Will Corona virus cause a house price crash?

[Pop321]

1 hour ago, msi said:

Without meaning to sound like the 4 Yorkshiremen, 2008 was pretty mild. Some of us know recessions in the 70s, 80s, and 90s that were much worse.  We are too far gone to avoid that now, so get ready for a rough ride.

There will be a lot of 'dead' economic activity that will die off and people are going to suffer. The effort needed to make any money flipping houses or BTL will disappear against actually working in a productive economy

 

I remember a scene with 4 sensible gentlemen making a lot of sense but not ‘4 Yorkshire men’. However, it might av summit to do wit fact I am from North Yorkshire and never noticed the accent or the intended humour ??

In terms of your general comments I concur. Early 90’s from a housing market crash were a beauty to behold. Like sinking sand it just wouldn’t stop. 2008 was not nearly so bad  

TPTB may stop that happening in real terms but they will be pushing against a tide and whilst shop window prices may remain stable ie 10/15% drop...some of the deals done off market will be mouth watering. 

I never bought anything that wasn’t 50% of comparables and I can see that happening again. Probably won’t be a Help to Buy new build or through an estate agents window though. 

[longgone]

22 minutes ago, Pop321 said:

I remember a scene with 4 sensible gentlemen making a lot of sense but not ‘4 Yorkshire men’. However, it might av summit to do wit fact I am from North Yorkshire and never noticed the accent or the intended humour ??

In terms of your general comments I concur. Early 90’s from a housing market crash were a beauty to behold. Like sinking sand it just wouldn’t stop. 2008 was not nearly so bad  

TPTB may stop that happening in real terms but they will be pushing against a tide and whilst shop window prices may remain stable ie 10/15% drop...some of the deals done off market will be mouth watering. 

I never bought anything that wasn’t 50% of comparables and I can see that happening again. Probably won’t be a Help to Buy new build or through an estate agents window though. 

i`m salivating with anticipation 

 

[winkie]

2 hours ago, Habeas Domus said:

I have been looking at newly listed rentals in Bath, which along with Edinburgh are the two biggest AirBnB cities.

Lots of new listings are obviously ex-AirBnB but they are mostly asking stupidly high rents i.e. they have taken the AirBnB weekly rate multiplied it by 5 and asking for that per month.

Sorry Richard, I dont think anyone is going to interested in a 2 bed flat at £3500 per month right now, even if it does have fluffy bed covers.

These people have to be mortgaged up to the neck and are caught between a rock and a hard place.

More to the point how is anyone going to get there....even if they do have the surplus funds to pay that much a month, however fluffy the bed covers are.....if they get there they will not be able to go out....if they can get out, there is nowhere open to go to.

[micawber]

2 hours ago, msi said:

Without meaning to sound like the 4 Yorkshiremen, 2008 was pretty mild. Some of us know recessions in the 70s, 80s, and 90s that were much worse.  We are too far gone to avoid that now, so get ready for a rough ride.

There will be a lot of 'dead' economic activity that will die off and people are going to suffer. The effort needed to make any money flipping houses or BTL will disappear against actually working in a productive economy

 

Time to dig out ....

[StuartMc]

2 hours ago, The Preacherman said:

I was just about to compose a similar post on the 3 D drivers.

Deaths - although tragic the number of deaths will not be significant enough (Think UK total will be 20,000 to 30,000 and many of those will have reduced life expectancy.)

Divorce - all lock down will do is possible pull forward a few divorces that would have happened anyway.

Debt - This will be a slow smoulder that puts sand in the wheels of the housing market. When people fall behind with payment schedules they usually struggle to get their head back above water. I don't see this as having an immediate impact but an impact in the next year or two and even then the banks will be reluctant to repo. Some types of investment led properties flats may be more exposed. (this involves a big assumption that we only loose a couple of months to lock down)

Therefore, a slow stagnation or deflation will happen in house prices rather than a sharp crash.

I think you're overplaying the "they would have happened anyway" angle meaning no impact.

People still wipe their bottoms the same amount, they just "brought forward" purchases of loo roll that they would have made in the months or years to come - and look what happened!

 

[simon2]

There will be also people moving up the ladder.

Someone I know has been trying to sell since 2018, for the reason being that they now have 2 kids and require an extra bedroom.

I don't know their equity position but obviously it may be uncomfortable living if they got stuck there. 

Can't see that this is that uncommon. The block of flats where I live is almost a function of price. Virtually every flat is a couple (because it would be too expensive to get it on your own), a very high percentage of these couples also appear to have kids (because it would be too expensive to get a family house in the vicinity). 

[Roman Roady]

2 hours ago, Pop321 said:

In terms of your general comments I concur. Early 90’s from a housing market crash were a beauty to behold. Like sinking sand it just wouldn’t stop. 2008 was not nearly so bad 

I agree and the 90's event shaped my thinking on housing ever since.

[Locke]

9 minutes ago, simon2 said:

Someone I know has been trying to sell since 2018, for the reason being that they now have 2 kids and require an extra bedroom.

There is absolutely nothing wrong with living together as a close family. People are taking up exorbitant amounts of space- another factor which has driven up house prices and is coming to an end.

I saw this about covidiots

https://www.bbc.co.uk/news/health-52124554

Quote

We were all social distancing when we met on the Thursday

What an absolute mong

Quote

Karen Mannering from Herne Bay in Kent is six months pregnant with her fourth child. The 39-year-old

*shudder*

 

[A17]

 

2 hours ago, Locke said:

  Quote

Karen Mannering from Herne Bay in Kent is six months pregnant with her fourth child. The 39-year-old

*shudder*

 

She's also a "Beauty Therapist". Tax credits?

[CityLAD88888]

11 hours ago, MuayThai18 said:

Long term lurker here, just made an account so I could post this:

 

My mate works in a hedgefund and his chief of economic research predicted last week a 10-15% drop in GDP and 35% drop in house prices. I was thrilled to hear about the house price drop but we are headed for a massive recession much much worse than 2008. I was a teen in 2008 and remember how hard things were - my dad (a joiner) was out of work for a long time. He and my mum aren't working right now and I'm not sure how long that will be for. I'm hoping my job should be fairly safe but I'm certain both my parents will be out work for the foreseeable future which ruins my plans of buying my own place since I'll be supporting them financially 

 

Good news is all property investors are going to lose a considerable amount of money and I'm jumping with joy. As an accountant I deal with them on a daily basis and most of them are gluttonous, entitled so and so's. They don't actually make that much money but act like bobby big ********. 

 

Most recent was a client that 'flipped a house' in the space of a year and made and net profit of 5 grand. She spent 180 on the house and 50 on renovations. I can't begin to imagine the headache she had for 50 grand of renovations all to make such a shit return on investment

Not sure if posted elsewhere but more 'buy-side' (Hedge funds, Asset Managers etc.) jitters https://channelnewsasia.com/news/business/blackrock--schroders-suspend-uk-real-estate-funds-12603206 . Canaries and coal mines spring to mind...

[markyh]

9 hours ago, Pop321 said:

I remember a scene with 4 sensible gentlemen making a lot of sense but not ‘4 Yorkshire men’. However, it might av summit to do wit fact I am from North Yorkshire and never noticed the accent or the intended humour ??

In terms of your general comments I concur. Early 90’s from a housing market crash were a beauty to behold. Like sinking sand it just wouldn’t stop. 2008 was not nearly so bad  

TPTB may stop that happening in real terms but they will be pushing against a tide and whilst shop window prices may remain stable ie 10/15% drop...some of the deals done off market will be mouth watering. 

I never bought anything that wasn’t 50% of comparables and I can see that happening again. Probably won’t be a Help to Buy new build or through an estate agents window though. 

I bought 1st house in 1996, 2nd in Q1 2009 (deal negotiated in Q3 2008) and 3rd in Q3 2016 (during the post brexit vote dip).  If you have the job, manage to be str before the drop and time the purchase you can really get good deals and big jumps. Gone from £55k 2 bed town semi to £600k  village detached on small private gated estate. 

[longgone]

34 minutes ago, markyh said:

I bought 1st house in 1996, 2nd in Q1 2009 (deal negotiated in Q3 2008) and 3rd in Q3 2016 (during the post brexit vote dip).  If you have the job, manage to be str before the drop and time the purchase you can really get good deals and big jumps. Gone from £55k 2 bed town semi to £600k  village detached on small private gated estate. 

Next year 400k detached ??

[markyh]

1 hour ago, longgone said:

Next year 400k detached ??

Probably, but once you are in you final house you don't really care to much, no plans to sell and still 16 years to clear the mortgage. So plenty of time for any price recovery.

[longgone]

2 minutes ago, markyh said:

Probably, but once you are in you final house you don't really care to much, no plans to sell and still 16 years to clear the mortgage. So plenty of time for any price recovery.

could be an opportunity to move up again ?

[markyh]

3 minutes ago, longgone said:

could be an opportunity to move up again ?

No need, as a boy from a council estate with early memories of a living in rented council 18th century workers terraced cottage with bare brick walls, only open fireplaces and no bathroom, outside toilet at the end of the Garden and a tin bath, Dad first, then mum and the kids at bath time, I’m very happy with my lot. Worked hard enough, married a hard worker and timed buying and selling right. Still the only one out of parents and 3 siblings who owns a house, everyone else is still in council or private rented. 
 

More interested in being mortgage free and ready for a drop in income retirement brings these days. Even with the wife’s final salary pension.

[Peter Hun]

Quote

What Italy’s property market can tell us about the future of UK house prices

Italy's coronavirus outbreak is two weeks ahead of Britain's and its property market is similar to ours. Here's what we can learn

Boom Boom according to the Torygraph.

https://www.telegraph.co.uk/property/abroad/italys-property-market-can-tell-us-future-uk-house-prices/

[scepticus]

I reckon it will definitely remove a good deal of price support from the housing market, mainly from economic effects rather than mortality (assuming the latter is in the 50K range) but I think it will be difficult for buyers to directly benefit from this in the short term since we'll get the same sellers strike we have seen before where they will hold on as long as they can. 

Also we need to see what effect it has on rental prices.

Medium term once sellers capitulate we should see significant effects. That said, the additional government borrowing is going to be highly inflationary in and of itself but that has to be set against a deflationary general backdrop. A drop in migration (initially due to brexit but maybe also economic/CV-19 effects too) would have weighed on real estate prices eventually anyway.

Its plausible to claim we've seen a top in house prices, but then again we have been here before, right?

 

[Dean]

44 minutes ago, scepticus said:

I reckon it will definitely remove a good deal of price support from the housing market, mainly from economic effects rather than mortality (assuming the latter is in the 50K range) but I think it will be difficult for buyers to directly benefit from this in the short term since we'll get the same sellers strike we have seen before where they will hold on as long as they can. 

Also we need to see what effect it has on rental prices.

Medium term once sellers capitulate we should see significant effects. That said, the additional government borrowing is going to be highly inflationary in and of itself but that has to be set against a deflationary general backdrop. A drop in migration (initially due to brexit but maybe also economic/CV-19 effects too) would have weighed on real estate prices eventually anyway.

Its plausible to claim we've seen a top in house prices, but then again we have been here before, right?

 

I remain hopeful.

We technically sold our place (offer accepted, solicitors almost instructed) the week before the market shut down. I give it a minus zero chance of completion now ?.

Even back at that (normal) time, the biggest challenge we had was communicating to the estate agents that we actually want to sell and that we were not concerned about the absolute price (we eventually sold at I believe a twenty percent ish discount from imaginary “market” value, which was our choice because most of the higher offers had no chance of securing the mortgage ).

In our situation, which is admittedly a fortunate one, we have two decades of savings and we can happily reduce our price technically by whatever percentage the market falls by.....but would still need somewhere to live, either here or overseas, sadly three adults in a two bedroom flat is not a long term option. (adjoining bedrooms if you catch my drift ?).

A crash for us would be great news even as sellers, because to us a home is only worth one home. 

However your first point remains my fear, just how long could the stagnation be ? How much more of a life does everyone have to spend waiting for people to wise up, people don’t even believe the horrific pandemic is real enough to not pop to Asda every five minutes, they are unlikely to accept that there house is now worth fifty percent less.

The new reality has to sink in with deluded sellers (believe me they are beyond deluded) and I have no idea still, what exactly will be the catalyst to make people “need” to sell, Council tax is low, utility bills are low, interest rates are low, there are mortgage payment holidays left and right, there are no punitive measures not to just hang on to a house, especially as we may see savings obliterated/raided by cash desperate Tories.

I once implemented a collections system for a good sized finance organization and found out during that process, that recovery of debts is more often than not more expensive than the debt itself is worth once you factor in staff costs and legal fees, so many finance companies will be reluctant to do anything other than payment holidays, payment plans and debt extensions and will eventually write off the debt for the low to mid tier of most of their book rather than realize the loss.

Before this horrible event, all that was for sale with willing sellers in my area was the absolute crap places, the rest was all just insane kite flying delusion, I worry that there will be great reductions to be had, but they will all be on crap flats, dodgy leaseholds and crumbling places needing tons of work, with everyone else sitting it out so basically the same market as before with a lower nominal value.

 

 

 

[Si1]

49 minutes ago, Dean said:

.

Before this horrible event, all that was for sale with willing sellers in my area was the absolute crap places, the rest was all just insane kite flying delusion, I worry that there will be great reductions to be had, but they will all be on crap flats, dodgy leaseholds and crumbling places needing tons of work, with everyone else sitting it out so basically the same market as before with a lower nominal value.

 

 

 

I'm pretty sure that's always happened in house price crashes in some form, that more innately desirable properties always held their value better - I believe.

[DonJop12]

Ready to top up the Lifetime ISA on Monday. Looking forward to gaining another £1,000 of taxpayers money. Should help if zoopla is flooded with probate sales once this is all over. ?   

[Confusion of VIs]

On 29/03/2020 at 09:45, Si1 said:

No you're so wrong it's ludicrous.

2003-4 was pretty expensive. 1996-7 was the time to buy, I had a next door neighbour moved in in early 1997, at the time we thought he was nuts buying as nothing was selling but he sold up in about 2003 tripled his money and semi retired to Spain at age 32.   

Hindsight is a wonderful thing.

Edited April 3, 2020 by Confusion of VIs

[Safe As Houses]

Would love some advice. I have been saving up for a few years because my understanding was that Brexit would likely lead to a house price crash. Now, with conronavirus that seem inevitable to me.

I earn good money - £500 per day - but as a contractor who knows how long that will last. My contract was renewed this week but is only until August.  I already have one mortgage (I have a £100,000 mortgage on a £400,000 property) - I don't want another one. 

 I have saved up £300,000 and if there's a 20-30% drop in house I am hoping I'll be able to buy the type of property that was worth £400,000 before coronavirus, outright with no mortgage, I will rent out the property I currently live in. 

I plan to jump fairly soon as the freeze is over - before inflation swallows up my money. Question is - am I mad to buy another property when I could be paying off my mortgage? It's only £490 per month so I thought it would be better to buy another place as prices will never be as low as they're going to be again. (However low that is -I appreciate that they might only reduce by 10% but I'lll probably not see that again in my lifetime given I'm 40.)

Thoughts?

 

 

[bobhope]

Haven't posted for quite a few years, but need a sense check - lots of assumptions below.

Positives for HPC.

1) Deaths

•   looking at the yearly stats, approximately 700k people die per year. 20k people die per year per year group, aged 70-85, so approx 300k -ish for this cohort.
• If we are looking at a peak of 1k extra deaths day per day for 70-85 year olds, that means an extra 360k per year (so about double the normal number for this cohort) - huge downward pressure at the top end of the market.

2) Debt/Destitution

• Already almost 1m extra Universal Credit applicants, assuming more to come. Recession is baked in.

3) Emigration /  "demand for housing"

• Take a look at https://www.flightradar24.com/data/airports/lhr/departures  There are barely any flights of course. However, which destination has the most flights still running? Answer: Warsaw.  It looks like a large number of East Europeans are returning home. Less demand for housing overall surely?

 

Negatives for HPC:

• QE - of course
• New TFS / FLS schemes
• Some new hair-brained HTB scheme

 

Short-term sounds like massive downward pressure on house prices, before Weimar republic kicks in.

 

 

 

 

 

[Trump Invective]

2 minutes ago, bobhope said:

Haven't posted for quite a few years, but need a sense check - lots of assumptions below.

Positives for HPC.

1) Deaths

•   looking at the yearly stats, approximately 700k people die per year. 20k people die per year per year group, aged 70-85, so approx 300k -ish for this cohort.
• If we are looking at a peak of 1k extra deaths day per day for 70-85 year olds, that means an extra 360k per year (so about double the normal number for this cohort) - huge downward pressure at the top end of the market.

2) Debt/Destitution

• Already almost 1m extra Universal Credit applicants, assuming more to come. Recession is baked in.

3) Emigration /  "demand for housing"

• Take a look at https://www.flightradar24.com/data/airports/lhr/departures  There are barely any flights of course. However, which destination has the most flights still running? Answer: Warsaw.  It looks like a large number of East Europeans are returning home. Less demand for housing overall surely?

 

Negatives for HPC:

• QE - of course
• New TFS / FLS schemes
• Some new hair-brained HTB scheme

 

Short-term sounds like massive downward pressure on house prices, before Weimar republic kicks in.

 

 

 

 

 

Absolutely agree. I'm sure many vested interests from the government down are balancing the pros and cons from their point of view. A crash absolutely can happen. Will it be allowed to happen? Depends on those with skin in the game and the power to do something about it.

[MARTINX9]

1 hour ago, bobhope said:

Haven't posted for quite a few years, but need a sense check - lots of assumptions below.

Positives for HPC.

1) Deaths

•   looking at the yearly stats, approximately 700k people die per year. 20k people die per year per year group, aged 70-85, so approx 300k -ish for this cohort.
• If we are looking at a peak of 1k extra deaths day per day for 70-85 year olds, that means an extra 360k per year (so about double the normal number for this cohort) - huge downward pressure at the top end of the market.

2) Debt/Destitution

• Already almost 1m extra Universal Credit applicants, assuming more to come. Recession is baked in.

3) Emigration /  "demand for housing"

• Take a look at https://www.flightradar24.com/data/airports/lhr/departures  There are barely any flights of course. However, which destination has the most flights still running? Answer: Warsaw.  It looks like a large number of East Europeans are returning home. Less demand for housing overall surely?

 

Negatives for HPC:

• QE - of course
• New TFS / FLS schemes
• Some new hair-brained HTB scheme

 

Short-term sounds like massive downward pressure on house prices, before Weimar republic kicks in.

 

 

 

 

 

Rather brutal presentation!

Of course it’s not going to be 1000 old people over 70 dying daily for weeks and months - many dying are much younger and the deaths will tail off as we get into summer but perhaps rise again in the autumn.

Agree about not being clear about where the cash is coming from to maintain the house prices. But properties are still being listed daily even now at the same pre crisis prices.

Perhaps estate and letting agents are busy celebrating their business rates holiday to March 2021 - a concession announced last week following special pleading while solicitors, accountants and other high street office businesses still have to pay full busineses rates. Shocking frankly!