YBS 99% mortgage is a big problem now . Houses are going down and let`s just say it is not looking good as unemployment is rising badly . Many construction companies have gone into bankruptcy and many other sectors are bad now . When people bought a 400k house for 1%-1.5% now having to pay 6% interest will be a big wake-up rising from 1.2k to about 2.7-3k . The future will be really bleak but when you get companies like Savills talking bull this is what happens always before a crash . Some friends of ours bought a new build for 410k but now they are in negative equity and lost about 100k in the last 2 years.
I'm sorry to hear about your friends in negative equity. That is very very tough. Without doubt for a portion of the market, like your friends you reference, the current market is especially tough.
@@BritishHomeInvestors At the moment we are not buying and waiting to see what BOE does , as it stands we can afford a 280k-300k mortgage with 6% interest . We are not going to risk going in a debt trap as our rent is currently about 40% lower than it would be for a mortgage for the same house . We will try to buy in 2026-27 , just looking at what will happen as I think BOE will lower their rates maybe in late 2025 as UK does not have anything to show regarding GDP .
With 3.5 million illegal immigrants entering the uk every 5 seconds along with everyone else arriving as well, I think supply and demand will dictate as usual with inevitable increase in prices.
I am inclined to agree with your view that we haven’t seen the worst of repossessions or defaults. I also think this year will be one of the most difficult for those remortgaging even if there is a base rate reduction. Most will be remortgaging from circa 2% to 5% plus, which equates to an additional £475 per month on the UK average mortgage (£189500). To service this increase without impacting on their disposable income a base rate tax payer would need a £7,900 pay rise and a higher rate tax payer would need a £10,700 pay rise and that ain’t going to happen. So at worst mortgage payers aren’t going to be able to pay the extra cost of their new higher rate or at best have far less disposable income. If the number of defaults and repossessions increase, as I suspect, banks will become increasingly more stringent with affordability tests and reduce the size of mortgages they will offer to buyers. The knock on effect is current asking prices become unaffordable and sellers will need to drop their prices to sell. The last 12-18 months have been flat in terms of house prices and repossessions, but the housing market is a slow turning beast and now showing the signs that We’re seen before the 2008 down turn, I don’t think we will see what we saw in 2008 but definitely think we will see a reduction in prices. So the theory is ringing true at the moment, nut only time will tell if it is truly correct.
I think this is incorrect, a crash entails prices dropping from 40% or more. This wasnt the case in 2008 they dropped between 10-20% and this persons graph says 14-18 years so the crash should have happened now which it has not. A crash will only happen when theres 1 million houses being built year on year by the government for 5 or so years. To give you context the government has built 230,000 homes in 2023; supply is the biggest factor.
Thanks for the comment. I think you raise completely valid points. The one thing I'd add is although nominal house prices have stayed steady over the last couple of years. Adjusted for inflation they have dropped 17%. Inflation has done a lot to distort house prices.
I agree. Adjusted for inflation house prices have dropped 16% over the last 2 years. I have a video coming out soon discussing this exact thing I’m more detail in a week or two. Titled has the house crash already happened? Thanks for the comment 🙏
A fair and interesting analysis that could have benefited from consideration of real terms as well as nominal terms. For example, house prices only recovered from the 2008 financial crisis in real terms in 2021.
Agreed 100% I funnily enough have a video coming out soon titled, why has the housing market not crashed. Which shares the reality of house prices relative to inflation dropping 16% over the last couple years. In the 07 crash they dropped 20% relative to inflation so we’ve not been far off that correction… but this time no one has really realised it! I would enjoy your comments and insights on future videos!
Nice video. Followed Fred since 2006. The model explained the last cycle well. Before that, 1955-1990 saw growth every quarter so model did not fit at all. This cycle, period from 2022 Q3 to now its fallen 5% - bigger than the mid-cycle at a time it is meant to be booming! If you correct for real prices on the x-axis it gets over these issues but then looks like the cycle peaked in 2022 Q3 so 4 years early. Personally, feels like 2010-11 to me, yields are there and we are back out shopping.
Another factor to consider is that Labour is coming to power with smashing majority in several weeks. I expect that they'll go hard after all investors- rent controls, progressive tax on each additional property, more tenant rights...They will start to dump their properties in the market...
Thanks for the comment. If you can keep property long term and keep careful consideration over the debt it’s hard to go wrong. I’m personally not selling anything
@@BritishHomeInvestors I'm thinking if 5 percent rates are the new norm, I'd be better off selling and buying a smaller property and having more equity. Voids will hurt less and I'll be paying less in mortgage payments, and thus tax on those mortgage payments. I think the days of house price inflation might be behind us, so there is less of a wave to ride by having less equity in a bigger place. That's before I start ranting about addition rules being added to 3 bed houses to make them defacto HMOs in Portsmouth.
That makes complete sense to me. I’m being careful on debt levels and deliberately keeping mortgages low on buy to let’s that don’t yield as well. I know I could sell and buy different better yielding assets but I work on the mentality I buy to never sell. Just so much effort and time to buy and sell. Not sure if that is right or wrong!
@@BritishHomeInvestors I suppose it's dependant on if it's your full time source of money or not. If it's on the side, I imagine anything that isn't obviously wrong is right enough, in all this uncertainty. The issue BTL might have in future is its margin Vs the s&p500, regulation is on the up and profit is on the down.
Completely agree. Unless I find good property opportunities, I park the excess in the S&P500 and global index funds. The part-time property investor is dying off in a way.
They will eventually. Unrealistic prices. You don't have to research this or have fancy degree's. It stands to reason. If average prices is about £3500.00 and the price increases, but wages / salary dies not increase whichis much slower in comparison. Something bad is going to happen. I don't think its if that happens, I think it's when????
@@BritishHomeInvestors It would be cool to get a video on your thoughts and possibly advice for young first time buyers (like myself). I watched your "Why you should not buy a home video" and agree with the points. However i already have some of my own business investments on the go alongside my 9-5 and looking to get out of renting now as i've probably lost about 50k over the last 6 years renting, also desperately needing my own real space at this point in my life. I think we will see a small drop in house prices, i've already seen some in my local area in south manchester from the usual 500k+ bonanza - but i feel with the sharp population increase and economic stagnation the income to house price ratio will further increase, making getting on the property ladder more crucial than ever. I also think the labour govt will not address this issue for the under 30's, especially looking at their currently voiced policies and what Rachel Reeves has come out with. This is just an uneducated opinion though of a software engineer Thanks again for your vids
Your self declared ‘uneducated views’ I think are spot on! Great idea on the video idea. I’m definitely going to produce something on the topic. My advice in short is getting good at house hunting without emotion. Find the opportunities to pick up a discount which is usually linked to events like fall through or the agent mismanaging the sale. As a software engineer I imagine you are very methodical. So create a spreadsheet or similar and keep track of any properties you like and keep track of time on the market, price changes and price you’d be happy to pay. Importantly keep track of properties falling through and keep communication with agents about your position and price you’d consider on each property. Periodically keep calling the agent as most agents are purely reactive. If you keep doing that, you will eventually have an agent call you and go, ‘you know that property you like, they’d actually now consider your offer if you can move quickly’ Just keep consistent with a methodical approach and something great will eventually come up.
@@BritishHomeInvestors Sounds great! Not heard anything like this in all the research i've been doing so seems like sage advice. I'll definitely try this - with luck i might be able to get a property in my home town that i'm priced out of
Rich people like to invest in property. They ultimately pass this down to their families...House prices will go much much higher..helped by the lack of building in recent years and increase in demand
What is a Crash in Mordern Day Terms. For me a Crash would be 75% Drop in Housing Across the Board all Properties and. Double digit interest rates will slow down Inflation which is what the goal should be.
@@BritishHomeInvestors Its not the interest rate its the Price of Houses. Interest rates have been to low for to long which is why housing is so high Sure low interest rates will allow you to buy things but you will Pay more for them. Would you rather have an 11% interest rate on $100.000 or a 3% interest rate on $500.000 ? Which Payment of the two examples would you Prefer? Its the same thing with cars it's the Price not the interest rate. The goal should be lower inflation unless you like Paying more for the things you need and want.
With your example it would depend on if I had the cash or not. High interest rates make cash more valuable, low interest rates make cash less valuable. I’d rather have 11% interest and pay 100k if it was for a like for like property
@@BritishHomeInvestors What i gave you was a Hipothecal yes cash is king in certain situations. But if something cost $500,000 and Hundred of People want it you're going to Pay the same as everyone else. In some cases you may Pay more because you're in a better financial Position to do so. I can Respectfully agree to disagree we just have two different Perspectives.
clown) if the prices crash that mean people can't afford to buy it anymore, because you lost your job or because mortgage rates will be high. Some people probably will benefit from this but most likely those who got more money people that can't afford right now to buy a house most likely won't be in a better position.
prices of houses in UK are insane they've gone up x4 to x10 times in 20 years more than anywhere in the world but fres is wrong due to supply and demand and the end game is house prices going up so nobody can afford them. Blackrock will buy them and rent them back under UBI
People will need your live omwwhere, but it's increasingly hard to live in one or buy a property because of the price property isnow. Hardly, any social housing.. may be we can move in caves and bus shelte's when it all crashes and come tumbling down. Lol😅
@@BritishHomeInvestors wasn't really a crash, but more a drop from their peak where houses were very overvalued. Also the situation and circumstances were extreme for example the huge peak prices at the time was fueled by easy access to debt and a boom in mortgage lending, back then loans were offered at scale to borrowers with poor credit histories (most of these loan companies bust now too like Wonga). As these borrowers defaulted led to loss in confidence. There was the collapse of Lehman Brothers and then banks became unwilling or unable to lend money. This lack of credit availability further made worse the decline in house prices, as potential buyers found it difficult to secure mortgages. All of this context needs to be put out there 🙂. Overall demand will continue to outstripe supply so that will always mean prices rising. Better to get on the market now then wait... Trying to predict market forces is impossible... But buying a house now is less risky than renting and hoping prices crash.... Thanks for your content 👍
@@BritishHomeInvestorsI am not good enough to do your job and best content 😂 but I do think worth exploring proportion of population renting historically vs today. I wouldnt be surprised if this is sky high meaning sensitivity to buy is higher as more people want to stop renting but also the wealthy will be ready to buy as soon as property is on market to take advantage of the rental demand.... My opinion is that it's landlords and 2nd time buyers who have driven prices up above market values. I think good to highlight how the situation we have today is crazy😢... Problem with house prices is if they are over valued all the time (but at same time value of what people are prepared to pay) , any drop off in price will be eaten up by investors shifting prices back up immediately (high interest rates for first time buyers don't help) so whether we see that actual drop off might happen but will be invisible to most. Keep doing what you are doing 🙂, apologies if I might have come across negative. 👍.. Appreciate you responding to comments
No apology needed! You have shared brilliant comments that are thought provoking. The last time house prices were as high as a multiple of earning was in the 1800’s but between 1845 to 1911 house prices dropped 23% and earning rose 90%. How? There was a massive push to build more homes. A doubling of housing from 3.8m to 8.9m homes. There are currently 30m homes. So that would be the equivalent of the uk building 40m homes over the next 56 years, about 720k homes a year. Interestingly back then, 75% of property was rented. It really demonstrates how much supply we need to inject to actually dent the market. I think I’ve just outlined a topic for a future video! Thank you for the inspiration!
Given enough predictions, one will inevitably be right. Government policy has arguably been the biggest factor in UK price trends. Rising prices has been winning elections. There are a lot of voters without homes now.
Thanks for the comment. Agreed. However which government? Often US policy on interest rates drives UK Bank of England policy. Market crashes aren’t confined to our borders, but often mirrored across western economies. What do you think? Could you elaborate?
Global interest rates generally move as a herd but UK government policy backed rising property prices. Inheritance tax benefits, government rheotic, lax BTL rules, no capital tax, help to buy, stamp duty holidays, underwriting lender risk, foreign buyer rules, sanctioning 40 year mortgages etc. The list list is long. Price to earnings matters and is now badly skewed. This has serious implications for the future and not forgetting those who now simply work to pay the mortgage. Political incentives created the boom. Today 25% of the working age population are not in work. Incentives are changing.
Incredibly insightful and I completely agree. I hope I’m not pushing my luck to ask what you think will happen? I suspect even with a change of government. The system is a giant ship with a very small rudder.
How many predictions did he make though? If he made 30 predictions and these 2 came true…. I could predict a crash every year for the last 40 years and be right twice
House prices have peaked around August 2022 and if you adjust it to inflation house prices have already fallen by 16%. Money printing doesn't seem to be stopping anytime soon, Housing demand is as high as it has ever been and there is simply not enough supply to meet the demand. Don't try to time the market...just buy when you can and any dip will be short-lived for sure!
But recent data indicates that the UK experienced a 0.7% GDP growth in the first quarter of 2024, and this growth trend has continued into the second quarter, showing stronger-than-expected economic activity for the first half of the year
HAHAHAHAH Funniest prediction ive seen in a while. Even the most negative people have given up on calling a crash... Two words... LABOUR. IMMIGRATION. That is all!
It depends how you look at it. House prices relative to inflation have fallen 16% in the last 2 years. However I agree. Nominal house prices won’t crash. I’m just trying to share different perspectives.
Thanks for the comment. Does that make my thoughts wrong? I’m not sure what you mean? Could you elaborate? Ultimately my interest is in a market that’s growing and a market that encourages transactions irrespective of if prices go up or down.
More people.......less houses..... Lower wages...... higher prices..... Higher crime... Displacement of natives.. Divided communities... The economic advantage is pretty much nill. Any claim we are better off financialy has already been debunked. The only advantage or gain is for the richest, and those who intend to take everything you own and change society forever... WEF....you'll own nothing and be happy. In other words.. your all equally worthless.
