What would a housing market crash look like?

Would it affect mainly cities since properties in cities are most expensive?

Is it likely to affect the South more than the North?

I’m just wondering if any areas may escape or even benefit from a crash. For example, if people exodus from places like London and surrounding counties, then one would think the shires and farther counties would gain.

Reply 1

Quady

The last ones have been pretty uniform, like the one 14 years ago was pretty much across the board.

Reply 2

Fruli

Original post by Quady

The last ones have been pretty uniform, like the one 14 years ago was pretty much across the board.

I see. Do you know when the projections are for the next housing crash?

Reply 3

Rakas21

Original post by Fruli

It's difficult to say. If we look at the 07-09 downturn it was alluded to across the board but afterwards when mortgage lending was restricted, growth was higher in cities than the countryside. In addition, after Brexit we saw slower growth in London than elsewhere.

Generally speaking the pattern of house prices is that London and the South East are a law upon themselves while the rest of the country more or less operates in unison. Additionally, the last business cycle had higher rates of home construction in the north than the south.

Economists are relatively poor at forecasting house price contraction since the biggest factor is credit supply (mortgage availability) rather than affordability.

We may see this change in 2023 though because once interest rates breach 2%, they will start having a larger impact since that's the level at which a lot of variable rate mortgages stopped following lower interest rates. If interest rates become high enough, demand may fall and cause the market to stall.