Buying a House in 2023 - Should you WAIT Until After the Crash?
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- Опубликовано: 25 июн 2024
- A look at options for potential homebuyers. Does it make sense to buy a house now or is it better to ride out the economic storm?
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This does not constitute financial advice.
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► www.economicshelp.org was founded in 2006 by Tejvan Pettinger, who studied PPE at Oxford University and teaches economics. He has published several economics books, including:
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Hi could you please leave charts on the screen for a little longer please
Why the housing market will collapse soon? the biggest reason is the GdP drop and the treasury can't sell its bonds except to the BOE which will put more pressure on it to raise the interest rate lot higher,
@@MrManny075 your talking rubbish mate, same goes for these other so called financial gurus on you tube, it’s all waffle and BS, using click bait to draw viewers so they can get paid from you tube, can’t get a real job 😂
@@vinnieomahoney6359 What did I say is rubbish? The UK GDP is 5% lower since Brexit and there is no real growth, the BOE holds 900 billion in government debt there is no way they can add more so the government had to cut spending and raise taxes or sell its assets, but for how long? they can't push the can forever,
Houses are not worth more than £20.000 it's only bricks, why would anyone be stupid enough to be tied to a mortgage of £150.000 for years on end, only to die before they ever pay it off..
houses have become unobtainable and deliberately priced at silly rates nobody can afford and most normal ppl will just never bother with buying a house because renting is so much cheaper & means your not locked into debt like a robot...
The younger generation are not interested in buying houses now because they see what a greedy market industry it has become..
Everyone needs a place to live sure, but not at pie in the sky prices & the cost of your entire working life, like we see today... What's worse is you never even own your home once you have paid it in full as the city council can sell your house to pay council tax bills if you decide you don't want to pay that guff... So home ownership is a massive scam.
Why should anyone pay more than they would pay for a car. it's not realistic and those controlling the price should hang their heads in shame... your greedy and we will not feed your greedy anymore...
I think a housing crash will happen because all those people who bought homes over asking price, although it was at a low interest rate, they are over their heads. They have no equity if the housing prices continue to go down, and if for whatever reason they cannot afford the house anymore and it goes into foreclosure because even if they try to sell, they will not make any money. I think this will happen to a lot of people especially with the massive layoff predicted for the future and the cost of living rising at a high speed.
For 2023, it’s hard to nail down specific predictions for the housing market is because it’s not yet clear how quickly or how much the Federal Reserve can bring down inflation and borrowing costs without tanking buyer demand for everything from homes to cars.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You are right! I diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
I just started a few months back, I'm going for long term, I'm still trying to wrap my head around it, who’s this advisor you work with?
Big Credits to ''Natalie Lynn Fisk'' she has a web presence, so you can simply search for, there are some others but it might be difficult to get them, but Natalie has been a good guide through the year.
I've been watching the housing market closely, Prices have been skyrocketing for years. It's going to be tough for first-time buyers to enter the market." how can one diversify $280k reserve .
I agree, It's not just the prices, but also the increasing interest rates that are making it more difficult for people to afford homes. With a good FA you can make up your portfolio.
The housing market has always had its ups and downs, but it's true that this time feels different. Having a portfolio manager will save you a lot in the market , My portfolio currently has 200% increase last couple of months with the help of my advisor.
Do you mind sharing info on the adviser who assisted you?
“Vivian Carol Gioia” is the coach that guides me, She has years of financial market experience, you can use something else but for me her strategy works hence my result. She provides entry and exit point for the securities I focus on.
Found her, I wrote her an email and scheduled a call, hopefully she responds, I plan to start 2024 on a woodnote financially.
Here in Cumbria it has been the case for several months that properties come on the market & within a month are reduced by 10%-20%. This is not fantasy it shows up on Zoopla etc.. & yet we keep hearing that the housing market is doing ok. A buy-to let-property nearby is priced at about 65% less than an equivalent non-tenanted freehold property & it has been on the market 7 months. B2L is dying.
I advise you to invest in stocks to balance out your real estate, Even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. This is not financial advice, but buy now because cash is definitely not king right now!
You're correct! With the help of an investment coach, I was able to diversify my 250K portfolio across markets and produce slightly more than 630K in net profit from high dividend yield equities, ETFs, and bonds.
@@ThomasChai05 Would you mind providing details on the advisor who helped you? You seem to have it all figured out unlike the rest of us
*Camille Alicia Garcia* is my adviser and she is highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further.
I located her, sent her an email, and scheduled a call; hopefully, she will reply because I want to start the new year off financially strong.
As a realtor in my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
You are right! I’ve diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
@@theresahv Could you kindly leave your investment advisor's contact information here? I absolutely must have one.
I thoroughly recommend Julie Anne Hoover, an investment advisor who is subject to US SEC regulation. She has assisted me with my portfolio for many years. Look her up online; she's a well-known figure.
@@theresahv thank you for this tip , I must say, Julie Anne Hoover appears to be quite knowledgeable. After coming across her online page, I thoroughly went through her resume, educational background, and qualifications, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
MYSTICFLIP is young. Holding almost anything mentioned here is a good hold because the VHS or Beta will only show in time. I want to hold them early. Its sad that most dont think of these things as good future holds instead of being out of the market and bottom hunting. Are we the adopters or are we scavengers? surely one of these layer ones will become the standard and i dont want to sell any of them too early.
I predict a housing crash due to people buying homes over asking price, lacking equity if prices decline further. Foreclosure becomes likely if they can't afford the house, and selling won't yield profits. With anticipated layoffs and rising living costs, many individuals may face this situation.
@HENAhlgren You are right! I’ve diversified my portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above $830k in net profit across high dividend yield stocks, ETF and bonds.
@@EricZachary-om7hf Do you mind sharing info on the adviser who assisted you?
@@Harperrr.99 It's best you do your due diligence, I have my portfolio overseen by “Mariam Sandra Milner” and her qualifications speak for itself. Most likely, the internet is where to find basic info, she has a noticeable page for consulting.
@@EricZachary-om7hf Thank you for sharing; I will need all the help I can get because I recently sold some of my assets in order to invest in the stock market.
Thank you!! Good to see all of the scammers in one thread 😂
I bought my place with two things in mind outside of the house it’s self, one was the fact the I know the mark was way over inflated and one day it will come down and I don’t expect it/ take a really long time to get back to 2019 market value. I also built in 5% rate hike. Remember been laughed out of the bank when I said I was planning on building in 5% rate rise, to be fair they did agree it’s good to build interest in. So my budget was £155,000, a year went by and nothing in a decent area. Was getting worried i had mis calculated the market, plus covid was causing problems. Eventually I found this run down shack, I won’t even say it was a house. Had to give 19% deposit over, my saving grace was they allowed a lone up to £25,000. But it’s in a good area. Everyone thought I was mad, we got the house to liveable stance, it’s been none stop save and go, save and go. This learning curve came from the 2008 crash, when I was just starting out on my career and seen grown men crying in the pub, drowning their sorrows, due to been in a house they could ill afford. Now I’m not wealthy by any means, but I learned to live with my means. I just think it’s almost impossible to live within the U.K. housing market
You're screwed if you rent. You're screwed if you buy. You're screwed if you work and earn high wages, since most of it will go to taxes, housing, groceries and bills.
The only sensible move is leaving the UK altogether.
This!!
Just found this channel… Wow.. really enjoyed the detailed and calm overview. Thank you
Great video!. Well I'm so happy I made the best decisions by having a good investment, Recently I'm able to acquire my third house even at my age and I believe if things keep going well I would retire early
That's nice! But how did you manage to achieve all that even with the current economy that's very bad? Please I'll appreciate your assistance on how to go about it, I'm desperately looking for a way to pay up my debts and also achieve my goals
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You’re videos are great mate. I really like the charts and graphs and excellent analysis
Sometimes the correction can be in the form of muted price growth for decades. This also catches up with the long term trend in house prices
The question is: WHERE DO I GET THE HUGE DEPOSIT NEEDED FOR A MORTGAGE?! My rent is £2k for a 3bed and adding up the bills and other expenses, it makes it unreal to save even one pound! When people cannot afford a cheaper mortgage because of an expensive rent they pay, it means the system is broken and there's no way out apparently.
So true. Most of us are living from paycheck to paycheck
There was recently introduced 100% mortgage based on tight criteria from your rental payment. Look into it whenever you decide to buy. In short, they would take your monthly rental payments as a demonstration of ability to pay.
And yes I agree it would be more sensible to actually have affordable homes, rather than creative and limiting schemes.
outside of London
@@temporarythoughts building firms control the supply, they won't oversupply and tank their own profits would they? This is why the councils needs to start building homes again and give the builders competition.
Omfg! MYSTICFLIP turned out to be a bloody smart move. I love love love this. I’m the wrong side of 40 so I’m taking this all on board IMMEDIATELY- thank you! Even if I run out of time my kids will benefit from this incredible education. Thankyou thankyou thankyou!!
A very helpful video Tejvan. Thanks for this.
Thanks for this informative video! The question of whether to buy a house now or wait for a potential market crash is on the minds of many homebuyers. Your analysis of the options and considerations is truly helpful. It's important to carefully assess the economic situation and weigh the risks and benefits. Your insights provide valuable guidance for those navigating the housing market in 2023. Keep up the great work in keeping us informed and empowered!
Dont drop the price of your house if you trying to sell it is just a trick for the estate agents to buy bargains ,,,,,,
Houses crashing 35% is the most funny thing I have ever heard. You will be lucky if they fall 3%.
Great info, thank you
Great info.Thanks
Best analysis ive seen yet, nice one !
Great presentation with good graphics.
Great informative video,thanks
Falling house prices ( yes it's already happening ) but still a long way to go.
This country is bankrupt, house prices will be the last of our worries !
All this talk of house price drops and in the end it's all about 5% and 10% and how that would be a huge hit, while looking at it, top return to something normal we'd need to see like 50% or more drops.
We need every single damn bullshit investment firm to lose every penny they have and let actual real people buy a home.
I fear the worst however, and that this situation will just squeeze everyone so badly we'll all be back in the industrial revolution times with 3 generations all squeezed into one house and sending the kids off to work for the slave wages of only £25,000 a day.
Unless we start lining people up against the wall, kick out foreign investment, take back public services from the greedy share holders... heh... who am I kidding....
😂
Always great listening to you 👍
cheers
I am one of those people who can finally get onto the ladder thanks to finding a seller that was willing to come down 17% on asking price. This mortgage will be £300 less than our renewal rent and the house we are purchasing is in better quality and bigger than the rentals available.
The caviat is that it took 3 months and 6 failed offers to find a seller that was willing to negotiate down to the actual market value.
Yea, they are dropping like flies on the main websites, only things that are shifting at any rate are 1 bed flats and 2 bed terrace houses which aren't seriously overvalued. Those people sitting in 4 bed detacheds in the south east ought to have plenty of lube at hand.
Where about? It depends on the area.
Cardiff
Well done.
Yeah, every year is supposedly the "wrong time" to buy a house. But rents are sky high, plus demand for rentals is so high that in some places (like here, in Bristol) landlords are asking for 6 months or even 1 year's rent in advance. When that's the alternative, buying is a very good option.
Excellent! Thank you
I've been saving for circa 10 years having 3 jobs at one point. I'm now in a position to purchase and am due to complete in the next weeks. You buy when you have the cash. Simple as that! Yes the interest rates are higher but I am also in a strong position so have managed to buy way under asking. Cash is king in times like this. Strong deposit etc
Thank you so much for your insightful videos and careful analysis! I enjoy your content very much and you're doing everyone a favor with your educational videos ♥
Brilliant video thank you
you really have a talent as a great communicator. Great stuff👍
Are you new on the internet? These ppl have been predicting crashes for the last 10 years
Good video. Thanks
Thanks very much for the video and the analysis. We were more than happy to remortgage for 5 years at 4%. Uk lagging badly on inflation recovery and I’ve little confidence in Andrew Bailey and the BoE to sort it out. Hoping to move house or pick up a 2nd property in the next 2-3 years.
Interest rates in the UK are never going to be as low again
Central Bankers meeting in Europe suggesting (reading between the lines) the UK bank rate could well get to 7%, and there will be several more rate hikes this year in all relevant countries like the UK, USA and the EU with inflation getting to 2% in 2025/2026. This means higher rates will prevail beyond this year and longer than originally anticipated. I should think more of this meeting will be reported soon.
Purely on financial reasoning, now would be a bad time to buy.
One of the serious consequences of the bust is a permanent loss of buyer wealth. If the final crashed price is less than the original buying price, the difference in value is permanently lost. Why? The final crashed numeric price will only increase with wages each year (a strong correlation, similar to inflation). So after the crash, the numeric value increases each year, but the true absolute value remains the same. So when it is said that prices 'recover', they only do so to numerics and do not actually regain any of the absolute value lost.
Importantly, the mortgage will be based on the original higher price, so the value loss will still be paid for, yet never realised by the buyer. A steady bleed of buyer wealth.
Hear about a crash every year. Yea, interest rates have increased quickly and people are struggling more. But demand is still high and mortgages relatively easy to get. The interest rate is what it was before the 2008 crash sent it to record lows. The problem is that people have got too used to nearly 0% interest rates. What usually happens is the housing market stagnates for a brief period and prices may dip slightly, but in the grand scheme of things they recover. Poor timing of remortgaging or moving will hurt some people, but houses aren't an investment they're homes.
Unfortunately a housing price drop could be good news for foreign investors or people looking to buy second properties or the rich looking to gift their children a bargin.
They should be banned from purchasing more than one home and there should be a foreign buyer tax.
That is just made up. The fact is there are 25 million homes in the UK and only 250,000 are foreign owned, so that is 1%! We certainly have lots of people from overseas working here so they can easily account for this number.
So we get to almost zero being bought by "foreign investors".
According to lots a lots of pro EU channels foreign investment has all by disappeared due to Brexit. So a price drop must be good for first time buyers
Or the rich who just want to force all middle and lower class people into being renters.
That is what's going to happen and it's 100% by design
Great stuff 💪
Your graph at 6:17 is interesting. The trend of 7 years decline, however, it's 3.5 years to reach the max low then another 3.5 years of sideways action before lift-off. This presents a good opportunity for savvy investors to stack deals y/y after the 3-year mark for a max ROI.
To be honest I think it’ll be more of a case of people getting less for their money but prices not dropping significantly.
Seem a few people recently commenting that they’ve bought smaller or bought outside of their preferred area due to the rates.
There’s still a massive housing shortage and people need to live somewhere so if people could’ve previously afforded a 3 bed detached in an area they’ll end up with a 2 bed with a loft conversion paying the same money on the mortgage.
Good luck buy house now!! I’m waiting!!
isn't commercial real estate supposed (in a recession) to tank before the residential market? would be nice to see if there is a correlation and how historically the commercial real estate prices compare to the residential prices
There is no crash. People talking about crash since 2007, and it never happened!
There'll be people here who didnt buy in 2019 "waiting for the crash" aswell...
Good video, very accurate representation of the low interest oeriod post crash. Although will disagree that bank margins have increased - swap rates and cost of funding for lenders has increased so, whilst it looks like the rate delta between BoE and Banks has increased, in reality margins for Banks are lower as their liquidity is taking a massive hit...
worth waiting... same situation I found myself in 07-08. my dad said wait because the writing was on the wall, rate rising and property prices were unsustainable as they are now. wait 1-2 years, save up and get the best deals.
Good video and interesting information.
One question on unemployment rates.
Do you know if the measure of unemployment has changed over the last 30 years?
Would be interesting to see if it has or hasn’t.
Thanks a lot for all your useful advice. I enjoy watching your videos. You always explain everything very thoroughly for people to understand well. We are lucky to have you ! So if I want to sell my property, should I sell it as soon as possible as the house prices will be falling even more?
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i love the scope of your stats and quality of graphs supporting economic arguments. Are these stats derived from the ONS or other publicly available data ?
Watched the video and read the comments. I own a house in Manchester due for remortgaging in Nov so my question is, do i fix or avoid fixing? If I fix, how long and at what rate?
Well, I bought early 2000s where the rates were about 7%, when I could get a rate of 5% for 10 years, I fixed it. The rates then went radically down, I therefore ended up making the wrong decision and overpaid for years (This doesn't happen to the banks, we (tax payer) pay for their mistakes). I think it went low was because of all the folk who pay on the never never and want everything new. If the rates had gone up then, the country would have been in real trouble with countless amounts of negative equity (worse than the 90s), on the opposite side the coin, those folks who watch their money and are sensible, lost out to those flouting the system.... Now, this time, I don't really care about the mortgage rates as I am mortgage free (Yippee), however with being one of those who are careful, I didn't spend my savings when saving interest rates were low, so mine are relatively healthy.... Now that the banks have made bad deals on fixed deals due to the interest rate rises, they can potentially loose out if they play fair and raise the interest rates on savings, however, they still refuse to pay decent interest on savings that don't benefit their shareholders because they cant afford it (boo hoo, Sh*t happens!), play fair guys!. I therefore think, I should stop being sensible, considerate and safe... sell my house, spend my money, max out my credit cards and join the rest of the folks on the never never, as these days it doesn't pay to be sensible. But I wont.....because I'm sensible, bring back the good old days! give me 5-6 % on my savings such as easy access savings and ISA's, not fixed deals, fixed deals mean that the banks expect the rates to go higher!, when people made mistakes and bad decisions, they got punished, I don't seem to see that these days.
Great information that shows that successive governments of all colours have relied too heavily on the private sector to provide affordable housing and transfer of capital to private landlords via housing benefit.
Houses are never falling by 35%, this is pure hysteria. Maybe in shite areas the prices will fall a bit. But in nice areas, people will stay in their houses rather than sell low. Then that creates a low supply, which keeps prices high. Additionally, private sector pay is increasing sharply, as in public sector pay for many. This enables affordability of higher mortgage payments.
I really think people who hold off for whatever reason could live to regret it. The best time to buy a house has always been when you can afford a house that you like in an area you like. That is the moment. Trying to time to market is a proven bad strategy.
Your RUclips videos are great, but can you please leave the graphs on for more than a few seconds at a time? I’m constantly having to pause the video and when you pause the video on a tv screen the screen darkens and a lot of the screen is taken up by links to other RUclips videos. Thanks.
The house prices will be dictated by who is willing to sell and who can afford to buy. One sale can dictate the price of an entire postcode, but if you aren't selling you need only worry about your mortage renewal. Every area will be different as reality bites and people start to care about how much it costs to heat all these poorly insulated homes that haven't seen any refurbishment in decades sometimes yet are pushing half a million.
The lower end of the market is always high flux and affordable for the average person so I doubt much will change there.
That 3 bed semi house you showed at £150k is at least £300k here in South east Kent, Margate.
Madness
The future is never the same as the past, if it was everyone would be a millionaire. The crash of the early 90s was completely different than what is happening today the world never stays the same.
"nothing changes by staying the same" David Brent
Like all other markets the housing market is ruled by supply and demand and as always in the UK there is always more demand than supply. Therefore, if there is a fall it will be small and temporary in my oppinion.
I like your short form ' buy to rent on loan'.
7:31
You’ve misquoted or misunderstood the IMF.
They say the “PACE of house price growth” slows by about 2 %. This does not even mean any drop in prices, just that they don’t increase as fast 🤔
that Doncaster house sure is depressing 😢, wish people put a bit more thought into making towns less bleak
House prices in London will not budge, outside of London we may see fluctuation.
35% drop needed as prices are ridiculous in the south east especially.
Bravo bravo to this chap... but how will this unfold if they can't get inflation down to 2%
With regards to house buying, the reason why there was no crash I'd because the banks bought up all the cheaper houses, put people in them for rent or just let them sit, so empty, so the banks have helped cause the problems, this time the banks may not have the savers money to use as savers have lost too much already, notice how the banks are jot passing on the interest hikes to their savers, well that will back fire because savers may look else where to out their money, especially if banks don't pass on the interest they are getting.
I’ll take another look after the next rate rise and the impact of those mortgage rates that are due to be changed.
In the 90s mortgage rates increased some 63%, it is more than that now, and then in the 90s people were spending about 25% of income on housing, now it is near 33%, plus all the other inflation eating away at the income.
Over the next 2 years as these rates start to affex4 mortgage renewals there is going to be carnage.
You should do a new video about MYSTICFLIP ! I really like you’re mellow delivery and you seem like you’re very knowledgeable. I watch lots of influencers and you always seem very calculated and know exactly what you’re talking about and understand it. You’re better at explaining complicated things simply, than any other person on youtube keep it up brother!
I totally agree with what you are saying ....
Confused about Fixed rating is it good or bad are you saying variable rating will be OK
I’m 35yo on a £45k job. Planning to save up £100k and move to Australia. I don’t see myself signing up for a mortgage in the UK, specially in London - shit and expensive properties!
The question should be Could you wait? End of the day people need homes. People are going to have to suck it up. Drop holidays abroad, stop takeaways, buy an old pay as you go phone contract. Cancel sky tv, and other tv services. Shop at lidl or aldi. Walk or cycle more unstead of short car trips. Get an allotment.
Jobs will start drying up so a 2nd job is a possibility but not easy.
Never try to catch a falling knife. Life is short don't wait around for anything. Go after your dreams.
Says the man that is selling all his buy let's 😂 nah just kidding
I can smell a sales agent. Sounds like a sales pitch. Sure buy a house you can barely afford and go into negative equity before you get the keys while struggling to make mortgage payments.
@@SphericallyChallenged I bought a house in 2006 was in negative equity for many years. I’m stronger for it.
@@prizeking1647 I actually do have them on the market but that was before the downturn. Now there’s just no one interested hah
And it may cost a fortune. We're not talking about cheap items.
The 2 year gilt is up 1% this month alone. Interest rates are not coming down anytime soon.
i think you need to look at it from a more practical viewpoint which is stamp duty has to be paid for property purchases and that's what's stopping most buyers from purchasing their own homes. Also, the help to buy schemes are getting too expensive for what's its worth in the UK. these are the true contributions rather than playing the speculative game.
This is the best AI video I have ever seen on the topic of UK property.
AI? so the guy is not real?
I can see the "Artificial" as he bangs on with the usual made-up rubbish, but not much "Intelligence" as he has been prediction a crash for about three years now and it still h as not happened nor does it look like it will.
@@GodiscomingBhappy surely is?
@@grolfe3210 I'm new to this AI channel. Has he really? Oh dear.
AI = Actual Intelligence
I really enjoy how you pick issues apart with data.
The graph of Bank Margins at 9:08. Seems to be added inflationary pressure. Clearly increasing interest rates doesn't work on that either.
Edifying. Thanks.
Rising interest rates are supposed to discourage lending, as it makes credit prohibitively expensive, so less people being able to afford new mortgages means fewer buyers at current prices.
So asking prices have to decrease as fewer buyers are competing to buy, lest sellers choose not to sell at all which is unlikely.
Also by making credit more expensive, it reduces the creation of new debt, debt issuing being one mechanism of money creation.
Also the main reason for interest rate hikes are to shore up the value of the pound as we're a net importer of goods including food.
Rival currencies such as the Dollar and Euro are respectively raising their interest rates, which would devalue the pound if the Bank of England doesn't react accordingly. Look up currency arbitrage for more information on this particular issue.
The UK has a dilemma, as a net importer it has to keep the value of the pound high lest we suffer even more inflation and risk our food and energy security.
Not sure I understand the graph on 24sec regarding the extent to which properties are overvalued as mortgage rates fluctuate. Surely there is purchase/sale value on the one hand but also the extent to which the buyer will have to pay more or less interest over time beyond the that price. It should be noted that my generation says how nice it is that rates are lower these days - despite recent rises - than the previous generation, which endured c 15 percent interest rates. But that was on a purchase price of many times less than those of today. My parents' house bought pre-oil crisis in the '70s was bought at that era's higher interest rate. But the cost of the property was some FIFTY times less than my place! (My wage may be around 15 times higher in monetary terms). In any case, it seems the height of absurdity - to say nothing of incompetence - to engender a situation where property values could fall by as much as a third. This is wealth destruction on a massive scale for anyone who holds the biggest asset most of us will ever buy. And all for the sake of a stupid inflation policy which was entirely unnecessary, given the government could have done like the French and the Spanish, notably, by simply forbidding massive energy price hikes which, as we have seen, only served to push millions into fuel poverty while directly bringing surplus profits to the energy providers. This government is so stupid it even shelled out 400 quid to millions of households to help them pay those larcenous and unnecessary prices.
I enjoy this channel - but I would like to see an even more critical appraisal. As a journalist I am all too well aware that the background to what is actually going on - as I have attempted to summarise above - is simply not in the newspaper reports nor on the TV news. What journalists primarily do today is shove out what the politicians and their financial cohorts tell us in their nice little soundbites of a few seconds. But they are lying.
Whatever the consensus is on MSM do the exact opposite & you will be fine…one thing to also consider is if house prices fall a lot & keep falling..u will struggle to get a borrower to lend unless u have a large deposit..
Large deposits are relative. The more the prices drop the lower the LTV will be thus being a larger deposit
Did a mortgage in principle application the other day and they agreed what we asked but offered us a much large amount if we wanted it. Over 100k more than we’d asked!
When I ran the numbers it would be my entire wage after tax gone on monthly payments. So we would be entirely reliant on my wife and I both being in work or we’d be screwed.
And that was WITH me telling them that my wife is on a temporary contract.
Completely irresponsible lending and I’m sure there are plenty of people who would have taken them up on it just to get a nicer house.
It’s basically 2008 all over again.
Will prices decrease? Yes. The houses that have been historically overpriced will see a reduction by the most as those are the most impacted by the increased interest rates and quite frankly, will not be affordable. As such, if you MUST sell them, nobody will be able to afford them unless you sell for less. For the majority of homeowners however, who are in affordable homes, there will very little impact. The reason for this is 2 fold:
1. High interest rates impact those properties the least.
2. Renters will prop up the market. With a plummet of rentable properties and skyrocketing rental costs, those people will be looking to buy, and they will be after the affordable homes. That demand will ensure that the prices remain consistent as competition will exist both between people escaping the rental market, and those looking to downsize to something more affordable.
Are you sure about renters propping up the market? They may want to buy but will they be passing the affordability checks which are now stress testing at 8%? What is an affordable home for the average person in a high interest climate?
Another thing you've missed is the lack of btl investor demand. Section 24 tax changes, high interest, eco friendly demands and proposed rental reform have led to a reduction in investors who would typically prop up a failing market. It really doesn't look good for UK property in the near term
@@dlc2479 Ironically, most renters could already meet the affordability criteria, it was the deposit that was always the stumbling block as well as the much bigger issue - they actually preferred to rent. There has since been a plethora of schemes to help with that deposit, 100% and 95% mortgage are still on the market and availability of rental properties has plummeted. This is not to mention the other options such as new 35 year mortgages and the old fashioned bank of mum and dad.
With regards to BTL investor demand, that's also incorrect. There has indeed been a decline in private landlords but there has also been a substantial increase in corporate landlords. Lloyds Bank for example is buying up large portfolios with the aim of renting - and given that these are new houses, that keeps the new build cost high. New build cost remains high, older houses also retain value. If anything, new builds are getting significantly more expensive to build due to inflation and demand.
Finally in terms of affordable, I'm talking anything from £80k to £180k. If you leave the extortionate and inflated areas, this kind of money easily buys you the size house you need. At that amount, interest rates make little difference and represent the perfect range both for first time buyers, renters escaping the market and people downsizing.
@@dlc2479 Other reasons:
Housing shortage: Immigration, new housing regulations and migration patterns in the UK means we have a housing shortage, more so in some areas of the UK. House building by itself is less than immgration year-on-year, never mind the standard population growth.
Building costs: To address the above, new homes need to be built. This is directly impacted by inflation and a new house is only costing more to build. Interest rates is making them harder to buy however, so either those builders will take a loss, or just slow down homebuilding. This keeps supply low and “competitive” housing more expensive.
Fixed deals / outright owners: Lots of people knew this was happening and was warned as such. This led to many with mortgages to lock in those rates for longer periods of time. We also have about a third of the UK that simply owns their home outright. Neither of those 2 groups need to sell or will be impacted by rising rates in such a way they need to sell their home. This keeps supply low.
Rising incomes: With record-low employment this results in higher-income households who can actually afford to pay the higher amounts.
@@jeffmcadam9071 On what basis are you saying that people preferred to rent?
Once again, those who passed affordability checks with 2/3% interest may not pass at 6% given historically high house prices.
I agree there have been moves by corporate to invest in UK rentals but it's not as significant as you think it.
If we know that the average house price is 260-270k, where will the average person find 180k properties? The supply issues mean nothing if the (eligible) demand isn't there.
@@dlc2479 On the basis that there are numerous studies showing that a large section prefer to rent. It offers them much more flexibility to move around for work, no liability for repairs and ultimately is more cost-effective for low income homes in receipt of housing benefit - which they would not get if owning a home (and yes, many of them do own a home). There's also late-life people who prefer not holding such a large asset which would be subject to inheritance tax.
As someone who works in Finance I can tell you very confidently that people going for REALISTIC and affordable homes (eg, not London or someone who thinks their first house is a £300,000 property) then they will easily pass the affordability checks as the majority of people currently borrow far less than we are willing to loan them (eg, a 2-income, minimum wage household can lend up to £200,000 these days but most lend £120k - £160k)
Prices down 18% so far in New Zealand, and still falling. That’s not adding in the 8% inflation rate over the last couple of years, which is eroding the value of each dollar … so yes, falls of 30% plus do happen!
Ah now that is a pertinent thing to be made aware of. Thanks! 🙏
I’ll be happy to visit to revisit in a years time. There’ll be no way house prices will drop 35%.
No way on gods green earth. 😄
I literally watch all of your content. I believe I can succeed following your advice and wisdom. I want to make 30000 every month lol that's what came to mind but Honestly. My main Affirmation is , I Am Self Employed, and everyday my company is getting Stronger. That's honestly the first step walking away from my 9 to 5.Forever grateful to MYSTICFLIP
Is it worth waiting? As he says, probably not if you can put down a decent deposit and would otherwise just be throwing money at ridiculous rents in the Uk. Where i live the avg rent for a 3 bed family home is about £1.4k.
I was one of those who held off buying first-time home due to the forecasts houses were going to crash in 2020; looking back now I realise it was a grave mistake :( with interest rates climbing and house prices having soared I'm being priced-out the market ... I;m 36 :/
36 too. I feel you. I'm starting to think there's never a good/bad time. Just got to go for it when you can.
I can empathise! Everyone predicted a slowing down of the economy based on Covid. No one predicted. The government would just print lots of money and that’s inflate the nominal price of assets. A tough lesson, I hope things improve for you in the future.
I remember last year when I wanted to buy a property when the interest rates where 3 to 4% for my offer in a property to be accepted I had to increase the purchase from £10,000 to £20,000 more. Still no luck majority of times. Now I bought a property around 5.5% rates and offer was accepted at below asking price and below the lowest Zoopla estimated price range.
I am not regreting I have a place to live till God knows when. Then been chased up and down by landlords and their un schedule checks.
A housing market is an over-the-counter market where the main asset is potentially held for decades. There’s a futures market for derivatives, but they rely on mortgages without any immediate changes.
There won't be any significant price drop. Period. There are simply too many people waiting for a price drop. Any dip and those people will jump in and keep housing costs from dropping any further
Great overview, thanks. I'm currently looking to buy my first house so I'm following this closely to decide whether to delay for a few months.
I personally think the predictions of a house price 'crash' are slightly off the mark. Effectively, we're already living through a crash in 'real' house prices with inflation near 10% and house price changes stagnant. Another 12 months of high inflation and stagnant house prices means the real value of houses will have fallen nearly 20% in this high-inflationary period. We've seen recently that nominal wages are increasing at around 6%, which is still a real terms fall but means that the house-price-to-earnings ratio is coming down even without any change in absolute house prices.
It's true inflation will be responsible for a significant part of revaluation of house prices (like 70s)
Demand is so high ,that prices will stagnate but not drop massively. A few bargains will come about where cost of living and transport finishes off the unlucky people that struggle with work.
The prices are clearly falling but I don't know if it's going to be so hard, maybe 10%,15% but 40%?
I'm in America, but we have the same mess here: Mortgage interest rates almost 8% -- I am WAITING. Will stay a renter until then.
--BR
Overseas buyers will always be there to prop plus we will get the government using tax funds to hold it up. First time buyer schemes etc.
Good Auld Donny 😝🤓
I'm 25 and currently saving for a house
Yes, it will happen. Cycles repeat this is most common in the 90s based on an adjusted basis of affordability and interest rate shock. 35% nationally and 40-50% in the South/London. I'm saving cash and sitting. When I tell some this they get very defensive and get angry, because they got too much to lose.
If prices are about to half in London- there will be a queue of foreign investors buying properties as it would be such a bargain , and the prices will jump back quite quickly. Don't forget we are not an isolated market and there is a huge demand in and outside the country for the properties.
@@vorong2ru That's assuming the domestic economy is not wrecked (People to rent too). Labour won't put policies in place to stop that. The global economy won't falter or contract. It's a lot of assumptions!
The problem is bigger than housing alone, just saying!!
Yeah people using food banks probably have other priorities at the moment. And those are people in work these days.
Like you say, I think the BOE is going to have lower rates when it realises what it's doing isn't working.