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reddog

Will Corona virus cause a house price crash?

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I really, really want to buy a house, and I'm willing to work a few (3ish) years in order to buy one. However, not at these prices and not in these circumstances, and certainly with as little debt as possible. Maybe even none if I'm lucky.

I'm patient and can wait 🙂 Can the sellers?

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Barclays is first to withdraw almost all mortgage products above 60% LTV, I suspect others will follow due to the state of the economy, people will need to some how stump up a 40% deposit for a house now, should have a major effect on prices. 

 

https://www.financialreporter.co.uk/mortgages/barclays-withdraws-almost-all-mortgage-products-above-60-ltv.html

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There seem to be an awful lot of houses suddenly listed on Zoopla for sale in my area this past 24 hours. Not sure whether it's panic selling or the tail end of normal activity before the big freeze, but one or two of them already seem priced lower than I'd expect. I'm not gonna lie, but I feel some pure excitement lurking in me. 

 

Edited by Orb

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34 minutes ago, Jimmyjammy001 said:

Barclays is first to withdraw almost all mortgage products above 60% LTV, I suspect others will follow due to the state of the economy, people will need to some how stump up a 40% deposit for a house now, should have a major effect on prices. 

 

https://www.financialreporter.co.uk/mortgages/barclays-withdraws-almost-all-mortgage-products-above-60-ltv.html

Banks acting like this they will bring a self fulfilling prophecy and the fall they actually fear.

Probably illustrates how much they are expecting the fall because they must know this is the case. 
 

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Ha, I actually posted on that Mumsnet thread someone linked earlier - I'm the one who's pulling out of a flat purchase. I am really hoping prices lower because of this, because they are crazy.

It's absolutely nuts that 2 people on good salaries who each save half their salary on a good month and live in a small flat, drive an old banger and have SIM-only contracts...have to save for several years......for 15% of a 2-bed flat. And then somehow expect to make money on it! It can't go on forever - what next, a million pounds for a studio?

Going for my daily lockdown exercise has made me realise how much I'd really like a garden, so hopefully after this is over we might be able to actually afford one, not in the council estate part of town.

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Potential buyers on here, what position are you in to get a bargain? 100% cash purchase or will you need a (40% deposit) mortgage?

 

Or how much do you need local prices to drop to be able to buy cash?

Edited by PeanutButter

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13 minutes ago, PeanutButter said:

Or how much do you need local prices to drop to be able to buy cash?

50% to grab a terraced or cheaper semi. 

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43 minutes ago, PeanutButter said:

Potential buyers on here, what position are you in to get a bargain? 100% cash purchase or will you need a (40% deposit) mortgage?

 

Or how much do you need local prices to drop to be able to buy cash?

Been advised I Can borrow some money to buy if something good comes up.  Any type of 2-3 bed house for 2-300 would be good.

Hopefully when I'm back working will take a fixed mortgage for as long as possible.

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Before the coronavirus I was of the opinion that if prices were 20% lower I would get involved and actively get viewings with a view to getting a bit more off under the asking price. Obviously a no-go back then so only have been bookmarking places in case they did fall.

TBH I am not still not sure we will get a crash like that quickly, and probably this might take years by the stealth method of flat nominal prices being eroded by inflation. 

Forced sellers may be interesting but I can see the government propping things up with more money should this play out longer or worse than expected.

Still, let's hope for some people waking up and smelling the coffee such as this:

https://www.rightmove.co.uk/property-for-sale/property-64679482.html

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1 hour ago, Pop321 said:

Banks acting like this they will bring a self fulfilling prophecy and the fall they actually fear.

Probably illustrates how much they are expecting the fall because they must know this is the case. 
 

Just read the article and Barclays state this is a temporary measure. However, how many temporary measures tend to become semi-permanent? Even a short term credit squeeze could snowball as you suggest.

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29 minutes ago, shavedchimp said:

But this refers to banks lending to firms, not banks lending to house buyers. Currently I'd say the former is more urgent and justifiable

Last time the money given to banks ended up as cheap mortgages, exactly the same will happen this time.

Banks see lending to SMEs as too risky.

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11 hours ago, PeanutButter said:

Potential buyers on here, what position are you in to get a bargain? 100% cash purchase or will you need a (40% deposit) mortgage?

 

Or how much do you need local prices to drop to be able to buy cash?

If any drop brought the average price to 3 or 3.5 average wage, then I could get something (flat, 2nd hand new-build ratcage) for cash, or something better (a decent 3 bed semi or something like that) for cash and a 25-40% mortgage. Back of fag packet calculations but nothing too extravagent.

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11 hours ago, PeanutButter said:

Potential buyers on here, what position are you in to get a bargain? 100% cash purchase or will you need a (40% deposit) mortgage?

 

Or how much do you need local prices to drop to be able to buy cash?

20% drop and I can get my forever house cash. I would feel like the biggest tool on the planet if I bought now. 

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Re Barclays - this is interesting.

Banks tendency with free central bank money is to push it into housing. However, given the demand to support SMEs, I can see Banks being 'forced' to support SMEs. They would then hedge the risk by reducing the domestic mortgage portfolio.

 

As said before, temporary measures have a pattern to become permanent and more widespread.

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With massive unemployment and a credit collapse looming I think house prices will collapse by much more than 20%. A 20% fall would do little more than knock the froth off.

The 1990s are a long time ago now. Many do not remember being offered houses for a few hundred pounds. Rows of terraces in Manchester were being marketed for a few pounds at one point. And nobody wanted them. I can remember seeing three bed semis in Didsbury for sale at 70k and thinking it was expensive.

Sounds unbelievable, I know, but that's how it was. Twenty years of bubble have distorted people's perception of a house's worth massively. If the credit bubble bursts, a lot of people are made unemployed and cannot service their mortgages and some people sadly die I think houses will return to their actual, non-bubble prices.

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51 minutes ago, Biggus said:

 

Sounds unbelievable, I know, but that's how it was. Twenty years of bubble have distorted people's perception of a house's worth massively. If the credit bubble bursts, a lot of people are made unemployed and cannot service their mortgages and some people sadly die I think houses will return to their actual, non-bubble prices.

Yes, as I may have mentioned here before, a lot of this is simply a mass psychosis. In the 1890's the Australian house price bubble burst, and the next time Australian housing rose at above inflation was in the late 1960's. If you were born in Melbourne or Sydney in the late 1880's and died in the early 1960's- an excellent lifespan then- you would have lived your entire life without a living memory of house prices rising in real terms. 

I remember my father telling me when he migrated to Australia in the mid 1950's that it simply was accepted that Australian house prices rose at no more than the annual CPI and often less. 

That is what I would hope would happen now, in large parts of the UK like London, Oxford, Cambridge, but also around the world in Vancouver, Toronto, Sydney, Auckland, Melbourne, and Hong Kong. 

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I've received an e-mail from HSBC offering me a mortgage payment holidays of up to 3 months, with no risk to my credit rating.  I don't have a mortgage.

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1 hour ago, Will! said:

I've received an e-mail from HSBC offering me a mortgage payment holidays of up to 3 months, with no risk to my credit rating.  I don't have a mortgage.

Sounds very generous. I wonder if they will offer it to customers with mortgages too 😆😆

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On 25/03/2020 at 21:35, simon2 said:

Before the coronavirus I was of the opinion that if prices were 20% lower I would get involved and actively get viewings with a view to getting a bit more off under the asking price. Obviously a no-go back then so only have been bookmarking places in case they did fall.

TBH I am not still not sure we will get a crash like that quickly, and probably this might take years by the stealth method of flat nominal prices being eroded by inflation. 

Forced sellers may be interesting but I can see the government propping things up with more money should this play out longer or worse than expected.

Still, let's hope for some people waking up and smelling the coffee such as this:

https://www.rightmove.co.uk/property-for-sale/property-64679482.html

UK credit rating has been downgraded and they have barely started, i can see them losing control financially and socially pretty quickly if this escalates.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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