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Will Corona virus cause a house price crash?


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What's going to happen to the housing market?

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Kevin Peachey

Personal finance reporter

What's going to happen to the housing market when the pandemic finishes?

I'm afraid my crystal ball has smashed. There's no point making forecasts at the moment.

The number of sales has dropped off a cliff. Lots of sales were cancelled. The peak of that was on 23 March - the day the restrictions on movement were announced.

What's difficult to tell is if there's a lot less activity, how that translates to prices.

There are different views from different people - get 10 economists in a room, you'll get 11 answers.

There are people saying prices will fall, there are others saying because there's so much government support in place it could bounce back quite quickly.

Once a Kevin always a Kevin

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On 30/04/2020 at 12:41, crumblingcon said:

It really depends on perspective, with this now well used saying which comes across to me like if you remove the parasite you will kill the host as well. The argument usually made, and usually by tired old boomers past their prime, if they truly ever had one, is that those with money, housing and most importantly power try to frighten the young stronger left out workers with the argument that yes they might be just dining on old stale bread now as those that have it all  sit on a huge food larder,  but you won't even have stale bread if you hurt us boomers. But if everything now crashes the young have the energy, drive and aspirational  energy to now grind them  out of existence as they hark back to lost old times when they held control.

Yes, the old "be careful what you wish for, if house prices fall significantly the economy will crash so hard buying a house will be the last thing on your mind!" threat shows a complete failure to understand what it's like to be priced out. Guess what happens if you don't let people have a slice of the pie? They become quite happy to see it fall and smash on the floor, at least it means they won't be the only ones without pie.

Edited by Dorkins
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18 hours ago, Voice of Doom said:

Danny Dorling, Professor of Geography at Oxford, has said this:

Yet it’s estimated that a third of FTSE-100 companies have cut their chief executive’s pay as a result of the economic shutdown; anyone whose wealth is held in stocks and shares has seen it collapse in recent months; and house prices are falling, and are likely to fall the most where they were highest.

https://www.theguardian.com/commentisfree/2020/apr/30/captain-toms-birthday-100-years-nhs-crisis

Stalwarts of HPC will know the name. Those who are new: he's written and spoken extensively about house prices. He knows his onions.

I thought you meant Captain Tom Moore for a second given the headline for the article. Perhaps they should put him in charge of solving the housing crisis - he couldn't do a worse job than 5 homes Jenrick even if he just paced up and down his garden for another few months!

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1 hour ago, Dorkins said:

Yes, the old "be careful what you wish for, if house prices fall significantly the economy will crash so hard buying a house will be the last thing on your mind!" threat shows a complete failure to understand what it's like to be priced out. Guess what happens if you don't let people have a slice of the pie? They become quite happy to see it fall and smash on the floor, at least it means they won't be the only ones without pie.

Very true.

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There will be a point where this will all come to an end or at worst be assimilated into our lives as we move on.

But the bit I am eager to hear about is how the bill is going to be paid, and even if it ended tomorrow it would huge. I am just waiting to hear those certain words that I know are coming

"WE ARE ALL IN THIS TOGETHER"

Very subjective sentence, and the outcome could be fireworks like we have never seen before, yes and that includes the financial crisis 2007/08

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5 hours ago, Dorkins said:

Guess what happens if you don't let people have a slice of the pie? They become quite happy to see it fall and smash on the floor, at least it means they won't be the only ones without pie.

happy to leave the pie in the oven until its burnt to a cinder and set the house on fire. They can have my slice and whack it in the oven too if it heats up quicker.

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@MissLemon18
We were until yesterday in the same position as you with a few lose ends to tie up but our buyers announced yesterday they are pulling out due to the fact they offered a few months ago and are uncertain about the market. They only way they would continue is if we took 20% off which is not reasonable so I think it is game over for us

https://www.mumsnet.com/Talk/property/3736982-sellers-buyers-roll-call-7?pg=22

 

its starting..

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'house prices always go back up eventually though'

This is all people have known for 20 years!

The new reality is that the bubble has burst and we're in a bear market for property. The £ is also falling due to the national debt and deficits so the real cost of houses  will significantly fall over the next 10 years...

 

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Ask yourself, how is a particular property valued?.....the area, availability of jobs, well paying jobs and jobs with prospects, a place where there are large numbers of people with surplus income to spend on extras such as going to the theatre or eating out......or would it be an area with fewer density of people, cleaner air, property with more space, larger gardens, park anywhere, natural wide outdoor spaces full of nature, slower pace of life.......one type of property might be worth more at certain times, another might be worth more during other times..... sometimes we see and value things differently.....Do people buy things to benefit themselves or to benefit their pocket......or both.?

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Apart from a prediction that house prices will fall post virus, that's something that is now written in without fail IMO, but give me an exact scenario of what is going to happen and how much prices will fall and at best I will take your prediction with a pinch of salt. But for all the "we are in this together" talk and action that is coming our way that means in code we want to save debt junkies and over leveraged property owners and investors and then will wrap them in cotton wool as much as possible.

What difficulties can they not hide post virus.

1. Unemployment.. averaged 3.8% for ages, what now, 10% +?

2. Rebalancing the finances.. tax, just stick in on the national debt?

3. World trade.. lack of

4. Strain on rental.. EU workers return home, rent costs now too high?

5. One initial huge  dumping of property for sale.. maybe continuous

6. Social and political unrest

 

I can think of so much more, does anyone have anything they will be focusing on? Social unrest is the misnomer with me. Already I am sensing the anger of those who were zero hours contracted compared to those on furlough. Not everyone is in a rush for this lockdown to end, 80% wages for some with no work expenses and nothing to spend it on, with a big garden and living in a pretty location, this is mega relaxing holiday for many that many badly needed as do we all, and people many of which have their own homes which will then be protected by people who were zero hour contracted and renting, Mmmm . I can see possible flash points in so many other areas.

When we go into downturns, recession and depressions one thing leads to another that tilts so and so that dragged X down that actually made Y grow that caused the unexpected Z to..........

In short no manic spinning of plates is going to get us out of having pain coming our way post virus

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30 minutes ago, hurlerontheditch said:

I don't look at Mumsnet ever, but I can imagine the replies and consensus revolves around the injustice and how unreasonable or dishonest these looking for a reduction are. But do any of them concede that there are now huge risks on the down side coming in the next few months and understand why some might want a cushion in the way of a reduction?

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7 minutes ago, crumblingcon said:

Apart from a prediction that house prices will fall post virus, that's something that is now written in without fail IMO, but give me an exact scenario of what is going to happen and how much prices will fall and at best I will take your prediction with a pinch of salt. But for all the "we are in this together" talk and action that is coming our way that means in code we want to save debt junkies and over leveraged property owners and investors and then will wrap them in cotton wool as much as possible.

What difficulties can they not hide post virus.

1. Unemployment.. averaged 3.8% for ages, what now, 10% +?

2. Rebalancing the finances.. tax, just stick in on the national debt?

3. World trade.. lack of

4. Strain on rental.. EU workers return home, rent costs now too high?

5. One initial huge  dumping of property for sale.. maybe continuous

6. Social and political unrest

 

I can think of so much more, does anyone have anything they will be focusing on? Social unrest is the misnomer with me. Already I am sensing the anger of those who were zero hours contracted compared to those on furlough. Not everyone is in a rush for this lockdown to end, 80% wages for some with no work expenses and nothing to spend it on, with a big garden and living in a pretty location, this is mega relaxing holiday for many that many badly needed as do we all, and people many of which have their own homes which will then be protected by people who were zero hour contracted and renting, Mmmm . I can see possible flash points in so many other areas.

When we go into downturns, recession and depressions one thing leads to another that tilts so and so that dragged X down that actually made Y grow that caused the unexpected Z to..........

In short no manic spinning of plates is going to get us out of having pain coming our way post virus

Fear you're right. You missed off one other negative factor: Foreign investors (particularly from the far East) are no longer going to see London (and other UK cities) as safe places to invest, if we become known as a high incidence plague carrier. Not saying we're quite at that stage yet, let's hope the govt scientists get this sorted out right. Also, income from tourist lets (HomeAway, Airbnb etc) have slumped bigtime. Otoh the amount of cash pumping may get the economy moving?  Interesting times.

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53 minutes ago, crumblingcon said:

I don't look at Mumsnet ever, but I can imagine the replies and consensus revolves around the injustice and how unreasonable or dishonest these looking for a reduction are. But do any of them concede that there are now huge risks on the down side coming in the next few months and understand why some might want a cushion in the way of a reduction?

I see there is someone hoping to get a 10% saving on a flat which they estimate will save them £100k. £1m for flat - not all those young mums are hard up.

Odd thing is if you had £1m why not  buy a house and give your kids a garden?

I expect some of those mums on there will be renting and hoping to buy - so some of them seeking 20% off will presumably be the p**s takers they despise!

Edited by MARTINX9
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36 minutes ago, Trampa501 said:

Fear you're right. You missed off one other negative factor: Foreign investors (particularly from the far East) are no longer going to see London (and other UK cities) as safe places to invest, if we become known as a high incidence plague carrier. Not saying we're quite at that stage yet, let's hope the govt scientists get this sorted out right. Also, income from tourist lets (HomeAway, Airbnb etc) have slumped bigtime. Otoh the amount of cash pumping may get the economy moving?  Interesting times.

Travel, Airbnb, incoming tourism I have that under unemployment, along with all the thousands of various industries that will be effected for the next 12 months at least. If within a year I could get my business to 70% of what it was pre virus I will be over the moon, baring in mind I have been preparing for this for years now, I could taken a 70% plus hit on my earnings and still pay the bills and have a beer or two in the evening.

I am finding this shocking that so many businesses could barely handle a small hit. Another thing that I am watching is the growing unemployment rate, those that have been working non stop for decades for example and paid into the system struggling to get anything because the sizable lifestyle welfare  section of our society have emptied the pot and left nothing, money will also be needed for that and I can see government getting more ruthless to who and what it pays out, more social anger.

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2 hours ago, Trampa501 said:

Fear you're right. You missed off one other negative factor: Foreign investors (particularly from the far East) are no longer going to see London (and other UK cities) as safe places to invest, if we become known as a high incidence plague carrier. Not saying we're quite at that stage yet, let's hope the govt scientists get this sorted out right. Also, income from tourist lets (HomeAway, Airbnb etc) have slumped bigtime. Otoh the amount of cash pumping may get the economy moving?  Interesting times.

If we decide we no longer trust globalisation, why would others trust to invest in us.....imo we have looked after the interests of rich others better than the clever of our own....we have lacked investing in our own people because we have been too busy following the easy money all around the globe......has that made us wealthier as a nation? ;)

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1 hour ago, winkie said:

If we decide we no longer trust globalisation, why would others trust to invest in us.....imo we have looked after the interests of rich others better than the clever of our own....we have lacked investing in our own people because we have been too busy following the easy money all around the globe......has that made us wealthier as a nation? ;)

It's eaten away at me for too long some of the BS we have been fed via the obliging media about globalisation. How we can lose our jobs here as they are transferred to the far east  and told "that's a good thing" and then also have cheap labour imported into the UK and also be brain washed into thinking "that's a good thing". And then the labour that enters the UK need housing, and lets face it the imported labour entering the UK are going to be no threat to rural communities where the richest live, they take housing where those now competing for jobs with the cheap labour used to live and who are also losing their jobs to China, but of course "it's a good thing".

I swear, I have no idea how people have not been rioting in the streets yet.

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1 hour ago, crumblingcon said:

It's eaten away at me for too long some of the BS we have been fed via the obliging media about globalisation. How we can lose our jobs here as they are transferred to the far east  and told "that's a good thing" and then also have cheap labour imported into the UK and also be brain washed into thinking "that's a good thing". And then the labour that enters the UK need housing, and lets face it the imported labour entering the UK are going to be no threat to rural communities where the richest live, they take housing where those now competing for jobs with the cheap labour used to live and who are also losing their jobs to China, but of course "it's a good thing".

I swear, I have no idea how people have not been rioting in the streets yet.

Perhaps they are ok with this.

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1 hour ago, crumblingcon said:

It's eaten away at me for too long some of the BS we have been fed via the obliging media about globalisation. How we can lose our jobs here as they are transferred to the far east  and told "that's a good thing" and then also have cheap labour imported into the UK and also be brain washed into thinking "that's a good thing". And then the labour that enters the UK need housing, and lets face it the imported labour entering the UK are going to be no threat to rural communities where the richest live, they take housing where those now competing for jobs with the cheap labour used to live and who are also losing their jobs to China, but of course "it's a good thing".

I swear, I have no idea how people have not been rioting in the streets yet.

The richest do not live in rural communities....a few comfortably off at the autumn of their lives maybe, the last of the final salary set maybe.....the second homes for the better off, maybe.....i have nothing against globalisation as long as those that can, pay the price in taxes, a price to live or own property that enhances their wealth in a place they would rather invest in than their own home.....how can it be that they pay less and gain more than those whose home it is and has always been, when those that work the hardest pay the most....whilst others that have the capital however they gained it good or bad pay the least.....just saying.;) 

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1 hour ago, crumblingcon said:

It's eaten away at me for too long some of the BS we have been fed via the obliging media about globalisation. How we can lose our jobs here as they are transferred to the far east  and told "that's a good thing" and then also have cheap labour imported into the UK and also be brain washed into thinking "that's a good thing". And then the labour that enters the UK need housing, and lets face it the imported labour entering the UK are going to be no threat to rural communities where the richest live, they take housing where those now competing for jobs with the cheap labour used to live and who are also losing their jobs to China, but of course "it's a good thing".

I swear, I have no idea how people have not been rioting in the streets yet.

What the last few weeks have shown is the public are remarkably compliant and will do what they are told for the 'better good'.

Problem is they are now so scared of the virus very few want to return to work, use public transport and in many cases even leave the house. Beyond of course heading out to crowded supermarkets to buy food  where social distancing in the aisles with shelf stackers etc is almost impossible. But you can't of course sit on a park bench 20 metres from another person as its too dangerous?!

Edited by MARTINX9
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