Telegraph shows the mechanics of 10-20% drops in motion already.

[HovelinHove]

I think this article is worth its own thread as it is absolutely rammed with choice Bear tidbits (It is behind the paywall, but read by the very people who are most likely to be at the top of chains). Everyone currently in a chain who has not exchanged contracts is now madly renegotiating. The quote I have pulled out is the most important though...this will ripple from the bottom to the top of each chain across the nation. Each purchaser/seller will either need to negotiate a similar percentage discount or borrow more to get the next house up, or the chain will collapse. People at the top either agree the 10-15% haircut, or pull out...they are the Ultimate decision makers as they only ones who will lose out financially from a 10% reduction across the rest of the chain...everyone else will be richer in the long term by a 10% reduction. It will depend on circumstances whether the top of the chain do or not agree a discount. There are three types I can think of.

1.If they are boomers looking to downsize...It will depend on health, financial and family reasons. Their children may live in a different part of the country, they may not be able to tend their gardens or climb stairs or they may have “unlocked their equity” and wasted it on cruise ships. They may think the market dip will only last a year and say no dice, or they may decide this could last for years and they are better off cashing in now rather than later.

2. Forced sellers...need to move for work, divorce or loss of job/business. They will take what they can get.

3. Probate. They will take what they can get.

Forget all the noise from the rampers in the immediate term...this is sudden shock to the system, and I believe we will see a very swift correction come the autumn, 5-10% drops by October, which will then feed into the next 10% by January or February. It is baked in if the Telegraph are saying 20% drops in my view. Not sure they ever said anything like that in 2008. These are people who are already emotionally invested in buying, those on the sidelines like us will be able to get even better discounts.

 

“Another first-time buyer who asked not to be named had agreed an offer of £358,000 on a London flat that was initially listed for £365,000. After lockdown, he dropped his price by a further £33,000. “Buying at an offer that was set before the biggest earnings shock in history is not on,” he said. The seller is now considering £335,000, on the condition that the discount gets passed up the nine-property chain.

[neon tetra]

Link...?

[regprentice]

23 minutes ago, neon tetra said:

Link...?

https://www.telegraph.co.uk/property/uk/buyer-demanding-20pc-house-price-cut-property-market-reopens/

[regprentice]

48 minutes ago, HovelinHove said:

2. Forced sellers...need to move for work, divorce or loss of job/business. They will take what they can get.

I think a lot in this group will try to let first. Its been the silver lining for a lot of people over the last decade, have a problem, move, get consent to let on the old mortgage at personal, not commercial rates, then marvel at your business acumen at becoming an 'accidental' landlord. 

[neon tetra]

2 minutes ago, regprentice said:

I think a lot in this group will try to let first. Its been the silver lining for a lot of people over the last decade, have a problem, move, get consent to let on the old mortgage at personal, not commercial rates, then marvel at your business acumen at becoming an 'accidental' landlord. 

But don’t forget the punitive extra stamp duty for then purchasing a second home.

[PeanutButter]

The seller is now considering £335,000, on the condition that the discount gets passed up the nine-property chain.

 

? There’s no way that chain ain’t breaking. Nine sets of people who’ve been told their houses are worf x - for sure there’ll be one ‘I’d rather not sell and wait it out’ clown.

Next question is how long this will last. This is HPC not House Price Crash Forever Forum, right? 

Or do all you cash buyers not mind a prolonged fall? Stick or twist?

[Burbujista]

15 minutes ago, PeanutButter said:

The seller is now considering £335,000, on the condition that the discount gets passed up the nine-property chain.

 

? There’s no way that chain ain’t breaking. Nine sets of people who’ve been told their houses are worf x - for sure there’ll be one ‘I’d rather not sell and wait it out’ clown.

Next question is how long this will last. This is HPC not House Price Crash Forever Forum, right? 

Or do all you cash buyers not mind a prolonged fall? Stick or twist?

Personally, I believe that a big shake is needed to break the culture of “property never goes down”, getting the market into the undervalued territory for a period o time to then return to reasonable values (well below current real values). In other words. Let’s have a nominal 40%+ shock in two years, 2-3 years of stagnation and then increases with inflation. Some years slightly more, some years slightly less, but still affordable to young people.

The big shock would allow me to satisfy my personal needs, getting a place to leave at a reasonable price. But if with “Forever House Price Crash“ you mean if I am fundamentally against housing bubbles, my answer is YES. Nobody should suffer the torture of not being able to afford the average house if they have income that is better than the average for the area they want to live in.

For anyone who is tempted to say that what I just wrote can’t happen... I will just tell you that that’s what they used to say to me 12 years ago when I was living in Spain, and it worked out exactly as planned. I am waiting for the same here in England, which is much more important to me, as I have always wanted to own my main home here.

[Simhadri]

4 minutes ago, Burbujista said:

For anyone who is tempted to say that what I just wrote can’t happen... I will just tell you that that’s what they used to say to me 12 years ago when I was living in Spain, and it worked out exactly as planned.

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

[highcontrast]

3 minutes ago, Simhadri said:

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

Eh? What's military prowess go to do with the housing market?

Edited May 18, 2020 by highcontrast

[slawek]

3 minutes ago, Simhadri said:

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

?

[Rian1988]

Full text of article anyone?

[blackhole]

22 minutes ago, Simhadri said:

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

Gosh that's a funny post.  If the UK economy was so so strong etc, why are buyers now demanding a 20% drop immediately?  Surely it would be pre-COVID pricing + % more.

(if it was so strong why has there been gazillion props for property prices.... )

 

[PeanutButter]

Never underestimate UK...ability to shoot ourselves in the foot while shafting the poor and bootlicking the wealthy.

[PeanutButter]

34 minutes ago, Burbujista said:

Personally, I believe that a big shake is needed to break the culture of “property never goes down”, getting the market into the undervalued territory for a period o time to then return to reasonable values (well below current real values). In other words. Let’s have a nominal 40%+ shock in two years, 2-3 years of stagnation and then increases with inflation. Some years slightly more, some years slightly less, but still affordable to young people.

The big shock would allow me to satisfy my personal needs, getting a place to leave at a reasonable price. But if with “Forever House Price Crash“ you mean if I am fundamentally against housing bubbles, my answer is YES. Nobody should suffer the torture of not being able to afford the average house if they have income that is better than the average for the area they want to live in.

For anyone who is tempted to say that what I just wrote can’t happen... I will just tell you that that’s what they used to say to me 12 years ago when I was living in Spain, and it worked out exactly as planned. I am waiting for the same here in England, which is much more important to me, as I have always wanted to own my main home here.

So you don’t want a 50% fall, or 60+? Why not?

 

[Locke]

41 minutes ago, Simhadri said:

Never underestimate UK.

Rather, never get stuck in a land war with Russia in the Winter.

Edited May 18, 2020 by Locke

[Fromage Frais]

57 minutes ago, Simhadri said:

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

Is that you Mark Francois ? ?

The only difference is that Spain did not have control of its currency and thus could not trash it to try and save its housing market.

House prices bubbles are not a sign of strength they are a sign of excess money in the system and a poorly functioning market.

Yes we are not as in debt as spain........but we might be soon

Edited May 18, 2020 by Fromage Frais

[Wayward]

2 hours ago, HovelinHove said:

People at the top either agree the 10-15% haircut, or pull out...they are the Ultimate decision makers as they only ones who will lose out financially from a 10% reduction across the rest of the chain...everyone else will be richer in the long term by a 10% reduction.

This is the key to the whole evil HPI racket...why don't more people see this.

[Fromage Frais]

1 minute ago, Wayward said:

This is the key to the whole evil HPI racket...why don't more people see this.

Because for many its the only route to a dream of riches.

Try and get a 95% loan on a business.... no chance for most

Its the most leveraged asset for most folk and fortunes have been made and the next lot of people want the same for themselves.

[blackhole]

Just now, Fromage Frais said:

Try and get a 95% loan on a business.... no chance for most

+1000.  Instead had to save for years.

[Wayward]

3 minutes ago, Fromage Frais said:

Because for many its the only route to a dream of riches.

Try and get a 95% loan on a business.... no chance for most

Its the most leveraged asset for most folk and fortunes have been made and the next lot of people want the same for themselves.

Hopefully the banks will lose money on those reckless 95% loans and their shareholders and bosses suffer the losses...

[Locke]

1 minute ago, Wayward said:

Hopefully the banks will lose money on those reckless 95% loans and their shareholders and bosses suffer the losses...

i.e. people who have pensions or savings. Niiice

[stuckinlimbo]

31 minutes ago, Wayward said:

Hopefully the banks will lose money on those reckless 95% loans and their shareholders and bosses suffer the losses...

Remember how that worked out in 2008....

[bomberbrown]

1 hour ago, Rian1988 said:

Full text of article anyone?

Outline.com is your friend. ?

https://outline.com/3wNU9m

[NoHPCinTheUK]

1 hour ago, Simhadri said:

British economy is much stronger than Spain. The capability of UK on global stage is more than Spain which is just another EU country.

During WW2, everybody was predicting Britain will be under German rule as most of EU countries have surrendered to Germany.

But we all know how UK fought back.

Never underestimate UK.

There’s a big difference between hope an illusion. Hope is a Christian virtue, based on the solid evidence that if you do what God told you do to, one day you’ll be sitting with him. Hence, it’s not something based on thin air. On the other hand, illusion is just a trick where you think something will happen just because you wish so. Evidence is that the property market, if left alone, will go south. Illusion is thinking that somehow, the British will fight back to keep that nice 2 bed in zone three above £ 700k. 

The land of illusion is Argentina, where property is extremely expensive. Be careful what you wish for. 

Edited May 18, 2020 by Neapolitan

[iamnumerate]

1 hour ago, Burbujista said:

Personally, I believe that a big shake is needed to break the culture of “property never goes down”, getting the market into the undervalued territory for a period o time to then return to reasonable values (well below current real values). In other words. Let’s have a nominal 40%+ shock in two years, 2-3 years of stagnation and then increases with inflation. Some years slightly more, some years slightly less, but still affordable to young people.

The big shock would allow me to satisfy my personal needs, getting a place to leave at a reasonable price. But if with “Forever House Price Crash“ you mean if I am fundamentally against housing bubbles, my answer is YES. Nobody should suffer the torture of not being able to afford the average house if they have income that is better than the average for the area they want to live in.

For anyone who is tempted to say that what I just wrote can’t happen... I will just tell you that that’s what they used to say to me 12 years ago when I was living in Spain, and it worked out exactly as planned. I am waiting for the same here in England, which is much more important to me, as I have always wanted to own my main home here.

Two big difference between Spain and the UK

1) Spain builds more homes - we had no Ghost towns like Spain after 2008 

2) A lot more generous benefit system.

I am not saying you are wrong, it could happen here but there are differences.