move.  Boomers don't move.  My dad's street is full of 4 and 5 bed detached properties with one or two people living in each one, all over 65. Only FTBs who bought recently would panic, but they bought recently, so again, why move and guarantee the negative equity?  Sure, BTLs will sell up, but I see a BTL panic giving way to 20% max in price falls (yes, I am guessing, but based on the fact that a lot of people simply can't afford to / don't want to move).

What does it matter who lives in it.....The fact is people do not move as much, either they can't or won't....btlers say they are in it for the long-term, first time buyers will live in it longer, fees, taxes and upgrade costs far too costly when costs of moving are higher than any growing income over the same time period, elderly will either stick sell or downside so in competition with the upsizers the investors and btlers.......There is no ladder, only debt.....debt may = wealth but debt will not necessarily make anyone wealthier.;)

Edited by winkie

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I think they're probably close with that figure, but only in terms of the initial leg down. 15-20% nominal drop over the course of 12-18 months would seem pretty well apocalyptic to most people who are not familiar with this site, although most of us here would agree that this would only be the froth that's built up in the past 4-5 years. What people might not be factoring in is a further 5-10 years of 1-2% nominal falls, which in a higher inflation environment could easily equate to a real terms fall of a further 5-6% per year. Only when they look back at the graph in 10 years time will they realise that the crash occurred over a much longer time frame, and in real terms rather than nominal.

I gave up any thoughts of buying when it became clear that the 60-70% drops we need in order for prices to become sensible are never going to happen in a short or even medium time frame. That's not a reason to jump in and buy, but instead a reason to walk away altogether.

I expect one day in the next 10 years or so to notice a house for sale and think to myself that it seems reasonable value for money. That's when I'll buy.

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7 hours ago, btd1981 said:

If markets fail I expect massive stimulus packages, negative interest rates and house prices tending towards infinity.

After all, my unborn children are generous like that.

I don't think that they will find anyone to buy the debt this time.

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2 hours ago, Fully Detached said:

I gave up any thoughts of buying when it became clear that the 60-70% drops we need in order for prices to become sensible are never going to happen in a short or even medium time frame. That's not a reason to jump in and buy, but instead a reason to walk away altogether.

I expect one day in the next 10 years or so to notice a house for sale and think to myself that it seems reasonable value for money. That's when I'll buy.

0Similar to me. A semi-detached in my area is worth £67,000 at a 1995 + inflation price, never mind a terraced or flat. If that was the case now I'd have no problems. 10 years + is my time scale too, or just taking my business somewhere else if not by then.

Edited by Arpeggio

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consider also the article was written by emoov who might possibly have an invested interest, just like most of the reports that I have read written by estate agents or mortgage lender etc always putting a positive spin on a negative result.

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If the crash is only going to be minor - say zero to twenty percent in nominal terms, taking us back to the already-stupid prices of 2007 - then I think it's reasonable to just write-off the idea of buying property in the UK for good, and just get right with the idea of letting someone else take on the balance sheet risks of buying an over-priced asset, while you buy cheaper ones and spend your energy pushing for better tenant's rights, building codes etc, so that at least living as a tenant could be pleasant as well as financially-shrewd. The days of making money just from being a property-owner are gone, regardless, and I suspect it will just be a long, drawn-out process of individuals being disappointed at how little of that "wealth" actually gets realised.

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20 hours ago, TheCountOfNowhere said:

Was hoping for a poll.

 

a) The BTLers will just put their rents up, innit

B)The BTLers will hang themselves, enmasse

c) Dont be silly, house prices only ever go up

Normally when b ) turns into a smiley it's not appropriate but that one strangely is.

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