Monday, March 15, 2021

What Happens to House Prices during Recessions?

UK House Prices during Recessions

House prices tracked during the last 4 UK recessions. Results may surprise...

Posted by Old Man George @ 10:10 AM (1639 views)
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5 thoughts on “What Happens to House Prices during Recessions?

  • LandOfConfusion says:

    Interesting, thanks.

    Seems to show that when they drop they don’t drop very much, although of course there will be outliers. I know of two people who brought/sold during the 1990’s, one sworn off ever buying again after the hit he took right at the beginning and another brought his flat for peanuts at around the same time. Interestingly the latter said he regretted not buying a house instead as the price difference by then wasn’t that great, even though the house wasn’t in the same convenient central location.

    But I guess population size has more of an impact than recessions?

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  • population size has more of an impact than recessions? – I would agree its a hugely influencing factor yes.

    O.N.S predicts that the population will hit 69.4 million by 2028, what will that mean for house prices?
    Of that population growth only 27% will come as a result of more births than deaths, leaving 73% from net international migration. Has Brexit killed or enhanced that? Again what does that do to house prices?

    Probably the best statistic to look at, in terms of house prices is ‘households’. Again ONS predicts households will increase from 23.2 million in 2018 to 24.8 in 2028. A net increase of 1.6 million households – all needing somewhere to live. Demand for housing is increasing but will supply keep up?

    Housebuilders to keep prices high and stable, and to retain the book value of their current ‘stock’ may drip feed houses onto the market. Sound plausible?

    Source:https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections

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    • why not look instead at dwellings per capita? This figure has never been higher (DCLG figures) and is much more concrete that a “projected” increase in “households”.

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      • @nickb the argument for building more to bring prices down rings hollow. There are more homes inside the M25 than the whole of Scotland, yet rents are much higher. The average number of people per household has never been lower, and the number of empty homes is in the hundreds of thousands. Plenty of homes to go round, 20m+ empty bedrooms. If you’re going to build say 250,000 new homes per year, what proportion of those is reasonable to allow to be left empty?

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    • Population size is not as important as per capita income available to pay rent. There are many more people in Delhi than Scunthorpe, yet rents are higher in the latter. Difference is that the average income is much higher in even Scunthorpe, so landlords (and home sellers) can tuck in to more of the captive audience’s private property

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