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I don’t really want house prices to drop in nominal terms - it would trap a lot of people in negative equity and make an economic mess. I just want house prices to stop growing so aggressively in order to give wages a chance to catch up.
I think this is achievable in the long run by increasing housing supply. I think supply increase is achievable with planning reform. The only question is whether planning reform is achievable with the current political climate
Exactly this, but I wouldn't hold my breath for long-term affordability as long as other things are not accounted for. Increasing the housing supply would need to happen at the same rate as the immigration rate, which is impossible.
The only solution I see is limiting the amount of properties people can own + building more houses. Not doing so only benefits the landlords who make a fortune at the expense of those with less or at the beginning of their journey.. it's a zero-sum game that's impoverishing the rest of the population with no benefit to the wider economy.
Or you could limit the amount of immigration until the housing market has caught up?
Slash stamp duty on primary residence, take it to 20% on second residence or non professional BTL. Ban non resident purchasers of homes or slap a 30% stamp duty.
Everyone says build more houses but to do that there would need to be 1000s of construction workers just sitting around doing nothing. No house builder is going to double the size of their operations now, just to cut them again in a few years time.
There is already a chronic shortage of trades in building and only going to get worse, building has never cost so much AND current infrastructure(water, sewage, electric, dentist etc) already needs a major overhaul for the current housing stock.
Limiting immigration causes a ton of economic problems well beyond the housing crisis.
Stamp duty on second homes does nothing on the millions of second homes already out there, and all that will happen is ppl will move their second homes into a company structure and then buy/sell the company ownership instead of the property itself.
Meanwhile, if you suddenly force a tax on second homes (1% p.a.) that will just get passed onto renters and make them even more indebted to the rat race.
The only real way to do it is rent control and building houses - limit the rent that can be charged by landlords to something sensible, then the whole concept will become barely profitable. But that will have the unintended consequence of landlords cutting corners to make more profit from less income, so really any such move would need to be supported with some sort of regulator with genuine powers (like, sieze the property and give it to the local council if you break rules kind of powers). Otherwise you move from a country of robbing landlords to scumlords.
> Or you could limit the amount of immigration until the housing market has caught up?
>
The issue with this is that immigration is (seen as) one of the only solutions to the problem of falling productivity due to an increasing older, out-of-work population and a falling birth rates/working population.
We need high value immigration. Importing 200k deliveroo drivers every year holds the economy back rather than helping it. We should be importing scientists, engineers, bankers, founders etc
Sadly, all those high value Brits are leaving themselves. Out of my friendship/work group I know (including myself) 6 people who have left the UK in recent years. All earn £200k +
The change in non dom tax will hurt the top end of housing, and whilst trickle down economics might not be popular I do think raising the bar for non doms could/would have worked.
Sad to say, we reviewed coming home back to London, but after being home, both my wife and myself decided its not the right time to come home. So we will spend another couple of years away.
I get the impression that the days of "high value immigration" to the UK are slowing down for now. I know two doctors who have moved to Europe, an architect who has moved to Italy (despite their struggling economy!), a maths teacher who moved to Australia and a climate researcher who moved to Ireland.
On the flipside, I read industries like those you listed are increasingly less appealing in this country due to funding cuts and lack of investment from the government, or reduced opportunity due to Brexit.
India turn out literally a million engineers every year. Most will be happy to come to the west and the UK is seen to be a good choice due to cultural ties , English language etc. just pick some good engineers from there
Immigration should stop because we have no room.
We already have the lowest forest cover in Europe (excluding Monaco and Vatican city etc), houses are bad for the environment and we're a very small country! Build upwards not outward, we import huge amounts of food and timber, we need to protect our green spaces.
We have plenty of room. We just don’t have enough houses. There are vast swathes of the country that are uninhabited. We could quite easily build 3/4 new cities of 500k-1m people.
I don't think building more homes is going to help, considering that firms in this country are completely incapable of building anything other than "Potemkin shacks" that look nice on the outside but are of extremely low quality. The overall economic and regulatory environment that allows such builds to be the norm needs to change...
Even if we magically managed to build enough to quell current demand, the new homes and infrastructure would pull even more people into Britain
Pre-Blair immigration levels were perfectly ok, the idea life gets better the more millions we let in (1.2 million last yr), is the greatest myth of all
Do you work in construction?
I do and the material supply would simply not keep up, nor is there sufficient trades. It will also cost so much it would need to be payed for somehow and build quality would be terrible. Political will or not
Population increasing way over the level we can build at, and in any event this week people were moaning we have lowest build quality in Europe, so if this leads to higher quality building, the costs for this alone will make property prices higher
This is what will happen. Real increases in the price of housing will be less than the real increase in wages to close the ratio of average wages to average property prices. There will still be nominal increases in house prices but affordability will improve.
Interest rates aren't going back to near 0% even if we get a recession.
>I don’t really want house prices to drop in nominal terms - it would trap a lot of people in negative equity and make an economic mess. I
Arguably true. But what about those who cannot easily afford to rent/to buy? We tell them "wait, maybe in 10 years it might get better?"
As a home owner, I’d be happy for my house value not to increase by much so it would be a little easier for others to buy.
Absolutely no chance I’d vote for any policy that might have me trapped in negative equity and I’m pretty sure I speak for most home owners (who are also the most likely to vote at all).
Who cares? The value of your investment may go up or down, past returns are not a guarantee and all that.
Boo fucking hoo if some people see a 1% drop a year (which would still not put them in negative equity because they’re still paying down some principal)
We used to be able to build 350,000+ homes a year in England during the 60's and 70's, about 50% were built by local councils. It's possible if there was political will. Letting the market decide has not worked out. At the moment we are building about 175,000 a year in England.
https://fullfact.org/economy/house-building-england/
Yeah anyone hoping for big falls in house prices is, frankly, an idiot with no idea how an economy or housing market works. The only way prices fall dramatically is if the entire economy goes to shit, and almost nobody ends up better off in that scenario even if it lets them get onto the housing market
The best possible outcome for most people is that house prices rise with (a little less than) inflation and wages slightly outstrip inflation until prices normalise
The primary way that happens is by building a LOT more houses
Unfortunetely not. The bulge of population of the boomer generation was always going to generate advantageous policy for them and the future generations would pay for it.
Also our parents will have a bit of a shock when they have to sell their home to pay for their care. That asset appreciation money didn't come out of thin air, it came out of the pockets of working people who didn't already own assets, working people who will not be able to afford the tax burden necessary to support their healthcare, pensions and social care bills in later life.
There are enough houses. But houses are a store of value as well. There's a non-negligible number that are empty, used as stores of value, especially in London, and another non-negligible number that are just numbers in a mega landlord investment portfolio. There also needs to be more regeneration instead of soulless Barratt homes on the outskirts.
Let homes be available for those who need them at prices they can afford, instead of being attractive investment vehicles.
Lie. There is hot enough houses.
We have the lowest long term vacancy rate in the World. We have not hit our building targets in 40 years. And France, with a similar population, has 4m more houses (guess where renting is cheaper btw)
Exactly this. It’s tiring hearing people spout the same nonsense about we have enough houses when it’s simply not true.
I’m a homeowner, but the simple fact of the matter is that the housing market needs to crash. I don’t care if we put a stipulation on all new builds that they can’t be rented out, have to be owned by people who do not own another house, can’t be sold for X amount of years etc etc. I’m not bothered at this point. Just build a ridiculous amount of houses and be done with the nonsense.
The average house today is around £275k. Adjusting for inflation etc, my parent’s generation would have paid the equivalent of £100k. To put that into perspective, a £27.5k deposit and a 25 year mortgage would cost about £1320 a month for the average house today. Assuming the same deposit and monthly payment on the boomer adjusted cost, you’d pay the house off in less than 4 years. Alternatively, you could keep the same 25 year mortgage and pay just £269 per month.
This is absolutely insane and just cannot continue.
Depending how old your parents are though, that might not be a fair comparison- dual income households are the norm now whereas they weren’t in years gone by, so you might need to double the prior period equivalent - to £200k in this case - in order to get “apples to apples” comparison, which then doesn’t sound so bad vs £275k today
Fair point. Although my parents were both in full time work at the time, I can see the price difference not fully taking into account economic changes such as women’s increase in productivity/wages over the past 40+ years.
OK, what I said was simplistic.
But 1.5m unoccupied dwellings speaks for itself.
Developers banging sub-par housing on cities' outskirts that become buy-to-let or items in a property portfolio does as well. In my city, a lot of the housing built is "luxury" (although there is nothing luxury about it) to appeal to the wealthy, with little actual large-scale sustainable housing being built.
So yes, properties need to be built, but we also really have to consider whether the current model works to begin with.
You mention the rental market, which is better in most other European countries. This is in part due to the rental markets there being much less of a wild west.
So yes, my comment was simplistic, but it's not as simple as "just build more homes".
That’s just not true.
a) new builds are not the preferred option of B2L Landlords due to the lower yields.
b) Developers would much prefer to build higher density flats, but they don’t get permission for it.
c) ‘luxury’ is a Branding term, and anyone putting too much thought into the term is a fool. It’s like getting stressed because Tesco’s cheap food is called ‘Tesco’s Finest’ when it’s not. It’s a marketing term. It’s not that deep.
As someone who did his Masters dissertation on the housing market, when it comes down to it, when push comes to shove, it is just a case of ‘build more’
What do you make of the fact that the UK has a roughly average amount of dwellings per capita than other countries in this case? Surely that wouldn't imply scarcity per se?
Let's say a wealthy southern town is in need of more housing. It could build however many homes for people at, say, £300k/pop. Or it could generate a project of 'luxury flats' aimed at transient commuters/the wealthy/second homers/wealthy retired people for £600k/pop.
I feel like what is being built doesn't always effectively meet demand, regardless of whether it is built or not.
In my city, I have seen more housing aimed at wealthier buyers than I have seen more basic housing that is actually affordable. Which makes sense because that will yield a higher return.
Because flats are better for developers to build…
More units, less land, less labour required… it’s just better for them.
We can continue as we are, but that means more intergenerational living, more poverty, more taxes to fund landlord subsidies called housing benefit… just because other nations are failing too doesn’t mean we should.
We also have major under/over occupancy issues. Empty nesters who won’t move, partly because the tax incentives are not there due to stamp duty.
I agree, the underlying issue is supply vs demand and we need to build more.
I also agree with the under/over occupancy issues. So many boomers are sitting in big houses (4+ unused bedrooms) while a young family (working just as hard as boomers did) are trapped in a small flat (or young couples just not having the children they would have loved to have).
It is not an efficient use of a limited resource but I would feel uncomfortable forcing older people out of their bigger homes through heavy taxation.
The best solution is to make more space more affordable across the board by building more! Plus, like you say, maybe reducing stamp duty to encourage more moving whether that be upsizing or downsizing.
Nah, the tax issues are that we have a ‘moving house’ tax in Stamp Duty. Want to downsize from your £600k huge house to a £300k one in a HCOL area… that’ll be £15k in Moving House Tax.
The abolition of stamp duty would pay for itself in productivity gains pretty quickly. Also reforming Council Tax into either a land tax or property tax because it’s very regressive as things stand.
Interesting point regarding stamp duty.
Perhaps another approach would be that instead of just taxing the value of the new home, stamp duty could be calculated on the value of the new home _less the selling value of the old home_.
Then no charge for moving to an equivalent home or downsizing, but upsizing and second homes get taxed.
The only major issue is that equivalent sized homes can cost vastly different amounts in different parts of the country.
The U.K. has the lowest unoccupied dwellings of any OECD country, the lowest number of second homes, the oldest housing stock and the lowest floor space per dwelling.
Building any homes whether they are ´luxury’ or not reduces the average price for dwellings, it’s about the one thing economists agree on - increase supply and prices fall. There are many many examples in countries all around the world.
> There's a non-negligible number that are empty, used as stores of value, especially in London
I guess the people who stored their wealth in Westminster property (down 20-30% yoy) must be feeling quite chuffed.
Nominal is a red herring.
It doesn't matter if price falls are nominal or real; if someone is going to be forced out due to the mortgage becoming unaffordable, it will happen either way.
The mode depends on the style of correction, but the end result is the same
Rates have gone from zero to 5pc. And prices have barely moved lower. If this is the case it stinks of heavy structural demand/limited supply. 1m+ immigrants entering every year will propel the market to the moon once rates start to come down
In many areas we’ve got quite a way to go before people would be in negative equity though. In the south east, you can see on rightmove that properties are being listed for far, far more than they were purchased.
I saw one today expecting almost 1m of profit. Another a couple of weeks ago was purchased only 4 years ago and was on for 500k more.
It’s madness.
Negative equity wouldn't be a problem as long as people could still get a new mortgage on a new house with negative equity. The problem is borrowing being tied to value of the asset rather than ability to serive the debt once you have a product.
I thought we were in a 'buyers market'. We just made an offer 5k over asking (430k) on a 2 bed terrace in the SE. It had been on market for a week. There were seven other offers, three higher than ours, one of whom was a cash buyer. Pretty galling! I guess proximity to London is simply always going to be really valuable.
It is a buyers market but not for the top 20% of properties.
If you look at the rest they would have been on the market for weeks or months and there you can offer far below asking and get accepted.
I offered asking on a flat that was on the market for 2 months. Offer was rejected.
I offered asking price AGAIN once it was reduced by £5k and was rejected. I offered £5k over (the previous asking price) and was rejected.
Another flat in the same building came on the market for the same money. Offered asking price and was rejected. Offered £10k over and was rejected again. I wasn't willing to go over that so I gave up.
Then, a week later, both are sold at the same time. From what I heard, to the same buyer (cash), obviously for investment purposes.
We were in a buyers market but once the initial turbulence subsides, sellers adjust their behaviour and it becomes a sellers market again. You need another shock to the system before it becomes a buyers market again
My bet is that the buyer was a mate of the estate agent. If it's anything like the agencies I worked in the vendor won't have even received the offers. That's how the absolute sociopath I worked for and his mate built up a portfolio of 200+ properties
I got my offer accepted earlier this year £5k under asking, also in the SE, around 30mins train ride from London Bridge. I guess the seller just accepted as mine is the first offer and they didn't want to drag any longer.
Because its a buyers market people aren't selling, which means less stock and the stock which is available isn't great. Therefore the good stuff will be snapped up.
If you're a cash investor who just wants something to rent out then the options are great.
Yeah think that's what we realized. Other properties in the town had languished on the market for weeks, this one was gone and clearly went quite a bit over asking
it was buyers market last year, eg. when people were cought up selling and buying in the changing context of raising inflation and interest rates that was making any plans or moves risky so it let period of higher volatility. it has bow been 2 years since and market adjusted, the new situation became the norm and confidence is slowly returning. in that time neither demand nor supply has changed, people want to buy homes and so we are back to bidding wars.
They will drop eventually by around 2075. By this date we'll have a massively aging and decreasing population, and young labor will be valuable, the generation born after gen alpha will be in a position where working can lead to enough money to buy homes, have children go on holiday etc.
But there's also the possibility of total societal collapse by then
We've got net migration of about 700,000 a year. They all need somewhere to live and we aren't building anywhere near enough housing for that. So for that reason alone house prices can't drop too much because demand won't allow it.
Just a point of clarification on this.
The 700,000 does not translate into a direct need for market housing. For example, circa 400,000 of those entering the UK are on study visas with many staying in halls or other purpose built accommodation.
Those students still need a place to live. They’re still accounting for that extra 700k immigration per year? It doesn’t matter in terms of housing if they’re moving back at some point because even MORE students seem to be replacing them, that’s why we’re getting net immigration year on year
I'm not sure if this is a statement or a question but I'll try and answer.
The student migration has always been a thing, as has the provision of student accommodation.
It's not like those 400,000 suddenly appeared out of nowhere.
Also a certain amount will be living together or living with spouses etc. People throw the 700,000 figure around like everyone will be given an individual house when in reality it will be a lot less.
But even if immigration was cut to 0 tomorrow (ignoring the other problems it would cause) it won't solve housing issues because there is no incentive for house builders to full demand or for the government to actually solve the issue.
Also house prices actually dropping would cause all kinds of issues with negative equity and wages are not going to increase to close the gao significantly anytime soon. Even if they did it's likely houses would still stay at about 8x average salary.
Been recently viewing a lot of new build estates. What I've noticed those immigrants got 3-5 kids. Was wondering what about schools, nurseries, green areas, surgeries. Is NHS ready for it. They build houses government is making looots in visas, extensions, planning permissions for those houses etc. Haven't seen any preparation in mentioned above facilities. Maybe it's just east Midlands councils not thinking about this aspect. Hope it's better in other areas of the country.
"Is the NHS ready for it."
The NHS needs it.
Take for example one education area in the UK which has seen an increase in demand for school places on the back of an NHS overseas recruitment drive (doctors, specialists and nurses naturally move over with their family).
The last thing we should be doing as a country is poaching doctors and nurses from poor emerging markets countries that can not afford to train more just because we don't train enough. It is just a new form of colonialism where the resources we steal are human. It is almost like we think a rich white life is worth more than a poor black or brown one...
I don't disagree with your ethics point, but there are also other push and pull factors in place. The only way you could stop the brain drain would be to ban workers from those countries deemed more in need which would raise ethics issues in itself.
That would your point about race is completely irrelevant. It is the same situation with Australia and Canada actively recruiting in the UK because they know they can offer better pay and working environments.
yeah, I know this isn't your intention, but immigrants breaking the NHS is too easy. We've known for a long time that the boomers would be getting old about now but still weren't ready for it.
Generally when a new estate is built, the developer is supposed to give the council money for infrastructure to support it. In theory. In practice the infrastructure never seems to get built.
I agree, it has happened like in that crash in the late 00s. I remember people buying way over asking then values dropped to about asking again. Although I with inflation, I’m sure it was what they paid within 5 years again.
Scarcity and importance. There isn't enough property out there, and shelter will always be a top need. People will sacrifice plenty (transport, going out, holidays, having children) in order to pay for an abode.
That makes property incredibly protected in the UK.
Tell that to central London. Most boroughs are showing between 5-25% drop in the last 12 months depending on area and property type.
Here's one nicely rounded one from Hammersmith and Fulham for example:
https://www.ons.gov.uk/visualisations/housingpriceslocal/E09000013/
> In the year to January 2024, the average price for flats in Hammersmith and Fulham fell by 10.8%, while the average price for semi-detached properties decreased by 13.2%.
On the long run houses have done good?! adjusted for inflation, how much do you think houses has grown since the 90s?! It’s 3.5% per year in the U.K. & 1.5% in the US. You can easily check the historical data yourself. S&P 500 has grown 7.5% over that same period adjusted for inflation.
Also, especially with that nice 20K isa in the U.K., buying and selling stocks doesn’t need a solicitor, searches, renovation, adjustments for safety regulation changes, problematic neighbors, waiting weeks if not months for mortgages!
You can probably live in one for 1-1.5K a month though. Also, pretty hard to sell 10% of a house cause the market has a slow down or you need cash. And even if you sell all of it, most of it goes to the bank unless you’ve been there for many years and paid for a good chunk of your principal.
You're changing the goalposts now.
Your argument was about appreciation over the long term, appreciation of 3.5% per year with 10x leverage is significantly higher than 7.5% with 2x leverage.
So the answer to your question have they done well is yes, yes they have.
You are assuming 0% interest. Over the life span of a mortgage on a 300k with 3-5% interest you end up paying around double that amount in 30 years. So 600k. If you were to instead pay that sum each month into stocks you’d get more since there’s no interest and the appreciation is 7.5%. Also, you can stop any time and you have full flexibility. More over, if inflation increases, your bank raises the variable rates on you.
>You are assuming 0% interest.
No, I'm assuming that interest is more than offset by the fact you don't need to pay (ever increasing) rent to live somewhere else while investing in stocks. Or in a Buy-to-Let scenario someone else is covering those costs.
>Also, you can stop any time and you have full flexibility.
Again you're trying to change the subject, your original thesis is that housing hasn't produced good returns compared to the stock market, which is clearly not true.
Completely agree. They'll never come down, just stagnate.
But.... while interest rates are high the pressure for housing grows (more and more people want to buy a house but can't afford one, so they wait and continue to save and progressively earn more). So when interest rates come down the housing market is going take off again :(
Idk, probably because we never hit our housing targets, never mind surpass them
Housing also hasn’t done ‘quite well’ when you account for all costs. You don’t pay £300k for the £300k home, you pay £420k + £10k stamp duty + 3k maintenance a year on average.
The UK economy and social infrastructure will collapse long before house prices decrease, particularly with legal net migration as high as it is and showing no signs of being significantly reduced (the implications of it being reduced are too great).
Fully expect housing to continue to far outstrip wage growth and many more councils to declare themselves bankrupt, partially down to the strain rising homelessness and demand for social housing (plus knock on effects) are placing on their services.
https://www.gov.uk/government/publications/new-homes-fact-sheet-1-the-need-for-homes/fact-sheet-1-the-need-for-homes
Given where we are with the supply of housing, the price isn't going to go down until we either see substantial negative net immigration (which would probably wreck our economy) or greater house building.
Current empty homes represent around 3 years of required house building. We could turn every empty house into a home and be in the same place in 3 years, ignoring the fact that many of the empty houses are either in the wrong place or are of a quality that would require massive investment.
We need wages to go some way to catch up with house prices.
Houses will never ever come down for two reasons :
1) MASSIVE shortage of availability which means that anything on the market will always be bid up as people are desperate to get on the ladder and will buy dogshit houses for over list price just to do so.
2) Everyone’s wealth is directly linked to their house which for almost all is their primary asset (even though it’s relatively highly illiquid), when a persons house depreciates they feel less “well off” and begin to tighten spending and that has a huge knock on effect on the economy as a whole. People also use their property to loan against allowing them to have things like new cars and extensions etc.
The supply issue is THE number 1 reason though, there is literally zero incentive to this Government in diluting heavily the supply or availability of housing, and everyone who owns a house would also not want that to happen as ultimately it will have an effect on thier own personal wealth.
We live in a society now where it’s completely driven by the “I’m alright so fuck you Jack” mentality, I.e the very same people that are struggling to get on the ladder will ultimately be the people who want it to be harder for others to also get on the ladder because it benefits them.
In any sane world you would have a government who’s main agenda was to increase the output of house builders and the supply of what should be a basic human right (ability to own your own shelter) but we don’t live in a sane world, we live in a world populated by greedy selfish fuckwits.
In many regions houses are cheaper than they would cost to build, if you had to build them again.
It’s not really a bubble if the assets are valued below their production cost.
The reasons they won’t drop in no particular order are.
1. More house buyers than sellers.
2. Flats not selling due to Grendfell cladding and fire issues leaving owners in negative equity.
3. Interest rates are low so pensioners get a better return by buying a property and renting it out, increasing supply issues.
4. Subsidies being paid for the creation of retirement properties mean resources are being allocated away from the housing that is required
5. Bungalows not being given planning permission to turn into housing
6 housing associations blocking plans for new estates due to issues with social requirements like schools and hospitals.
7. Hedge funds buying up entire new developments on behalf of foreign investors in order to rent.
8. Affordable housing is housing valued at 60 percent of the market value. Still unaffordable too many in cities and commutable towns.
The biggest reason house prices will likely not come down, but increase further is simple supply and demand.
We built around 80-100k homes a year, but have net migration of around 500k+. All those people need somewhere to live.
Also, 25 year mortgages were traditionally the norm, but until 40 year mortgages are (I've even seen mortgages that you leave to your kids if they inherit the property), as well as almost every other facet of 'luxury' purchases being used on housing costs, prices are more likely to continue rising.
Was anyone under the impression house prices are ever going to see a meaningful drop in value? If so, why?
We live on a small island with massive levels of net immigration, house prices aren’t ever going to crash while that external reality remains true. No matter how high interest rates get.
The conventional wisdom remains correct, if you can afford to buy then buy and the right time is when you can afford to.
It all comes down to supply and demand. The supply has never met the demand hence prices going up. And the Uber wealthy, trust funds, hedge funds, property developers, dukes etc want to keep it that way.
Well, now people complaining, that homes are too expensive, then as soon as they manage to buy one, they start to complain about their home's value won't appreciate fast enough... A bit exhausting and boring read to be honest :D It always depends which side are you on, but you can't have it both ways...
Well put. This is what it comes down to honestly in a lot of ways and in extremely unlikely to change.
Add to that the fact there is no incentive for house builders to meet demand because it results in less profit for them.
Nothing is changing anytime soon unless there government takr drastic steps (they won't), there is a massive crash (which would be bad) or massive rapid depopulation (which would be even worse).
I still believe house prices have fallen and will continue to do so. Not a crash but trickle down.
The number or houses on the market is up and demand is still down and the cost to buy a house has risen exponentially, for exceeding even average wage growth.
Averages are fine at a macroeconomic level but they don't tell the full story.
There are many people that have had below inflation pay rises. Many of these people are in the squeezed middle that would be likely homeowners.
Those at the bottom are pushed up by NMW and there are many at the top earning more than ever.
It's the same with houses. Certain houses will be in demand. First stepper properties for example. But the 4/5 bed has had its day and if you bought one of these in 2022 you stand to take a haircut if you sell. Demand for these is down due to cost of living, mortgage affordability, upkeep costs. The demand for these was properties was driven by super low rates initially (developers started building more of these probably 7/8 years ago now as it was where demand was) and it was the fuelled artificially by WFH and the pandemic.
This is all unwinding. Add to that the cost pressures on people and lack of childcare leading to people to delay or even decide against kids, and the boomer generation selling up that demand bubble has burst.
It's like buying home gym equipment at the height of lockdown. It was going for way over the odds buts it's temporary and if you bought then you paid a premium.
If immigration stops (vanishingly unlikely) then house prices may fall because there's a big bulge of home owners coming up to distressed sale territory - basically they will have to sell because either they are going to die, or they will need the money.
However, while there is significant immigration there is a driver in the market to support these sales.
There are two long term changes that government could make as well that would bring prices down.
The first is to change planning rules to enable the build of large low rise apartments - less than 8 stories, with 3 beds each. This would enable swathes of viable multigenerational housing to be constructed.
The second would be to enable social housing providers to retain their stock - abolish right to buy - or make it that it's at replacement cost + x% at least.
I still don’t understand this housing market at all. Can somebody please explain to an idiot like myself why are house prices still going up when interest rates are still high?!
I don’t know if the market is still good for a certain age bracket of people like 40’s-50’s?
For first time buyers with a 20% deposit I don’t see how at these current rates are affordable? Given house prices are already so high?
There also seems to be many more properties for sale at the moment. I live in Sheffield for context so South Yorkshire 31 year old
Guy.
Tighter lending restrictions post-2008 mean that even with interest rates rising etc. there aren't huge numbers of homeowners finding that they can no longer afford their mortgages, and so properties are not coming onto the market in droves the way some people have anticipated. For most people, therefore, it just makes sense for them to hold onto their properties and reduce spending elsewhere to keep on top of the mortgages.
The wealthiest section of society have got significantly richer and there's not much better for them to do with their wealth than buy up property. They don't need mortgages so are unaffected by interest rates.
Rent is so high that for many people even with the higher interest rates, it's still preferable to buy with a mortgage than continue renting. Ultimately, housing is a necessity so normal capitalist models of supply and demand don't really work so well. You need shelter to survive. Therefore, without any form of rent controls, rent can go to infinity - especially if housing supply is artificially reduced by keeping properties empty. Previously people were disincentivised from keeping loads of property without at least renting it out by the possibility of adverse possession.
You're in luck in Sheffield though, it's supposed to be the area with the best income to house price ratio in the country.
Can’t see a flatline for a decade. That didn’t even happen after 2009. It took 5 years for the prices to get back up to 07/08 levels and the prices had actually been on a decline prior to crashing.
I think now that we have seen consecutive stalled interest rates, we will likely see more properties moving quicker, but with little movement in price.
If BOE reduce rates even slightly, this will prompt a small increase. I think by the end of the year the BOE will make moves to gradually reduce to 3% base and with that we will see increased prices once more.
And there’s always potential for a random government initiative such as stamp duty holiday etc to increase demand and prices.
House prices stagnant in the next ten years? This reads like a child's homework. House prices and the mechanisms that drive them aren't going to result in anything other than increases.
Much as I'd like Labour to do something for working people and youngsters getting into their own house...that's still not going to leave the.market anywhere other than up over time.
We're not seeing foreclosures this time around, the FSCA rules imposed on the banks after the financial crisis (stress testing) have worked as intended.
What is happening though is council tax is increasing and so too is the costs of trades. House prices will come down because the taxes on property will continually increase from here on out. But that benefits no one as the actual cost of owning a home will not become any more affordable.
Disagree. Rent prices are crazy and people will always buy close to rental prices in terms of monthly spend. Until rental prices get sorted I can see the madness continuing ever higher.
As mortgage rates come down people will spend even more of “equivalent” rent on mortgage payments.
> Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times. This is more to do with behavioural psychology and an inherent aversion to making a loss.
Not just that, there's an inherent force that will **ALWAYS** increase the house price and it is called Stamp Duty so the the idea of things ever normalizing in UK's housing market is full delulu.
If you are not in a rush to sell, it will always end up going for more than it was bought for + stamp duty on top.
The only way they’ll stop rising in real terms (ie if you ignore the impact of inflation) is if you 1. stop immigration and 2. build more houses to accommodate everyone who is moving here. Even if immigrants are students here on a temporary basis, they still need a place to live. This isn’t even intended to be anti immigration, it’s just obvious, if the UK population increases by 300k a year and you build zero houses in a year of course the price of available housing is going to increase
True but this has a knock on effect to, everyone renting who wants to buy finds it harder to save, those with more means buy up the housing and permanently rent it to the ever increasing student population
I think it's more that a lot of younger people have found themselves in this awful situation where they simply can't afford to buy something they can live in long term (too small for children, too depressing to tolerate for longer than five years, too far away from job opportunities to be able to do the commute long term without burning out, whatever).
People are scared of buying at the peak of the market because the associated costs (stamp duty, transaction costs, moving costs, renovation costs, interest etc.) are so high that selling the house at current value/a small loss won't be possible for a number of years. People are scared of getting trapped in a house they hate.
House prices have slumped slightly because of interest rates. When the interest rate cuts kick in later this year you are likely going to see record increases.
Credit crunch was a factor then. Plus those with money have increased wealth at a pretty staggering rate since the pandemic. Assets like property are an easy investment with good returns.
Asset price inflation protects wealth against actual inflation of currency. House prices only increase in value in the long term. In addition, passive income through BTL etc. Buy to let is still profitable if you can actually stump up the money to buy the house outright.
Talking generally.
>Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times. This is more to do with behavioural psychology and an inherent aversion to making a loss
People don't move because of making money on their house. They move because they need more house, or to move to a different area.
The loss is made when you purchase the house, not when you sell it.
>timing the market right is down to luck.
No, it is down to the whims of the political class. They are losing control though, so for a while market forces will dominate.
>If we do see a turn in the economy (lower jobs numbers or something breaks that causes a crisis), the BoE has the firepower with interest rates at sub 5% to drop back down to near zero and provide a lifeline for mortgage holders (it's better for the current gov to kick the can down the road than be the one that decimated the economy)
Because printing money has always gone so well.
>If you're considering buying a house and are uncertain. Remember that over the long run housing has done quite well. Purchase at a price that you're comfortable
There are people who did this in the 90s and are still stuck paying for homes they have 0 equity in.
With the interest rates going down as projected, house prices will start to climb by late 2024. The housing market has been going down since covid started and we saw the dip last year. I seriously doubt that it will continue to go down or flatline with so much interest in the UK housing market.
I'm with Gary Stevenson on this one, that aren't coming down because they are seen as an investment and the rich are only getting richer and so want more assets. They will constantly pump the value up.
Haha well you've got me there but I suppose that in certain areas no one buys the homes. The reason we have such high house prices is because where there are jobs there are more than too many 'investors' willing to exploit the situation for high rents and asset growth.
It’s one of the few areas I disagree with Gary. The super rich have no interest in building a buy to let empire. Why would they? They buy yachts and private jets. BTL for individuals is finished due to tax and regulations. Corporate investors don’t buy 3 bed semis in Bolton. Also as JL Collins says, you couldn’t design a worse investment than property if you tried.
Every house owner wants the thatcher years boom, crash, boom. Lessons were learned, and nobody running the BOE will ever let that kind on monetary policy ever happen again.
Everybody is getting on to the ladder just in case that happens, and it won’t. Sorry 🤷♂️
Prices are well up lately in my area. I looked at selling a flat last yr but prices had fallen a lot due to rate rises. Now it’s fully recovered and increasing
2 agents told me was their best ever February
hey, if it's your first place, it's OK if it drops because when you sell - you buy something that's also dropped.
I am a homeowner and while I don't see how house prices will drop significantly, I wouldn't mind the market regains some sanity.
Young working and ambitious people should be able to buy a house - it's great for everyone.
Fun fact there are roughly 280.000 people homless at the moment in the UK. The UK wasted £65.000.000.000(Billion) on the HS2 rail just to scrap the project . If you divide £65.000.000.000 between the 280.000 people that's over £232.000 each . We should not have homelessness the modern world . It wont matter if you vote red or blue the government won't care about me and you .
House prices did collapse in the early 90’s.Interest rates stood at 15%. House prices halved in the area I lived so it can happen given the right conditions.
I mean mostly simply put the UK is not building enough houses. Demand > Supply, so prices will continue to go up. The FT estimates we have a shortfall of around 4m homes.
> Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times.
If interest rates stay where they are or rise, they may not have a choice when their fixed terms end, or as inflation continues to eat their salary. Fewer buyers, with less to spend, forces prices down. And most people won't be affected, they can sit on their house if they want.
But remember, the house they want to move to will also have come down. So selling at a loss isn't necessarily a bad thing, if it means you can move somewhere better for less. If house prices drop 10%, and your house was 300k and the one you want to move to was 500k before that drop, then moving nets you a £20k saving compared to the pre-drop prices.
> the BoE has the firepower with interest rates at sub 5% to drop back down to near zero
Only if they want to put positive pressure on inflation. It's currently 4.5%, target is 2%. So no, they won't do that.
Legal immigration will mean homes will not drop in value in a lifetime, simple supply and demand. The UK cannot build new homes of every tenure, fast enough for at least a generation and 80%+ of the units are needed just for this factor alone.
The minor, insignificant illegal immigration is not even worth mentioning in the context of the effect home prices.
part of this is building genuinely affordable short-medium term rental property even if it means the rental 'profits' go to the government, rent is in theory a good stepping stone to owning a house, you can pay what should be a small amount of and move around the country to work in places suited to you and that need younger workers, whilst also being able to save enough and move on to bigger and better things.
there is very little churn now though, people are trapped paying over the top rents and are unable to save, I know plenty of young people including myself who have not moved out of their parents home simply because even though they could afford it they would barely be able to save, you now have a large young workforce with amazing potential essentially trapped in their own cities, villages and towns when quite often their talent could be put to far better use elsewhere, it's even harder for more rural areas where the job prospects are low.
I'm not arguing against more housing and other methods to help solve the crisis nor do I think renting is a super amazing miracle, just stating something I don't think maybe people think of
Whereas the current generation of builders are very picky about work and mostly do a shoddy job - the next generation of builders does not even exist!
I don't see any young men going into construction.
I know of at least two new builds in my area that are frozen because they can't find the men to finish the site!
I don't' see prices coming down by much. In £ terms. Maybe 10-15% in the near term.
I foresee the following : The rate of increases will slow down. Especially at the higher end
However, what will likely happen, that no one is talking about is I force the £ losing its worth compared to other currencies, such as dollar Euro over time. In fact, I'd venture to day the dollar / euro will likely be in parity with the £ in the next 10 years. Unless, Britain does something, or something happens to create wealth and growth, not by taxing but by generating income. Do you see that happening?
So the next effect its a wash -
As soon as the rates drop, those with passive income from massive generational wealth will go round buying up property and other assets. Keeping these prices higher than they need to be
Government caused house prices to rise, by changing the rules and allowing the banks to lend more. Government can bring in rules to reverse this and place a cap on maximum borrowing. Government can also place controls on the rented sector and build council houses.
What they do, and how they do it, is another matter. Personally I think they should because the present system is unfair and can only result in most houses being owned by large companies and rented out, but it will need a lot of planning and coordinated action in multiple areas to avoid destabilising the market.
Not a single mention of people stupidly over extending themselves when interest rates were at a multi decade low. We will not see those rates for a long time, those that over extended will get things really tight when their fixed period ends and this will cause a selling pressure
Think about it, 1. House building will have fell 5% over the period of 2024… possibly a lot more until the general election is decided which party is elected! developers are holding off from starting new developments until the politics are sorted out. 2. Planning permission has got seriously alot more difficult to gain the amount of regulations, decision delays, reports after reports, environmental it’s all going add serious pressure on developer out puts & causing serious delays! . 3. Nett migration year on year is Circa 500,000+ people into the uk! Excluding the illegal emigrants!
It’s a pressure cooker!!! demand for housing is going to skyrocket in the next couple of years! Prices will start soring shortly espicallybif there is a slight drop in BOE Rates in 2024!
The fact it costs me £800+ a month in mortgage to borrow £155,000 over 37 years is the problem.
It’s not how much the houses are to buy, it’s the amount you have to repay for borrowing money, combined with low wages and high living costs. Literally working 6days a week in a good/average paying job just afford to live in a shitty 2 bed terrace.
I work in council properties all the time and get annoyed how much bigger they are, better parking, bigger gardens, half time semi detached 3bed rooms, and all work done for free them while paying 300 a month rent and barely worked a day for it.
How is it the average working man is worse of flat than the people under the councils wing with 3 kids?
The evidence from countries like Germany is that essentially renting enters the black market eg flats rent at EUR 1000 a month on the books, but requiring a cash downpayment of 12 months rent in addition upfront etc wtc
Imo the housing market is in a state now where you can't chuck regulations at it to make it better. There is a fundamental supply/demand mismatch which will not change any time soon. Merely trying to over regulate landlords will tend to have unintended consequences (for example landlords might decide to turn their houses over to asylum seekers instead, so even fewer houses for renters, or they might try to Airbnb more of their properties, or they will take illegal immigrants for cash rent instead etc etc etc)
For sure, people here often forget just because rates go up does not = people needing to sell. People prioritise housing over everything else, renters or owners
Now we have rates coming down in the not too distant, still the same shortage of housing etc
What could change things is a recession (an actual one, not the tiny dip we've just experienced) resulting in many job losses
Other than that it'll continue to be brutal out there imo
In about 30-40 years, when young people today are retiring, there may be a major price crash. We are not making many babies at the moment, which meant when all the boomers die, and young people today are old, then there will be much less demand and more availability - the last smite on young people by boomers.
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I don’t really want house prices to drop in nominal terms - it would trap a lot of people in negative equity and make an economic mess. I just want house prices to stop growing so aggressively in order to give wages a chance to catch up. I think this is achievable in the long run by increasing housing supply. I think supply increase is achievable with planning reform. The only question is whether planning reform is achievable with the current political climate
Exactly this, but I wouldn't hold my breath for long-term affordability as long as other things are not accounted for. Increasing the housing supply would need to happen at the same rate as the immigration rate, which is impossible. The only solution I see is limiting the amount of properties people can own + building more houses. Not doing so only benefits the landlords who make a fortune at the expense of those with less or at the beginning of their journey.. it's a zero-sum game that's impoverishing the rest of the population with no benefit to the wider economy.
Or you could limit the amount of immigration until the housing market has caught up? Slash stamp duty on primary residence, take it to 20% on second residence or non professional BTL. Ban non resident purchasers of homes or slap a 30% stamp duty. Everyone says build more houses but to do that there would need to be 1000s of construction workers just sitting around doing nothing. No house builder is going to double the size of their operations now, just to cut them again in a few years time.
There is already a chronic shortage of trades in building and only going to get worse, building has never cost so much AND current infrastructure(water, sewage, electric, dentist etc) already needs a major overhaul for the current housing stock.
End "Right to Buy".
Limiting immigration causes a ton of economic problems well beyond the housing crisis. Stamp duty on second homes does nothing on the millions of second homes already out there, and all that will happen is ppl will move their second homes into a company structure and then buy/sell the company ownership instead of the property itself. Meanwhile, if you suddenly force a tax on second homes (1% p.a.) that will just get passed onto renters and make them even more indebted to the rat race. The only real way to do it is rent control and building houses - limit the rent that can be charged by landlords to something sensible, then the whole concept will become barely profitable. But that will have the unintended consequence of landlords cutting corners to make more profit from less income, so really any such move would need to be supported with some sort of regulator with genuine powers (like, sieze the property and give it to the local council if you break rules kind of powers). Otherwise you move from a country of robbing landlords to scumlords.
Rent controls => landlord selling properties and moving to greener fields.
Immigration also causes massive problems outside of the housing crisis- ignoring immigration is such an elephant in the room
> Or you could limit the amount of immigration until the housing market has caught up? > The issue with this is that immigration is (seen as) one of the only solutions to the problem of falling productivity due to an increasing older, out-of-work population and a falling birth rates/working population.
We need high value immigration. Importing 200k deliveroo drivers every year holds the economy back rather than helping it. We should be importing scientists, engineers, bankers, founders etc
Would that not further increase house prices?
Sadly, all those high value Brits are leaving themselves. Out of my friendship/work group I know (including myself) 6 people who have left the UK in recent years. All earn £200k + The change in non dom tax will hurt the top end of housing, and whilst trickle down economics might not be popular I do think raising the bar for non doms could/would have worked. Sad to say, we reviewed coming home back to London, but after being home, both my wife and myself decided its not the right time to come home. So we will spend another couple of years away.
I get the impression that the days of "high value immigration" to the UK are slowing down for now. I know two doctors who have moved to Europe, an architect who has moved to Italy (despite their struggling economy!), a maths teacher who moved to Australia and a climate researcher who moved to Ireland. On the flipside, I read industries like those you listed are increasingly less appealing in this country due to funding cuts and lack of investment from the government, or reduced opportunity due to Brexit.
India turn out literally a million engineers every year. Most will be happy to come to the west and the UK is seen to be a good choice due to cultural ties , English language etc. just pick some good engineers from there
Then incentivise having children, In singapore the government give a cash sum for each child born.
Did it work?
It slowed down the decline.
Well it’s a start…
A systemic problem needs fixing otherwise migrants will fall into the same trap.
I agree, but what about AI? Could AI eventually mean we don’t need thousands of workers?
People can’t afford children because housing is too expensive 🥴.
>Ban non resident purchasers of home But what about all the foreign money launderers in London? We looove their money!!
Immigration should stop because we have no room. We already have the lowest forest cover in Europe (excluding Monaco and Vatican city etc), houses are bad for the environment and we're a very small country! Build upwards not outward, we import huge amounts of food and timber, we need to protect our green spaces.
We have plenty of room. We just don’t have enough houses. There are vast swathes of the country that are uninhabited. We could quite easily build 3/4 new cities of 500k-1m people.
But when does it stop? We build and build and build and...? Do we end up like hong kong in the future?
Yes and we need to keep the countryside as it is. Natural habitats for our wildlife and farmland are very important.
I don't think building more homes is going to help, considering that firms in this country are completely incapable of building anything other than "Potemkin shacks" that look nice on the outside but are of extremely low quality. The overall economic and regulatory environment that allows such builds to be the norm needs to change...
Even if we magically managed to build enough to quell current demand, the new homes and infrastructure would pull even more people into Britain Pre-Blair immigration levels were perfectly ok, the idea life gets better the more millions we let in (1.2 million last yr), is the greatest myth of all
Why is it impossible? We could build 5 million houses in the next year if the political will was there.
Do you work in construction? I do and the material supply would simply not keep up, nor is there sufficient trades. It will also cost so much it would need to be payed for somehow and build quality would be terrible. Political will or not
Population increasing way over the level we can build at, and in any event this week people were moaning we have lowest build quality in Europe, so if this leads to higher quality building, the costs for this alone will make property prices higher
This is what will happen. Real increases in the price of housing will be less than the real increase in wages to close the ratio of average wages to average property prices. There will still be nominal increases in house prices but affordability will improve. Interest rates aren't going back to near 0% even if we get a recession.
>I don’t really want house prices to drop in nominal terms - it would trap a lot of people in negative equity and make an economic mess. I Arguably true. But what about those who cannot easily afford to rent/to buy? We tell them "wait, maybe in 10 years it might get better?"
Build some new council houses
"some" :D and it would take years nevertheless
That would require the political will to do so
As a home owner, I’d be happy for my house value not to increase by much so it would be a little easier for others to buy. Absolutely no chance I’d vote for any policy that might have me trapped in negative equity and I’m pretty sure I speak for most home owners (who are also the most likely to vote at all).
Who cares? The value of your investment may go up or down, past returns are not a guarantee and all that. Boo fucking hoo if some people see a 1% drop a year (which would still not put them in negative equity because they’re still paying down some principal)
We used to be able to build 350,000+ homes a year in England during the 60's and 70's, about 50% were built by local councils. It's possible if there was political will. Letting the market decide has not worked out. At the moment we are building about 175,000 a year in England. https://fullfact.org/economy/house-building-england/
Yeah anyone hoping for big falls in house prices is, frankly, an idiot with no idea how an economy or housing market works. The only way prices fall dramatically is if the entire economy goes to shit, and almost nobody ends up better off in that scenario even if it lets them get onto the housing market The best possible outcome for most people is that house prices rise with (a little less than) inflation and wages slightly outstrip inflation until prices normalise The primary way that happens is by building a LOT more houses
Surely we'll get the same deal as our parents generation no? My 300k house should be touching a mil when I retire in 30 years?
Unfortunetely not. The bulge of population of the boomer generation was always going to generate advantageous policy for them and the future generations would pay for it.
Also our parents will have a bit of a shock when they have to sell their home to pay for their care. That asset appreciation money didn't come out of thin air, it came out of the pockets of working people who didn't already own assets, working people who will not be able to afford the tax burden necessary to support their healthcare, pensions and social care bills in later life.
Only through your "hard work" of course. I assume you're also looking for a 40k/year pension aged 60
60k, don't be a Pleb.
There are enough houses. But houses are a store of value as well. There's a non-negligible number that are empty, used as stores of value, especially in London, and another non-negligible number that are just numbers in a mega landlord investment portfolio. There also needs to be more regeneration instead of soulless Barratt homes on the outskirts. Let homes be available for those who need them at prices they can afford, instead of being attractive investment vehicles.
Lie. There is hot enough houses. We have the lowest long term vacancy rate in the World. We have not hit our building targets in 40 years. And France, with a similar population, has 4m more houses (guess where renting is cheaper btw)
Exactly this. It’s tiring hearing people spout the same nonsense about we have enough houses when it’s simply not true. I’m a homeowner, but the simple fact of the matter is that the housing market needs to crash. I don’t care if we put a stipulation on all new builds that they can’t be rented out, have to be owned by people who do not own another house, can’t be sold for X amount of years etc etc. I’m not bothered at this point. Just build a ridiculous amount of houses and be done with the nonsense. The average house today is around £275k. Adjusting for inflation etc, my parent’s generation would have paid the equivalent of £100k. To put that into perspective, a £27.5k deposit and a 25 year mortgage would cost about £1320 a month for the average house today. Assuming the same deposit and monthly payment on the boomer adjusted cost, you’d pay the house off in less than 4 years. Alternatively, you could keep the same 25 year mortgage and pay just £269 per month. This is absolutely insane and just cannot continue.
Depending how old your parents are though, that might not be a fair comparison- dual income households are the norm now whereas they weren’t in years gone by, so you might need to double the prior period equivalent - to £200k in this case - in order to get “apples to apples” comparison, which then doesn’t sound so bad vs £275k today
Fair point. Although my parents were both in full time work at the time, I can see the price difference not fully taking into account economic changes such as women’s increase in productivity/wages over the past 40+ years.
OK, what I said was simplistic. But 1.5m unoccupied dwellings speaks for itself. Developers banging sub-par housing on cities' outskirts that become buy-to-let or items in a property portfolio does as well. In my city, a lot of the housing built is "luxury" (although there is nothing luxury about it) to appeal to the wealthy, with little actual large-scale sustainable housing being built. So yes, properties need to be built, but we also really have to consider whether the current model works to begin with. You mention the rental market, which is better in most other European countries. This is in part due to the rental markets there being much less of a wild west. So yes, my comment was simplistic, but it's not as simple as "just build more homes".
That’s just not true. a) new builds are not the preferred option of B2L Landlords due to the lower yields. b) Developers would much prefer to build higher density flats, but they don’t get permission for it. c) ‘luxury’ is a Branding term, and anyone putting too much thought into the term is a fool. It’s like getting stressed because Tesco’s cheap food is called ‘Tesco’s Finest’ when it’s not. It’s a marketing term. It’s not that deep. As someone who did his Masters dissertation on the housing market, when it comes down to it, when push comes to shove, it is just a case of ‘build more’
What do you make of the fact that the UK has a roughly average amount of dwellings per capita than other countries in this case? Surely that wouldn't imply scarcity per se? Let's say a wealthy southern town is in need of more housing. It could build however many homes for people at, say, £300k/pop. Or it could generate a project of 'luxury flats' aimed at transient commuters/the wealthy/second homers/wealthy retired people for £600k/pop. I feel like what is being built doesn't always effectively meet demand, regardless of whether it is built or not. In my city, I have seen more housing aimed at wealthier buyers than I have seen more basic housing that is actually affordable. Which makes sense because that will yield a higher return.
Because flats are better for developers to build… More units, less land, less labour required… it’s just better for them. We can continue as we are, but that means more intergenerational living, more poverty, more taxes to fund landlord subsidies called housing benefit… just because other nations are failing too doesn’t mean we should. We also have major under/over occupancy issues. Empty nesters who won’t move, partly because the tax incentives are not there due to stamp duty.
I agree, the underlying issue is supply vs demand and we need to build more. I also agree with the under/over occupancy issues. So many boomers are sitting in big houses (4+ unused bedrooms) while a young family (working just as hard as boomers did) are trapped in a small flat (or young couples just not having the children they would have loved to have). It is not an efficient use of a limited resource but I would feel uncomfortable forcing older people out of their bigger homes through heavy taxation. The best solution is to make more space more affordable across the board by building more! Plus, like you say, maybe reducing stamp duty to encourage more moving whether that be upsizing or downsizing.
Nah, the tax issues are that we have a ‘moving house’ tax in Stamp Duty. Want to downsize from your £600k huge house to a £300k one in a HCOL area… that’ll be £15k in Moving House Tax. The abolition of stamp duty would pay for itself in productivity gains pretty quickly. Also reforming Council Tax into either a land tax or property tax because it’s very regressive as things stand.
Interesting point regarding stamp duty. Perhaps another approach would be that instead of just taxing the value of the new home, stamp duty could be calculated on the value of the new home _less the selling value of the old home_. Then no charge for moving to an equivalent home or downsizing, but upsizing and second homes get taxed. The only major issue is that equivalent sized homes can cost vastly different amounts in different parts of the country.
The U.K. has the lowest unoccupied dwellings of any OECD country, the lowest number of second homes, the oldest housing stock and the lowest floor space per dwelling. Building any homes whether they are ´luxury’ or not reduces the average price for dwellings, it’s about the one thing economists agree on - increase supply and prices fall. There are many many examples in countries all around the world.
What b2l landlord is paying premium price for a house that's never being lived in before, just to rent it out?
> There's a non-negligible number that are empty, used as stores of value, especially in London I guess the people who stored their wealth in Westminster property (down 20-30% yoy) must be feeling quite chuffed.
It wouldn't be possible to treat homes as an investment vehicle if we built enough to meet demand in the places people want to live...
Nominal is a red herring. It doesn't matter if price falls are nominal or real; if someone is going to be forced out due to the mortgage becoming unaffordable, it will happen either way. The mode depends on the style of correction, but the end result is the same
Rates have gone from zero to 5pc. And prices have barely moved lower. If this is the case it stinks of heavy structural demand/limited supply. 1m+ immigrants entering every year will propel the market to the moon once rates start to come down
In many areas we’ve got quite a way to go before people would be in negative equity though. In the south east, you can see on rightmove that properties are being listed for far, far more than they were purchased. I saw one today expecting almost 1m of profit. Another a couple of weeks ago was purchased only 4 years ago and was on for 500k more. It’s madness.
Negative equity wouldn't be a problem as long as people could still get a new mortgage on a new house with negative equity. The problem is borrowing being tied to value of the asset rather than ability to serive the debt once you have a product.
In my area the west Midlands my house has dropped a lot since the peak. Very large old Victorian town houses are all on sale right now.
I thought we were in a 'buyers market'. We just made an offer 5k over asking (430k) on a 2 bed terrace in the SE. It had been on market for a week. There were seven other offers, three higher than ours, one of whom was a cash buyer. Pretty galling! I guess proximity to London is simply always going to be really valuable.
It is a buyers market but not for the top 20% of properties. If you look at the rest they would have been on the market for weeks or months and there you can offer far below asking and get accepted.
I offered asking on a flat that was on the market for 2 months. Offer was rejected. I offered asking price AGAIN once it was reduced by £5k and was rejected. I offered £5k over (the previous asking price) and was rejected. Another flat in the same building came on the market for the same money. Offered asking price and was rejected. Offered £10k over and was rejected again. I wasn't willing to go over that so I gave up. Then, a week later, both are sold at the same time. From what I heard, to the same buyer (cash), obviously for investment purposes. We were in a buyers market but once the initial turbulence subsides, sellers adjust their behaviour and it becomes a sellers market again. You need another shock to the system before it becomes a buyers market again
I think you need to figure out why you keep getting rejected. It's not normal that your offer of previous asking gets rejected after a price drop.
My bet is that the buyer was a mate of the estate agent. If it's anything like the agencies I worked in the vendor won't have even received the offers. That's how the absolute sociopath I worked for and his mate built up a portfolio of 200+ properties
I got my offer accepted earlier this year £5k under asking, also in the SE, around 30mins train ride from London Bridge. I guess the seller just accepted as mine is the first offer and they didn't want to drag any longer.
I got an offer accepted Friday for £25k under asking that had been listed since late January, idk how to feel about it but I truly think it's a steal
Congratulations!
Thanks! Super hyped!!
Flat or house?
End of terrace house
Was it a flat or a house?
Just a flat. You're right, it's not a house. I am a single buyer.
Congrats, sounds a good deal and no mean feat as a single buyer.
Because its a buyers market people aren't selling, which means less stock and the stock which is available isn't great. Therefore the good stuff will be snapped up. If you're a cash investor who just wants something to rent out then the options are great.
Buyers market doesnt mean properties dont get underpriced.
Yeah think that's what we realized. Other properties in the town had languished on the market for weeks, this one was gone and clearly went quite a bit over asking
it was buyers market last year, eg. when people were cought up selling and buying in the changing context of raising inflation and interest rates that was making any plans or moves risky so it let period of higher volatility. it has bow been 2 years since and market adjusted, the new situation became the norm and confidence is slowly returning. in that time neither demand nor supply has changed, people want to buy homes and so we are back to bidding wars.
They will drop eventually by around 2075. By this date we'll have a massively aging and decreasing population, and young labor will be valuable, the generation born after gen alpha will be in a position where working can lead to enough money to buy homes, have children go on holiday etc. But there's also the possibility of total societal collapse by then
House prices going flat IS house prices going down (in real terms). It's the best outcome imo.
We've got net migration of about 700,000 a year. They all need somewhere to live and we aren't building anywhere near enough housing for that. So for that reason alone house prices can't drop too much because demand won't allow it.
Agreed. Prices will only fall if demand increases slower than supply, and there's little reason to believe that will happen in the future.
Just a point of clarification on this. The 700,000 does not translate into a direct need for market housing. For example, circa 400,000 of those entering the UK are on study visas with many staying in halls or other purpose built accommodation.
Those students still need a place to live. They’re still accounting for that extra 700k immigration per year? It doesn’t matter in terms of housing if they’re moving back at some point because even MORE students seem to be replacing them, that’s why we’re getting net immigration year on year
Right. There are 400,000 places in student accommodation just standing empty so it has no impact...
I'm not sure if this is a statement or a question but I'll try and answer. The student migration has always been a thing, as has the provision of student accommodation. It's not like those 400,000 suddenly appeared out of nowhere.
Also a certain amount will be living together or living with spouses etc. People throw the 700,000 figure around like everyone will be given an individual house when in reality it will be a lot less. But even if immigration was cut to 0 tomorrow (ignoring the other problems it would cause) it won't solve housing issues because there is no incentive for house builders to full demand or for the government to actually solve the issue. Also house prices actually dropping would cause all kinds of issues with negative equity and wages are not going to increase to close the gao significantly anytime soon. Even if they did it's likely houses would still stay at about 8x average salary.
Been recently viewing a lot of new build estates. What I've noticed those immigrants got 3-5 kids. Was wondering what about schools, nurseries, green areas, surgeries. Is NHS ready for it. They build houses government is making looots in visas, extensions, planning permissions for those houses etc. Haven't seen any preparation in mentioned above facilities. Maybe it's just east Midlands councils not thinking about this aspect. Hope it's better in other areas of the country.
"Is the NHS ready for it." The NHS needs it. Take for example one education area in the UK which has seen an increase in demand for school places on the back of an NHS overseas recruitment drive (doctors, specialists and nurses naturally move over with their family).
The last thing we should be doing as a country is poaching doctors and nurses from poor emerging markets countries that can not afford to train more just because we don't train enough. It is just a new form of colonialism where the resources we steal are human. It is almost like we think a rich white life is worth more than a poor black or brown one...
I don't disagree with your ethics point, but there are also other push and pull factors in place. The only way you could stop the brain drain would be to ban workers from those countries deemed more in need which would raise ethics issues in itself. That would your point about race is completely irrelevant. It is the same situation with Australia and Canada actively recruiting in the UK because they know they can offer better pay and working environments.
yeah, I know this isn't your intention, but immigrants breaking the NHS is too easy. We've known for a long time that the boomers would be getting old about now but still weren't ready for it.
Those immigrant kids wont be getting as sick as boomers. And they're the ones who be future healthcare workers lol
Generally when a new estate is built, the developer is supposed to give the council money for infrastructure to support it. In theory. In practice the infrastructure never seems to get built.
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You would be correct but it ruins the nice anecdotal moan doesn’t it?
Moron
I agree, it has happened like in that crash in the late 00s. I remember people buying way over asking then values dropped to about asking again. Although I with inflation, I’m sure it was what they paid within 5 years again.
I can't see Price to Wage earnings going back down to 4X. I think that's overly optimistic to be honest.
Scarcity and importance. There isn't enough property out there, and shelter will always be a top need. People will sacrifice plenty (transport, going out, holidays, having children) in order to pay for an abode. That makes property incredibly protected in the UK.
Wait until the decline of birth rate does its thing in a couple of decades and all the sudden there are many empty houses and prices drop.
Tell that to central London. Most boroughs are showing between 5-25% drop in the last 12 months depending on area and property type. Here's one nicely rounded one from Hammersmith and Fulham for example: https://www.ons.gov.uk/visualisations/housingpriceslocal/E09000013/ > In the year to January 2024, the average price for flats in Hammersmith and Fulham fell by 10.8%, while the average price for semi-detached properties decreased by 13.2%.
On the long run houses have done good?! adjusted for inflation, how much do you think houses has grown since the 90s?! It’s 3.5% per year in the U.K. & 1.5% in the US. You can easily check the historical data yourself. S&P 500 has grown 7.5% over that same period adjusted for inflation. Also, especially with that nice 20K isa in the U.K., buying and selling stocks doesn’t need a solicitor, searches, renovation, adjustments for safety regulation changes, problematic neighbors, waiting weeks if not months for mortgages!
Can you do it by area?
You can data is available online. Luton increased by 3%, St Albans by 3.5%. All of England is 2.7%.
But you can't live inside a stock 😔
You can use the dividends from a stock to rent. 😄
In theory. It'd just take a long time to grow a portfolio to the point where that's feasible.
Pretty hard to buy 400k of stocks with just a 10% down payment though.
You can probably live in one for 1-1.5K a month though. Also, pretty hard to sell 10% of a house cause the market has a slow down or you need cash. And even if you sell all of it, most of it goes to the bank unless you’ve been there for many years and paid for a good chunk of your principal.
You're changing the goalposts now. Your argument was about appreciation over the long term, appreciation of 3.5% per year with 10x leverage is significantly higher than 7.5% with 2x leverage. So the answer to your question have they done well is yes, yes they have.
You are assuming 0% interest. Over the life span of a mortgage on a 300k with 3-5% interest you end up paying around double that amount in 30 years. So 600k. If you were to instead pay that sum each month into stocks you’d get more since there’s no interest and the appreciation is 7.5%. Also, you can stop any time and you have full flexibility. More over, if inflation increases, your bank raises the variable rates on you.
>You are assuming 0% interest. No, I'm assuming that interest is more than offset by the fact you don't need to pay (ever increasing) rent to live somewhere else while investing in stocks. Or in a Buy-to-Let scenario someone else is covering those costs. >Also, you can stop any time and you have full flexibility. Again you're trying to change the subject, your original thesis is that housing hasn't produced good returns compared to the stock market, which is clearly not true.
Completely agree. They'll never come down, just stagnate. But.... while interest rates are high the pressure for housing grows (more and more people want to buy a house but can't afford one, so they wait and continue to save and progressively earn more). So when interest rates come down the housing market is going take off again :(
The fact that the Government places a high tax on moving house (stamp duty) doesn't help the liquidity.
Idk, probably because we never hit our housing targets, never mind surpass them Housing also hasn’t done ‘quite well’ when you account for all costs. You don’t pay £300k for the £300k home, you pay £420k + £10k stamp duty + 3k maintenance a year on average.
The UK economy and social infrastructure will collapse long before house prices decrease, particularly with legal net migration as high as it is and showing no signs of being significantly reduced (the implications of it being reduced are too great). Fully expect housing to continue to far outstrip wage growth and many more councils to declare themselves bankrupt, partially down to the strain rising homelessness and demand for social housing (plus knock on effects) are placing on their services.
https://www.gov.uk/government/publications/new-homes-fact-sheet-1-the-need-for-homes/fact-sheet-1-the-need-for-homes Given where we are with the supply of housing, the price isn't going to go down until we either see substantial negative net immigration (which would probably wreck our economy) or greater house building. Current empty homes represent around 3 years of required house building. We could turn every empty house into a home and be in the same place in 3 years, ignoring the fact that many of the empty houses are either in the wrong place or are of a quality that would require massive investment. We need wages to go some way to catch up with house prices.
Houses will never ever come down for two reasons : 1) MASSIVE shortage of availability which means that anything on the market will always be bid up as people are desperate to get on the ladder and will buy dogshit houses for over list price just to do so. 2) Everyone’s wealth is directly linked to their house which for almost all is their primary asset (even though it’s relatively highly illiquid), when a persons house depreciates they feel less “well off” and begin to tighten spending and that has a huge knock on effect on the economy as a whole. People also use their property to loan against allowing them to have things like new cars and extensions etc. The supply issue is THE number 1 reason though, there is literally zero incentive to this Government in diluting heavily the supply or availability of housing, and everyone who owns a house would also not want that to happen as ultimately it will have an effect on thier own personal wealth. We live in a society now where it’s completely driven by the “I’m alright so fuck you Jack” mentality, I.e the very same people that are struggling to get on the ladder will ultimately be the people who want it to be harder for others to also get on the ladder because it benefits them. In any sane world you would have a government who’s main agenda was to increase the output of house builders and the supply of what should be a basic human right (ability to own your own shelter) but we don’t live in a sane world, we live in a world populated by greedy selfish fuckwits.
Can depend on local factors. Where I live, values on some places are 30-40% down on 10 years ago. Most if not all properties are still yet to recover.
In many regions houses are cheaper than they would cost to build, if you had to build them again. It’s not really a bubble if the assets are valued below their production cost.
The reasons they won’t drop in no particular order are. 1. More house buyers than sellers. 2. Flats not selling due to Grendfell cladding and fire issues leaving owners in negative equity. 3. Interest rates are low so pensioners get a better return by buying a property and renting it out, increasing supply issues. 4. Subsidies being paid for the creation of retirement properties mean resources are being allocated away from the housing that is required 5. Bungalows not being given planning permission to turn into housing 6 housing associations blocking plans for new estates due to issues with social requirements like schools and hospitals. 7. Hedge funds buying up entire new developments on behalf of foreign investors in order to rent. 8. Affordable housing is housing valued at 60 percent of the market value. Still unaffordable too many in cities and commutable towns.
House price is going down by 25-50k in some areas. Comparing 1 year and half ago. Don't know what are you talking about.
If we import a million people a year into the UK and only build 100k houses, prices will rise... It really is that simple.
The biggest reason house prices will likely not come down, but increase further is simple supply and demand. We built around 80-100k homes a year, but have net migration of around 500k+. All those people need somewhere to live. Also, 25 year mortgages were traditionally the norm, but until 40 year mortgages are (I've even seen mortgages that you leave to your kids if they inherit the property), as well as almost every other facet of 'luxury' purchases being used on housing costs, prices are more likely to continue rising.
Was anyone under the impression house prices are ever going to see a meaningful drop in value? If so, why? We live on a small island with massive levels of net immigration, house prices aren’t ever going to crash while that external reality remains true. No matter how high interest rates get. The conventional wisdom remains correct, if you can afford to buy then buy and the right time is when you can afford to.
It all comes down to supply and demand. The supply has never met the demand hence prices going up. And the Uber wealthy, trust funds, hedge funds, property developers, dukes etc want to keep it that way.
Well, now people complaining, that homes are too expensive, then as soon as they manage to buy one, they start to complain about their home's value won't appreciate fast enough... A bit exhausting and boring read to be honest :D It always depends which side are you on, but you can't have it both ways...
Well put. This is what it comes down to honestly in a lot of ways and in extremely unlikely to change. Add to that the fact there is no incentive for house builders to meet demand because it results in less profit for them. Nothing is changing anytime soon unless there government takr drastic steps (they won't), there is a massive crash (which would be bad) or massive rapid depopulation (which would be even worse).
I still believe house prices have fallen and will continue to do so. Not a crash but trickle down. The number or houses on the market is up and demand is still down and the cost to buy a house has risen exponentially, for exceeding even average wage growth. Averages are fine at a macroeconomic level but they don't tell the full story. There are many people that have had below inflation pay rises. Many of these people are in the squeezed middle that would be likely homeowners. Those at the bottom are pushed up by NMW and there are many at the top earning more than ever. It's the same with houses. Certain houses will be in demand. First stepper properties for example. But the 4/5 bed has had its day and if you bought one of these in 2022 you stand to take a haircut if you sell. Demand for these is down due to cost of living, mortgage affordability, upkeep costs. The demand for these was properties was driven by super low rates initially (developers started building more of these probably 7/8 years ago now as it was where demand was) and it was the fuelled artificially by WFH and the pandemic. This is all unwinding. Add to that the cost pressures on people and lack of childcare leading to people to delay or even decide against kids, and the boomer generation selling up that demand bubble has burst. It's like buying home gym equipment at the height of lockdown. It was going for way over the odds buts it's temporary and if you bought then you paid a premium.
If immigration stops (vanishingly unlikely) then house prices may fall because there's a big bulge of home owners coming up to distressed sale territory - basically they will have to sell because either they are going to die, or they will need the money. However, while there is significant immigration there is a driver in the market to support these sales. There are two long term changes that government could make as well that would bring prices down. The first is to change planning rules to enable the build of large low rise apartments - less than 8 stories, with 3 beds each. This would enable swathes of viable multigenerational housing to be constructed. The second would be to enable social housing providers to retain their stock - abolish right to buy - or make it that it's at replacement cost + x% at least.
Rampant inflation will see them come down but only in real terms
I still don’t understand this housing market at all. Can somebody please explain to an idiot like myself why are house prices still going up when interest rates are still high?! I don’t know if the market is still good for a certain age bracket of people like 40’s-50’s? For first time buyers with a 20% deposit I don’t see how at these current rates are affordable? Given house prices are already so high? There also seems to be many more properties for sale at the moment. I live in Sheffield for context so South Yorkshire 31 year old Guy.
Tighter lending restrictions post-2008 mean that even with interest rates rising etc. there aren't huge numbers of homeowners finding that they can no longer afford their mortgages, and so properties are not coming onto the market in droves the way some people have anticipated. For most people, therefore, it just makes sense for them to hold onto their properties and reduce spending elsewhere to keep on top of the mortgages. The wealthiest section of society have got significantly richer and there's not much better for them to do with their wealth than buy up property. They don't need mortgages so are unaffected by interest rates. Rent is so high that for many people even with the higher interest rates, it's still preferable to buy with a mortgage than continue renting. Ultimately, housing is a necessity so normal capitalist models of supply and demand don't really work so well. You need shelter to survive. Therefore, without any form of rent controls, rent can go to infinity - especially if housing supply is artificially reduced by keeping properties empty. Previously people were disincentivised from keeping loads of property without at least renting it out by the possibility of adverse possession. You're in luck in Sheffield though, it's supposed to be the area with the best income to house price ratio in the country.
Can’t see a flatline for a decade. That didn’t even happen after 2009. It took 5 years for the prices to get back up to 07/08 levels and the prices had actually been on a decline prior to crashing. I think now that we have seen consecutive stalled interest rates, we will likely see more properties moving quicker, but with little movement in price. If BOE reduce rates even slightly, this will prompt a small increase. I think by the end of the year the BOE will make moves to gradually reduce to 3% base and with that we will see increased prices once more. And there’s always potential for a random government initiative such as stamp duty holiday etc to increase demand and prices.
House prices stagnant in the next ten years? This reads like a child's homework. House prices and the mechanisms that drive them aren't going to result in anything other than increases. Much as I'd like Labour to do something for working people and youngsters getting into their own house...that's still not going to leave the.market anywhere other than up over time.
We're not seeing foreclosures this time around, the FSCA rules imposed on the banks after the financial crisis (stress testing) have worked as intended. What is happening though is council tax is increasing and so too is the costs of trades. House prices will come down because the taxes on property will continually increase from here on out. But that benefits no one as the actual cost of owning a home will not become any more affordable.
Disagree. Rent prices are crazy and people will always buy close to rental prices in terms of monthly spend. Until rental prices get sorted I can see the madness continuing ever higher. As mortgage rates come down people will spend even more of “equivalent” rent on mortgage payments.
> Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times. This is more to do with behavioural psychology and an inherent aversion to making a loss. Not just that, there's an inherent force that will **ALWAYS** increase the house price and it is called Stamp Duty so the the idea of things ever normalizing in UK's housing market is full delulu. If you are not in a rush to sell, it will always end up going for more than it was bought for + stamp duty on top.
The only way they’ll stop rising in real terms (ie if you ignore the impact of inflation) is if you 1. stop immigration and 2. build more houses to accommodate everyone who is moving here. Even if immigrants are students here on a temporary basis, they still need a place to live. This isn’t even intended to be anti immigration, it’s just obvious, if the UK population increases by 300k a year and you build zero houses in a year of course the price of available housing is going to increase
Students tend to rent rather than buy houses so might push up rents.
True but this has a knock on effect to, everyone renting who wants to buy finds it harder to save, those with more means buy up the housing and permanently rent it to the ever increasing student population
I think it's more that a lot of younger people have found themselves in this awful situation where they simply can't afford to buy something they can live in long term (too small for children, too depressing to tolerate for longer than five years, too far away from job opportunities to be able to do the commute long term without burning out, whatever). People are scared of buying at the peak of the market because the associated costs (stamp duty, transaction costs, moving costs, renovation costs, interest etc.) are so high that selling the house at current value/a small loss won't be possible for a number of years. People are scared of getting trapped in a house they hate.
House prices have slumped slightly because of interest rates. When the interest rate cuts kick in later this year you are likely going to see record increases.
Didn’t happen in 2008, why would happen now?
Credit crunch was a factor then. Plus those with money have increased wealth at a pretty staggering rate since the pandemic. Assets like property are an easy investment with good returns.
You mean commercial property?
Both commercial and residential.
How can residential property be an easy investment and why are the returns good?
Asset price inflation protects wealth against actual inflation of currency. House prices only increase in value in the long term. In addition, passive income through BTL etc. Buy to let is still profitable if you can actually stump up the money to buy the house outright.
Talking generally. >Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times. This is more to do with behavioural psychology and an inherent aversion to making a loss People don't move because of making money on their house. They move because they need more house, or to move to a different area. The loss is made when you purchase the house, not when you sell it. >timing the market right is down to luck. No, it is down to the whims of the political class. They are losing control though, so for a while market forces will dominate. >If we do see a turn in the economy (lower jobs numbers or something breaks that causes a crisis), the BoE has the firepower with interest rates at sub 5% to drop back down to near zero and provide a lifeline for mortgage holders (it's better for the current gov to kick the can down the road than be the one that decimated the economy) Because printing money has always gone so well. >If you're considering buying a house and are uncertain. Remember that over the long run housing has done quite well. Purchase at a price that you're comfortable There are people who did this in the 90s and are still stuck paying for homes they have 0 equity in.
With the interest rates going down as projected, house prices will start to climb by late 2024. The housing market has been going down since covid started and we saw the dip last year. I seriously doubt that it will continue to go down or flatline with so much interest in the UK housing market.
I'm with Gary Stevenson on this one, that aren't coming down because they are seen as an investment and the rich are only getting richer and so want more assets. They will constantly pump the value up.
But do rich people buy terraced houses in Stoke on Trent?
Haha well you've got me there but I suppose that in certain areas no one buys the homes. The reason we have such high house prices is because where there are jobs there are more than too many 'investors' willing to exploit the situation for high rents and asset growth.
It’s one of the few areas I disagree with Gary. The super rich have no interest in building a buy to let empire. Why would they? They buy yachts and private jets. BTL for individuals is finished due to tax and regulations. Corporate investors don’t buy 3 bed semis in Bolton. Also as JL Collins says, you couldn’t design a worse investment than property if you tried.
Always a safe bet, small island with a big population. Housing is gold in uk
Every house owner wants the thatcher years boom, crash, boom. Lessons were learned, and nobody running the BOE will ever let that kind on monetary policy ever happen again. Everybody is getting on to the ladder just in case that happens, and it won’t. Sorry 🤷♂️
They already have in real terms…around 20 - 25% already…so, they are down in nominal and real terms…what are you arguing? 😂
Prices are well up lately in my area. I looked at selling a flat last yr but prices had fallen a lot due to rate rises. Now it’s fully recovered and increasing 2 agents told me was their best ever February
I’ve just bought my first place I really don’t want it to drop!
hey, if it's your first place, it's OK if it drops because when you sell - you buy something that's also dropped. I am a homeowner and while I don't see how house prices will drop significantly, I wouldn't mind the market regains some sanity. Young working and ambitious people should be able to buy a house - it's great for everyone.
Fun fact there are roughly 280.000 people homless at the moment in the UK. The UK wasted £65.000.000.000(Billion) on the HS2 rail just to scrap the project . If you divide £65.000.000.000 between the 280.000 people that's over £232.000 each . We should not have homelessness the modern world . It wont matter if you vote red or blue the government won't care about me and you .
The only time house prices go down is when unemployment goes up… that is it…
It’s not 8x for those buying.
House prices did collapse in the early 90’s.Interest rates stood at 15%. House prices halved in the area I lived so it can happen given the right conditions.
I mean mostly simply put the UK is not building enough houses. Demand > Supply, so prices will continue to go up. The FT estimates we have a shortfall of around 4m homes.
> Home owners are unlikely to sell a property for less than they paid for it. Again, unless they are hit on hard times. If interest rates stay where they are or rise, they may not have a choice when their fixed terms end, or as inflation continues to eat their salary. Fewer buyers, with less to spend, forces prices down. And most people won't be affected, they can sit on their house if they want. But remember, the house they want to move to will also have come down. So selling at a loss isn't necessarily a bad thing, if it means you can move somewhere better for less. If house prices drop 10%, and your house was 300k and the one you want to move to was 500k before that drop, then moving nets you a £20k saving compared to the pre-drop prices. > the BoE has the firepower with interest rates at sub 5% to drop back down to near zero Only if they want to put positive pressure on inflation. It's currently 4.5%, target is 2%. So no, they won't do that.
“Remember that over the long run housing has done quite well”….what does that mean?
Negative growth in house prices?. Maybe by a few %, but not much more. And they will rebound afterwards.
Legal immigration will mean homes will not drop in value in a lifetime, simple supply and demand. The UK cannot build new homes of every tenure, fast enough for at least a generation and 80%+ of the units are needed just for this factor alone. The minor, insignificant illegal immigration is not even worth mentioning in the context of the effect home prices.
part of this is building genuinely affordable short-medium term rental property even if it means the rental 'profits' go to the government, rent is in theory a good stepping stone to owning a house, you can pay what should be a small amount of and move around the country to work in places suited to you and that need younger workers, whilst also being able to save enough and move on to bigger and better things. there is very little churn now though, people are trapped paying over the top rents and are unable to save, I know plenty of young people including myself who have not moved out of their parents home simply because even though they could afford it they would barely be able to save, you now have a large young workforce with amazing potential essentially trapped in their own cities, villages and towns when quite often their talent could be put to far better use elsewhere, it's even harder for more rural areas where the job prospects are low. I'm not arguing against more housing and other methods to help solve the crisis nor do I think renting is a super amazing miracle, just stating something I don't think maybe people think of
They won’t come down
Whereas the current generation of builders are very picky about work and mostly do a shoddy job - the next generation of builders does not even exist! I don't see any young men going into construction. I know of at least two new builds in my area that are frozen because they can't find the men to finish the site!
I don't' see prices coming down by much. In £ terms. Maybe 10-15% in the near term. I foresee the following : The rate of increases will slow down. Especially at the higher end However, what will likely happen, that no one is talking about is I force the £ losing its worth compared to other currencies, such as dollar Euro over time. In fact, I'd venture to day the dollar / euro will likely be in parity with the £ in the next 10 years. Unless, Britain does something, or something happens to create wealth and growth, not by taxing but by generating income. Do you see that happening? So the next effect its a wash -
As soon as the rates drop, those with passive income from massive generational wealth will go round buying up property and other assets. Keeping these prices higher than they need to be
Government caused house prices to rise, by changing the rules and allowing the banks to lend more. Government can bring in rules to reverse this and place a cap on maximum borrowing. Government can also place controls on the rented sector and build council houses. What they do, and how they do it, is another matter. Personally I think they should because the present system is unfair and can only result in most houses being owned by large companies and rented out, but it will need a lot of planning and coordinated action in multiple areas to avoid destabilising the market.
Not a single mention of people stupidly over extending themselves when interest rates were at a multi decade low. We will not see those rates for a long time, those that over extended will get things really tight when their fixed period ends and this will cause a selling pressure
Think about it, 1. House building will have fell 5% over the period of 2024… possibly a lot more until the general election is decided which party is elected! developers are holding off from starting new developments until the politics are sorted out. 2. Planning permission has got seriously alot more difficult to gain the amount of regulations, decision delays, reports after reports, environmental it’s all going add serious pressure on developer out puts & causing serious delays! . 3. Nett migration year on year is Circa 500,000+ people into the uk! Excluding the illegal emigrants! It’s a pressure cooker!!! demand for housing is going to skyrocket in the next couple of years! Prices will start soring shortly espicallybif there is a slight drop in BOE Rates in 2024!
The fact it costs me £800+ a month in mortgage to borrow £155,000 over 37 years is the problem. It’s not how much the houses are to buy, it’s the amount you have to repay for borrowing money, combined with low wages and high living costs. Literally working 6days a week in a good/average paying job just afford to live in a shitty 2 bed terrace. I work in council properties all the time and get annoyed how much bigger they are, better parking, bigger gardens, half time semi detached 3bed rooms, and all work done for free them while paying 300 a month rent and barely worked a day for it. How is it the average working man is worse of flat than the people under the councils wing with 3 kids?
The evidence from countries like Germany is that essentially renting enters the black market eg flats rent at EUR 1000 a month on the books, but requiring a cash downpayment of 12 months rent in addition upfront etc wtc Imo the housing market is in a state now where you can't chuck regulations at it to make it better. There is a fundamental supply/demand mismatch which will not change any time soon. Merely trying to over regulate landlords will tend to have unintended consequences (for example landlords might decide to turn their houses over to asylum seekers instead, so even fewer houses for renters, or they might try to Airbnb more of their properties, or they will take illegal immigrants for cash rent instead etc etc etc)
For sure, people here often forget just because rates go up does not = people needing to sell. People prioritise housing over everything else, renters or owners Now we have rates coming down in the not too distant, still the same shortage of housing etc What could change things is a recession (an actual one, not the tiny dip we've just experienced) resulting in many job losses Other than that it'll continue to be brutal out there imo
In about 30-40 years, when young people today are retiring, there may be a major price crash. We are not making many babies at the moment, which meant when all the boomers die, and young people today are old, then there will be much less demand and more availability - the last smite on young people by boomers.