[Closed] Are we heading for the biggest housing crash in history?

No.

But welcome to the forum. What bikes do you ride?

An impressive first post!

No

Thanks Scot.

Unfortunately, I don't have a bike.

So what do you think will happen with property prices in the near future?

House prices are never going down and never let anyone talk you into buying Specialized tyres.

Again?

Might be a 1995 stylee correction but not a crash. Too few houses too many buyers.
Remember tubeless is a fad. Like 27.5.

Long term house prices will always go up.

But what is going to happen in the next 1,2 or 3 years will they keep rising? If you think they will please give me your reasons why?

sharkattack, I thought it was Contis? 😀

Hopefully no

House prices won't go down long term as long as the people selling them are controlling the supply!

So what happens when all these buyers don't have the resources to pay for these expensive houses anymore due to businesses collapsing and people losing their jobs. We have just come out of a pandemic with mass money printing which is going to have disastrous effects on economies all over the world.

Please explain to me where all this money will come from?

Tony don't worry too much about the cynicism shown in response to your first post. It's quite normal!

I wrote a similar post (not long after I also rejoined) about how private housing is being concentrated into a smaller number of hands (moderately wealthy people owning more than one property) and this being akin to a re-emergence of a feudal like system.

The baby boomers are dying. They are a very large block of the population and they are thge largst property owning block. As the houses they once lived in become vacant and thus sold, it is possible this will result in a correction.

What may happen however is that the people you would ideally want to have buy the resulting surplus (i.e. first time buyers/millenials buying the houses left over as everyone has finished trading up to the larger baby boomer homes) simply cannot afford them. Instead the relatively wealthy with existing property portfolios leverage these assets to buy more property thus keeping the price high and further disenfranching millenials.

So what happens when all these buyers don’t have the resources to pay for these expensive houses anymore due to businesses collapsing and people losing their jobs. We have just come out of a pandemic with mass money printing which is going to have disastrous effects on economies all over the world.

Please explain to me where all this money will come from?

My long lost Nigerian cousin who has just e-mailed me with a very tempting offer?

Even with rising interest rates if you are a saver or investor the traditional ‘safe’ investment options give derisory returns therefore residential property is one of the few things that for those with surplus cash can put their money into. As the UK is still seen as a destination for laundered money, UK property is also a relatively safe bet for your run-of-the-mill kleptocrat. Also, house builders have no interest in significantly increasing the volume of houses they build when all the Polish builders left and you can make as much money effectively doing nothing. They may be some ‘local’ adjustments as the appeal of city centre living and working loses it’s appeal post-COVID, but demand in other areas for second homes, holiday rentals etc far outstrips supply.

No bike, my word you poor person. You need one or four !

Can you please explain your motivation for posting this question as your first post on a mountain bike focussed forum?

Are you selling somthing, or have some kind of vested interest.

Can you please explain your motivation for posting this question as your first post on a mountain bike focussed forum?

Why is this relevant?

No vested interest in buying properties or being a landlord has this would go against my way of thinking. Sorry for my mistake I will remove my post if you want me to, I didn't realize I have posted in the wrong place.

I didn’t realize I have posted in the wrong place.

You haven't.  This is the chat section of the forum, topics like this are fine.  I must admit though I am a little intrigued as as to why you would join a mountain bike forum specifically to post this, if you don't own a bike? Not having a pop, honest.  Just curious.

No problem thanks you for welcoming me.

I was searching on google for chat forums for housing and this site comes up on the first page.

Supply and demand innit. Demand is outstripping supply in the UK right now so any corrections are unlikely.

27.5 or 29?

I was searching on google for chat forums for housing and this site comes up on the first page

Genuine LOL....peak STW 😂

And in answer to the question, no....at this time demand still outstrips supply and therefore, even with budgets squeezed, in the near term I cant see house prices falling. Might change as the economic damage from covid, bexit and war continues but conditions will have to be much worse and sustained at that level before any significant fall

I am a little intrigued as as to why you would join a mountain bike forum specifically to post this, if you don’t own a bike? Not having a pop, honest. Just curious.

I get that you're not having pop and perhaps the answer is that this is a well established community of people that has evolved so far from it's original focus that it has become something more. It's a testimony to (modern) community that a group of people with only a fleeting connection to a shared interest should register loudly enough in the digital space that it eventually attracts members with no connection to cycling.

What do you think about landlords who are renting their properties? Do you think the way the cost of living is going a lot of people will struggle to pay high rents which may well lead to a lot of landlords folding?

No problem thanks you for welcoming me.

I was searching on google for chat forums for housing and this site comes up on the first page.

Thanks for the answer.  Go STW!  My own view, based on no particular insight or inside knowledge is we will likely see a correction, maybe quite a large one in the next few years. But after that, prices will continue to rise inexorably.  There is still far too little housing stock, and no real signs that will change significantly any time soon.

I understand the demand and supply issue. But what happens when people don't have the resources to pay for these high prices anymore due to the economic downturn?

It's not like it hasn't happened before.

Cost of living crisis aka redistribution from poor to rich means that money is concentrated in fewer hands. Uncertainty in the economy plus buy-to-let bollox means that many investors have become rent seekers. The wealthy can buy up property for their family and screw meveryone else with high rents.

I've just bought a property, paid over the asking, and sincerely hope that prices do fall but I can't see it happening.

It is interesting how when there's a crisis in the middle east or other major events new figures appear on here with well structured, grammatical and accurately spelt statements but who might imagine Mary bars to be somewhere to hang out in Glasgow. Strange.

Feels a bit like wishful thinking on your part do you want a crash?

I still don't think it will happen. The rich are getting richer, the poor, poorer. So the rich will still be able to afford the housing and get the poor to rent and pay their mortgages.

But what happens when people don’t have the resources to pay for these high prices anymore due to the economic downturn?

The risk is not that there won't be enough buyers, the risk is that there will be fewer buyers but still enough to compete and keep prices high. Economic hardship is usually an opportunity for those that survive to thrive; it's what causes the Gini co-effecient to increase. This is my theory and I'm not an economist. My (very smart) economist best friend however does indeed firmly believe that we are headed for an almight house price correction (she runs a very successful Private Equity fund and is so paid on her ability to, at some level, predict long run macro-economnic trends!)

A housing correction combined with falling real incomes and raised interest rates will just mean the rich can buy more of them.

I was searching on google for chat forums for housing and this site comes up on the first page

Yet some how you completely missed this is a mountain bike magazine forum?

Very odd that google would come up with here if you had no interest in biking.

Thanks for the clarification Tony, and apologies for my initial scepticism.

In a more considered reply, I thought my first house was expensive when I purchased it in 1999. A little worried about negative equity then, but there's been nothing but price inflation since then. I can't see sellers accepting lower prices, (apart from the odd stress sale) they'll just take longer to sell.

And when I searched for forums for housing I got the likes of
Forums - House Price Crash https://www.housepricecrash.co.uk › forum
House prices and the economy. This is the main discussion forum where you can have your say about house prices and the economy.

The threads are eerily similar to STW, they even have a 6,000 page Brexit thread.

Seems like a better hit than this forum, which didn't come up in the search AT ALL.

Do you _Scoff those tea cakes?

A lot of people out there with what I would consider spectacularly large mortgages , and interest rates can only go 1 way . I think there will certainly be a drop in prices , I'm just not sure how soon or how dramatic it will be .

The optimal number of houses to own is n+1

House prices will continue to rise in places like the Lake District where demand will always outstrip supply.

Yet some how you completely missed this is a mountain bike magazine forum?

Easily done if you aren’t a longtermer. A scan down the forum overview and it’s more Mumsnet than Singletrack.

It certainly has the feel of an overheated market. I earn well over the national average and way above the local average, decent amount of savings, ~50% equity in my fairly modest 2 bed terrace.

To upgrade to something bigger in my town would involve taking on a huge amount of debt. 3/4 terraces are 400k+, something detached starts at 500k and yet anything that comes on the market has 20-30 viewings and is sold over asking in days.

I don’t know who’s buying them but there is no shortage of them.

I think Betteridge considered this question - and answered it - some time ago.

https://en.wikipedia.org/wiki/Betteridg e's_law_of_headlines

A crash wont happen because:
a) Lending criteria has been tightened up, so people arnt overstreached
b) it goes across every government policy for the past 30 years

But there are a lot of indicators that the next recession is on its way though:
a) inflation is rising at an alarming rate, especially on essentials (food, fuel, utilities)
b) interest rates will continue to rise across this year

Both of these will continue to squeeze household budgets, which will lead to reduced demand for non essentials, which will start to impact on employment and that cycle continues.

Don't worry about UK house prices, just be thankful you've been sent to create economic collapse here rather than to the front line. 😃

For what it's worth I found this site when searching for how to deal with mice in the loft

Possibly. Nothing stays the same from a macro window.

We are almost certainly heading towards recession (nearly there early 2020). The contraction and expansion of the economy was a dead duck waiting to happen.

Tories will do anything to keep the asset class alive. But the BoE is stuck with very few tools as the current economic model fails.

Free-market capitalism is on life support.

Whichever government wants to succeed they must start adjusting the current circumstances. But no evidence of big spending taking place - so not good in my book.

Anyone else picking up Russian Bot vibes here?

I would have to agree with your friend. A lot of people seem to think all these investors are buying all these houses with cash, although some are.

This is why we have to start looking at the bigger picture and the wider economy. With rampant inflation, I really don't see any way out of this one as we can't just flick a switch and turn inflation off. There is a bad choice and a worse choice. The bad choice is to fight inflation and let interest rates go up so everything will collapse. The worse choice is to continue to create inflation to avoid that and postpone to consequences of hyperinflation.

If we only have tiny interest rate hikes and provide cheap money, it will not be cheap enough to keep this bubble going. A lot of the bubbles in the stock market are already down, some by 50%. We are going to have the worse of both worlds inflation & recession. Inflation will drive the cost of living up so high, we are going to spend a very high percentage of our incomes on basic necessities, food, energy, rent, mortgages, etc, so people won't have any money left over for other things for leisurely things. This will drive unemployment up and lead to very tough times.

Unfortunately, the government won't be able to print any more money this time around because this will drive inflation much higher. They don't really have the tools to get us out of this one. This crisis we are going to have is manufactured just like the one in 2008 but this time around this one is going to be a lot worse. It will be even worse than what we had had in the 70s-80s because the government have so much debt this time around.

It is not me painting a picture of doom and gloom, don't be blindsided, it's just the reality.

The better question would be to ask one self .... What can I do to have effect on this situation....

At that point I realise - **** all(other than not vote Tory) and then go about ensuring that me , my family and my loved ones are as best prepared as we can be to weather the storm.

There's an element of being self aware enough to see what's going on while also being aware that people have been citing this mantra for the 20+ years I've paid attention to the housing market.

I agree with everything you say, you have got everything spot on.

Many households have routine monthly spend on stuff like car lease, amazon prime, Netflix, sky, Spotify, phone contracts etc etc - they will all show a downturn long before any housing market crash. We're just about seeing some decline with Netflix's recent announcements but that may also be tied to a post pandemic correction.

Oh, and random bold statements don't add much to a post

nailed it trail_rat

I hadn't really thought of it like that but I've never exposed myself to debt excessively and I reckon it would take an awful lot for me to end up worse than going without luxuries.

@tony_teacake - what's your view on gravel bikes?

Are they a fad, the answer to Life's many questions or a revolutionary new form of transport ?

I am not sure normal economic 'rules' apply. Following Brexit and the pandemic, the UK has a shortage of workers; I suspect most people who are unemployed have chosen to be or are unemployable (and my apologies to anyone looking for work, if I'm wrong). If the economy is resource limited, not demand limited, a drop in demand won't necessarily lead to a recession.

Anyone else picking up Russian Bot vibes here?

Not a bot as such but someone equipped with a generic and widely applicable pre-prepared set of paragraphs to cut and paste. The neat formatting, lack of typos and mostly decent grammar interspersed with some jarring anomalies are a dead giveaway.

Or maybe I'm just being cynical...

STW forum, where you talk about anything but MTB biking... It's Fight Club Mk2! 😆

Dropper house next big thing

Well it is the chat forum after all. There's another section for bikes.

Easily done if you aren’t a longtermer. A scan down the forum overview and it’s more Mumsnet than Singletrack.

Then there’s a signing up page.

I’m very sceptical seems very much fake grass.

Not a bot as such but someone equipped with a generic and widely applicable pre-prepared set of paragraphs to cut and paste.

Um....

https://www.bbc.co.uk/news/business-60734392

don’t panic. it’s just the new world order enacting their plans. all the governments are working for a shadowy elite group of child abusing, super rich communist liberal baby killing cabal who won’t stop until they have your pension. once we all wake up to the fact that the war in ukraine is staged (or is it trump closing down bill gates’ virus labs? i forget) the price of oil can go back to normal and we’ll be fine.

what i can’t work out is if the new world order is good or bad. they want to introduce universal basic income. this sounds good to me.

anyway, if interest rates go so high that people can’t afford their mortgage, this will be a bad thing. it seems unthinkable that any uk government after seeing what happened in the 90’s would let this happen/do this again.

what i wonder is, if inflation is being driven by the scarcity of food, fuel and other essentials as a result of war, covid and brexit, how will raising interest rates help?

what would be “interesting” to see is what happens to house prices if high interest rates lead to a lot of folk defaulting on their mortgages. hopefully that doesn’t happen. my head says that they will drop, but if don’t perhaps we do have a group of medaling elites trying to own everything.

You make a lot of assumptions about people losing jobs, abandoning houses, landlords folding. People tend to make a lot of sacrifices to hang onto property and the government will do what it can to support this for a few reasons.
However as you state economic conditions are a bit rubbish and going to stay that way. You stated inflation at 15-20 %, but that's a blip caused by energy prices that will stabilise at this higher number so expect it to stay higher than the last ten years, but not that high. Itdoesn't necessarily follow that interest rates will track that rate entirely as the BoE etc. try to avoidstagflation. There may well be a recession, or it might just be technically dodged.

The above balance out as stagnant prices overall for the next few years, tho' there will always be areas that go down, and a very few that go up.

You should buy a bike, it will help you relax a bit . Ditto Chew

This is a great point if interest rates go so high that people can’t afford their mortgage, this will be a bad thing. it seems unthinkable that any uk government after seeing what happened in the 90’s would let this happen/do this again.

Like I say we have 2 choices.

1. Is to fight inflation and let interest rates go up so everything will collapse.
2. The worse choice is to continue to create inflation to avoid that and postpone to consequences of hyperinflation.

This is why no matter which way the government steers this one it will end in disaster either way. They can't really print more money. Everyone will suffer from inflation and it could be here for many years. CPi is 6.2% (supposedly) and we have the BOE at 0.75%. So in negative terms this is over 5%.

Or maybe I’m just being cynical…

I'm waiting for the punchline, it's bound to come along soonish.

What do you reckon:? Crypto or a pozi scheme.

if interest rates go so high that people can’t afford their mortgage, this will be a bad thing

I recant my earlier cynical post - tony_t's making some original and insightful points here.

I am very relaxed thank you. Thanks for your comments, very interesting.

In regards to people losing their jobs. Consumer spending has dropped rapidly for the month of March. This is an indication of the real economy taking a big hit which inevitably will lead to many job losses down the road because many businesses will make job cuts.

Also we know there is going to be another huge hike in energy prices in October at 54%. This will be detrimental to many households and businesses.

No you don't have just those two choices in a stagnant market. You can decide to do not very much... there is little value in trying to fight inflation with higher interest rates as that is a surefire way to kill any growth and make things a lot worse.

Why do you think the BofE hasn't immediately slammed up interest rates to try and catch this early. Because that will makes things a lot worse instantly. The worse choice you describe is not a likely economic outcome

That one made me laugh Dyna-ti. No scheme here to buy gold or crypto. I will leave that one to the YouTubers.

To be honest what gets me wound up is these property investors telling people this is the best time to invest in property so don't miss out. As if it is not hard enough for First Time Buyers to get on the ladder. I've lived through the crashes in the late 80s and 2007. The whole housing system is flawed and it's a shame our younger generation will end up renting for a very long time while these landlords benefit.

Bear in mind that in those crashes the amount of price drop was very variable locally. If you live inEarlsfield, a lot, next door in Wimbledon, zero.

What do you think will happen with unemployment?

So correct me if I am wrong are you saying we should let inflation run even higher? If that is the case the cost of everything will be to high and most things will just be unaffordable, a lot of businesses will cease to trade.
Also doing nothing is just kicking the can further down the road so they will see an even bigger crash in the economy.

The BOE hasn't been aggressive with interest rates yet but this may well change. In other countries, they have started to raise them a lot quicker.

I live my house so it doesn't really matter if the price goes or down, unless it gets to negative equity and we get trapped.

I live my house so it doesn’t really matter if the price goes or down, unless it gets to negative equity and we get trapped.

The negative equity is only a problem if you plan to sell or you wish to remortgage and have no equity in your house. Then the LVT comes into play and the option of lower rates becomes inaccessible.

To answer the OP. No, there will never be a housing crash as long as free market capitalists run the government. The whole economy is based on home ownership and the lending market dedicated to it.

With such a high inflation I think a house is one of the best investements one can make now.

It's very unlikely you'll get more % gains with your stock market investments than the inflation rate as it stands now, whereas a house will raise its value with inflation, at least medium to long term.

I might be wrong though!

So you say " No, there will never be a housing crash as long as free market capitalists run the government. The whole economy is based on home ownership and the lending market dedicated to it".

Do you mind elaborating in detail on this for me so I can fully understand why you think there won't be a crash?

Lots of se vende signs in Galicia. Not sure if that helps the debate. Back home in France there's not much for sale, not much being sold and prices are said to be down, but not on properties I'd buy. Madame says horse prices are still rising.

A stock market crash is caused by two things: a dramatic drop in stock prices and panic. Here’s how it works: Stocks are small shares of a company and investors who buy them make a profit when the value of their stock goes up. The value and the price of those stocks are based on how well investors believe the company will do. So, if they think the company they’re invested in is headed for hard times, they sell that stock in an attempt to get out before the value drops.

The reality is, panic has just as big of a role in a stock market crash as the actual economic issues that cause it. Now, this is how I think this will play out this year or early next year. I do believe this will be a massive crash because we have had 2 very strange years during the pandemic and the stock market has been on steroids.

This will be the biggest crash we have ever seen in history and house prices will plummet up to 50%.

This will be the biggest crash we have ever seen in history and house prices will plummet up to 50%.

You've heard it here first folks.

You are dead right about not voting these tories back in. They are a bunch of greedy liars like most politicians are.

The thing is I have not been seeing this crash in the last 10 years. I have only seen it brewing over the last 18 months. This time around though we are dealing with a totally different set of circumstances in the economy and there are too many red flags to see for anything to turn out positive in the near future.

Are you just writing in the style of mystic meg so that if it does come true you can point back at your wild speculation and say I told you so ?

@tony_teacake

I note that your second to last post is eloquent - are these your views?

Mystic Meg I like that. You have made me laugh. I might be choosing that name for my next profile.