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

[nuts]

there will be no crash.    just a debasing of the pound as money is printed to keep rates low.   

houses will still be unaffordable for many.... but many things  that we take for granted will inflate in price.

my prediction.  no HPC but £1.50 per litre petrol, food inflation at 10+ percent (esp for foreign food),   

the alternative would be political suicide

[PropertyMania]

15 hours ago, Fully Detached said:

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.

Agree, but seeing as we've been in a 45 year bull market I see demographic / technological / lifestyle / political changes meaning we're heading to a secular bear market  of closer to 20 years of falling real prices. 

[Fully Detached]

2 hours ago, PropertyMania said:

Agree, but seeing as we've been in a 45 year bull market I see demographic / technological / lifestyle / political changes meaning we're heading to a secular bear market  of closer to 20 years of falling real prices. 

Yes, I can well see that being the case, too. What I meant really was that Joe public and the MSM would only consider the nominal drops as the "crash", not realising that approximately static nominal prices actually meant a protracted crash in real terms over the sort of time spans that we're talking about.

It's just a great pity that a 20 year secular bear market means that two generations will have to suffer before house prices equal value.

[crashmonitor]

I think it could crash, but not this year. The Uk housing is a bit like a supertanker that can't do a handbrake turn on a sixpence. Low inventiories and zirp can't be turned around in 12 months imo. May look like things might be happening in post  boom micro markets of Cambridge and Central London, but most of the country hasn't really gotten to the same stage.

Thinking back to other crashes they took a while to get going from the first stutter. The July 1989 peak took until the following spring to turn into a major correction. And the last time around we had twin peaks in 2004 and 2007 and another year til spring 2008 before the crash took hold. In the run up to previous  crashes inventories had ballooned with interest rates and there wasn't a cat in hell's chance of selling a property...the SSTC strike rate on rightmove was more like 5% not the 40% or so of today once prices started falling.

[GreenDevil]

A crash is fantasy. 

There be some forced sellers when buyers holiday if supply goes up, people aren't buying.

But there no chance if a crash with rates low zirp. A crash is pain, and must be avoided at all costs.

[PaTrickUK]

A crash is exactly what is needed, otherwise most of my generation and the next will not buy (born in the 80s). People assume that we aren't buying because we can't afford to, what they don't consider is the fact that many of us CAN afford to buy. Having around 115k in savings and adding around 2-3k a month, I would argue that I can buy in most parts of the UK, but at current prices, it's just not worth it. Buying a house is a huge risk. Things like the ridiculous 30-35 year mortgages they now offer are just another scheme to help sustain the bubble, interest rates are at record lows, the dreaded help to buy scheme is being scrapped - they are running out of tools to sustain the bubble, sooner or later something has to give. Many of my work colleagues are in the same boat, we can afford to buy, but we aren't willing to pay 300k for a 1 bedroom maisonette, previously bought in 1998 for 160k.  I would rather save for a few more years, then take my money and spend it elsewhere as it seems the UK is only for the well to do.

[Society of fools]

1 hour ago, PaTrickUK said:

People assume that we aren't buying because we can't afford to, what they don't consider is the fact that many of us CAN afford to buy. Having around 115k in savings and adding around 2-3k a month, I would argue that I can buy in most parts of the UK, but at current prices, it's just not worth it.

How very true. Being in my forties and on a good salary for two decades, I have enough stuffed away in cash, precious metals, and solid equities to buy a 3 or 4 bedroom place in London, perhaps even in Central London. But I'm not going to do it at these prices.

And I probably wouldn't do it even it prices declined say 40%, it would still be a rip-off.

A genuine HP crash though, that saw prices go down 60% or 75%, would; however, get me off the fence and spending.

[disenfranchised]

I saw a very average identikit 1980s £299,995 4 bed detached on shitemove this morning - popped up with a mortgage insta quote of 30 grand down £1400-odd a month for 25 years.

Lots of people in their 30s are picking up significant inheritance lumps from property of deceased grandparents (or having it BOMADed over to them) to pay the deposit.

However, when I fired some made up but fairly low numbers about car loan repayments and other outgoings based on what we were earning a few years ago as normal employees into a mortgage calculator it suggested we would only have been offered a 220k loan on a 66k joint gross income - leaving a bit of a gap to bridge to buy that property. Some numbers massaging and debt clearing, a slightly higher deposit and the fictional "we" could have jumped. An acquaintance of mine just managed to trade up to a£325k property with a little bit of equity, some inherited cash and a joint income around 70k. That's why the market is still ticking along in this town. There are people who can make it work and a culturally deep seated desire to buy and 'climb the ladder' amongst many.

So... until unemployment or interest rates actually bite, prices outside London mega bubble are, in my view, not really going anywhere fast. They about topped off a couple of years ago when 5 year very cheap fixes abounded and will probably slide a little this year now that they don't. But... further strangling of the credit supply is required to affect a big kick in the nuts to nominals.

A couple of % on base rates and pop goes the weasel IMO but no idea when that will ever happen.

Mortgage rates are drifting up and fixed terms are being shortened despite the 0.25% Carney cut.

The banks are mainly through the stress testing OK which is based on some fairly stark economic conditions. By mid-2018 the big mortgage lenders like Halifax & Woolwich currently attached to banks with big investment and corporate arms will be safely ensconced inside the ringfencing of Retail banking...

I'd guess you can knock a certain % off the nominals for every % rise in the base rate or unemployment but not sure what that actually looks like. 10-20% nominal drops followed by a long drift sideways seems most likely to me but where is the trigger?

Edited January 22, 2017 by disenfranchised

[Tapori]

lol at CityAm.

If that's their conservative estimate, in amongst a full blown panic including BTL-tax changes and Interest-Only Loans coming up for maturity, I'd double their estimate.

People will be lookin fierce shook when we see who was naked as the storm settles.