House prices.. will it really crash?

18
Edited by:"xsor"Found 4th Sep 2017
I know there's a similar discussion, whether the house prices crashing is a good or bad thing.

But I pretty much want to know more on what you guys think will happen..

Personally, I really don't see it "crashing", if it does, it will be maybe like 10%? But outside London may suffer higher losses?

It's pretty obvious that the ones in control do not want the prices to crash, raising the interest rates to 3-5% will definitely kick people out of their homes (if they buy alone).

Example: £200,000 mortgage, 2% interest, 35 years is about £662 per month..
If interest rate rises:
0.25% (0.5%) = £26 (£688)
1.75% (2%) = £196 (£858)
3.75% (4%) = £449 (£1,111)
(hopefully the numbers are right) - thisismoney.co.uk/mon…tml

So what do you think? Up or down, reason and predict when?

Please note, everyone should also not take anyone else's comment as advice.

  1. Misc
Groups
  1. Misc
18 Comments

I don't think it's going to happen.

Two things drive house prices, and they are buying power, and demand. Buying power is tapering off as wages across the board generally stagnate, but demand, at the moment, is only continuing to grow as immigrants arrive and as existing citizens reach property-owning age. That won't change unless there's some sort of an exodus, which is a possibility under the possibly-disastrous coming Brexit.

Personally, assuming Brexit doesn't completely destroy the country, I see house prices continuing to rise, and the popular work-around being the middle classes buying up property in areas traditionally held by the working classes, and then the working classes buying property in rougher areas, where people can get a lot more for their money than in nicer areas. This will cause those areas to gentrify over time, so current states of roughness won't be a major issue for those buyers.

Will not crash in London. Elsewhere unlikely imo.

Original Poster

dxx22 m ago

I don't think it's going to happen.Two things drive house prices, and they …I don't think it's going to happen.Two things drive house prices, and they are buying power, and demand. Buying power is tapering off as wages across the board generally stagnate, but demand, at the moment, is only continuing to grow as immigrants arrive and as existing citizens reach property-owning age. That won't change unless there's some sort of an exodus, which is a possibility under the possibly-disastrous coming Brexit. Personally, assuming Brexit doesn't completely destroy the country, I see house prices continuing to rise, and the popular work-around being the middle classes buying up property in areas traditionally held by the working classes, and then the working classes buying property in rougher areas, where people can get a lot more for their money than in nicer areas. This will cause those areas to gentrify over time, so current states of roughness won't be a major issue for those buyers.


Yeah, exactly.

As nothing like Brexit has happened - it's really hard to say how this will affect us once we're out etc..

Will people lose their jobs, will there be less jobs, will borrowing be harder, will interest rates peak up

But yes, I somewhat agree that house prices won't really crash, more likely to stagnate, simply because there are now more middle class people here, as the existing homeowners are more likely to just keep the property they are staying at.

I'm still in the middle, and have no clue what to do - whether to buy or to hold.

If people can only afford their house because interest rates are low then they have made a large error.

Your numbers are completely off.

MIDURIX16 m ago

Your numbers are completely off.



His numbers were a little muddled but I think he means the first percentage is the increase in interest rates.

So the final figure is actually interest rates of 5.75% which is roughly £1111.00

I work it out as being £1107 actually but I'm not going to moan about £4, even though over 35 years you will have over paid a few grand.

I'm not really sure what the percentages in the brackets are for.
Edited by: "CoeK" 4th Sep 2017

Original Poster

CoeK57 m ago

His numbers were a little muddled but I think he means the first …His numbers were a little muddled but I think he means the first percentage is the increase in interest rates.So the final figure is actually interest rates of 5.75% which is roughly £1111.00I work it out as being £1107 actually but I'm not going to moan about £4, even though over 35 years you will have over paid a few grand.I'm not really sure what the percentages in the brackets are for.


Haha yeah, sorry. I was learning it on the spot and doing the calculations - thanks for reconfirming the actual numbers.

Brackets are just the total interest rate, adding it with the existing 0.25% today.

But I guess it didn't matter there for the calculation

It's all up in the air as no-one knows that's going to happen with Brexit.
6 months after invoking article 50 and 15 months after the vote and nothing is clear.

If London crashes then the rest of the country will follow suit.

The issue we have is because there is so much uncertainty no-one wants to risk moving.
As no-one is moving house prices start to stagnate and those which do move are wild cards as they are either people who just want out or someone is extremely desperate for the house so they are either way below or above market price.

If it crashes then the country is screwed.
Houses have been about the only solid investment and for a lot of people it's their lives work and retirement option.
If the prices crash the banks lose millions which they can only recoup by increasing interest rates which leaves buyers in the same or worse position to what they are currently in.
Anyone with a house looses the money they invested it it and gets a double whammy of increased interest rates for the remaining amount. For a lot of people it will push their finances over the edge and they'll end up getting repossessed.

I don't imagine prices will crash as much as people think but I don't have a house and have lots of savings(for a house) so if interest rates rise and house prices drop it will be pretty perfect for me, as selfish as that sounds

Original Poster

CoeK45 m ago

I don't imagine prices will crash as much as people think but I don't have …I don't imagine prices will crash as much as people think but I don't have a house and have lots of savings(for a house) so if interest rates rise and house prices drop it will be pretty perfect for me, as selfish as that sounds


Even if house prices drop, the interest rates will just be high - you'll probably pay the same amount of money as you would have now - but needing a lesser deposit right?

But still probably better than those who bought recently, which they may face a hike in interest rates.

I do agree though, don't think it'll be much of a crash.

MIDURIX4th Sep

Your numbers are completely off.



https://www.hotukdeals.com/profile/SorJai
"...Please note, everyone should also not take anyone else's comment as advice."

I'm still struggling to comply with this sentence.

SorJai23 m ago

Even if house prices drop, the interest rates will just be high - you'll …Even if house prices drop, the interest rates will just be high - you'll probably pay the same amount of money as you would have now - but needing a lesser deposit right?But still probably better than those who bought recently, which they may face a hike in interest rates.I do agree though, don't think it'll be much of a crash.



My savings rates will go up, admittedly I don't keep much in a normal savings account so it won't be that much of a difference. My deposit money will go further though. I have always planned on buying a house within £300k so that I can put up with high interest rates if I have to so the more houses that drop into that range the more choice I will have. And I don't imagine house prices will stay low, they will go back up eventually.

Original Poster

fanpages1 h, 3 m ago

@SorJai "...Please note, everyone should also not take anyone else's …@SorJai "...Please note, everyone should also not take anyone else's comment as advice."I'm still struggling to comply with this sentence.


LOL, good one.

I used Excel PMT to calculate my numbers, it's slightly off compared against the mortgage calculators online.

I'm pretty sure I done it correctly too on Excel

Original Poster

CoeK1 h, 4 m ago

My savings rates will go up, admittedly I don't keep much in a normal …My savings rates will go up, admittedly I don't keep much in a normal savings account so it won't be that much of a difference. My deposit money will go further though. I have always planned on buying a house within £300k so that I can put up with high interest rates if I have to so the more houses that drop into that range the more choice I will have. And I don't imagine house prices will stay low, they will go back up eventually.


Indeed, it's going to be the same cycle anyway.

The people who sells/ has their home repossessed, will just allow those who are waiting to jump at the chance of buying, assuming that mortgage rates still remain fair.

Good luck though! Sounds like you've got a plan

SorJai45 m ago

LOL, good one.I used Excel PMT to calculate my numbers, it's slightly off …LOL, good one.I used Excel PMT to calculate my numbers, it's slightly off compared against the mortgage calculators online.I'm pretty sure I done it correctly too on Excel

PMT should come back with 1107, that's what I used

Original Poster

CoeK38 m ago

PMT should come back with 1107, that's what I used


Yeah, I know how you worked your one out.

I got lazy with calculating the interest rate rise, and used thisismoney.co.uk/mon…tml

And used 3.75, assuming the 0.25% is already incorporated, and added it to my £662 number.

But if you actually put in all the numbers, 200k, 2% interest, 35 years, 3.75% increase - it actually gives £1,116.05.

Which is why mine is in between your calculation and the one from thisismoney.

So, I don't really know what is more accurate, Excel or Thisismoney lol

Edit: Though I did not know you just add the interest rate rise, with the bank interest? Thought it would be more complicated than that heh
Edited by: "xsor" 4th Sep 2017

SorJai3 h, 38 m ago

Yeah, I know how you worked your one out.I got lazy with calculating the …Yeah, I know how you worked your one out.I got lazy with calculating the interest rate rise, and used http://www.thisismoney.co.uk/money/mortgageshome/article-1633413/Interest-rate-rise--fall-calculator.htmlAnd used 3.75, assuming the 0.25% is already incorporated, and added it to my £662 number.But if you actually put in all the numbers, 200k, 2% interest, 35 years, 3.75% increase - it actually gives £1,116.05.Which is why mine is in between your calculation and the one from thisismoney.So, I don't really know what is more accurate, Excel or Thisismoney lol Edit: Though I did not know you just add the interest rate rise, with the bank interest? Thought it would be more complicated than that heh

I would say excel unless there are workings for the other side. At least I know what figures excel is using.

I pretty much never use the PMT formula, this is the first time it's come in useful.

prob go down. those that already have them will scoop them up.

prices are holding for now, but generally it's not the seller's market it was pre-referendum.

there is rising household debt, much of it unsecured.

wages are stagnating.

inflation rising (due to post ref pound fall).

interest rates likely to rise

i can see an increasing number of people defaulting.

oldies will soon start dying off or selling up to fund elderly care, freeing up homes larger than they need.

changes to tax re BTL have cooled the market also; big players will continue to clean up.

the whole govt strategy of the last almost 10 years is to keep prices rising by any means possible.
Post a comment
Avatar
@
    Text

    Top Discussions