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TheCountOfNowhere

Why are house prices starting to fall ?

Why are house prices starting to fall ?  

160 members have voted

  1. 1. Why are house prices starting to fall ?

    • Removal of HTB
      15
    • US Interest Rate rises
      14
    • BTLers running for the exit
      68
    • BrExit
      32
    • Immigrants leaving
      23
    • Term Funding Scheme about to be pulled
      8
    • The MSM
      16
    • Prices are just too insane
      102
    • Foreign buyers have disappeared
      46
    • Investors are getting out
      45


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1 minute ago, mathschoc said:

Wages stagnated and have reached an unaffordable level

I tweaked the poll and added in 

 

Prices are just too insane

 

which is pretty much the problem.

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When average house was 125k, it was just about credible that it could double. Now at 250k, nobody believes an average house can hit 500k.  Prices can only fall. Ordinary people have woken up to the fact now. Fear of NE will deter buyers. Discounts will be needed if anyone needs to sell. Will create a vicious (virtuous) circle. Houses will again be seen as a liability to own, especially if tied to a mortgage that exceeds the value. 

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The BTL disaster we have experienced is over. When a problem becomes obvious to everyone the government generally catches on about 10 - 20 years later and acts. BTLs were on the way to cornering the market in housing stock.  Prices were not an issue with the old system of claiming tax relief on mortgage payments, they could bid each other up to any level. If the government does not get cold feet the next few years are going to be interesting to watch.  

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Uncertain times, fewer people buying more than one property due to higher taxes, thus more diversification, low rate of pound and other central banks  pushing for higher lending rates,deposits and debt required for most/growing numbers of people totally beyond their means and ability to pay......happy days.;)

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I voted Brexit but not in the way it's listed in the Poll.

I've always said that Brexit will never happen and there would be another election. TPTB know it was the grey vote that won the first referendum. There will be an all out fear campaign now and separating the grey vote from their housing equity will be a large part of it. It might create a window to buy at a less obscene price before the second referendum.

(This is not a Brexit thread, so no spitting loons please)

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Its nothing to do with insane prices. That never stopped people buying all they way up to where we are now and when prices were lower but mortgage rates higher so your repayment as a percentage of income was worse than now. We know that the market thrives on sentiment, confidence and availability of credit. If these things disappear the market tanks. There is also the fear of never being able to buy  so they pilled in at insane prices - some people now have just given up on buying altogether. If it is going down then is is more likely sentiment, investors running for the exit including foriegn buyers although with the weak pound are they really?

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Haha only for BTL investors though. I was thinking of caving in and buying a house in a deprived area of the north. There will be no point in buying anything for a good few years if prices really are going down. I think this will only happen with another recession.

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At a guess: foreign investors getting nervous due to Brexit and possibly stamp duty, and the beginnings of restrictions on buy-to-let may be just starting to operate at the margins (not buy-to-letters getting out, they'll never do that, it's about fewer getting in). 

These might be having a knock on effect on sentiment.

Regular people have mostly been priced out for ages anyway, so I don't see that as being an issue. 

However, I think it's too early to say that prices are starting to fall.  They might be, but it'll take a few months at least to see if it sticks.  

In the meantime, some indices will rise in some months, and the media will immediately celebrate in an attempt to change sentiment. 

Basically, things are starting to look good so for God's sake stop jinxing it. 

Edited by DrBuyToLeech

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Whilst "The prices are just too insane" option should be the number one reason, I also think it should be disqualified and removed as that has been present for the last 10+ years and hasn't caused the current concern the media, estate agents, and banks are displaying, so it has to be a different reason.

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I chose "insane prices", but that's a rather simplistic take on it, needless to say. I suppose "transparently unsupportable prices for both banks and consumers" might be a little closer.

I've generally argued that we will only see mild price 'corrections' until we get a rise in IRs, but I suppose it's possible that the removal of any chance of capital gains might be enough. However, given the pool of idiots that seem to be out there, I'm not sure if something as abstract as that (sarcasm) properly figures into their choices. Only the monthly cost seems to get through to a lot of people.

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5 minutes ago, tomandlu said:

I chose "insane prices", but that's a rather simplistic take on it, needless to say. I suppose "transparently unsupportable prices for both banks and consumers" might be a little closer.

I've generally argued that we will only see mild price 'corrections' until we get a rise in IRs, but I suppose it's possible that the removal of any chance of capital gains might be enough. However, given the pool of idiots that seem to be out there, I'm not sure if something as abstract as that (sarcasm) properly figures into their choices. Only the monthly cost seems to get through to a lot of people.

Mortgage rates can rise without base rates rising, although I don't know if we are seeing that yet. 

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I'd say the major reason is that the perception of the UK property market as a safe place to hold your cash is quickly falling apart. At the top end foreign investors are starting to wobble on the issue, finding other places to put their dodgy money, money isn't flooding out of places like Russia and China at quite the same rate as it was. 

I think this perception is due to a number of factors. Brexit being a big one, not so much the immediate effects, but the idea that Brexit could screw the British Economy is more than enough to make people worried. There are also too many voices saying that something has to be done to balance the economy and get money away from people hiding it in their homes, must worry some people.

The BTL changes have been great as well, clearly many LL's are changing their minds about their lifestyles now. 

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33 minutes ago, AvoidDebt said:

Are you not expecting any estate agents to respond? You've missed their favourite. It's always the stamp duty!! 

I tried to add....Price only ever go up, but it wouldnt let me edit it.

I dont think we need it anyway.

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23 minutes ago, tomandlu said:

I chose "insane prices", but that's a rather simplistic take on it, needless to say. I suppose "transparently unsupportable prices for both banks and consumers" might be a little closer.

I've generally argued that we will only see mild price 'corrections' until we get a rise in IRs, but I suppose it's possible that the removal of any chance of capital gains might be enough. However, given the pool of idiots that seem to be out there, I'm not sure if something as abstract as that (sarcasm) properly figures into their choices. Only the monthly cost seems to get through to a lot of people.

To understand how prices will correct we need to look at how prices post 2007 rose.

Low IRs were about for 5 years and had little effect other than putting a floor under prices.

The BIG rises we have witnessed in the space of 2 years running up to an election were down to FLS and HTB.

HTB for new builds is still in place ( but for how long, it seems to be exposed as a con now )

HTB2 has gone.

FLS has ended and replaced by Term Funding which could be withdrawn shortly, the CEO of Shawbrooks bank indicated that he thought this was likely!!!

The pension changes will have an effect too but without the FLS then no one was buying.

Sentiment will no doubt have encourage people to go out and take on the HTB/FLS debt but I think the prices were more driven by BTLers getting access to FLS than FTBers piling in.

Take these props away and prices will plummet back to 2004 levels...we should see the follow through this time as there is nothing to slow down falls.

If Term funding is withdrawn it really is game on.

 

 

Edited by TheCountOfNowhere

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Prices too high, BTLers exiting, fewer foreign buyers.  Aren't there now restrictions on the Chinese taking money out?  But China is not exactly known for its low level of corruption so I guess plenty will still manage. 

Certainly for the past several months I have seen a lot of reductions in newbuild flats (one bed flats at £650k+ and evidently targeted at foreign buyers).  Prices of older properties not beloved of foreign investors are also slowly coming down in the areas I mostly keep an eye on - Sw15 and Sw17. 

Brexit may also be playing a part but in the areas and types of property I watch most I think it's largely BTL getting out and insane prices. 

I also keep an eye on certain parts of Oxford, since both daughters live there, and lately there are rather more BTLs inc. student HMOs coming on to the market.

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