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Will UK property prices crash in the next 1-2 years and do you want this to happen?

With prices unaffordable for 1st time buyers and baby boomers hosting masses of cheaply bought property is or time for a crash? What are your thoughts???

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Reply 1

the bear

it will end in tears. the £ will tank by about 50% when we have the inevitable hard Brexit™. property at bargain prices will be snapped up by overseas buyers.

Reply 2

JoeCUK

Original post by the bear

it will end in tears. the £ will tank by about 50% when we have the inevitable hard Brexit™. property at bargain prices will be snapped up by overseas buyers.

Interesting would be good for the 1st time buyers mind??

Reply 3

Neilos

No, can't see any significant drops coming in the average prices (regions may vary).

I wouldn't be overly upset if they did, though.

Reply 4

MidgetFever

Original post by JoeCUK

Interesting would be good for the 1st time buyers mind??

How would it be? If they lived in the UK and the value of the £ dropped, their savings would be worth half as much, and therefore still couldn't afford property.

Reply 5

JoeCUK

It depends on the circumstances of the individual's but for many your point is correct

Original post by MidgetFever

How would it be? If they lived in the UK and the value of the £ dropped, their savings would be worth half as much, and therefore still couldn't afford property.

Reply 6

DarthRoar

There's no reason to think prices would crash at all, let alone in 1-2 years. Demand is so high that these prices are definitely sustainable. There are none of the usual hallmarks of a bubble.

If somehow they did crash, we'd be in for one heck of a recession, which is good for no one.

Good points

The only new homes which have been built are those for people who can afford a mortgage. The need for social housing has increased year on year and the banks love it because renters have had to borrow more to keep a roof over their head. Mean while mortgage rates have remained low and mortgage holders have been sheltered from these increases.

Let me put it this way, my house has increased in value from £60,000 in 2014 to £100,000 in 2019. In my area rents have increased from £350 to £530 for a 3 bed semi. 13% rise in house prices per year and 10% rise in rents per year.

I can't see any neo-liberal Government building social housing because it will burst the property bubble. There isn't much chance of Corbyn getting in. All Brexiteers are moving towards the Brexit party and Remainers are divided amongst Labour, the Greens and the Liberal Democrats. Tories on the other hand are finished woo hoo!

I also don't think the housing market will crash. Instead it will slowly stagnate. Depends on how long the down term is. Demand isn't going to suddenly decrease in the snap of a instance from Brexit or a House building program. If this was the case the Russians would be moving their money out the country.

If the trend continues in 10 years time most families will be living in bedrooms because they wont even be able to afford a flat. A 3 bedroom house will be shared and have 3 families living in it.

Mean while mortgage holders will be millionaires.

(edited 4 years ago)

Reply 9

fallen_acorns

the reality for me is that its unlikely to significantly crash any time soon. Brexit chaos aside (and even that would only be temporary) - I can't see a crash on the horizon.. unless there is some kind of political rebellion, or radical leader who is willing to re-think the way we approach housing.

The problem is - as with many issues - those in power, who have the capability to enact the change I personally think we need, are also those who benefit most from the current system. To radically reshape the housing sector would require many many politicians to vote to make themselves considerably poorer. Can you see that happening?

It needs to happen, and it will happen one day, whether by revolution or crisis, because you can't keep ****ing over young people and expecting them to be distracted by consumption/media forever.. there will reach a tipping point where the youth rebel.. but I don't think it will happen any time soon.

Reply 10

username1799249

Original post by JoeCUK

Interesting would be good for the 1st time buyers mind??

No it won't. A crash in the pound would see a rise in inflation and with it interest rates. So property would fall in value at the same time that borrowing would become more expensive. Lenders would likely tighten their criteria as current home owners start to default on mortgages.

As stated. A fall in the pound and house price crash would see investment from cash rich foreign investors.

Reply 11

username1799249

Original post by illegaltobepoor

If the trend continues in 10 years time most families will be living in bedrooms because they wont even be able to afford a flat. A 3 bedroom house will be shared and have 3 families living in it.

Mean while mortgage holders will be millionaires.

Not really. Housing is only unaffordable to those at the very bottom of society and that includes most graduate signletons. However property is very affordable to couples even on average wages. Two people on 25k each can get a mortgage for £200k which in most areas buys something. 5 years later they have paid down their mortgage a bit, seen their property rise in value and earn a bit more allowing them to step up the ladder.

Reply 12

Notoriety

Original post by DarthRoar

If we make ourselves less attractive to investors, i.e. by leaving the largest RTA in the world, why do you suppose demand would remain at the same level?

Reply 13

fallen_acorns

Original post by ByEeek

I would change your wording slightly to:

"Property is achievable/available to couples even on average wages"

Its not affordable though. Having to borrow 5x your combined wage, and take on 30 years of debt, isn't exactly 'affordable'. One of the biggest shocks I had when I moved abroad was to see that other nations didn't all have debt-ridden property system we had.. and then after plenty of research, that even we didn't used to have the debt-ridden system that we have now. Your average couple back in the 70s, would have borrowed 2-3x their yearly salary, and paid it back in 15-20 years at most. Now, its far far more. Yes its still achievable to own your own home, but only through incurring massive debt, unlike any seen by previous generations. Its one of the things that pisses me off about all of these 'help-to-buy' schemes.. they aren't helping in a real or meaningful way, to do that would be to lower the cost.. they are helping you to take on an incredibly high amount of personal debt.

My wifes friends here in China laugh about my english friends saying 'we own our home' - they laugh and say 'no, the bank owns your home!!'

Reply 14

Arran90

A hard Brexit will crash the rental market. It will create a situation of too many landlords chasing too few tenants when the eastern Europeans return home. Inevitably many will sell up which will result in a fall in house prices towards the bottom end of the market as many of the houses will be bought by homeowners.

Reply 15

username1799249

Original post by fallen_acorns

Your average couple back in the 70s, would have borrowed 2-3x their yearly salary, and paid it back in 15-20 years at most.

I don't think that is true. Back in the 70s getting a mortgage was pretty hard and only one person's salary was taken into account. Rich people still lived in big houses and those struggling had to compromise. People in the 80s and 90s were shafted by high interest rates and frequent crashes. People in the 90s / 00s were shafted by endowment mortgages.

What has changed is that the number of people who aspire to live in desirable areas has risen and unsurprisingly, many can't afford to buy what they want and are equally unprepared to compromise by buying in less desirable / cheaper areas.

Reply 16

Salostar

There will be a crash. When and to what extent however is another matter.

Property prices rise and fall due to a variety of reasons, for example:

•

Interest rates rise? Expect increasing numbers of mortgagors to default, banks auction property, prices fall. Too many at once and repeat 2008.

•

Less owner-occupier buyers? Property prices to fall.

•

Less buy to rent buyers? Property prices fall.

•

Help to buy* abolished? Property prices likely fall.

•

Oversees buyers stop buying UK (primarily London, but also Cambridge and a few other places) properties? Property prices fall in prime locations, while having a lessor effect in secondary locations (domino effect).

•

Land banking** declared illegal? Interesting, could see to a fall in prices as developers ramp up construction to either use the land or sell to other developers. Could also see an increase in small building companies who have suffered the most in recent years.

I don’t have the data to hand, but the majority of lending by banks since the 80’s has been in property – both residential and commercial. While I do dislike saying it, home ownership (even thou the overall % is falling) has become a key area of the UK’s economy, to the extent that a major property crash would cause unknown damage, the crash of 07/08 could have been a lot worse if government/Bank of England policies hadn’t propped up the property market.

*Help to buy has had the effect of pushing house prices up, in reality subsidising developers rather than first time buyers.

**Developers sitting on land that’s been given the go ahead to build on, usually to get the supply low and maximise profits.

Reply 17

Arran90

Original post by ByEeek

What has changed is that the number of people who aspire to live in desirable areas has risen and unsurprisingly, many can't afford to buy what they want and are equally unprepared to compromise by buying in less desirable / cheaper areas.

That's untrue. Back in the 1970s undesirable areas tended to be older suburbs with terraced houses often close to town centres. They were also the most popular choice for FTB. What has happened is that since the late 1990s such areas have become the favourite of BTL investors, so FTB are competing with landlords for houses in these areas to a degree far greater than back in the 1970s and 80s. The less desirable and cheaper areas today tend to be lower class neighbourhoods and (former) council estates on the outskirts of towns as houses aren't so prized by BTL investors and tend to be bought by poorer families instead.

Reply 18

lionelmessi123

Question, BTW i'm new to The student room and this is my first chat-typical lol. Anyway i live in the southfields wimbledon area and am moving to surrey soon my house here will be going on rent, if we sell it in a few years time and Britain's out of the EU will it be sold on a very cheap price?

Reply 19

username1799249

Original post by Arran90

, so FTB are competing with landlords for houses in these areas to a degree far greater than back in the 1970s and 80s.

True. But landlords tend to want cut price because they need to make a profit. Ftb prepared to pay market rate can always outbid a cash buyer. We sold our first house for £118k. We had an offer from a cash buyer for £107k. No chance.