Collapse of the UK housing market

[Tara]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

[Tedx]

Hmmm. Bloomberg. Everything in the UK is in crisis. Everywhere else....well, its shooperb.

[BullDog]

"Could" but probably won't.

[stevensfo]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Ever since discovering TMF over 20 years ago, I don't think there's ever been a week when house prices weren't going to either fall or rise!

When prices keep going up well above the rate of inflation, nobody seems to bat an eyelid, but as soon as they fall, it's all over the news!

A fall in prices would be excellent news for young first-time buyers.

Though get in fast. Starting quite soon, us millions of baby boomers are going to start dropping like flies and there could be one almighty glut of houses on the market. This is already starting to happen in the village where my mum lives, though at the moment, empty houses are sold very fast.

Steve

[88V8]

A perfect storm is brewing that could send UK house prices down by 40%.

Considering all the bleating about prices and affordability, would that not be a good thing?

V8

[Mike4]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Well let's hope so, as falling prices mean rising rents which will suit plenty of us here just fine.

Also helps more would-be property investors get started with their first purchase.

ISTR Nationwide stats showing 1% off house prices per month for the last few months, so that's a start.

[ursaminortaur]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Ever since discovering TMF over 20 years ago, I don't think there's ever been a week when house prices weren't going to either fall or rise!

When prices keep going up well above the rate of inflation, nobody seems to bat an eyelid, but as soon as they fall, it's all over the news!

A fall in prices would be excellent news for young first-time buyers.

Though get in fast. Starting quite soon, us millions of baby boomers are going to start dropping like flies and there could be one almighty glut of houses on the market. This is already starting to happen in the village where my mum lives, though at the moment, empty houses are sold very fast.

Steve

Already happening in Japan where there are lots of abandoned properties know as "ghost houses".

https://www.atlasobscura.com/articles/japanese-ghost-houses


In municipalities across Japan sits an increasing number of forgotten, dilapidated homes known as “ghost houses.”

Despite the name and oft-eerie appearance, however, these are not haunted houses in need of an exorcism. Rather, ghost houses, or akiya as they are known in Japanese, are abandoned homes that towns cannot get rid of through demolition or resale. Impacting rural towns the hardest as young residents flock to the country’s major cities, the glut of ghost homes has prompted some municipalities to come up with creative solutions to deal with the problem..
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.
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As a town’s older residents move to assisted living facilities or die, their homes pass down to their heirs. Younger generations, now increasingly located in Japan’s major cities, often have no interest in inheriting or maintaining the family’s ancestral home deep in the countryside, beyond paying the required property taxes. In other cases, officials are unable to locate or identify the proper heirs, leaving the fate of the property in a state of limbo.

As a result, homes increasingly sit abandoned, becoming overgrown and run-down in the process. Government statistics as of 2018 consider 13.6 percent of properties in the country to be ghost houses. Put another way: By 2040, the total size of abandoned properties in Japan is estimated to equal the land size of Austria. This presents a challenge for local governments over how to handle these properties. In contrast with other countries, Japanese law does not allow municipalities a quick right of eminent domain, leaving them instead to try to track down and negotiate with absentee heirs. Where local law empowers a town to demolish abandoned houses, municipalities often balk at the associated cost, leaving the structures to waste.

[absolutezero]

A perfect storm is brewing that could send UK house prices down by 40%.

Considering all the bleating about prices and affordability, would that not be a good thing?

V8

Very.

[scrumpyjack]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Ever since discovering TMF over 20 years ago, I don't think there's ever been a week when house prices weren't going to either fall or rise!

When prices keep going up well above the rate of inflation, nobody seems to bat an eyelid, but as soon as they fall, it's all over the news!

A fall in prices would be excellent news for young first-time buyers.

Though get in fast. Starting quite soon, us millions of baby boomers are going to start dropping like flies and there could be one almighty glut of houses on the market. This is already starting to happen in the village where my mum lives, though at the moment, empty houses are sold very fast.

Steve

Already happening in Japan where there are lots of abandoned properties know as "ghost houses".

https://www.atlasobscura.com/articles/japanese-ghost-houses


In municipalities across Japan sits an increasing number of forgotten, dilapidated homes known as “ghost houses.”

Despite the name and oft-eerie appearance, however, these are not haunted houses in need of an exorcism. Rather, ghost houses, or akiya as they are known in Japanese, are abandoned homes that towns cannot get rid of through demolition or resale. Impacting rural towns the hardest as young residents flock to the country’s major cities, the glut of ghost homes has prompted some municipalities to come up with creative solutions to deal with the problem..
.
.
.
As a town’s older residents move to assisted living facilities or die, their homes pass down to their heirs. Younger generations, now increasingly located in Japan’s major cities, often have no interest in inheriting or maintaining the family’s ancestral home deep in the countryside, beyond paying the required property taxes. In other cases, officials are unable to locate or identify the proper heirs, leaving the fate of the property in a state of limbo.

As a result, homes increasingly sit abandoned, becoming overgrown and run-down in the process. Government statistics as of 2018 consider 13.6 percent of properties in the country to be ghost houses. Put another way: By 2040, the total size of abandoned properties in Japan is estimated to equal the land size of Austria. This presents a challenge for local governments over how to handle these properties. In contrast with other countries, Japanese law does not allow municipalities a quick right of eminent domain, leaving them instead to try to track down and negotiate with absentee heirs. Where local law empowers a town to demolish abandoned houses, municipalities often balk at the associated cost, leaving the structures to waste.

The Japanese population is not growing and is forecast to fall substantially over the next few decades (from 125m to 75m), so weak house prices is no surprise. The UK population continues to grow strongly and is forecast to continue doing so. So I think a substantial fall in house prices is unlikely. Probably they will stagnate or drift mildly lower for a while whilst inflation carries on - so a fall in real terms but not so much in nominal terms. There will be fewer transactions for a while, but the pressure cooker of demand just builds up and then prices will resume their increase. Supply and demand imbalance will make it so. Sad, but more convenient for HMG and the financial system than a fall in nominal prices.

[Dod101]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Ever since discovering TMF over 20 years ago, I don't think there's ever been a week when house prices weren't going to either fall or rise!

When prices keep going up well above the rate of inflation, nobody seems to bat an eyelid, but as soon as they fall, it's all over the news!

A fall in prices would be excellent news for young first-time buyers.

Though get in fast. Starting quite soon, us millions of baby boomers are going to start dropping like flies and there could be one almighty glut of houses on the market. This is already starting to happen in the village where my mum lives, though at the moment, empty houses are sold very fast.

Steve

Already happening in Japan where there are lots of abandoned properties know as "ghost houses".

https://www.atlasobscura.com/articles/japanese-ghost-houses


In municipalities across Japan sits an increasing number of forgotten, dilapidated homes known as “ghost houses.”

Despite the name and oft-eerie appearance, however, these are not haunted houses in need of an exorcism. Rather, ghost houses, or akiya as they are known in Japanese, are abandoned homes that towns cannot get rid of through demolition or resale. Impacting rural towns the hardest as young residents flock to the country’s major cities, the glut of ghost homes has prompted some municipalities to come up with creative solutions to deal with the problem..
.
.
.
As a town’s older residents move to assisted living facilities or die, their homes pass down to their heirs. Younger generations, now increasingly located in Japan’s major cities, often have no interest in inheriting or maintaining the family’s ancestral home deep in the countryside, beyond paying the required property taxes. In other cases, officials are unable to locate or identify the proper heirs, leaving the fate of the property in a state of limbo.

As a result, homes increasingly sit abandoned, becoming overgrown and run-down in the process. Government statistics as of 2018 consider 13.6 percent of properties in the country to be ghost houses. Put another way: By 2040, the total size of abandoned properties in Japan is estimated to equal the land size of Austria. This presents a challenge for local governments over how to handle these properties. In contrast with other countries, Japanese law does not allow municipalities a quick right of eminent domain, leaving them instead to try to track down and negotiate with absentee heirs. Where local law empowers a town to demolish abandoned houses, municipalities often balk at the associated cost, leaving the structures to waste.

We are a long way from Japan in every sense of the term.

Dod

[Lanark]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Well let's hope so, as falling prices mean rising rents which will suit plenty of us here just fine.

I wouldnt count on that, if new landlords can buy property for 40% less they can rent it out for much less and still make a profit.

Interest rates will make far more difference to the rental market, if they stay too high for too long a lot of landlords will just exit the market and park the money in an easier to manage asset with a better return.

[stevensfo]

A perfect storm is brewing that could send UK house prices down by 40%.

https://www.bloomberg.com/news/articles ... ify%20wall

Ever since discovering TMF over 20 years ago, I don't think there's ever been a week when house prices weren't going to either fall or rise!

When prices keep going up well above the rate of inflation, nobody seems to bat an eyelid, but as soon as they fall, it's all over the news!

A fall in prices would be excellent news for young first-time buyers.

Though get in fast. Starting quite soon, us millions of baby boomers are going to start dropping like flies and there could be one almighty glut of houses on the market. This is already starting to happen in the village where my mum lives, though at the moment, empty houses are sold very fast.

Steve

Already happening in Japan where there are lots of abandoned properties know as "ghost houses".

https://www.atlasobscura.com/articles/japanese-ghost-houses


In municipalities across Japan sits an increasing number of forgotten, dilapidated homes known as “ghost houses.”

Despite the name and oft-eerie appearance, however, these are not haunted houses in need of an exorcism. Rather, ghost houses, or akiya as they are known in Japanese, are abandoned homes that towns cannot get rid of through demolition or resale. Impacting rural towns the hardest as young residents flock to the country’s major cities, the glut of ghost homes has prompted some municipalities to come up with creative solutions to deal with the problem..
.
.
.
As a town’s older residents move to assisted living facilities or die, their homes pass down to their heirs. Younger generations, now increasingly located in Japan’s major cities, often have no interest in inheriting or maintaining the family’s ancestral home deep in the countryside, beyond paying the required property taxes. In other cases, officials are unable to locate or identify the proper heirs, leaving the fate of the property in a state of limbo.

As a result, homes increasingly sit abandoned, becoming overgrown and run-down in the process. Government statistics as of 2018 consider 13.6 percent of properties in the country to be ghost houses. Put another way: By 2040, the total size of abandoned properties in Japan is estimated to equal the land size of Austria. This presents a challenge for local governments over how to handle these properties. In contrast with other countries, Japanese law does not allow municipalities a quick right of eminent domain, leaving them instead to try to track down and negotiate with absentee heirs. Where local law empowers a town to demolish abandoned houses, municipalities often balk at the associated cost, leaving the structures to waste.

The Japanese population is not growing and is forecast to fall substantially over the next few decades (from 125m to 75m), so weak house prices is no surprise. The UK population continues to grow strongly and is forecast to continue doing so. So I think a substantial fall in house prices is unlikely. Probably they will stagnate or drift mildly lower for a while whilst inflation carries on - so a fall in real terms but not so much in nominal terms. There will be fewer transactions for a while, but the pressure cooker of demand just builds up and then prices will resume their increase. Supply and demand imbalance will make it so. Sad, but more convenient for HMG and the financial system than a fall in nominal prices.

The UK population continues to grow strongly and is forecast to continue doing so.

OMG!

Our old village where I grew up is at breaking point, yet the first new housing estate isn't all finished, and the 2nd, even larger project (removing allotments that go back a hundred years) hasn't even started. The local Primary school can't really expand any more without building on the bit of green that the school has. The traffic to get onto the A1 is already crazy. Apart from the rush hours, I don't know why there are so many cars on the road. The closest towns are shadows of their former selves, the local buses have either been withdrawn or cut back.

At least with all these extra people paying income tax, N.I., VAT, IHT, petrol tax, alcohol tax, fag tax etc, the ridiculous local council taxes should come down a lot.

Steve

[Lootman]

if new landlords can buy property for 40% less they can rent it out for much less and still make a profit.

LLs do not think like that. The rent I ask for is not based on my costs, but on what the market will bear. I do not lower the rents I charge because (say) I have just paid off my mortgage.

[Mike4]

if new landlords can buy property for 40% less they can rent it out for much less and still make a profit.

LLs do not think like that. The rent I ask for is not based on my costs, but on what the market will bear. I do not lower the rents I charge because (say) I have just paid off my mortgage.

Same here, and way back in the early days when my mortgage payments exceeded the rent, I subsidised them out of my on earned income. Nobody ever thanked ME for subsidising my tenants' accommodation!

[Tara]

“The UK population continues to grow strongly and is forecast to continue doing so.”

Well the main reason for the growth in UK population is the neverending migration of various illegal migrants and undocumented criminals to the UK, who have to be housed at the taxpayers expense. They have also brought the NHS and various other social services to breaking point. This may all be good news for UK landlords, but not so good news for the vast majority of British people.

[scrumpyjack]

“The UK population continues to grow strongly and is forecast to continue doing so.”

Well the main reason for the growth in UK population is the neverending migration of various illegal migrants and undocumented criminals to the UK, who have to be housed at the taxpayers expense. They have also brought the NHS and various other social services to breaking point. This may all be good news for UK landlords, but not so good news for the vast majority of British people.

I made that comment not because I approve of the continual increase in population of an already overcrowded island but rather as a reason why housing demand will continue to increase almost certainly at a greater rate than supply. That imbalance in supply and demand will be a powerful force counteracting any pressure for falls in house prices.

[GeoffF100]

“The UK population continues to grow strongly and is forecast to continue doing so.”

Well the main reason for the growth in UK population is the neverending migration of various illegal migrants and undocumented criminals to the UK, who have to be housed at the taxpayers expense. They have also brought the NHS and various other social services to breaking point. This may all be good news for UK landlords, but not so good news for the vast majority of British people.

"Illegal" immigrants have a legal right to come here, and constitute about 10% of net emigration.

[GeoffF100]

I made that comment not because I approve of the continual increase in population of an already overcrowded island but rather as a reason why housing demand will continue to increase almost certainly at a greater rate than supply.

Already overcrowded? What gave you that idea? We lots of space, but people are not allowed to build on it, and our tax system gives people no incentive to downsize. If we fix those issues and the skills shortage, the housing shortage can be fixed, but it will take time.

Here is an illuminating video form the New Statesman, "UK housing market crash is the end of the PONZI SCHEME":

https://www.youtube.com/watch?v=qTJ_uxrR-Cw

[ursaminortaur]

“The UK population continues to grow strongly and is forecast to continue doing so.”

Well the main reason for the growth in UK population is the neverending migration of various illegal migrants and undocumented criminals to the UK, who have to be housed at the taxpayers expense. They have also brought the NHS and various other social services to breaking point. This may all be good news for UK landlords, but not so good news for the vast majority of British people.

The vast majority of immigrants to the UK are neither illegal or asylum seekers ( who those on the right tend to wrongly label as being illegal immigrants ).
Unfortunately the debate during the referendum conflated all these different types of immigration together with EU freedom of movement rather than treating them all as the separate things they are - and even after we have left the EU and freedom of movement is no more the right still conflate these different types of immigration.

[Steveam]

Perhaps increased longevity has something to do with both our increased population and our (vastly) increased demands on the NHS. (I’m in my 70s and not volunteering for euthanasia).

Best wishes, Steve