House Prices Just Started To Crash
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- Опубликовано: 18 янв 2024
- UK House Prices fell by 2.1% in November, but data indicates this is just the start of a bigger collapse.
With average monthly mortgage payments going up 40% to 50% and high inflation, people can't afford to buy homes resulting in a 20% drop in house sales.
And a lot of different data suggests that this mortgage crisis is only just getting started.
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I feared a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k in houses but I'm not sure on how to mitigate risk.
You are not alone we can no longer afford our mortgage, wife wants us to travel or relocate/I am proposing cashing in, walking away and renting while putting the rest in the stock market.
If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets. It's better to hire a skilled financial planner especially if you're not one yourself. I hired one after my retirement pension took a hit in April due to the crash.
wow that’s stirring! Do you mind connecting me to your advisor please.
Sharon Ann Meny, just check her out. It's better to hire a skilled financial planner especially if you're not one yourself. I hired one after my retirement pension took a hit in 2021 April due to the crash.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
Wish I had a 17% pay increase in the last year
@@HelloHello33333 17% of 0 is obviously 0. If you were trying to insinuate that I earn nothing however, sorry try again. Here is an L for the time you wasted writing your comment.
Think that was 17% over the last three years.
Trust me guys, everyone is going to be able to afford a mansion if we just wait for the house prices to crash. Not a single person will go without a butler.
Not everyone can afford a mansion
🤣 true that!
But But, there aren't enough mansions for everyone.
Yes, but my buddy who makes 100k+ a year will be able to afford a small house for his wife and 2 daughters so at least someone will be better off. Affordability has been ridiculous recently.
@@quixomega really not everyone can make 100k
They started crashing 1 year ago. The report has been lagging for several months. The formular is adjusted with some strange variable that only the office on national statistics can adjust. If you calculate the average price without any of that by only considering residential property, you would see it. The government is fiddling again.
Still far far far too high. It's Got so bad now that I wouldn't be approved for a mortgage even on a 1 bed flat. Got 20k deposit together but with current interest rates there's nothing I can do but keep adding to it, oh the joys of living with parents.
Sasha seems to be the only UK economist actually looking at the data. Love it! Keep them coming.
No Sasha is the only one who thinks America is doing well it’s inflation data was accurate (it’s not) uk data is wrong and we are fucked but we are not in recession like Germany etc. he’s a typical cynical Uk citizen who always thinks we are fucked. He totally ignores the abject poverty Americans live in with no access to affordable healthcare or education and inflation got so bad there that getting your nails done hit 100USD compared to £27 in the UK. It costs $20 for a McDonald’s now but is £5 here. California has human poo on the footpaths and skid rows full of crack heads and theft is so bad entire roads have had big chains close their stores. None of this happens in the Uk. But if you listen to Sasha the UK has been fucked for 2 years and yet there is no mass unemployment, no housing market meltdown and I’m struggling to book a holiday because demand has shot up. Makes perfect sense so Sasha though and his spread sheet data
The data is rigged
@@johnnagle7702 it could only be worse than the rigged data, media whores covering the cracks and lots of buyers dying suddenly with no cause of death reported.
Moving home with Charlie does too, and predicted this over a year ago
@@Abigail-sx8mt he’s been wrong every video he’s made. I just checked all the new builds for sale on my estate and they are selling at only 5% below peak pricing don’t confuse the shit end of the stock with the desirable houses. In a boom even the shit sells above market price. Good stock will hold value it’s no different than any market.
Bank of England say that mortgage losses are surging at the highest rate since 2009.
Official figures from the ONS show the average UK house prices rose from £167,716 in January 2013 to £290,000 at the end of January 2023 - a gain of 73 per cent. The simple reason house prices have shaved a few % from their value is because they are currently vastly overpriced from year apon year of massive value hikes until they become unattainable and less in demand. The value is still incredibly overpriced, even if they drop 20-30%. In a few more years the property market will then skyrocket again due to a huge supply and demand issue.
we have a problem where we don't have enough houses being built so all the people who own homes for selling were able to push prices up with absolutely no consequences, gj england
Yes, but it is also worth considering why they don't build more houses. Politicians, everyone in their social circles and many voters own at least one property. They want these properties to increase in value, increasing their total wealth. Furthermore, many of these people have concerns for the environment and do not want to encroach further into the Green Belt.
There is also the fact that the population is going up due to mass immigration which is needed to fuel the ever expanding economy. This increases demand. Also people and corporations abroad are buying up UK property, depleting the stock available for UK residents. Something like a third of all UK property is not even owned by a physical human being who lives here (meaning it's owned by a corporation or non-UK resident).
All in all, it is the effect of the capitalist system, which must constantly expand on all fronts. The property industry expands most effectively when there is limited stock of housing and people are struggling with their living arrangements.
If you would like an effective solution to the housing crisis it's better to look at the source of the problem rather than simply build more houses imo. The problem is the modern globalist capitalist system, which is also the root cause of every other social ill in the UK. @@maksimso5300
@johnny2bad67 iv researched a bit into the problem and the reason why the prices are high is because building firms take too long to recieve permits to build from council plus the timelag it takes to build a house. Also population right now is on the decline since people are busy worrying about being able to feed themselves rather than having a family and etc.
I agree with your first point though that the politicians would be incentivised to basically not do anything about the problem. Unfortunate
So if they had gone up by inflation they would be £215,216. They were 0.5% and now are 5.25% . So the truth is because it is 5 times more expensive to borrow they should drop down by far more than £215,261. Those that could afford a mortgage can no longer do so. They should go down to under £200,000 which is a third. I lost a 33% in 1997 when selling in Chaddlewood Portsmouth. IT must happen for the sake of our kids and only a fool would buy now.
Too much demand too much supply. Pretty simple way to fix the demand but they won't do it because GDP line needs to go up at all costs
Sacha puts across good points. But, Rightmove and their price reductions are phoney. When you see "offers above" and "guide price", its there for agents to tempt in buyers and seek the original asking price
Yes, and also, he makes no mention at all of this time of year, famously, being the slowest/weakest/worst time to sell a house - therefore prices tend to be more prone to dropping for sellers who have to sell (with fewer buyers engaging over the Christmas/New Year period). Not that I disagree that the housing stock is ridiculously overvalued in the UK. However, politicians of all stripes have consistently propped up property prices, which are the means by which most middle-class homeowners feel 'wealthy'. This underpins the whole consumption/debt-driven economic model we've been chasing down the plughole since c. 1980s.
In short, I'm not convinced we are on the precipice of a much-needed correction.
You are so good man. I worked in the city and have a masters degree in real estate finance and you are the best at what you do. Really appreciate and enjoy your content
Did you enjoy working in RE? I have a bachelors in computer science and I’m thinking about doing a masters in real estate finance
Been coming for a while. Thanks for the heads up
This has been going on for months, Rightmove in the south East was showing massive reductions on properties. Some stubborn sellers will be kicking themselves in a years time.
*Comment made before time lag was explained 🙃
One at 330k down to 260k sold one at 450k down to 375,k sold both detached
No they won’t. Interest rates will come will come down and house prices will boom again.
@@progressivedemagogue8480 Boom is a bit OTT, but you're basically right. The fall is already stopping; the market will be stagnant for 6 months then start to slowly rise again in a stop start way, and 12 months later will start to gather pace again; all of which is a real terms fall, but that will be forgotten. Heck, It's almost like I've seen it all before.
@@progressivedemagogue8480 I completely agree, late 2024/2025 interest rates will start to come down if inflation does and no more wars kick off effecting global supply lines. Over this high interest period a lot of wealthy people have been making tones and will be desperate to use that cash they currently are accruing interest on to buy assets like property again. I reckon houses will drop quite a bit briefly and then explode again. I think In the short term though there are going to be a lot of sellers that needed to sell before any rebound happens and will have chased the market down and end up selling for a lot less than they will have gotten a year or so ago.
I love the fact your lovely doggy is saying " come on enough chatting to that camera - you promised me walkies !! "😀
yeh take the dog for a walk, NOW!
I would say the factor keeping house prices buoyant at the moment is a small number of incredibly rich cash buyers who had access to the free money spigot a couple of years back. There is also a trend for developers to not sell the properties, but “build to let”. Just because houses are being built, doesn’t mean you can buy one…
New builds go up for rent all the time! Never mind how much they’re demanding pcm as no matter what you can’t buy that house for yourself 🫠
Why people can’t afford shit these days is because the value of that paper we call currency has completely diminished value
Nothing to do with the 750k new people that came in the country just last year? They must not need housing, just live in other people basements
That and the uk is one of the very few countries in the world where you don’t need to be a citizen to own property here, so we have to compete with anyone anywhere in the world with money to throw around
"I accidentally chose Coventry." Lol, I'm from Cov...we're used to hearing this.
Same
That's what I tell people too 😂
Nothing is selling in my Area (south east commuter town). Huge reductions, many deletions and relistings. To add i am looking at large family houses so uts not just the cheap ones
Another brilliant video with excellent analysis of key drivers overlooked by mainstream economists. Thank you 🙏
That's a really interesting point about the lowest are hit hardest so the lower prices get removed from the average which keeps it artificially high. Great analysis as usual!
UK average house price in Aug 2021 was £260,575. in Jun 2022 it was £286,436 and in Jul 2022 they were £292,118. The ONS in the July 2022 Bulletin reported a yearly house price rise of 15.5% and a monthly rise of 7.4%. Do the maths and the real rise was 11.4% for the year and 1.9% for the month. That is a 400 billion mis-reporting in 1 month when things were good. The ONS now say due to a 22% reduction in house sales they are only able to process 50% of usual volumes. If the ONS was a large company they would be charged with fraud. This is a Ponzi con and it must be outed. Look at any postcode by going to Land registry sold house prices and you will see any smart person is getting a 30% reduction and the rest are being fooled by estate agents. Get 30% off (the real low estimate and not the asking price) or walk away.
So your data shows higher in June 2021 than August 2021, so a large decrease?
Then they went back up and rose by July 2022.
Quarter million pounds.. That sounds so insane for me. Serbia here..
Bruh, a house at 450k is not going to give you a 30% discount...
Then they will never sell. Friend sold last January 23 and the chain broke in July. They put there house back on for £50,000 less and have not had a single offer and only 2 viewings. They sold for £500,000 a year ago. It has already happened! @@Kazi2812
@@Kazi2812 Then walk away, come back in 6 months it's probably still there, and cheaper.
Great to see these Stats put in a simple and easy to understand way. Very Useful. Thanks for uploading. ; )
Love your videos!! great breakdown and structure!! very informative!!!
Great video thanks for the time you put into research 👍🏼
🙏
We bought a 289k house on a interest rate of 0.9% £720 pcm. At the time we questioned getting a 350k house. But didn't want to just work to live. Our new rate is now 4.89% so it went up +£420 total £1140... watching sasha videos we literally cut back on everything. Sold the motorbike 😢 and worked every day for 3 months.. just so we could survive..
I will admit we didnt know much about mortgage rates when buying.. i think first time buyers so learn all this as i feel we just only mananged to dodge a bullet.. if we had bought that more expensive house we would be stuffed now.. feels like in my 40's all i ever think about is bills and mortgages whilst the older generation just harp on about how tough they had it.. 🙄
You bought a house without learning about mortgage? Umm wow. Are you 20 or something ?
Maybe the older generation still harp on about how tough they had it because they went through 15% interest rates?
@@mrstax3583thing is when they bought it houses were cheap. So even if you havd 15% it was ok. And even so the interest rates went down slowly since 15% so thats a massive plus for the same price on the house.
@@mrstax3583with the house at 3 times earnings not 9 😂😂😂😂😂😂😂
@@TheChariot99 na didn't sit down for a master class just asked a mortgage broker as I thought they would know better..
Brilliant video Sasha , Thank you !!
Sat in Coventry with mortgage renewal due watching this video, thinking bankruptcy might be easier.
Thanks Sasha. Great work as always
Superbly constructed with great insights, keep the data coming.
Thanks!
This man has single handily taught me everything I need to know about houses, mortgages, interests rates etc in the uk. All I can say is thanks since I recently turned 18 I have the right to leave the country and oh boy I’m gone 😂😂😂.
@PBnJ Where are you thinking of moving to?
The problem that i see is how many investors are waiting for the drop. And what will be the right price for them. Limited housing in uk is a norm so when things get better people will definitely jump on houses again in the later years.
So there will be a threshold, a limit and maybe is after this year.
I had the same feeling with brexit that a massive surge of companies will flee the uk but it wasnt like that. GDP is still barely there. I was expecting like a massive long term drop. Recession.
Appreciate your videos sir 🤜🤛
Thank you!
Houses in my area some have gone down 65k and 75k both sold
Taxes, taxes and more taxes are killing economical prosperity, savings, growth and they are destroying backbone of common people. In my area people are collecting food from food banks and local schools. We are poorest country of Western Europe and living in 1800 century era but never afraid to fund unwanted wars and loading up more taxes 😢
Property prices in the UK have been slowly decreasing for the last 10 years. My flat valuation has gone down by 35% over the last decade.
This is not news.
Great analysis Sasha, thank you for your work.
🙏
Great video, agents are re-listing some flats from last year that didn't sell with a lower price as of January, I am looking at starter homes in London, one bedrooms, studios. They were holding on for very long to inflated prices from 2020 and finally starting to let go.
People have serious issues with affordability to buy property or rent
Loved the ending g of the video
This was really helpful. Thanks Man. I love how brutally honest you are and how you actually make it understandable on the ground.
Was planning to get a foot on the ladder with a house and then decided not to go that route.
Now considering something much smaller, a flat with a small (considering), mortgage.
Any comments on that idea are welcome
I have a lovely 4 bedroom home. Large 4 double bedrooms, lovely large garden,garage etc. Perfect family home.
Ive had 6 people view in now 14months.
Original valuation £445,000. Currently marketed at £390,000. Local sales in the last 6months next to nothing. Most properties are either still listed or removed from market. Painful times people. And it will get worse
You’ll be lucky to get more than 325k for it.
Half a million pound home with these interests rates. You are screwed 😂. Maybe a footballer will buy your house
If you want to sell it, why not reduce the price? It's the single determining factor.
I'm in a position that I don't need to sell it and certainly won't be driven by the panic. This price range has seen next to zero sales in the last 12months around me.
But the last viewer was a 1st time buyer that knew their budgets, but the house was much bigger than she expected. Too big for her. There was a sale reasonably close buy for a similar property at £375,000 so that might be the marker. Hard to say. That's the only sale in a year 😅
Which Region are you in if you dont mind me asking please ?
I bought my house at £235,000 eight years ago. Currently looking at remortgaging - the estimated value according to the bank is £360,000.
Any 'crash' will just be eating into, 'profit' and will be relatively minor in relation to the increases of recent years.
Try selling it for 360k. You’ll soon find out what it’s really worth
@martynwaugh nah. Plan on dying in it. If similar recent sales in my area are anything to go by, its actually an undervaluation - not that I'm overly bothered as I'm over the 60% LTV either way.
@@mrmeldrew693 why are you even on here then? Spouting irrelevant nonsense.
@martynwaugh any 'crash' will be minor compared to recent growth in prices.
Hope that's simple enough for you.
Seems quite relevant.
@@mrmeldrew693 thanks for the heads up
Great video! How do you get this type of analysis into the mainstream?
This channel has helped me to understand maths a lot better. I always struggled with it at school but using real life examples here it’s so much easier to understand.
If anything house prices seem to be more ridiculous.
A house near me, I’m not in a city, end terrace in a sad state, not seen a lick since 1974, the road outside has potholes the size of a small reservoir next to an abandoned pub is on the market for £525,000… … really?! Are they insane?! I wouldn’t pay £25,000 for it let alone over half a million!
It'll be brought and done up by the privilege class. Half a mil will be a drop in a bucket. Working class are getting displaced. The rich are taking over pushing up prices.
You wouldn’t, but someone else would - that’s why the market is still hot
the 'market' is a fancy euphemism for greed
Until it’s sold the price is nonsense.
Natwest ad below this video for 95% mortgages. They'll take it in interest... Or more likely they'll just take it.
Yeah, I am shocked that this didn't happen six to eight months ago. When houses are costing more to buy and then costing more to borrow the money for the mortgage, this was inevitable. A lot of foreclosures are going to happen when people can't pay and they have negative equity in their homes.
It takes time for the rate changes to filter-through as people renew mortgages
Gary's Economics RUclips channel explains why there will be no crash in the housing market. He has been right in his predictions before.
@dtz1000 not really, I was exposed to his one of shorts the other day and he doesn't seem to understand taxation.
The housing market has huge inertia. Once prices started sliding down in the 1990s it took seven years for them to start rising again.
@MrDuncl you are right. The housing market works in cycles. Stage 1 is after the crash. Stage 2 prices begin to rise. Stage 3, house reach their peak and stage 4, house prices crash. The cycle repeats itself.
Less houses coming on the market too. Lovely dog!
Sasha you really speak sense for the rest of us to understand. I follow Charlie Lamdin (Moving Home with Charlie) he is on the same page as you. It would be great if you guys did a vlog together on this that would get many many views
Excellent analysis. I've been house hunting and watching the market for the past 8 months (in the Midlands). We are now seeing chains collapsing because people who can't afford to lower prices are just giving up and taking them off the market. Overall, the only thing stopping a collapse in this area is the absolute impossibility of finding rented.
I'm in the Midlands been looking for 4 years. A friend of ours bought their 4 bed detached for £197k in 2018 and tried selling it in August for £280k and it was reduced in December to £270k and they've had 5 viewings and no offers in that time.
@@Loundsifyyour friend think its 40% more in 4 years 😂
@@andrewlam5021the average price of a house in this country has risen by nearly 15% a year for a while now. Its only this last year that those numbers have started to drop so a 40% rise in 4 years is actually more reasonable then you realise. Obviously, the housing crash is going to drastically change that.
@omumbeejumbee proud of that one? Do you get a kick from people struggling with grammar?
@@samoke4527 considering most property rises 3 to 5% per year depending on location, type of property and how the economy is doing. 40% in 4 years is clearly a bubble that is about to pop. 15 to 50% drops I can see over the next 5 years.
Excellent ... Amazing Analysis
I've seen prices reduced since the end of summer last year up north
Few seem to accept a house is for living in, its not an investment.
Of course government want us to believe we are asset rich, however that produces a compliant debt ridden labour force with few choices.
Study countries were credit card debt and subscriptions are low
Greater personal disposal income and a more relaxed lifestyle.
I doubt the population will learn the lessons
How much are mortgages going for on tents right now, wanna get in first before the rush
Oh and BTW - love your doggo!
Love Sasha's videos. But they end so abruptly! Where's the outro? Where's the "please like and subscribe"?
UK house prices are highly inflated if you compare with salaries and affordability. Majority of houses in UK won’t even survive minor earthquakes if it ever happens to UK. Totally out dated and poor condition houses asking prices £350K -400k. Some greedy sellers think they can rip off
We only get very minor earthquakes in the UK, the region is atectonic.
Luckily for us most earthquakes here are unable to be felt by humans due to being so weak.
Germany in a recession, with the US its a question of when not if they enter a recession as well....since the 1970's an inverted yield curve of 6 months or more has predicted a recession 100% of the time (yield curve has been inverted for 11 months!) strap in and get the popcorn out.
2y-10y treasury curve inverted in July 2022. 3m-10y in Oct 2022.
Just wanted to point out that recessions don't always mean bad news for stock markets. As you pointed out Germany was in recessions experienced negative GDP growth from the first quarter of 2022 to the second quarter of 2023. Despite this, the DAX, Germany's stock market index, soared to an all-time high in July 2023 and again in December 2023 . This just goes to show how complex and sometimes counter intuitive the economy can be.
Thank you so much for your help
🙏
I've recently moved house to a cheaper property because of this (slightly smaller house, much cheaper area). Last summer I saw the affordability crisis heading down the track - both for my own mortgage when my fix expires, and that it would push house prices down more widely. I'm very glad I was able to sell up quickly at a decent price (though still below what it likely would have gone for earlier in 2023). I worry for those trying to do the same when the crash in the housing market really becomes apparent to everyone. Tough times!
I remember people doing this in 2008 then they got fukd.
The crash has been and gone, we are at the initial stages of a recovery
@@Jos-qk7oj😂
@@Jos-qk7ojyou mean the dead cat bounce. Red sea, reducing NI, tax cuts to come in the March budget, minimum wage up over 10% (which I agree with). Corrupt, racist, lying tory government in power.
I'm not sure the show is over just yet. I do hope your right and I've been fooled into thinking otherwise, for the sake of the poorest who are affected the most.
@@Jos-qk7oj😂😂😂
I just bought last year. I wasnt going to and the only reason I did is with the hope that the sale of my business will clear a good chunk of the borrowed amount. Yes I could have waited and paid less, but the rent is way over mortgage payments currently, and I think rent will continue to rise.
Timing the market when to enter is hard. If a person has the money, deposit and funds for a place they like then go for it.
Yes there is a risk you may look back and say I lost £x amount as the price fell, but if your living there for a long while then nothing lost as rent would have been the same.
A small back story from me.
I should have bought in 2003/4 but i couldn’t believe the prices at the time compared to my salary and interest rates were around 4.5% or a bit more.
I could have just about made the payment but I thought prices gotta come down.
Remember I was in a position of looking at the past data and the house price back in 1999/2000 were 30% cheaper.
I sat waiting and they still were going up (up 30%)
Then the financial crash happened in 2008/9. Prices came down a bit maybe around 10 to 15%. Then it stabilised.
Then in 2012, I couldn’t sit tight anymore and had to buy. I bought in a hit/miss area and the house was most expensive on the street st the time.
I paid nearly 50% more than the 2003/4 price. The rate was around 3.5% and with the increase in my salary over those 10 years, it was affordable.
10 years later in 2022 the house is worth double which is mad.
I want them to come down as I would like to move but the next step up in the area is unaffordable with current asking prices and interest rates.
My experience isn’t to show yes it’s good to buy or it’s good to wait. It more about me not taking action when I could have. The waiting cost me tens of thousands in the price I paid let alone the rent I paid during that time.
What I have learnt is if you cut all the unnecessary expenses, earn extra if possible and save all you can. Find a place you like and if you can afford the mortgage payments for the next 3 to 5 years, then do it and live.
Excellent analysis as usual.
🙏
I can't wait for the ONS to present its December report.
I understand that there are delays (you are talking about about 5 months🤔), but looking at the historical chart of ONS and Nationwide, it seems to me that the maximum delay is 2 months (of course they can make updates up to a year)
I won't be surprised if the ONS reports an increase (October)
The chart can be compared
Yopla Are house prices falling? - Live tracking
Compare only ONS and Nationwide
Manual focus is your friend!
A one bed ex council flat in Kensington was and had been for some time advertised for sale at £650,000, last week the price was reduced by £75,000 to £575,000. Landlords are the usual buyers of these flats but as of today no takers not even with a rental value of £1,700pm.
You would need a rental value of 25000 a year to get 5% then you have to take off repairs, empty between tenants, management costs, insurance, safety checks.
.
@@michaeljohnson1006 tax now, as well
That's a super low rent for Kensington. Probably why it's not selling. I'd expect it to be minimum £2500
I looked at a two bed flat in Marylebone for £950,000. Leasehold which only has 56 years left and new lease was going to chop me a further £500,000. I get some owners are overly optimistic but that was just fucking insane!
Seriously 2500 for a one bed flat, how do people live in London
Your example at the start is basically my situation now, give or take £100. The increase is doable for us but coupled with all the other rises (car insurance doubling for no reason, gas and electric rises, council tax rises etc) we might struggle. And even if we are ok, it definitely pushes back other plans - e.g holidays, kids, home improvements, newer car. Even if people keep their homes then the economy will be impacted because nobody will have money to spend outside of surviving.
Makes me realize how lucky my parents got in 2020 when we bought this new house at like 1.6% (can't remember rate but defo under 2%) and it's fixed at that rate until April 2027. The current payment is £363 a month.
@@JudeTheRUclipsPoopersubscribe we should have got a longer fixed rate but as1st time buyers didnt know better and were poorly advised by the broker
@@jminsh463 my mother is obsessed with price certainty and fixes absolutely everything where possible. So mortgage is fixed at an unheard of rate these days for years to come still. We were also shielded from the insane price cap for energy of £2500 once again because of fixing lol, our energy in 2022 and 2023 cost about 35% less than what everyone else had to cough up.
Smart man Sasha……great points as usual
Great vid as always and cool dog! 🐕
When new houses are being offered at a discount you know things are less than optimum for the building companies. Additionally Ibstock the brick makers took a big turn south this week.
Some developers desperate for cash flow are trying to flog new builds to housing associations and councils. That's a sign the market is in deep trouble.
House prices crash in Real terms adjusted for inflation but not really so much in nominal terms. Especially with the Uk being an island with a high demand for affordable housing
Keep telling yourself that lmao
That's just the point...... There is no affordable housing 😂😂
Hi Sasha, I don't own a house but am intrigued to know who is the most fucked. Is it the people that have bought houses in the last 2 years or the people that are coming off their mortgages. The reason I ask is because the people that have recently bought a house, they're going to be stuck with high mortgage payments and a depreciation with their house value because they bought at the peak of prices. On the other hand people coming off fixed rate mortgages might not lose value to their house in respect to what they paid as the value of the house they bought would have gone up and now might drop the level they originally paid. You are teaching me so much about economics and how incompetent the government actually are
I'm past modelling this in real time but I'd invest if you also added a volatility surface element to account for seasonality on a daily basis. Could be interesting !
Depends on the area. We have Chinese moving from Hong Kong and our house prices are through the roof.
Which areas are they moving into ? Thanks
Of course. How many ? 😂
Warrington
Sutton/ Carsholton is the same
I work in new build construction and this is true, LOADS of Hong Kong Chinese moving here
Good video!! What is so worrying is that many people do not understand how this all works and filters through in the economy. You can tell them 100 times but they don't see it! I have found it is better to just stay quiet and let it unravel.
Proof is in the pudding with the example you used at the start of your video with the 1.2% to 4.5% interest rates on a 25 year mortgage...massive affordability crisis on the way.
and they were encouraging people to buy during covid and also implying rates would never come down, a lot of people decided to only take a 3 hear fixed instead of 5 so they could afford that little bit more. I refinanced 2 years ago and took a 5 year at 1.57%, I just didn't see the point in saving 30 quid off my monthly payments and have a shorter term.
The banks didn't lend assuming a 1.5% mortgage indefinitely. They lent based on salary multiples and also based on affordability assuming a much higher nominal interest rate
Most homes are owned outright or with a tiny mortgage. Think a £500k home with a £100k mortgage. As the person caught 15 years ago for 250k and has already paid more than half off
@@kaya051285 fair point. It is all circumstantial. Those with high LTV %s will be hoping they have built enough equity in their property, and that prices don't fall too much before the time of remortgage so they can access the best rates and mitigate any sharp rises in payment. It will be really interesting to see what happens in the coming years. But there are still hundreds of thousands who bought with low rates, who may be too far stretched
Great video, thanks 🙏
Good analysis
The banks are lowering rates because they're getting screwed and nobody can get a loan once the risk valuers check the asset and err on the side of caution, that's why the L2V is really high on the best deals. How's bank liquidity looking? BoE?
I think you’re wrong in that lower end houses won’t sell bc that’s where you have to go to get out if you’re higher priced property with higher monthly costs. Those cheaper homes start snapping up
I agree. There's logic in what Sacha is saying. But there's been a growth in the rich over the last few years thanks to gov giving cash to their friends and all sorts. It's all pushing up due to the growing rich class while working class poverty and homelessness is growing. Coincidence?
The only houses that are going in my area are houses under 250k.
Where I live, the houses have gone from being on the market for only a few days, to not selling at all. It's pretty crazy to see.
just used a fixed manual focus on your camera as you dont move. Then your camera won't constantly go out of focus hunting for focus
I'm predicting a short crash before interest rates go back down and the asset owning class, who have been saving their cash due to said higher interest rates, then buy everything up making the market even worse than before. Perhaps even pricing the entire bottom 90% out of housing at some point soon 😂😂
Welcome to neo-feudalism
Agreed
Still blows my mind that no other countries do the 30 yr fixed mortgage. That alone has to account for a huge chunk of prosperity for the average American as well as the flexibility of the Fed
No other than what? Fixed rate for the entire duration is much more common than what we have here in the UK. In Russia for example it was always fixed for the whole duration of mortgage. Here in the UK banks together with government just bending people over.
The US individual median net wealth stands at No 18 in the world - hardly high mate. The UK is above the US, with Australia at No 1 and NZ at No 3.
20y or 30y fixed is very normal in the Netherlands. I have 20y at 2,15% from 2019
You can do all kinds of periods fixed here, from 1y to 30y fixed. Or split your mortgage 8 times if you want to with different fixed rates. UK has a stupid system
@@Hoodie89NL Im also from the Netherlands. I know people with 1% @ 30 year fixed rate. LOL And you can take that mortgage with you when you move with the low interest.
thank god for Sasha !
This will probably get lost in the ether but I wonder if Sasha would care to explore the idea in the upcoming ugliness that we might not see forced sales, repossessions or keys being handed back like in the 70s but instead something like a gulf of mid 30 to 50 year olds having their credit worthiness destroyed through defaults on unsecured lending or CCJs.
Surprised I haven't started to see more adds for those companies that try to consolidate and write off debt for people with some rediculously long repayment plan.
Yes, that's what I suspect will happen - much better to not pay credits cards than not pay mortgage and there's been a lot of cheap credit available for over a decade. He showed some data on that and regarding the lag effect, it'll probably get much worse this year. That will prompt the BoE to cut rates - albeit too late for many people.
You have kind of answered your own question these people will not be ALLOWED to default because in the same way, Greece wasn’t allowed to default. Someone who defaults doesn’t PAY the money back. All that will happen is the borrowing terms will extend like has been doing for years if not decades. They are already talking about the hundred year mortgage. Just like Japan has and it’s not a problem there ho, ho..
We here in Florida are already feeling not just the pain of high insurance rates but also a crash
If you keep living in your house and pay your mortgage. You feel nothing on any crash.
Dunno if house insurance is mandatory in your country but in those where it isn't, the best insurance is common sense. Don't live near a river, don't have fire risks etc. Paying insurance for things is s scam, it's only really needed for automobile where the risks would come from other people.
@@HermanWillems i watched a video where nearly 7 thousand people in the south did not pay there council tax bill
@@Lee_303.... Don't live in a US state subject to hurricanes and massive amounts of home insurance lawsuits causing insane insurance costs, which in turn drive down prices.
I love your honesty
Unbelievable content 👏
Sasha - Great explainer on the fact that house prices are set by affordability. This seems to be missed by most finance RUclipsrs.
My first mortgage was 7 percent, 4 percent is low
irrelevant when houses cost many more times annual income than they did back that
True my house is worth about 50 percent more than when I bought it but saying that I earn double what I did back then.
Income to house price ratio makes this totally irrelevant
@@ardarricvannes5347In the 90s average salry was 15k, average house was 50k. Today average salary has doubled to 30k, but houses have gone up 5x the average now is 300k.
You can thank mass immigration spiraling the demand for housing while supressing wages.
@@quillo2747 true the 90s was a great time but my paper round didn't pay that good, low interest rates have been a major factor in houses prices going up, cheap mortgages, immigration obviously has a impact limited housing stock and a government that only cares about being re-elected instead of doing what's right for the country
Fantastic vid
🙏
First class content as always 👌
You make a rational case, but supply and demand is at play, especially in London and SE. 2023 was a pause with 5 year fixes going to 6%. Now at 3.8%. Prices will go up. In short-mid term baby boomers wealth will flow down via inheritance and prices will continue to grow
Interest rate is not immediately reflected proportionally on the mortgage rates. I use mortgage calculator for monthly payment from Barclays and since September the amount hasn’t changed for my situation (looking for a property in North of London with around 30% deposit). I think you didn’t try researching house prices using chrome extension and practically evaluating affordability by using mortgage calculators. Get your hands on and don’t follow blindly what media tell you.
Also, the underlying data for inflation calculation is total fake as we know - so, many “surprises” wait us ahead.
baby-boomer inheritance wealth is concentrated and will flow to people already fairly well off.
I've never understood the mentality of taking out a 25 year loan without the interest rate being fixed for the entire period. If it was you would know where you stand for the entire 25 years. Anything else is just pure gambling. And your stake is your house.
And if history has taught us anything, it is the interest rates constantly go up and down.
You are gambling everything you have on black for 25 years - and hoping it doesn't land on red (and wipe you out).
Or you know, just but comfortably within your affordability
@@AfcDombut that affordability could change with a sudden interest change or other factors out of your control. Constantly having to reevaluate your household budget to make sure you have a roof over your head is a nightmare. Even being comfortably within your affordability, if you suddenly get made redundant and that happens to coincide with the fixed term of your mortgage ending, you suddenly have an increase in mortgage payments to deal with which could make you desperate to accept any job coming just to keep a roof over your head,
A fixed rate payment for the duration of the mortgage just makes so much sense (for the consumer). Plus it means you don't have to keep forking out lending and arrangement fees ever 5 or less years. But...that doesn't work for the banks as they don't get the free money from the arrangment fees etc. and then they dont get to capitalise on short term interest rate hikes
Just like stocks, cheaper prices, buy the dip, however I don’t think prices will go down much if at all. Wage increases and cost of building materials will keep prices where they are
Great video 👍
Thanks Sasha - I'm keeping my youngest daughter who's renting to keep her up to speed on this - much appreciated!
Thank you for the support!!
REITS dropped 40% in 2022 which has foreshadowed retail housing prices dropping. I wonder if they could drop the same amount.
Most REITS are in commercial property.
Lots of properties on their books are empty units but valued as if going concerns
there not the same as commercial property a business will choose to rent if they can make money whereas we all need somewhere to live (no choice) but want its signalling is that businesses are handing back keys and a lot of empty commercial building
Thankfully for me my previous mortgage brokers got me an utterly shit deal of 2.5 percent on a 2 year deal in 2021, so when I had to remortgage in march last year I only had an increase of 90 quid a month when my remortgage deal was agreed at 4.1%. I'm happy right now and will be for the next 4 years
Then why’s new builds offering an arm and a leg to get you to buy. I.e flooring and 10k deposit contributions, full furnish etc. no one’s buying
Not to mention international pressure on commodity prices pushing up inflation.
Large crude oil tankers never sailed through the Suez Canal.
@@stevo728822 crude oil is not the only commodity in this world.
Please check the word "inflation"...100 years ago meant - increase in supply of money. Nothing changed since then but now "inflation"…..is apparently represented by CPI or RPI. Mind boggling how little people know about “paper money” system (fiat currency). Do a bit of research and check the reason for French Revolution.
Bankers are doing the same trick over the last 200 years and sheep cannot learn anything from that, ha ha ha. Who owns the ledger…has a real power. But there is good news for the UK house market, the interest rates will start dropping soon and then we will experience a steep rise of the house prices because of massive QE… but not for long…looks like a crack-up boom is coming. The intrinsic value of all fiat currencies is always….zero. It's all just history repeating itself. Funny that BoE stopped publishing stats on M0 back in 2006....
Great vid 👏🏻👏🏻 always said the pain was in the post, it’s impossible for the prices to not come down with interest rates rising and locked in deals ending 😮
Unless the currency hyperinflates ?
@@johnnagle7702 by that you mean everyone gets a 20% pay rise from their boss?!
Hey could you share the link to the calculator you used?
personally in the nw of england low end property shifts high end stays on the market for ever cut off seems to be around 250k-350k
Getting a 40yr mortgage may be better than not paying a credit card payment as the rate will be lower and if its the type of mortage you can over pay back when you get that bonus or better job ..... Better than appearing on "cant pay then we'll take it away "
Any property bought or built on a morgage is owned by the bank, not you.
Same in Nottinghamshire for the cut off. So many houses unsold it's ridiculous. they have no where to go but down.
NW England is so expensive and I mean really expensive compared to the average salary in a very dead end job. Yet high tech jobs were absent yet hi-tech entrepreneurs in Silicon Valley from NW England seemed like flocks of birds what is going on in NW England that talent is being exported? Even bio-tech is repeating the same .
I know this is about housing but without real jobs then its just communism.
I think they have already crashed, stats just need to catch up now.
Seeing 20% price drops in my area.
I don’t agree. what they dropped already so far is quite significant, but nothing really compared to what is will be ahead 🍿
@@YaQ1988 I dont see them dropping much further. Many forget property is the wealthiest's asset of choice.
When a currency has been devalued as much as ours there's a rush to move it into assets, It's coming...
Less ownership more rental demand.