House market - how low will it go?

[JozefBlofeld]

....
House prices are driven by credit and demographics.

Ding ding! We have a winner. Thanks for that. Without credit there is no aggregate 'demand'.

Mortgage lenders are dropping their LTV ratio to 60%.

[DodgyAccountant]

Mortgage lenders are dropping their LTV ratio to 60%.

Which reduces the price people can pay.
Which reduces value.
Which reduces the price people can pay.

[BrilloPad]

Which reduces the price people can pay.
Which reduces value.
Which reduces the price people can pay.

Excellent!

Prices will reduce to what people can afford. Or maybe prices will stay the same and incomes increase...

[MrMarkyMark]

Could be worse, given the lack of/delays in getting people money.

There are so many people over stretched with credit, in this country, its untrue.
This covers people from all demographics.

Halifax is already only lending 60% LTV, for example.

People who have leveraged multiple properties and those who run multiple Air Bnbs should be very worried indeed.

Exactly what I said at the beginning of the chain

In fact our whole economy is driven by credit, hence why all this so worrying.

[DodgyAccountant]

In fact our whole economy is driven by credit, hence why all this so worrying.

Gold is money.
Everything else is credit.

JP Morgan

[Whorty]

This is not entirely true.

If you have a wave of forced-sellers, for example, the newly unemployed or a significant number of newly empty properties ( owners died ), you will enter a situation where the prices fall sharply, rapidly on the basis of a few sales because you have supply but not demand.

That then sets the price for the rest of the market.

Personally I'd like to see a 30 - 40% drop ... but that's because I have adult children who cannot get onto the market.

You're agreeing with me, but saying it's not true! How strange.

I said the housing market is driven (mostly) by supply and demand ... this is what you've also said above but in a lot more words!

When I said in the short term the market is static, I was referring to the fact that today you can't view property, list property, exchange contracts, move house etc. So, as of today, there is no supply or demand, so the market is static and neither moving up or down.

Once restrictions are lifted, we'll see. If you don't need to sell, then individuals will sit tight. Only those forced to sell will potentially lose out; as per the last few years, people have sat tight, supply has reduced to a trickle and as such house prices have held fairly stable for the most part.

We're not going to see a 30-40% drop unless a vast, and I mean vast, portion of the country are forced to sell. Very possible, but not in the government's interest so they will do all in their power to stop that from happening.

[MrMarkyMark]

You're agreeing with me, but saying it's not true! How strange.

I said the housing market is driven (mostly) by supply and demand ... this is what you've also said above but in a lot more words!

When I said in the short term the market is static, I was referring to the fact that today you can't view property, list property, exchange contracts, move house etc. So, as of today, there is no supply or demand, so the market is static and neither moving up or down.

Once restrictions are lifted, we'll see. If you don't need to sell, then individuals will sit tight. Only those forced to sell will potentially lose out; as per the last few years, people have sat tight, supply has reduced to a trickle and as such house prices have held fairly stable for the most part.

We're not going to see a 30-40% drop unless a vast, and I mean vast, portion of the country are forced to sell. Very possible, but not in the government's interest so they will do all in their power to stop that from happening.

Agreed, but the government are both not doing enough in the financial help, or dealing with it in a timely enough way.

An example would be the business loans from the banks, they have now tried to spin that they have told the banks to remove the personal guarantees required etc.

This is totally untrue, it was written into the original government policy and the banks just acted on that.

You also have to factor in most people live pretty much day to day, 10s of thousands of pounds on credit cards, a lot on interest only mortgages etc.

Housing market crash currently looks inevitable, given the above. .

[jamesbrown]

You're agreeing with me, but saying it's not true! How strange.

I said the housing market is driven (mostly) by supply and demand ... this is what you've also said above but in a lot more words!

When I said in the short term the market is static, I was referring to the fact that today you can't view property, list property, exchange contracts, move house etc. So, as of today, there is no supply or demand, so the market is static and neither moving up or down.

Once restrictions are lifted, we'll see. If you don't need to sell, then individuals will sit tight. Only those forced to sell will potentially lose out; as per the last few years, people have sat tight, supply has reduced to a trickle and as such house prices have held fairly stable for the most part.

We're not going to see a 30-40% drop unless a vast, and I mean vast, portion of the country are forced to sell. Very possible, but not in the government's interest so they will do all in their power to stop that from happening.

I think that’s mostly true. However, the price of any asset, particularly an illiquid one, is determined at the margins. What percentage of the housing stock was being sold in early 2009? Transaction levels took a massive hit in the year through June 2019 at the same time prices were plummeting.

[DodgyAccountant]

I think that’s mostly true. However, the price of any asset, particularly an illiquid one, is determined at the margins.

There may be low transaction level but the transactions that are made will be used to set the valuation of neighboring properties. That will then affect LTV levels which will affect mortgage and remortgage availabllity and price.

Are then any surveyors here who know exactly how this works?

DA

[SeededLoaf]

The Government will extend mortage holidays to 6+ months if needed. Banks will also give loan holidays for everything else too.

They've already robbed shareholder dividends which gives them a cushion to carry on for longer (waste of time doing stress tests).

House prices won't budge.